· by Michael Blair, Nashville's Contractor
A project that finishes well over budget did not always start with a bad price. Often the overrun came in as change orders, each one defensible on the day it was signed and none of them alarming by itself. Knowing where they come from is what lets you keep them in hand.
The three kinds, which behave differently
Owner-requested changes are the ones you asked for: a different tile, an added outlet, moving a doorway. They are legitimate and entirely within your control, and on many jobs they make up a large share of the overrun.
Discovered conditions are what turns up once things are opened: knob and tube wiring, a rotten sill, no header over an opening, a drain line where the plan assumed none. They are common in older homes, and on permitted work an inspector sees the job as well: Metro Codes’ page on renovating a single-family residence says interior renovations must go through the permitting process and the permit triggers required inspections. The new work is built to the codes Metro has adopted, which its adopted codes list gives as the 2024 International Residential Code and the 2023 National Electrical Code with local amendments, and our post on how permits and inspections work here walks through the sequence. Errors and omissions are the third kind, where something was missed in the original scope, and those are worth a harder conversation.
What should a change order contain?
Ours carry a description of the change, the cost, the effect on the schedule in days, and a signature from both parties before the work happens. That is good practice, not a state form: the Board for Licensing Contractors’ complaint page says its jurisdiction is limited to discipline against a contractor’s license and that it cannot give legal advice or recover refunds, so the change order clause in your construction contract is what you will be relying on. The schedule line is the easy one to overlook, and a series of small changes can add weeks without anyone deciding that it should.
Get it in writing every time, including for changes that reduce the price. Verbal changes on a job site are a common source of disputes, and the person who remembers the conversation differently tends to be whichever party it costs.
- Written and signed before the work is done
- Cost, and the schedule impact in days
- Reference to what it replaces in the original scope
- A running total showing the revised contract sum
- Credits documented the same way as additions
How can you cut change orders before work starts?
Make the decisions early. Owner-requested changes often happen because a selection was left open and then got made under time pressure once the trades were on site. Tile, fixtures, hardware, paint colors and appliance models chosen and specified before demolition cut that category down considerably.
For discovered conditions, put a contingency in the budget rather than in your hopes (our post on sizing a renovation contingency covers how), and investigate in advance where it is cheap to do so. On a pre-war Nashville home we would rather open a small area of wall or look in the crawl space before the scope is final, since what we find there often changes the plan. If the new plan takes out a wall, Metro’s renovation page lists wall removal, even when the wall is not load bearing, as work that needs a building permit.
What is an allowance in a construction contract?
An allowance is a placeholder amount for something not yet selected. Allowances are a normal part of contracting, and they are also where a low bid can hide. A quote with a tile allowance well below what you intend to buy will produce a change order the moment you make a real selection.
Ask what each allowance actually buys, in specific terms, and whether it includes labor or only material. The Tennessee Attorney General’s home repair scam warning tells homeowners to check a contractor’s license and references and to get more than one estimate, and those estimates only compare fairly once their allowances do. A custom home carries a long list of them, so if you already have a bid in hand, ask us for a free estimate on the same scope and lay the two side by side.
Sources
- Metro Nashville Codes and Building Safety, Renovate a Single-Family Residence — Interior renovations must complete the permitting process; the permit triggers required inspections; wall removal, even if non-load bearing, needs a building permit
- Metro Nashville Codes, Adopted Codes List — 2024 International Residential Code and 2023 National Electrical Code adopted with local amendments (BL2025-898)
- Tennessee Department of Commerce and Insurance, Board for Licensing Contractors, File a Complaint — Board jurisdiction limited to license discipline; cannot give legal advice or seek refunds; points to private counsel or Consumer Affairs mediation
- Tennessee Attorney General, Division of Consumer Affairs, Home Repair Scam — Check a contractor’s license and references and get more than one estimate
FAQ
Change Orders and How They Get Away From You — questions
Do I have to pay for a change order I did not sign?
That depends on your contract, and this is general information rather than legal advice. Many written contracts have a change order clause that requires written authorization before extra work, and that clause protects you. Disputes tend to start where work went ahead on a verbal instruction, so signing before the work begins is what makes the clause useful, and staying silent while the work happens can weaken your position. For a dispute over money, the state Board for Licensing Contractors points homeowners to private legal counsel or the Tennessee Division of Consumer Affairs mediation program.
How much contingency should a renovation carry?
Enough that discovered conditions do not force a decision between finishing and stopping, and more on an older house than a newer one. What matters as much as the figure is treating it as reserved for genuine discoveries rather than as spare budget available for upgrades, since spending it early leaves nothing for the surprise.
Is it reasonable for a contractor to charge for their own mistake?
We do not think so, and that is what separates an error or omission from a discovered condition. Something that should have been visible and priced at bid time is different from something concealed behind a wall. It is a fair conversation to have, and having it calmly with the original scope on the table is more productive than treating every change as a dispute.
What are some examples of change orders in construction?
They fall into three kinds. Owner requests, such as a different tile, an added outlet or a moved doorway. Discovered conditions, such as knob and tube wiring, a rotten sill, a missing header or an unexpected drain line. And errors or omissions, where something belonged in the original scope and was missed.