The Change Order Black Hole: Where $31 Billion Disappears Between the Field and the Office

I watched a superintendent on a hospital renovation project in Adelaide pull a crumpled piece of paper out of his vest pocket. It was a T&M tag from three weeks earlier — signed by the owner’s rep on site, documenting four hours of electrical rework caused by a design conflict between the mechanical and electrical drawings. The tag had been sitting in his pocket since the day the work was done. The office had no record of it. The project manager did not know the work had been performed. And the subcontractor who did the work had already submitted his monthly pay app without it.

That $2,800 in legitimate extra work was about to fall through the cracks entirely.

This is not an unusual story. It is the normal state of change order management in construction.

The Paper Trail That Leads Nowhere

The standard change order workflow in most small to mid-size construction companies looks like this:

1. Something changes on site — a design conflict, an owner request, unforeseen conditions, a code requirement nobody caught.
2. The superintendent documents it on a paper T&M tag or, if you are lucky, sends a text message with a photo.
3. That documentation makes its way back to the office — eventually. Sometimes the same day. Sometimes a week later. Sometimes it surfaces when someone finds it in a truck console.
4. A project engineer or PM transcribes the field documentation into a formal Potential Change Order (PCO).
5. The PCO gets priced — which requires pulling labor rates, checking material costs, calculating markup.
6. The priced PCO goes to the owner or owner’s rep for review.
7. The owner reviews, asks questions, requests backup documentation.
8. The architect weighs in on whether the change was actually required.
9. Eventually, a formal Change Order is executed.
10. The CO gets incorporated into the Schedule of Values for the next pay application.

ClearStory’s data shows this process averages 24 days. I have seen it take months. And during that entire time, the work has already been done, the costs have already been incurred, and the contractor is carrying unbilled work on a 5-6% net margin.

Where the Money Actually Disappears

The obvious cost of slow change order processing is the unbilled work sitting on your books. But the less obvious costs are worse.

Transcription errors. When a field document gets manually transcribed into a formal CO request, pricing errors creep in. ClearStory found that manual transcription of T&M tags regularly produces typos and inaccurate pricing that either shortchange the contractor or create disputes with the owner.

Lost documentation. The superintendent signed the T&M tag in the field. But where is it now? In a truck. In a site trailer filing cabinet. In someone’s email as a photo attachment with no subject line. When the owner disputes the CO amount six weeks later, finding the original field documentation becomes an archaeological expedition.

Scope disputes. Without real-time documentation and approval workflows, the line between “included in the original scope” and “this is extra work” gets blurry. The longer the gap between when the work is performed and when the CO is formally submitted, the harder it is to establish that the work was genuinely out of scope.

Pay application delays. You cannot bill for unapproved change orders. If your CO is sitting in approval limbo when your monthly AIA billing is due, that revenue gets pushed to next month — or the month after. On thin margins, this delay compounds.

What Procore and Buildertrend Do Well (and Where They Stop)

Procore has robust change order management within its platform. You can create PCOs, track approval status, and link COs to prime contracts and commitments. For firms already deep in the Procore ecosystem, this works well. The limitation is that the initial field documentation — the T&M tag, the photo, the superintendent’s sign-off — still needs to get into Procore manually. And if your subcontractors are not on Procore (most small subs are not), you are still chasing documentation via email and text.

Buildertrend handles change orders for residential builders and remodelers with client-facing approval workflows. The owner can review and approve change orders through a portal. But Buildertrend’s change order module is designed for the residential workflow — a homeowner approving a kitchen upgrade — not the multi-party commercial workflow involving owner’s reps, architects, and multiple subcontractor tiers.

The gap in both cases is the same: getting field documentation digitized and into the system fast enough to matter, and coordinating between parties who are not all on the same platform.

Building the Bridge Between Field and Office

The change order problem is fundamentally a communication and workflow problem. The work happens in the field. The documentation happens in the office. The approval happens somewhere in between. And the payment happens last — if it happens at all.

The Math on a Typical GC

Consider a general contractor running $5 million in annual revenue across eight to ten active projects. At 8% average change order value, that is $400,000 in change orders annually.

If the average CO takes 24 days to process and you are carrying that unbilled work at a 5% cost of capital, the financing cost alone is roughly $13,000 per year. Add the administrative time — a project manager spending 3-4 hours per CO on transcription, pricing, and follow-up across perhaps 40 change orders per year — and you are looking at 120-160 hours of PM time, worth $8,000-$12,000 at loaded rates.

Now add the change orders that slip through entirely. The T&M tags that never make it back to the office. The scope changes that get absorbed because nobody documented them in time. Industry consultants estimate that small GCs lose 1-3% of revenue to undocumented or abandoned change orders. On $5 million, that is $50,000-$150,000.

The total cost of a broken change order process is not the time it takes to fill out a form. It is the revenue that disappears between the field and the office because the form never got filled out at all.