Change Orders: How to Stop a Contractor's 'Extras' From Blowing Your Budget

A construction change order is a written, signed, priced change to your contract. The rule that protects your budget is short: no extra work starts until the change order is signed and the price is on it. Most blown budgets come from skipping that step, because a verbal “we’ll sort it out later” turns into a bill nobody expected.

A homeowner in r/HomeImprovement posted about getting three kitchen bids, and the worry behind that kind of thread is familiar. The cheap bid looks great until the extras show up. Someone is told the wall has wiring in it, or the floor needs more prep, or the cabinets arrive in a different size. Each one is small. Together they close the gap with the expensive bid and then pass it.

Some extras are legitimate. Others are the contractor fixing a bid that was too low. This guide shows you how to tell them apart and how to set up the contract so the second kind never reaches you.

What a change order is

A change order adjusts the contract when the scope of work changes. Hunker puts it this way: it describes changes to the scope of work that the contractor and homeowner have agreed on, and it also covers how those changes affect the price and the completion date.

There are two kinds.

• An additive change order raises the cost.
• A deductive change order reduces the cost, the work or the time.

Hunker lists what a proper one includes: the contract number, both parties’ names and contact details, the project address, a change order number (the first is #1), the dates, a description of the change, any new contract dates, the cost, and a signature line for each side.

You need one when the cost or the deadline moves. Swapping a paint color at about the same price usually does not need one.

What is a real extra and what is not

This is where most arguments start. Hunker is blunt on the point. A contractor cannot use a change order to fix their own bid. An underbid or a forgotten item is not grounds for an extra charge. If a paint maker calls for three coats and the painter puts on one, the painter cannot bill you for the other two.

Situation	Real change order?
You decide to move the sink to another wall	Yes, you changed the scope
Demolition uncovers rot or damage nobody could see	Yes, a hidden condition
An inspector requires a code upgrade the contractor could not have known about	Usually yes
The contractor forgot to price the backsplash in the plans	No, that was in the scope
The contractor’s supplier raised a price on an item the contractor quoted	Depends on the contract, ask before signing
Work was done without your OK, verbal or written	No. Hunker advises not signing or paying for it

The line between “hidden condition” and “should have known” is blurry, which is why the contract language matters more than the argument.

Write the rule into the contract

Four clauses carry most of the weight.

1. No work outside the original scope begins until a change order is signed by both sides.
2. Every change order states the added cost, the new total price, and the new finish date.
3. The markup on changes is fixed in the contract. Ask what percentage applies and to what.
4. Payment for a change is due on the terms in the order, not whenever the contractor invoices.

Hunker notes that for urgent fixes a verbal agreement can be binding, with the formal order submitted afterward. That is a risk for you. If something truly cannot wait, say yes in writing by text or email, with the price, and ask for the formal order the same day.

Markup: what a fair price for an extra looks like

A change order is not a free-for-all. It is the contractor’s cost plus overhead and profit. BuildingAdvisor says contractors typically mark up hard costs by 18 to 25 percent for overhead and profit on new homes, and that the figure is generally higher on remodeling jobs. Its example of a cost-plus contract suggests 14 to 18 percent is more reasonable, since the owner carries the overrun risk there.

Here is what that does to a small extra:

• Contractor’s cost for the extra: $1,000
• At 18 percent: $1,000 x 1.18 = $1,180
• At 25 percent: $1,000 x 1.25 = $1,250

So expect to pay roughly $1,180 to $1,250 for a $1,000 extra, and more on a remodel. If a contractor quotes $2,000 for something that costs $1,000, ask to see the invoice. BuildingAdvisor suggests asking for invoices that show actual costs for materials, labor and subcontractors, and asking whether materials are billed at retail or at the contractor’s discounted cost.

Allowances and contingency

Two different cushions get mixed up, and mixing them up is how budgets break.

An allowance is a placeholder for something you have not picked yet, like tile or light fixtures. Built, in its July 2026 guide, uses a $50,000 allowance for lobby light fixtures as its example. If you pick something more expensive than the placeholder, the overrun is yours. Contingency is different. It covers unplanned problems.

Built gives these typical contingency ranges as a percentage of hard construction costs.

Project type	Typical contingency
New construction, complete design	3 to 5 percent
New construction, schematic design	5 to 10 percent
Renovation	10 to 15 percent
Historic preservation	15 to 20 percent

Built is written for larger commercial and residential projects, so use its numbers as a guide and not a rule. For a house remodel, 10 to 15 percent is the sensible starting range because the walls are closed and nobody knows what is behind them.

Worked example for a kitchen with a $60,000 contract price:

• 10 percent: $60,000 x 0.10 = $6,000
• 15 percent: $60,000 x 0.15 = $9,000

Keep that money separate from the contract price. If you do not need it, you keep it. Track allowances and contingency as two separate lines, which is also Built’s recommendation.

Ask each bidder what allowances are inside their price and how big they are. A bid that carries a $1,500 allowance for countertops when real stone costs $4,500 is $3,000 cheaper on paper and not in practice. The Countertop Cost Calculator will tell you what your square footage really costs, and the Home Addition Cost Calculator helps with bigger jobs.

The four questions to ask before signing

Put these to every contractor, and write the answers down.

1. How do you price and approve changes? You want “written, signed, priced before work starts.”
2. What allowances are in your price, and what is each one for?
3. What is not included? Ask about demolition, disposal, permits, painting and repairs to walls and floors.
4. What markup do you apply on changes, and can I see the invoices for materials and subs?

A contractor who answers these clearly and in writing is telling you something good. One who gets vague or irritated is telling you something too. The Hunker article also notes that if you cannot settle a disagreement directly, the contract should name a dispute process, so check that yours does.

What to do when an extra shows up mid-job

Stop and ask for four things before you say yes.

• A written description of what changed and why.
• The price, with the markup shown.
• The effect on the finish date.
• A line telling you whether it is a hidden condition or something that was in the original scope.

If it was in the scope, push back. If it is a hidden condition, ask for photos. If it is something you asked for, expect to pay, and decide whether it is worth it. You always have the option to say no and keep the original plan.

What I could not verify

I could not open the Reddit thread, so I am relying on its title and the general complaint it describes. The contingency and markup figures come from industry sources, not government data, and your state may have its own rules about written contracts and change orders. Check with your state licensing board.

Sources

• What Is a Construction Change Order?, Hunker
• Construction Contingency, Built (July 2026)
• Contractor markup and comparing bids, BuildingAdvisor
• Got 3 contractor bids for my kitchen, r/HomeImprovement