The true costs of estimating change orders

The ability to manage change orders effectively has a direct impact on your project’s profitability. Establishing a consistent, detailed, and logical methodology to classify and justify costs for recoverable direct costs, overhead/markup, and consequential costs are vital to gaining change order acceptance and for project success.

Determine true costs: 3 types of change order costs

The majority of disagreements in the change order process are – with no surprise – due to cost. The top cost-related disputes are:

• Items related to what’s fair and reasonable for recoverable direct costs,

• Indirect costs defined by overhead-profit percentage, and

• Impact factors resulting in consequential costs