Subcontractor Change Orders: How to Track and Approve Them
A subcontract starts as a number. Then the owner adds a room, the inspector wants a different fitting, and a field decision gets made over text message. By the final invoice the real contract value is a different number, and nobody wrote down how it got there. Change orders are how that number gets updated. Tracked well, they make every invoice easy to check. Tracked badly, they are the reason a sub bills well past the original value and you cannot say whether they are wrong.
Track a subcontractor change order by logging it the moment it is agreed, in writing, with the scope change, the dollar amount, any schedule impact and who approved it. Add approved change orders to the original subcontract value to get the revised contract value, and compare every invoice to that figure, not the original.
Key Takeaways
- Revised contract value = original value + approved additive changes − approved deductive changes.
- Only approved change orders change the number. Requested and rejected ones stay in the log but never in the math.
- Every invoice should be checked against what is left: revised contract value minus billed to date.
- Reconcile all change orders before approving the final invoice.
1. What a Subcontractor Change Order Is
A change order is a written amendment to the contract. AIA's A201 general conditions define it as a written instrument stating agreement on three things: the change in the work, the adjustment to the contract sum, and the adjustment to the contract time (quoted in SimplyWise's contractor guide, retrieved September 2026).
For a general contractor there are usually two layers. The owner approves changes to your contract. You then approve changes to each subcontract, and those are separate documents with their own prices. This guide is about the second layer, because that is where invoices get checked.
2. Where Change Orders Go Wrong
- Verbal changes. The work happens on a phone call or text, the price is argued about afterward, and the subcontractor's version is the only one in writing.
- Pending changes treated as approved. Someone tells the sub to go ahead while the price is still being negotiated, and the invoice arrives before the change order does.
- Approved, but not in the ledger. The signed change order sits in a project folder while accounting pays against the original contract. A legitimate invoice looks over budget, or an illegitimate one slides through because nobody knows the real limit.
- Deductive changes forgotten. Scope removed from a sub's work rarely gets the same attention as scope added, so the revised value stays too high.
- Surprise at the final invoice. With no running total, the first time anyone compares billed to contract is at closeout.
3. The Change Order Log: What to Record
Keep one log per subcontract. A spreadsheet works. What matters is that every change order has the same eight fields filled in.
| Field | Why it matters |
|---|---|
| Change order number | A sequential number per subcontract (CO-01, CO-02) so everyone refers to the same item. |
| Project and vendor | Change orders belong to one subcontract. A log that mixes projects can't be reconciled. |
| Description of the change | What is added, removed or replaced, in words the subcontractor and your accountant can both read. |
| Amount, added or deducted | A signed dollar figure. Deductive changes need to be logged with the same care as additive ones. |
| Schedule impact | Days added or removed, or "none". Often forgotten, and the source of later delay claims. |
| Status | Requested, approved or rejected. Only approved items change the contract value. |
| Approved by and date | Who had the authority, and when. This is the first thing asked for in a dispute or audit. |
| Backup | The quote, written direction, photos or email that justify the price. |
4. A Five-Step Approval Flow
- 1Write it down before the work starts.
A change is real the moment someone says "can you also...". Capture it in writing that same day, even if the price isn't settled. A short note with the description and the person who asked beats a detailed recollection three weeks later.
- 2Get the price, with backup.
Ask the subcontractor for a written quote that breaks out labor, materials and any markup your contract allows. Compare it to the original scope and unit prices if you have them.
- 3Approve it at the right level.
Route the change order to whoever has the authority for that dollar amount, and check whether it also triggers a change order on your own contract with the owner. Rejected ones stay in the log, marked as rejected.
- 4Get it signed.
Both parties sign the change order. The standard AIA form for changes between a contractor and a subcontractor is G701S, which records the change in scope, the adjustment to the subcontract sum and any change in time.
- 5Update the contract value and tell accounting.
The moment a change order is approved, the revised contract value changes. If accounting keeps paying against the original number, the control is gone. One person should own this update, every time.
Signing is the step most often skipped because it is tedious, and collecting signatures by email and PDF means chasing them. AIA publishes instructions for completing the G701S (retrieved September 2026). For signing without the PDF ping-pong, see how to sign a subcontractor agreement electronically.
5. Billing Against the Revised Contract: A Worked Example
Take an electrical subcontract with two approved change orders, one added scope and one deduct, and a new progress invoice.
| Original subcontract value | $120,000 |
| CO-01: added lighting scope (approved) | + $8,500 |
| CO-02: deleted fixture package (approved) | − $3,000 |
| Revised contract value | $125,500 |
| Billed to date | − $90,000 |
| Remaining on the contract | $35,500 |
| New progress invoice | $40,000 |
| Over the remaining balance by | $4,500 |
The $40,000 invoice is not automatically wrong. It is an exception that needs an answer before payment: either there is a third change order that never reached the ledger, or the subcontractor is billing ahead of the work. Without the running total, nobody would have seen it. This example ignores retainage, which your subcontract may apply to the revised value.
Never bill against a pending change order. If the work has to start before the price is agreed, get a written directive from the right person and treat the change as pending until the signed change order exists. Only then does the contract value move.
6. Closing Out: Reconcile Before the Final Invoice
Before approving the final invoice, walk through four checks: every change order is approved or rejected, none are still pending; the revised contract value matches what the subcontractor believes it is; the final invoice equals the revised value minus what has been paid, with retainage handled as the contract says; and the final lien waiver and current insurance are on file. The full approval routine is in our guide to the subcontractor invoice approval process.
7. Tracking Change Orders in SubDoc
The log above is easy to keep up for one project. It gets harder across many vendors and jobs, and the real risk is the gap between the log and the invoice queue. This is how SubDoc closes that gap.
- Each vendor on a project has a contract value. Change orders added to that vendor change its revised contract value, and adding or removing one is recorded in the audit log.
- When you approve an invoice that would take the vendor past its revised contract value, SubDoc shows how much it would be over and asks you to confirm before it proceeds.
- The project page shows the revised contract value with change orders included, what has been paid and the remaining balance, so the running total in the worked example above is always visible.
SubDoc does not draft or negotiate change orders. It keeps the approved ones attached to the money.
Frequently Asked Questions
As a rule, yes. A written, signed change order before the work starts protects both sides: the subcontractor knows the price is agreed, and you can show why the contract value changed. Contracts differ, and some allow work to begin under a written directive while the price is settled, so check your subcontract. What you want to avoid is extra work performed on a verbal instruction and priced after the fact.
Yes. A deductive change order, which removes scope and reduces the price, changes the contract value just as much as an addition does. If you only log the additions, the revised contract value drifts upward and invoices look more reasonable than they are.
That depends on the subcontract. Many contracts apply retainage to the revised contract value, so a change order increases or decreases the amount held, but some treat it differently. Read the retainage clause and record how you apply it, so the final release is calculated the same way the progress payments were.
Hold or decline only the extra portion, not the whole invoice if the rest is correct, and ask the subcontractor to submit a change order request with backup such as a quote, photos or the written direction they received. Approve the change order first if the work is legitimate, then pay against the revised contract value.
Set approval by dollar threshold. A project manager can approve small changes within their authority, larger ones go to a senior manager or owner, and anything that also changes the owner's contract needs to be coordinated with the owner's change order. Write the thresholds down so nobody has to guess.
Related Guides
Keep change orders attached to the money
Track contract values, change orders and invoices per project, and get a warning before an invoice passes the revised contract. Free for up to 3 vendors.