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$8,500 of direct work prices at $11,550: 10% overhead + 10% profit + 3 days of general conditions at $450/day. Signed before the work, or it is an invoice argument.
Change orders are where construction profit is made or litigated. The honest structure: $8,500 of direct labor and materials, plus 10% overhead (office time, resequencing, coordination is real cost), plus 10% profit, plus the part owners never expect — schedule extension priced as general conditions, $450/day for supervision, trailer, fence, and insurance. Total: $11,550, and the signature lands BEFORE the work starts, because a change order written after the work is an invoice argument, not a contract. This calculator prices the change, and the FAQ carries the documentation discipline that keeps it collected.
Contractors use it before the scope creeps: $8,500 of direct work prices at $11,550 with OH&P and 3 days of general conditions — signed before the work, or it becomes an invoice argument.
Because the change costs more than the work. Direct cost — labor and materials — is only the visible layer. Overhead is real: the estimator re-pricing, the PM resequencing the schedule, the coordinator re-booking the sub, the office processing the paperwork — 10% is the industry-standard allowance baked into most contract forms (AIA and ConsensusDocs both assume it), and small, disruptive changes justify 15–20% because a $2,000 change consumes nearly the same office hours as a $20,000 one. Profit belongs on changed work for the same reason it belongs on base work — the contractor is not a cost-recovery service; the markup structure was the deal. The components owners resist most are the ones they cannot see: general conditions for time extensions (every added day is supervision, temporary facilities, insurance, and equipment on site — $300–600/day on commercial jobs, real money that owners instinctively treat as free) and remobilization when the change pulls a crew back. Owners reading this from the other side: the legitimate check is itemization — direct cost breakdown, labor hours and rates, material quotes, and the GCs rate — a contractor who itemizes earns the markup; one who waves at a lump sum invites the negotiation.
Match the pricing mode to the uncertainty, per change — not per project. Lump-sum (the contractor estimates, the owner accepts or negotiates) is right for defined scope: the owner wants a new door moved, a finish upgraded — known work, known productivity; it favors the contractor on price risk and the owner on certainty, and it forces the estimate discipline that keeps changes from metastasizing. Cost-plus with a guaranteed maximum fee is right for genuinely unknown conditions: rock in the trench, rot behind the wall, utilities that are not where the drawings swore they were — the owner pays actual cost plus a fixed or capped fee, saving the risk premium a lump sum would carry, but buying the obligation to audit tickets and receipts. The hybrid most contracts actually use: lump-sum when scope is definable, cost-plus with a not-to-exceed cap when it is not, with unit prices (per yard of rock, per square foot of unforeseen repair) pre-agreed in the base contract for the predictable unknowns — unit prices are the cheapest dispute insurance in construction. Whichever mode: the fee percentage, the GCs daily rate, and the documentation standard belong in the base contract, negotiated when everyone is friendly — change-order terms written mid-dispute are written in blood.
Process, signed paper, and photos — the unglamorous trinity. The written-before-work rule is the whole game: scope, price, and time impact signed by both parties before mobilization; the contract should require written change orders and state that work performed without one is at the contractor's risk (contractors) or that directives must come from one authorized person (owners) — verbal directives on site are how both parties end up testifying. Scope discipline: the change order lists inclusions AND exclusions — "includes relocating the panel; excludes patching, painting, and ceiling repair" — because the argument later is always about the edges. Time impact in writing: every change states its schedule effect, even zero, so the cumulative float erosion cannot be relitigated at the end; owners should track cumulative change volume too — changes past 10% of contract value signal a scope failure at bid time and justify a frank conversation about the drawings. Documentation that wins: daily field reports (who, what, where, weather), dated photos before/during/after the changed work, delivery tickets, and the owner's initials on field directives — in a dispute, the side with contemporaneous records beats the side with memories. And the deductive mirror: changes that REMOVE work run the same math in reverse — credit equals direct cost saved plus markup, not the full retail line item; owners who know that clause and contractors who honor it keep the relationship through the project.