Change Order Tracking Template for Subs

Why Change Orders Kill Sub Margins

A Dodge/Procore 2022 survey of 537 specialty contractors found that small subs lose an average of 16% of change order revenue to unbilled or uncollected work. On $200K in annual change orders, that is $32,000 left on the table every year.

A change order is work outside the original scope. It should be straightforward: extra work gets documented, priced, approved, and billed. In practice, it rarely goes that smoothly.

Here is what actually happens on most jobs. The GC tells your foreman to add three outlets in a conference room that was not on the original plan. Your foreman does it because the GC said “we’ll handle the paperwork.” The paperwork never gets handled. By the time the PM realizes the extra work happened, the job is three weeks past that point, the GC’s memory is different from yours, and the CO is either never submitted or submitted so late that the GC disputes it.

One CO for $1,200 is annoying. Five COs at $1,200 each over the course of a 6-month job is $6,000 out of your margin. On a $200,000 contract with a 10% margin, that is 30% of your profit gone.

The problem is not bad GCs (though some are). The problem is that change orders require a tracking system, and most subs do not have one. They rely on the PM remembering, the foreman writing it down, and someone in the office following up. When any one of those steps breaks, money disappears.

The Change Order Tracking System

Change orders affect over 75% of construction projects at 8-14% of total contract value (PMI). The 5-stage system below is how you capture your share.

This template tracks each change order through five stages. Every CO must pass through each stage in order. If a CO stalls at any stage for more than 7 days, it gets flagged for follow-up.

Stage 1: Identified

Someone on your crew was directed to do work outside the original scope. This stage captures the basic facts before anything else happens.

Fields to record:

CO Number: Sequential. CO-001, CO-002, etc. per job. Never reuse numbers.
Date Identified: The day the extra work was directed or discovered.
Identified By: Foreman name or crew lead who received the direction.
Directed By: GC superintendent, project manager, or whoever gave the direction.
Description: What the extra work is. Be specific. “Additional electrical work in conference room B” is too vague. “Install three duplex outlets and one data drop in conference room B, not on original plan set dated 01/15. Direction given verbally by GC superintendent John Smith at 2:00 PM on 02/10.”
Verbal or Written: Was the direction given verbally or in writing (email, RFI response, revised drawing)?

The critical step at this stage: If the direction was verbal, send a confirmation email to the GC the same day. “Per your direction on-site today at [time], our crew will proceed with [description of extra work]. We will submit a change order for this additional scope.” This email becomes your paper trail. Without it, the GC can later claim the work was in the original scope.

Stage 2: Priced

Before the extra work starts (or as soon as possible after, if the GC pushed you to start before pricing), calculate the cost.

Fields to record:

Labor Hours Estimated: How many crew hours will this work take?
Labor Cost: Hours times your burdened rate (not the wage — the fully burdened rate including taxes, insurance, and benefits).
Material Cost: Itemized material list with current pricing. Include waste factor.
Material Markup: Your standard markup percentage applied to materials.
Equipment Cost: Any rented equipment or specialized tools needed for this scope.
Overhead and Markup: Your standard markup on the total direct cost.
Total CO Amount: The number you are submitting to the GC.

Pricing approach:

If the scope is clear and you can estimate it, submit a lump-sum CO. Lump-sum is better for subs because it sets a fixed price regardless of minor productivity variations.
If the scope is unclear or evolving, submit a T&M (time and materials) notice and track actual hours and materials separately. T&M is riskier for subs because it caps your recovery at actual cost plus markup, and it does not account for disruption to your other work.
Always include your markup. COs are not favors. Extra work deserves the same margin as base contract work.