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Write the change-order clause before the client changes course

Clients change their minds. A one-paragraph clause decides whether that costs them money or costs you your margin.

By Ray Okonkwo · Money & Business6 min read
Write the change-order clause before the client changes course

Quick answer: Put a change-order clause in every contract. Any change to the scope gets requested in writing, priced by you, and approved in writing before anyone does the work. Add a second clause covering what happens if the client stops the job entirely.

The call comes on a Tuesday, three weeks into the job. The client is friendly. "Love what you've done. While you're at it, could we move the whole entry to the other side? Shouldn't be much, right?"

It's a lot. It's a different drawing, a different material order and two days of rework. But nothing in your contract says what happens next, so you do the arithmetic in your head while he waits on the line. If you say "that'll cost extra," you're the guy who nickel-and-dimes. If you say "sure," you've just agreed to eat it.

A change-order clause takes that decision out of your head and puts it on paper, where it was settled before anybody was emotional.

What the clause has to do

It does five things, and a paragraph can cover all of them.

  • Defines the scope. The contract describes what you're delivering. Anything outside that description is a change, even if it's small and even if the client thinks it's included.
  • Requires the request in writing. An email counts. A text counts if you say so. A phone call doesn't, and neither does "we talked about it on site."
  • Gives you the pricing. You send back what the change costs in dollars and what it does to the schedule.
  • Requires written approval before work starts. No signature, no work. This is the line that actually protects you.
  • Names the rate for anything you can't price up front. If the change is too fuzzy to quote, the clause says it's billed at your hourly or day rate, plus materials.

Plain language works. Something like this:

Any change to the scope of work must be requested in writing. Contractor will respond with the added cost and any change to the schedule. Work on the change begins only after Client approves it in writing. Approved changes are added to the contract price and invoiced with the next payment.

Have a lawyer in your state read your version. Contract law varies, and a paragraph that holds up in one place can be soft in another. That's a few hundred dollars well spent, once, on a template you'll reuse for years.

The part everybody skips: work already done

The clause above handles the new request. It says nothing about the half of the entry you've already built on the old side.

This is where jobs get ugly. The client changes direction, and now he expects to pay only for the new plan. The finished work is "your problem."

So add a sentence: work performed before a change is approved is billed at the contract rate, and materials already ordered or cut for the original plan are billed at cost. You're not penalizing anybody. You're keeping the cost of his decision on his side of the table.

Stage payments do most of the protecting here. If you've been paid for each phase as you finished it, there's very little left to argue about. If the whole balance is due at the end, every dispute becomes leverage against you. The same discipline that fixes slow invoices fixes this, and most late invoices are a process problem, not a people problem. A deposit that's partly non-refundable covers your first few days of setup, which is when you've spent the most and delivered the least.

When the client doesn't change the job, he ends it

The other version of the Tuesday call is shorter. "We've decided to go a different direction."

You need a termination clause beside the change-order clause. It should say three things:

  1. Either side can end the contract with written notice.
  2. The client pays for all work completed through the notice date.
  3. The client pays for materials and commitments you can't undo, such as a special order or a sub you've already booked.

Some operators add a flat cancellation fee on top, as a percentage of the remaining contract. Whether that holds up depends on how it's worded and where you live, which is one more reason to put your lawyer's eyes on it. Don't copy one from the internet and hope.

Say it out loud on day one

Nobody reads contracts. Clients sign them, and then they act as though the conversation was a handshake.

So walk through the clause before the pen comes out. Thirty seconds: "If you want to change anything once we've started, send me an email, I'll price it the same day, and we go ahead once you've said yes. It keeps both of us out of arguments."

Said that way, it sounds like what it is, a promise that you won't surprise him with a bill. Clients who bristle at that are telling you something, and it's better to hear it before the deposit than after the third change.

Enforcing it on a friendly client

The clause is easy. Using it on a client you like is the hard part.

The move is to keep the tone warm and the process fixed. When the "while you're at it" call comes, you say: "Happy to. Send me a quick email with what you're thinking and I'll get you a price this afternoon." No lecture and no mention of the contract. You're just doing what you said you'd do on day one.

Then send the price. Then wait for the yes.

One concession is worth making. Not every change deserves an invoice. If a client asks for something that takes you ten minutes, do it, and put it on the paperwork anyway as a line item with a courtesy credit. That way he sees the value, you've set the precedent, and the next request, the big one, doesn't come as a shock. Decide your threshold in advance, say a half hour of work or a few dollars of materials, so you're not deciding it case by case under pressure.

The failure is the quiet one. You absorb change after change because each is small and the client is nice, and by the end the job that was supposed to clear 20 percent clears nothing. Your weekly numbers will show it before you feel it, which is one reason to check the numbers every Monday and compare what you quoted against what the job is actually costing.

Selling the change

A change order is also a sale. The client has just told you he wants more, which is the best news a small shop gets all week. Treat it like one: restate what he wants, give him the price and the time, and let him decide. If you've been selling without the sales voice, you already know how. It's a plain answer to a plain question.

Some of the best repeat business comes from clients who watched you handle a mid-job change cleanly. They saw you didn't flinch, didn't pad the price and didn't leave them guessing.

The test

Pull out your current contract. Find the paragraph that says what happens when the client wants something different from what's written. If you can't find it, you don't have one.

Fix that before the next Tuesday call.

Ray Okonkwo

Money & Business

Former commercial banker turned small-business owner. Covers salary, credit, margins and the arithmetic nobody does before signing.

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