Managing Change Orders in Your Budget
What change orders are, when to use them, and how they affect your budget and lender documentation.
What a change order is
A **change order** is a recorded decision that the cost of something has changed after you set the budget: an upgrade you chose, a price increase, a condition found on site, or work added or removed.
It is a record with a date, a description, an amount and a status. Recording it, rather than quietly editing the budget, means you can still show your original plan and explain every difference — which is exactly what a lender or an appraiser will ask for.
When to use one instead of editing the line
| Situation | What to do |
|---|---|
| The cost of the work genuinely changed | Record a change order |
| You typed the wrong number | Edit the line |
| One line is over and another is under, and the total is unchanged | Use **Transfer Funds**; the move appears separately from approved change orders |
| A bid came in and you are setting the agreed amount for the first time | Enter **Agreed Cost** on the line |
What a change order actually changes
A change order affects **one budget line** and only the budget:
- While it is **Draft** or **Pending**, it changes nothing. Your numbers are untouched.
- Once it is **Approved**, its amount is added to that line's **Changes**, and **Revised** becomes Original plus approved Changes.
- Because Revised moved, **Unspent Budget** on that line moves with it.
It does **not**:
- change the line's **Agreed Cost** or **Remaining Commitment**. Approving a budget change does not alter your agreement with the contractor — if the agreed price has changed, update Agreed Cost on the line yourself.
- create an expense, pay anything, or change **Actual Cost**.
- change your **Expected Final Cost** forecast.
Amounts are entered as positive figures, so a change order raises the budget for the line it is attached to.
Definitions of each of these amounts are in [Understanding Your Budget Amounts](/help/budget/actual-vs-budget).
Bank funded or out of pocket
Each change order is marked **Bank** (bank funded) or **OOP** (out of pocket). This records who is paying for the change. Extra work your lender has not agreed to fund is usually out of pocket — confirm with your lender before assuming it can be drawn.
Statuses
- **Draft** — recorded, no effect on the budget.
- **Pending** — waiting on approval, still no effect on the budget.
- **Approved** — counted in Changes and Revised.
Why lenders care
Construction lenders fund against an approved budget. A clean change order log shows why your revised total differs from the budget they originally approved, and change orders appear in your lender packet and draw documentation.
Common questions
**Can a change order lower a budget?** No. The form requires an amount greater than zero, so a change order only increases the line it is attached to. To reduce a line's budget, lower its quantity or unit price. Whether OwnerDraw should support credit (negative) change orders is an open product decision.
**Does approving a change order tell my contractor anything?** No. Approval is your record. Sending the change order for signature is a separate step — see the workflow article.
**Where do I see all of them?** Select **Change Orders** in the Budget toolbar.
For professional builders
Change orders roll up into the revised contract amount reported on G702/G703 draw documents. Because they are budget-side only, keep the line's agreed cost in step manually so contract balance to complete stays accurate.
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**Verification note:** The effect of each status on Original, Changes and Revised was confirmed by inspecting the calculation used by the budget table, and the form's fields, funding switch and status options were confirmed by opening the change order dialog. A change order was not created or approved on a live project during this documentation pass.