You just got a change order on a job you're running (or you issued one), and your monthly cost-to-complete report is due Friday. So the question on your mind is the practical one: how do change orders affect cost to complete, and does this one change the number you hand to finance? Usually yes — but how much it moves depends entirely on what kind of change order it is. Here's how to think about it, type by type, with no accounting talk.
A change order changes the scope of work on a job, and scope is what you're priced to finish. When a change order adds work that isn't done yet, your cost to complete goes up by the cost of that remaining work. When a change order removes work, your cost to complete comes down. A pending change order — one submitted but not yet signed — is a judgment call: include what you genuinely expect to do, and flag it in your note.
This is the deeper version of what cost to complete means, the monthly number that answers "how much more will it cost to finish this job?" That guide covers what the number is and how to build it; this one picks up where it left off, because the single most common reason your cost to complete moves at all is a change order.
What does a change order actually do to your cost to complete?
A change order changes the scope of work, and scope is exactly what you're pricing when you estimate your cost to complete. More scope means more work left to finish, so a higher cost to complete. Less scope means less to finish, so a lower cost to complete. That's the whole mechanic — everything below is just applying it to the kinds of change orders you'll see.
This is not a small effect. On major construction projects, change orders account for roughly 10–15% of total contract value, and some projects see that figure climb to 25% or more (Rhumbix). On a job that size, change orders aren't noise around your cost to complete — they're a big part of what drives it.
One thing trips PMs up: a change order can be settled on paper and still be wide open in the field. "Approved" tells you the contract changed. It does not tell you the work is done. Your cost to complete only cares about the work that's left, so the question that moves your number isn't "is this change order approved?" — it's "how much of this change order's work do I still have to do?" If your finance team wants the accounting side of how an approved change order hits the WIP schedule, that's their territory; this post stays on your side of it.
How does each type of change order affect your number?
There are five common situations, and each moves your cost to complete differently. The table is the fast version; the worked example after it shows the math on a real job.
| Change order type | What it is (plain English) | Effect on cost to complete | What to put in your note |
|---|---|---|---|
| Approved + work complete | Owner signed it; you've finished the work | No change — the work is done and the costs are recorded | "CO #[N] approved and complete" |
| Approved + work in progress | Owner signed it; you haven't finished it yet | Add the remaining cost of that change-order work to your number | "Includes ~$[X] for CO #[N] work still to finish" |
| Pending / unapproved | Submitted but not yet signed | Include what you realistically expect to do; flag it | "Includes ~$[X] for CO #[N], not yet executed" |
| Disputed / claim | Rejected or actively contested by the owner | Include your realistic cost to do the work regardless; flag the dispute | "Includes ~$[X] for CO #[N] — owner disputed; work may still be required" |
| Deduct / credit | Owner removed scope from the contract | Remove the remaining cost of that scope from your number | "CO #[N] deduct — removed [scope]; cost to complete reduced by ~$[X]" |
For the worked example, use the same job from the cost-to-complete guide so the numbers are familiar: the contract is $700,000, you've spent $400,000, your cost to complete is $340,000, and your cost at completion is $740,000. Each example below is a separate situation measured from that same $340,000 base — five different change orders, not one job stacking them up.
- Approved + work complete. CO #7 added a slab pour, the owner signed it, and your crew finished it last week. Cost to complete stays $340,000 — the work is done, nothing left to price. The contract value goes up; your remaining-work number doesn't.
- Approved + work in progress. CO #8 added $40,000 of curtain-wall scope, signed, but the panels aren't installed yet. That remaining cost folds in: cost to complete goes to $380,000 ($340,000 + $40,000).
- Pending / unapproved. A pending change order is one you've submitted but the owner hasn't yet signed. You're confident you'll do CO #9's $25,000 of site work because the field can't proceed without it. Include it and flag it: cost to complete moves to $365,000.
- Disputed / claim. A disputed change order is one the owner has rejected or is actively contesting — but you may still have to do the work. CO #10 is $30,000 of rework the owner won't pay for, and your crew is already on it. Who pays is unsettled; whether the work happens is not. Include it — cost to complete moves to $370,000 — and flag the dispute.
