Beginners think the bid is where the money is. Veterans know better: change orders are where margins are born. Here's the story our instructors tell to prove it.
The $75,000 phone call
A contractor called one of our instructors about a job gone sideways. The work had grown beyond the original scope, and he was about to eat the difference. The instructor spent time on it — reviewing the contract, the correspondence, the specs — and told him exactly what to send the government.
Result: a $75,000 change order. The contractor's profit on that change order was about $50,000. What did the advice cost him? About $7,000 in consulting time.
The kicker: the invoice was paid so fast it bounced back as "paid" before it seemed to have even arrived — because the contractor knew he'd just made $50,000 for $7,000 and couldn't hit the pay button fast enough.
The bigger picture
That same year, one of our instructors consulted about 30 days at $1,000 a day — $30,000 in fees. Added up, what those clients earned from the changes he identified: roughly $250,000. The lesson isn't "hire a consultant." The lesson is that change-order money is sitting inside the contract documents, visible to anyone who knows how to read them — and invisible to everyone else.
Where change orders come from
- Scope growth: the government asks for more than the contract describes. The moment the ask exceeds the contract, it's a change — and changes are money.
- Defective specs: the documents say one thing and reality says another. Interpretation rules decide who pays.
- Site conditions: hidden conditions — the classic "we opened the wall and found this." The differing site conditions clause exists precisely for this.
- Government-caused delay: they moved your schedule; the costs they caused are recoverable.
The habit that separates pros
Professionals document everything from day one: daily reports, photos, emails confirming verbal directions. When the government tells you something on site, confirm it in writing the same day — politely, routinely. Six months later, that email chain is the difference between a change order that gets approved and one that gets denied as "unsupported."
The trap
Do not price a change in a live phone call. A contracting officer can lock in a number you blurted out. Get the change in writing, price it deliberately, and respond in writing. The paperwork isn't bureaucracy — it's your protection.