Change Order ( CO )

What does Change Order ( CO ) Mean?

Definition of Change Order ( CO ) in Construction
Formal notification of a change in the project agreement. This can be a change in the scope of work, the cost of the project, the schedule, or any other entity that requires a formal change to the agreed upon legal terms of the contract.

Normally on a larger project, the architect will be the party to issue a change order on the project. The change order is presented to the contractor for review and approval. In most instances the change order is not issued to the contractor, unless the owner has agreed that the architect should be issuing the change order.

Each change order, should include the change in pricing as well as any adjustments to the schedule required by the change order. The change order will include a summary of the current financial agreement on the project.

Values identifying the original contract value, the additive sum of change orders to date, and the current change order value. The change order will identify the latest final contract value inclusive of the current change order. It is important for a contractor to understand the total affect on their costs that change orders represent. Several change orders adding scope of work must be associated with a change order for either an increase in the schedule on the project or another change order for acceleration on the project.

Theoretically, it is impossible to perform additional work without extending the schedule of the project, unless the work production is actually accelerated to complete additional scope within the original contract time schedule. If there is a need to accelerate, then there is additional cost. Acceleration is not free and many contractors are not properly compensated for this cost.