The Insider’s Guide to Custom Homes

Episode 10: Change Orders

Welcome to *The Insider’s Guide to Custom Homes*. I’m Rick Bell, founder of Landmark Custom Homes. After four decades building custom and semi-custom homes across South Florida, I created this show to help you navigate the journey — from dream to design, all the way to move-in day. Whether you’re building a cozy retreat or a 10,000-square-foot legacy estate, this podcast is your roadmap to building smart. In each episode, we break down the process — from assembling your dream team to choosing the right materials, managing timelines, and protecting your investment. No fluff, no jargon — just real-world experience and straight talk to help you stay in control.

Over the years, I’ve seen it all — the highs, the hiccups, and the unexpected in custom homebuilding. This show is where I share those lessons to help you build smarter, avoid costly mistakes, and turn your vision into reality with confidence.

[Today’s Episode: Change Orders]

In previous episodes we discussed the process of building your team, designing and building your home, but how do we handle changes during construction?

It is rare for a custom home to be built without changes occurring. So, when they do happen, we need a path to follow to ensure the Owner, the Contractor and other affected parties are fully informed regarding what changed and the impact of the change on the project.

In the construction agreement with your Contractor, you should make sure there is a provision for Change Orders and how they are handled.  The Change Order language should include a description of what changed, the cost of the change and how it is calculated and any additional time needed to complete construction if the change affects the completion schedule.

There are several types of changes that can occur during construction, but the most common are called Owner Directed Changes or changes the owner would like to make to the home.

Let’s use and example of an owner change and how we would handle this in our construction contract.

Mr. and Mrs. Johnson are super happy with how their home is turning out.  The roof is on, the interior walls are framed, and the electricians have started installing the wiring, switches and recessed lights.  At a recent site visit with their interior designer, they realize the lighting over the breakfast bar does not have the visual impact they first imagined, and they want to add a few junction boxes to provide electricity for three future hanging fixtures over the counter.  The designer then sketches the location of these junction boxes and reviews it with the contractor who in turn discusses the change with the electrician who then provides a price to make the change.  The contractor then adds his fees to the change as provided for in the change order provision of the contract. In this case, as it is a relatively minor change, no additional time is added.  The change order is then presented to the owner, who approves the change and new work is incorporated into the subcontractor’s scope of work. Simple.

Now, let’s examine a more comprehensive change.  Mr. and Mrs. Smith’s really like the overall feel of the front of their home, but as their roof is going up, they believe the entrance does not have enough visual impact and needs a larger covered area.  They ask the contractor to stop construction in this area so they can review the desired change with their architect.  The architect estimates he can design a new entry in a week, but the engineering and permitting for the change can take up to a month.  Without the roof complete, the building inspector will not let the framing begin on the home and the will be a one month delay on the completion of the work.  Since this change is really important to the Smith’s they agree to the delay.

So what does the change order look like?  The carpenters supply a proposal for the work, the roofer adds his estimate for increasing the amount of tiles to be installed and the contractor adds these costs along with the fee to the change order.  In addition. the contractor documents the additional time needed along with additional costs for the supervision needed for the extra time.  With the change order approved, the additional design, permitting and work begins.  It is clearly documented and all parties involved are aware of the changes and the impact to the build.

There are three other come types of changes which can impact construction and should be documented by your builder.  They are:

Government Regulation and Requirements

Errors and Omissions

Unforeseen Conditions

Let’s explore examples of each type of change.

Government Requirements.

A custom home has part of the air conditioning system located in the attic, the architect placed a access panel in the ceiling ten feet from the unit, but the inspector determined there was not adequate space in the attic to access the AC unit.  To pass inspection, he requires an additional access panel 3’ to the opposite side of the air handler.  This government required change triggers a change order from the mechanical contractor who in turn creates a change order for the home’s owner.  To help offset the cost of this change, a seasoned contractor will have a Contingency line item in the budget.  We will delve deeper into the concept behind contingencies in upcoming episodes.

What are examples of Errors and Omissions?  These are changes resulting from either plan errors or items not on the plans that should have been included.   Let me start off by not offending our designers. Custom homes can be very complicated and not everything may be accounted for by your homes designers.  For example, the building code requires all windows in bedrooms to have two forms of exit which also referred to as egress from the room in case of emergency.  The primary entrance and exit are from the door connecting the bedroom to the home.  The secondary egress may be from a window which an architect can note as such on the plans.  If it is not labeled as egress, the wrong type of window may be ordered.  If this occurs, the additional cost to reorder the correct window would fall under errors and omissions. Again, the contingency in your budget would help offset the cost of the new window.     

Unforseen Conditions

These are items your contractor may not account for particularly when working with unique details.  For example, auger pilings are drilled into the ground to support the foundation.  During the operation, the pile contractor determines that trees are obstructing his rig and he needs to use helical piles instead and issues a change order for the additional cost of the work. 

If the Owner and Contractor have a Cost-Plus Contract, a change order will be issued to the owner to cover this unforeseen cost.  Once again, the contingency comes into play.

There is one more type of Change Order you may encounter to account for allowances.   Allowances are used as place holders in your budget for selections which will occur during construction. These Allowances will go up or down depending upon what is chosen for a given item.

At Landmark, we continually update your budget using change orders to track your allowance spending and keep you informed and up to date.   

Bottom line, Change Orders are a necessary part of custom home building.  It is essential to hire a quality contractor who uses Change Orders as a tool to better manage your construction, giving you real-time information and providing a rewarding building experience.

As always, you will find the key terms and a point-by-point summary of this episode in the show notes and can download them at TheInsidersGuideToCustomHomes.com or TIGTCH.com

I truly hope you benefit from the information provided in this episode and I look forward to discussing many more topics to help you navigate your custom home build.

In future episodes, we’ll dive deeper into essentials like handling payment applications, Selections & Allowances and Building Mockups to better visualize unique details.

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I’m Rick Bell — and this is The Insider’s Guide to Custom Homes.

Let’s build your masterpiece — the Landmark way.

Stay tuned — and enjoy the journey.