Why Your Commercial Contract Needs Clear Change Order Language

by Willy Hughes

June 2, 2026

Legal Tip: Scope changes are inevitable – payment disputes don’t have to be

In commercial construction and development, change orders are not the exception – they are the rule. No matter how detailed the original scope, unforeseen conditions, design revisions, and owner-directed changes are a near-certainty on any significant project. What separates manageable change from a costly dispute is almost always the contract language governing it.

Owners, developers, and general contractors who fail to address change order procedures clearly upfront often find themselves arguing over who approved what, when, and at what price – sometimes years after a project is complete.

The Three Areas to Address

1. Written Approval Requirements

Verbal change authorizations are one of the most common sources of construction litigation. A contractor proceeds with work based on a conversation or email thread, the owner disputes the authorization, and the result is a claim that could have been avoided entirely.

Your contract should require that all changes to scope, schedule, or contract price be approved in writing through a clearly defined written procedure. This typically means a signed change order or, at minimum, a written directive that explicitly authorizes the contractor to proceed. The standard “no damages for delay” or “no oral modifications” clauses may not prevent disputes if the parties routinely proceed with work based on informal directives or course of conduct modifications during the project. The contract needs a clear, affirmative procedure that both parties are trained to follow.

Practical Tip: Define who has authority to approve change orders on behalf of each party. A project manager’s approval may not bind the owner. Ambiguity here creates risk on both sides.

2. Pricing Before Work Starts

Proceeding with changed work before agreeing on price is a recurring and, ultimately, avoidable mistake. Once a subcontractor or contractor has completed the work, the owner’s leverage disappears, and the pricing conversation becomes adversarial.

Well-drafted contracts establish a clear process: the contractor submits a change order proposal with supporting cost documentation, the parties negotiate and agree on price, and only then does the work proceed. Where time constraints make pre-pricing impractical, the contract should allow work to begin pursuant to a written construction change directive or similar written authorization, often on a time-and-materials basis with a not-to-exceed cap, subject to final pricing once the scope is better defined.

Practical Tip: Include a deadline by which the owner must respond to a change order proposal. Without a response deadline, pricing can languish while work proceeds, creating exactly the ambiguity you are trying to avoid.

3. Notice and Preservation of Entitlement

Even with written approvals and agreed pricing, contractors and subcontractors can lose their right to payment through procedural failures. Many contracts contain notice requirements that condition entitlement to additional compensation on timely written notice, sometimes within days of when the contractor knew or should have known of the changed condition.

These provisions are generally enforceable, and in many jurisdictions, failure to provide timely notice may bar an otherwise meritorious claim, regardless of whether the owner was actually prejudiced. Contractors must know their notice obligations and treat them as non-negotiable deadlines. Owners, for their part, should ensure their contracts include reasonable notice windows. Overly aggressive notice requirements may produce short-term leverage but often lead to inflated contingencies and more aggressive claims behavior from contractors who feel the deck is stacked against them.

Practical Tip: Audit your standard contract or the contract you have been asked to sign. Identify every provision that conditions entitlement on notice, and calendar those deadlines from the moment a potential change arises.

A Word for Owners and Developers

Clear change order language is not just a contractor protection, it is equally valuable to owners and developers. When scope, authorization, and pricing are documented consistently, owners can accurately track project costs in real time, reduce exposure to inflated claims, and avoid the uncomfortable position of disputing work that was completed months ago without clear authorization. The upfront investment in well-crafted change order provisions pays dividends on every project it governs.

Bottom Line

Change order disputes are among the most litigated issues in commercial construction, and most of them are preventable. Whether you are negotiating a new construction contract or reviewing the terms of a project you have already committed to, the change order provisions deserve careful attention.

If you have questions about your construction contracts and need help evaluating your current change order procedures, contact Willy Hughes at Griffith Davison’s Dallas office at (972) 392-8900, or email Willy directly at whughes@griffithdavison.com. 

This article is intended for general informational purposes and does not constitute legal advice. Contact an attorney to discuss the specific facts and circumstances of your situation.