Change Order
A formal document that modifies the original project agreement when scope, timeline, or budget changes. Change orders protect agencies from scope creep by making scope changes visible and billable.
Definition
Related Terms
Scope Creep
The gradual expansion of project requirements beyond the original agreement, often without corresponding budget or timeline adjustments. Scope creep is one of the leading causes of project overruns and profit erosion.
Statement of Work (SOW)
A detailed document that defines project scope, deliverables, timelines, milestones, and terms. A well-written SOW prevents scope creep and sets clear expectations for both agency and client.
Project Profitability
The financial performance of individual projects, measured by comparing revenue to total costs (labor, overhead, materials). Tracking project profitability helps agencies identify profitable vs. unprofitable work and improve pricing.
Related Resources
Frequently Asked Questions
When should agencies use change orders?
Use change orders whenever project scope, deliverables, timeline, or budget changes from the original agreement. This includes client-requested additions, necessary scope adjustments, timeline changes, or any work outside the original Statement of Work.
How do you present change orders to clients?
Present change orders clearly and professionally, explaining what's changing, why it's necessary, and the impact on cost and timeline. Frame changes as opportunities to improve the project. Get written approval before starting change order work to protect both parties.
What happens if a client refuses to approve a change order?
If a client refuses to approve a change order for necessary work, you have options: perform the work within original scope (if possible), defer it to a future phase, or negotiate an alternative solution. The key is not performing unbilled work outside the original agreement.
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