18 Common Budget Busting Construction “Change Orders” That Occur During Additions, Remodels and New Construction

The New Avenue online project management system reviews hundreds of projects at any given time.  We track all of the change orders submitted by contractors in these projects.

This post highlights the 18 most common change orders.  These are changes that may be called “surprises” on your project and often times they shouldn’t be surprises at all.  You should be planning on these changes.

You can review this checklist and check if your project budget includes them.  Do this and you can be prepared to review any bid.   You can make sure the full scope of work is included in the price you are quoted.

First, a note on what a “Change Order” is.”Change Ordering” is a verb used in the construction industry and it’s something that many owners are completely unaware of.  One of the unfortunate facts of many remodels is blown budgets. One cause of this is that unscrupulous contractors use change orders in a strategic and deceitful way to offer low bids.  They then make your project a miserable experience as they introduce additional hidden costs.  Some (and certainly not all) contractors make all of their profit off of these “Change Orders”.  This is true for projects ranging from small $1,000 projects to billion dollar bridges.  The good news is that many contractors have noble motivations.  They became contractors because they want to build beautiful homes – and they want you to be happy.  Even a perfect project can have 20+ change orders that you willingly choose to make.   In fact, you can have 20 or more change orders and still complete the work on budget.  With a well prepared bid the changes can be fun ways to add things that you love. Use this list to improve your next or only remodeling experience.

In our review, 13 of the 18 most expensive change orders were “discretionary”.  Discretionary change orders are changes the customer asked for. This was not part of the original bid.  It is an add that the customer requested. We consider those good change orders. They often pop up as a project is progressing on budget and the customer had a little reserve money socked away and they decided to add something nice.

However, five of these change orders were “non-discretionary”. These are the unpleasant changes. These changes are difficult to manage because sometimes the cause is beyond the owner’s or builder’s control. A building inspector may exercise their authority and request something that is not in the plan or the budget. In this case disagreeing with the inspector is an issue of fighting City Hall.  From what we have seen, City Hall never loses that battle. Other times, a designer, engineer or contractor overlooked something. Again, in a complex project this if common and a little leeway is fair.  But if this happens too often then it becomes a real question of competence or even integrity. This varies wildly by professional and most professionals are very fair and honest. However the bad apples are also very good at figuring out how to get you. It might be that you didn’t read the plans or it may be that you love custom woodwork… or both.

A well run project will stay within 10% of the bid.  If an invoice is 25%, 50% or even 100% over budget then you should tell your contractor these two things: 1) “I’m paying what was in the bid, I’m sure you can make it up on the rest of the project” or 2) “I’m canceling the contract and going back to bid with different contractors”.

Here is the list of top 18 Change Orders. This list is from all of the projects reviewed not just one project! The average of 8% increase from the original construction bid to the final completed project cost with the 8% split evenly between discretionary and non discretionary changes.

1-13 Discretionary Change Orders: 

1) Add a new bay window to the home.  Since windows were being added in the addition, it made sense to add a bay window to the existing living room at the same time.  Amount: $5,684

2) Upgrade window quality Marvin windows and Velux skylights.  Amount: $4,086

3) Landscaping:  Install a fenced in trash area and stone flatwork in the yard. Amount: $3,393

4) Add a gas line to a backyard cottage to upgrade from electric stove to gas:  $3,000

5) Change siding from Hardi board concrete to wood board and batten.  Amount: $2,325

6) Add tile to main home entry stoop.  Amount: $1,880

7) Add crown molding to living room and kitchen.  Amount: $1,761

8) Install a new skylight in a loft.  Amount: $1,487

9) Additional tile wainscoting in bathroom and tile nook in shower.  Amount: $1,050

10) Change from stained concrete floor to tile floor throughout 610 square foot space.  Amount: $1,050

11) Add false wood beams to living room.  Amount: $996

12) Addition of extra lighting fixtures throughout house.  Amount: $835

13) Provide and install 8’x4′ fence and lattice made of redwood for trash cans.  Amount: $771

Non Discretionary: 

14)  Foundation improvement: Excavate an additional two feet for foundation improvements, fill with compacted gravel, additional concrete.  Amount: $6,042

15) Fire proofing of laundry room.  Amount: $2,151

16) New water line from the street to the main home in order to increase capacity for fire sprinklers. Amount $5,505

17) Add fire sprinklers due to a new building code requirements. Amount $4,360

18) Replace electrical panel in main home with a new 200 amp service, including a wire from the street, new panel and all breakers.  Amount $3,272

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