5 Ways to Reduce Cost Overruns Caused by Change Orders

Real-world strategies for construction professionals to stay on budget and ahead of risk

Change Orders are Inevitable, Cost Overruns are not

If you are in construction, then you know change orders are synonymous with commercial projects, or any project really. Whether due to design changes, unforeseen site conditions, or shifting owner expectations, it's all part of the job. But, the real risk lies in how they’re managed. A study from KPMG shows that up to 80% of construction projects experience cost overruns, and change orders are a leading cause, accounting for 7-15% of total project costs. 

Which brings us to the million dollar question: How do top-performing firms avoid the financial blowback and expensive delays associated with change orders? Below are five tactical, user friendly, field-tested ways to reduce cost overruns caused by change orders.

1. Prioritize Front-Load Scope Clarity and Collaborative Precon Planning

A poorly defined scope is one of the biggest contributors to change orders; misalignment, vague unfinished plans, and design discrepancies set the stage for budget creep before the first shovel hits the ground. Construction Executive reports, up to 30% of change orders are tied to inadequate planning or incomplete designs. 

The first way to reduce cost overruns is fairly simple: Adopt integrated preconstruction planning tools to collaborate with early owners, designers, subcontractors or PMs to align on scope, finalize designs, materials and schedule. Be sure to use planning tools that allow for real-time doc sharing, updates, data, digital markups and material + labour management. 

AGC found in 2023 that contractors who use historical data in pre-bid planning report 20% fewer cost-related change orders. 

2. Standardize and Streamline Your Change Order Process

Inconsistent handling and rushed change orders lead to documentation gaps, siloed communication, delays, and disputes; all of which drive up costs, delays, and tempers. 

Change Order Process – Best Practices:

Establish a clear, transparent, repeatable change order workflow that includes:

• Defined thresholds for approval authority
• Templates for documenting scope, cost, and schedule impact
• Version control and time stamping
• Change impact assessments (cost & schedule)
• Digital sign-off,  audit trails & digital signatures

Make sure all team members from field supervisors to CFOs understand the workflow and their role in it.  According to the Navigant Construction Forum, 2024, projects with standardized change order processes reduce administrative delays by over 50%, improving both response time and cost control.

3. Leverage Historical Data to Bid Smarter & Eliminate Costly Surprises 

Change orders often repeat from the same mistakes: inaccurate scope, underestimated bids, and poor assumptions. Top performing contractors use historical data to anticipate scope gaps, flag high-risk trades, and prevent margin-eroding surprises.

What to Track:

• Frequent change order triggers (design errors, late owner changes, site conflicts)
• Trade-specific cost overruns and productivity gaps
• Escalation trends & productivity, regional benchmarks
• Time and cost impacts by project type, scope, and phase

Data-backed preconstruction and historical project data combined with predictive analytics leads to accurate scopes, tighter bids, and fewer mid-project delays. McKinsey found that contractors using historical data in preconstruction reduce change order costs by up to 25%.

4. Build A Culture of Accountability with Real-Time Field Reporting 

If you’re not tracking field conditions and task progress in real-time, you’re already losing money. Empower your field teams to capture changes as they happen, reducing costly change orders changed by miscommunication. Without real-time visibility, teams make undocumented decisions that can cause expensive rework.

The solution? Mobile field reporting tools to spot changes and delays as, or before they happen, not weeks later. 

Tactic:

• Deploy mobile apps or tablets & software training to supers, foreman, and crews
• Require daily logs with: photos, quantity updates, and weather conditions.
• Flag any deviations: scope, labor, materials, delays – immediately 
• Clarify responsibilities with transparent task ownership
• Track change patterns through project insights and reviews

Collaborative, real-time field visibility cuts reactive change order costs by up to 30% according to FMI.

Build a Fast-Track Approval Workflow (Speed = Savings)

Time is money, especially with change orders. The longer a change order sits in limbo the more it disrupts sequencing, procurement, manpower allocation and scheduling. Leading construction firms are cutting waste and delays with pre-approved cost thresholds, and dedicated approval workflows to move fast without sacrificing efficiency and documentation.

Approval Workflow Tips:

• Set dollar thresholds for field-approved vs. executive-approved changes
• Use digital routing and sign-off tools to streamline & track  the process
• Notify accounting instantly once a CO is approved to adjust forecasts
• Set up an automatic notifications to keep all stakeholders informed 

The result of implementing process workflows? Faster approval. Which means fewer delays, tighter cost control, and zero surprises at the next budget review.

Control What You Can, Prepare for What You Want

Not every change order is avoidable, but most cost overruns are preventable with the right systems, data, disciplined execution and communication habits in place. The five strategies outlined here aren’t just best practices, they’re proven levers for improving productivity, protecting margins, and delivering more predictable outcomes. 

Firms that embrace structured, real-time, and data-informed change management don’t just control costs , they build stronger client relationships, win repeat business, and build profits. In today’s market, that’s more than operational excellence, that’s sustainable growth in a volatile market. 

High-level Recap: 5 Ways to Reduce Cost Overruns from Change Orders

1. Lock down scope with full stakeholder alignment
   Get everyone on the same page early, owners, designers, subs, and PMs. Clear scope upfront eliminates costly surprises down the line.
   
   
2. Treat each change order like a mini-project
   Define it. Document it. Price it accurately. Manage each CO with the same attention you give the base contract — or risk paying for it twice.
   
   
3. Learn & leverage your change order & project  history
   When the same issues keep showing up, it's not bad luck,  it's a process problem. Use past project data to strengthen your bids and tighten your scope.

4. Use real-time field reporting to catch issues early & unify communication
   If your crews aren’t flagging changes as they happen, you’re already behind. Real-time updates from the field help you stay proactive, not reactive.
   
   
5. Move fast with a documented approval workflow
   The longer a CO sits, the more it costs. Fast-track approvals with clear thresholds, digital routing, and instant visibility for all stakeholders.

Want to learn more about how Linarc’s unified, cloud-based software can help reduce change-orders, and cost overruns for your team?