Price a Change Order from Incremental Work

A change order should describe the difference between the agreed project and the revised one. Pricing the entire new request without crediting work that disappears can overstate the change; charging only the visible new task can miss rework and coordination. Build a before-and-after scope comparison, identify the incremental effort, and confirm the schedule impact. The financial model supports a concrete discussion about the revised work.

Calculate net added effort

Suppose a hypothetical client adds a feature requiring 12 production hours and 3 coordination hours. The change also removes 4 hours of work that has not yet been performed. Net additional effort is 11 hours. At an internal planning cost of $70 per hour, labor cost is $770. Add $130 of new direct expenses, giving $900 incremental cost. At a 25% margin on change-order revenue, the additional fee is $1,200.

Treat completed work differently

If the removed four-hour task has already been completed, its cost cannot be avoided merely because the client no longer needs the result. In that case, new effort is 15 hours and incremental labor cost is $1,050. With the same $130 expenses, cost is $1,180, implying a fee of $1,573.3333 at a 25% margin before quote rounding. Whether a credit is commercially agreed is separate from whether the original effort can actually be recovered.

Include rework and dependencies

A change can require revisiting approved design, tests, documentation, or training. List those dependencies and avoid counting them twice if they are already in the new-task estimate. If the change delays other work, show the revised delivery dates and any supported incremental cost. Opportunity cost belongs in a separate decision analysis; do not automatically present every possible future sale as a cost the current client owes.

Create a reviewable change record

State the requested difference, added and removed deliverables, assumptions, incremental fee, payment timing, and revised milestones. Use a version identifier so the team can connect the approved scope to its estimate. Do the operational planning before asking for agreement, then follow the established authorization process before undertaking dependent work. A numerical quote does not replace a clear record of what the parties accepted.

Update the project forecast after approval

Add the approved revenue and expected cost to the existing project budget, keeping the original baseline visible. Compare actual change effort with its estimate later so recurring omissions improve future scoping. A negative net change can produce a credit when costs are genuinely avoided and the agreement supports it; preserve that possibility rather than forcing every change to a positive charge. These examples are managerial arithmetic, not legal advice about variation rights or a claim that all cost increases are billable.

Method references: Acquisition.gov: firm-fixed-price description; OpenStax: break-even and contribution analysis. Accessed October 22, 2026. All dollar figures are hypothetical worked examples.