- Deduct / credit. A deduct change order removes scope from the contract. The owner pulled the $20,000 canopy you hadn't started. Take it out: cost to complete comes down to $320,000.
The pattern is the same every time: price the work that's left after the change order, not the dollar value written on the change order itself. A $40,000 change order that's already finished moves your cost to complete by zero. A $40,000 change order you haven't started moves it by the full $40,000.
What should you put in your note when a change order is involved?
Whatever type the change order is, the move that protects you is the same: write a one-line note next to your cost to complete — which change order is in the number, and how (use the right-hand column of the table above). The note costs ten seconds and turns a bare figure into a defensible one. It's professional documentation, not a hedge.
The note matters more with change orders than with anything else, because a change order is the one item where two reasonable people can look at the same job and pick different numbers. Did you include the pending one? Did you carry the disputed scope? Months later, when someone re-reads your number, the note answers that in your words, on the record — instead of you reconstructing it from memory.
Unapproved and disputed change orders are the ones that quietly throw a job's numbers off, precisely because they're the judgment calls — the places where what you expect to do and what's been signed don't line up yet (NASBP). You don't have to untangle any of that. You put the work in your cost to complete and say so in the note — that's what keeps a fast field judgment from getting second-guessed later.
What about the contract value — does that change too?
Yes, but that's a separate number from yours, and it's important not to mix them up. An approved change order raises the contract value of the job; a pending change order does not change the contract value until it's signed. Finance tracks the contract value on its own — it's already in the system.
What finance needs from you is the cost to complete: how much more it will cost to finish, your part of the job. Those two numbers live in different columns of the WIP schedule, the monthly report finance builds from your cost to complete (Grit Insurance). So when a pending change order is in your cost to complete but not yet in the contract value, that's not a mistake — it's the honest picture, and your note is what explains it.
Frequently asked questions
Does a pending change order change my cost to complete? It can. A pending change order is one you've submitted but the owner hasn't yet signed. If you genuinely expect to do the work, include a realistic cost for it in your cost to complete and flag it in your note — for example, "includes ~$25K for CO #14, not yet executed." Including work you expect to do, with a note, keeps the number honest without pretending the change order is final.
What happens to my cost to complete when a change order is approved? It depends on whether the work is done. If the approved change order's work is already finished, your cost to complete doesn't change — those costs are recorded. If the work is approved but still open, add the remaining cost of that change-order work to your cost to complete, the same as any other scope you still have to finish.
How do I handle a disputed change order in my monthly estimate? A disputed change order is one the owner has rejected or is actively contesting — but you may still have to do the work. Price your realistic cost to do that work and include it in your cost to complete regardless of the dispute, then flag the dispute in your note: "includes ~$30K for CO #9 — owner disputed; work may still be required." The dispute is about who pays, not about whether the work happens.
Does a deduct change order lower my cost to complete? Yes. A deduct change order (also called a credit change order) removes scope from the contract. If that scope wasn't done yet, take its remaining cost out of your cost to complete. Note what was removed: "CO #11 deduct — owner pulled the canopy; cost to complete reduced by ~$20K."
Should I include a pending change order in my cost to complete if the owner hasn't signed it? Include it if you realistically expect to do the work, and flag that it isn't signed yet. Your cost to complete is what it will actually cost to finish the job — not only the work that's been formally executed. Leaving out work you know you'll do makes the job look cheaper to finish than it is. The note is what keeps that judgment call defensible.
How WIP Ready helps
A change order is a field call before it's an accounting entry, and your cost to complete is yours to decide — no software knows which pending change orders you'll actually do or how much of an approved one is left. WIP Ready never calculates that number for you. What it does is send you the monthly request, give you one screen per job with a place for your cost to complete and a place for your note, and route what you write straight to finance — no login, no spreadsheet, about two minutes. The number, and the note that explains it, are always yours. If you're the one who gets the monthly WIP email, see how the check-in works at wipready.com.
