A change order modifies your original contract — adding or removing scope, and adjusting the price. On a progress bill, the question that trips people up is simple but important: when and howdoes a change order actually show up on your pay application? Here's the workflow.
Only approved change orders are billable
This is the rule that protects your cash flow and your relationship with the GC: you bill approved change orders, not pending ones.A change order becomes part of the contract when it's approved in writing. Until then, even if you've done the work, it isn't part of the contract sum — and putting it on a pay app will get the whole application kicked back.
Keep a running list of pending change orders so nothing gets lost, but only move them onto the bill once they're signed.
How an approved change order flows through the pay app
An approved change order touches two places:
- G702 Line 2 — net change by change orders. The net of every approved CO (additions minus deductions) lands here and adjusts your contract sum to date on Line 3.
- The G703 schedule of values. The scope itself goes on the continuation sheet— either as a new line item or by changing an existing line's scheduled value (Column C).
When those reconcile — your G703 scheduled-value total equals the adjusted contract sum on Line 3 — the pay app is internally consistent and the GC can approve it at a glance.
New line vs. adjusted line
Most GCs prefer change orders as new SOV lines(e.g., "CO #3 — added roof drains"). It keeps the change visible and auditable. Adjusting an existing line's scheduled value is fine for a small tweak to that exact item, but it hides the change inside the original scope — ask your GC which they want.
A quick example
Say your original contract is $200,000 and you get one approved change order for $15,000 of added work:
- Line 1 (original contract sum): $200,000
- Line 2 (net change by change orders): $15,000
- Line 3 (contract sum to date): $215,000
On the G703 you add a $15,000 line (or increase the relevant line by $15,000) so the schedule of values totals $215,000 and matches Line 3. From there you bill the change-order work each period just like any other line — percent complete, retainage, and all.
Deductive change orders
A change order can also remove scope. A deductive CO is entered as a negative on Line 2, lowering your contract sum, and reduces the affected scheduled value on the G703.
Stop building pay apps in a spreadsheet
DrawFort fills in the carry-forward, computes retainage and current payment due, handles change orders, and exports a clean G702/G703 PDF your GC can approve at a glance.