Change order vs. estimate: what’s the difference, and why it matters

An estimate and a change order can look alike: a list of work with prices. They do different jobs. An estimate describes what a contractor proposes to do, and for how much, before you have agreed to anything. A change order changes the scope, price or schedule of a contract that already exists.

This guide is informational. It is not a professional estimate or legal advice, and the rules for your project depend on your contract and your state.

What an estimate is

An estimate (also called a quote, bid or proposal) is the contractor's price for a described piece of work. The Federal Trade Commission's advice on hiring a contractor says a written estimate "should include a description of the work to be done, materials, completion date, and the price."

An estimate comes before the contract. The same FTC guidance lists what the contract itself should contain and notes that contract requirements vary by state.

How to compare contractor bids and estimates

The FTC's advice is short: get multiple estimates, "don't automatically choose the lowest bidder," and "ask for an explanation if there's a big difference among the estimates."

To make that comparison possible:

1. Give every bidder the same written description of the work.
2. Check each estimate for the four things the FTC lists: description of the work, materials, completion date, price.
3. Line the estimates up item by item rather than total against total. A lower total can simply leave something out.
4. Where two bids differ a lot on the same item, ask each contractor what they assumed.
5. Ask how changes will be priced if the scope changes after you sign.

If you already have the bids, a line-by-line review of a quote, bid or estimate shows which lines sit outside the local range.

What a change order is

A change order is a written change to a signed contract. Three public reference points show how it works.

Federal contracts. The Federal Acquisition Regulation defines a change order as "a written order, signed by the contracting officer, directing the contractor to make a change that the Changes clause authorizes the contracting officer to order without the contractor’s consent." Under the construction Changes clause, a change must be "within the general scope of the contract," and if it increases or decreases the contractor's cost or time, the government makes an equitable adjustment and modifies the contract in writing.

AIA contract forms. The American Institute of Architects describes its G701 change order form as the document that implements changes agreed by the owner, contractor and architect; signing it records agreement on every term of the change, including the contract sum and the contract time.

California home improvement contracts. Business and Professions Code section 7159 says a change-order form becomes part of the contract "only if it is in writing and signed by the parties prior to the commencement of any work covered by a change order." The required contract notice says the order "must describe the scope of the extra work or change, the cost to be added or subtracted from the contract, and the effect the order will have on the schedule of progress payments."

Other states have their own rules. What the three examples share is that a change order is written, signed, and tied to the existing contract, with price and time adjusted in writing. They differ on who signs: the owner, contractor and architect on the AIA form, both parties in California, and the contracting officer alone under the federal clause, where the adjustment to price and time follows the order.

Estimate vs change order, side by side

	Estimate	Change order
When	Before you sign a contract	After a contract is signed
What it does	Proposes work and a price	Changes the scope, price or time of the contract
What it should state	Work, materials, completion date, price	The change in scope, the amount added or subtracted, the effect on schedule or payments
Signatures	Not covered by the sources cited here	Both parties under the AIA form and California law (in California, before the changed work starts); the contracting officer under the federal clause

A contractor may send you an "estimate" for extra work in the middle of a job. That document is a proposal. It changes the contract when it is written up and signed as a change order.

A worked example

These numbers are hypothetical and are not benchmarks.

You sign a contract for a kitchen remodel at $48,000, with completion in eight weeks. During demolition the contractor finds a damaged section of subfloor that was not in the scope.

• The contractor gives you a price for the repair: $2,150 and two more working days. At this point it is an estimate.
• You ask what it includes and get a breakdown: 14 hours of labor, materials, and markup.
• You both sign Change Order 1: replace 40 square feet of subfloor, add $2,150 to the contract, extend completion by two working days.
• The contract sum is now $50,150.

A change order can also subtract. If you later drop a $900 pantry cabinet from the scope, Change Order 2 reduces the contract to $49,250.

Checklist before you sign a change order

• It names the contract it changes and has its own number and date.
• It describes what is added, removed or changed compared with the original scope.
• It states the amount added to or subtracted from the contract, and the new contract total.
• It states the effect on the completion date and on progress payments.
• The price is broken into labor, materials and markup you can check. The labor and materials breakdown checklist lists what to ask for.
• Both parties sign it before the changed work starts.

For a field-by-field walk through the document, see how to read a construction change order.

Common mistakes

• Treating the estimate as the contract. The estimate is the proposal; check what the signed contract says.
• Approving extra work verbally. In the federal clause, an oral order counts as a change only if the contractor gives written notice of it. California requires a home improvement contract to tell the owner that extra work is not enforceable against them unless the change order identifies, in writing before the work starts, the scope, the amount added or subtracted, and "the effect the order will make in the progress payments or the completion date." The same notice must also say that a contractor's failure to comply "does not preclude the recovery of compensation for work performed based upon legal or equitable remedies designed to prevent unjust enrichment."
• Leaving out time. The federal clause adjusts "the time required for" performance along with cost, the AIA form records the contract time, and California's enforceability statement names the effect on progress payments or the completion date.
• Paying twice for the same work. Before you agree to a price, check whether the "extra" work was already in the contract. See change order vs. contract scope.
• Comparing totals only. Two estimates, or an estimate and a change order, can only be compared line by line.

Questions people ask

Is a change order the same as a new estimate? No. An estimate proposes a price. A change order amends a signed contract and states the change in scope, price and time.

Does a change order have to be in writing? That depends on your contract and your state. The federal definition, the AIA form and California's home improvement law all describe a written, signed document.

Can a change order reduce the price? Yes. California's notice refers to the cost "to be added or subtracted," and the federal clause covers a decrease in cost as well as an increase.

How do I compare contractor bids? Give each bidder the same scope, check that each estimate states the work, materials, completion date and price, compare line by line, and ask about large differences.

When you have the estimate or change order in hand, a line-by-line change order review shows which lines are worth a question before you sign.