What is a Change Order?

A Change Order is fundamentally a written agreement that modifies the terms of an existing construction contract. It is used to document agreed-upon changes to the project scope, which may include alterations to the design, the addition of new work, or adjustments in the project timeline or costs. Change Orders are essential in the construction industry because they help to maintain clarity and prevent disputes between contractors and clients by ensuring that both parties acknowledge the modifications to their initial agreement.

By formalizing any changes in writing, a Change Order provides legal protection for both the contractor and the client, ensuring that all parties are aware of and agree to the new terms. This is particularly important in construction, where unforeseen circumstances can frequently lead to changes in project requirements, and without proper documentation, such changes could complicate project management and financial tracking.

The other options all relate to different aspects of construction and project management. For instance, an insurance policy is related to risk management, a project completion report would summarize the status or results of a project after its completion, and a record of expenditures details costs incurred during the project, but none of these serve the specific purpose that a Change Order fulfills in modifying the contractual agreement.