A PCO change order isn’t actually a change order at all. A Proposed Change Order is the written proposal a contractor submits to flag a potential modification and request an adjustment to the contract price, the schedule, or both. It carries no contractual weight until the owner, architect, and contractor sign off and convert it into an executed Change Order. Treating the proposal as permission to proceed is the mistake that costs contractors the most money.
What a PCO Is and What It Isn’t
Construction teams use several names for the same document. Proposed Change Order, Potential Change Order, and Change Order Request all describe the initial submission that opens negotiations over a modification. The label depends on the contract language and the project management software in use; the function is identical.
Under the AIA A201 General Conditions, formal changes to the work come in three forms. A Change Order is signed by the owner, contractor, and architect once everyone agrees on scope, price, and time. A Construction Change Directive is signed by the owner and architect alone and directs work to proceed even without the contractor’s agreement on cost or schedule. A minor change can be issued by the architect, provided it doesn’t affect price or completion. The PCO sits upstream of all three. It’s the contractor’s pitch that something needs to change, and here’s what it should cost.
Because the PCO is only a proposal, it does not authorize work, change the contract sum, or extend the schedule. Only the signed Change Order does any of those things. Starting work on the strength of a PCO alone, without the signed document in hand, puts the contractor’s compensation at serious risk.
When a PCO Gets Written
Most PCOs come out of a short list of situations. The simplest is an owner-requested change: upgraded finishes, a reconfigured layout, additional systems not shown in the original drawings. The contractor prices the modification and submits.
Unforeseen site conditions are the second major trigger. A crew excavating for footings hits contaminated soil or rock where the geotechnical report showed clay. AIA A201 requires the contractor to notify the owner and architect promptly when concealed conditions differ materially from the contract documents, and no later than 14 days after first observing them. That notice usually starts the PCO.
Design errors and omissions produce PCOs when drawings conflict, when a specified product is no longer available, or when a mid-project code update forces modifications nobody priced at bid.
What to Put in a PCO
A PCO that moves through review quickly has one feature in common with every other PCO that moves through review quickly: the backup is airtight. Vague numbers invite questions, and questions create delays.
Cost Breakdown
The cost section should be granular. Labor broken out by classification, showing hourly base rates and burdened rates that fold in payroll taxes, workers’ compensation, and benefits. Material costs supported by vendor quotes or invoices, not estimates. Equipment charges tied to daily or weekly rental rates on a rate sheet; specialized machinery like large compressors or crane trucks can run well over $1,000 per day depending on region and class. Every line item should trace back to a specific element of the changed work.
Overhead and profit markup goes on top of direct costs. Most contracts fix those percentages in advance, commonly in the range of 5% to 10% each. AIA A201 references “an amount for overhead and profit as set forth in the Agreement” when calculating adjustments under a Construction Change Directive, which means if your contract doesn’t spell out the percentages, you’re left arguing over what’s reasonable. Check the agreement before the first PCO comes up, not after.
Scope Narrative
Beyond the numbers, write a plain-language narrative. It should answer three questions: what was supposed to happen under the original contract, what will happen instead, and what’s driving the difference. If the change comes from a design conflict, cite the specific drawing sheets and specification sections involved.
Schedule Impact
If the change affects the completion date, include a time impact analysis. That analysis inserts the proposed change activities into the most recent schedule update and shows whether the completion date shifts. The critical path is the longest chain of dependent tasks controlling when the project finishes, and a delay to any activity on that chain pushes the end date by the same amount. Asking for extra days without showing the scheduling logic rarely survives review.
Supporting Evidence
Photographic documentation, engineering reports, soil test results, and RFI responses all strengthen the submission, especially for changes driven by unforeseen conditions. Attach them from the start. Review cycles stall whenever the architect has to chase down missing evidence.
Forms and Numbering
The AIA publishes two forms at different points in the process. AIA Document G709, the Construction Proposal Request, is used to obtain price quotations during the negotiation of a potential change, and it maps to the PCO stage.1AIA Contract Documents. G709: Construction Proposal Request AIA Document G701, the Change Order, is executed only after everyone has agreed on scope, price, and time.2AIA Contract Documents. G701: Change Order People casually refer to the whole workflow as “change orders,” which is where the confusion starts.
The G701 form has fields for the original contract sum, the net change from previously authorized change orders, and the new contract sum after the current change is applied.3Connecticut Department of Administrative Services. AIA Document G701 2017 Change Order Keeping that running total current is essential on long jobs where changes stack up.
Many firms skip the AIA forms and use construction management platforms that build the PCO workflow into the software. Procore, for example, lets field teams create PCOs from a mobile device, with fields for the change reason, schedule impact estimate, cost line items, and attachments.4Procore. Create a Commitment Potential Change Order The platform tracks status and syncs approved changes into the project budget.5Procore. Construction Change Order Management Software Whatever the tool, give every PCO a unique sequential number (PCO-001, PCO-002). Projects with heavy change volume become unmanageable without it.
How Approval Works
Once prepared, the PCO goes to the architect or the owner’s representative. Digital platforms timestamp submission automatically. If the team runs on email, use a read receipt or delivery confirmation so you have a record of when the review clock started. Many contracts set a specific review period in the general conditions, and the contractor needs proof of when it began.
During review, the architect evaluates whether the costs are reasonable, whether the scope aligns with the design intent, and whether any schedule extension is justified. Pushback on line items is normal. The architect may ask for more backup, challenge a labor rate, or negotiate the markup before recommending approval to the owner. Simple changes can clear in a few days; complex ones take weeks.
Once the owner approves, all three parties sign, converting the PCO into a binding Change Order that updates the contract sum and, if applicable, the completion date. The approved amount shows up on the contractor’s next application for payment. Retainage is typically withheld from change order amounts at the same rate as the original contract, usually 5% to 10%, so the full change value isn’t collected until substantial completion.
Notice Deadlines That Can Void the Claim
This is where contractors get burned. Nearly every standard-form contract contains notice provisions with hard deadlines, and missing them can permanently bar a claim for additional money or time, regardless of how legitimate the underlying change was.
Under AIA A201, a contractor who encounters concealed physical conditions that differ materially from the contract documents must notify the owner and architect before disturbing those conditions and no later than 14 days after first observing them. Miss that window and the claim evaporates, even if the changed condition genuinely cost an extra $200,000 to address. Some contract versions go further: failure to give timely notice of a critical event is treated as a “condition precedent” to any claim, meaning no notice equals no right to recover.
The practical rule is unglamorous. Send written notice the same day you discover a potential change. Keep it brief: identify the condition, state that you consider it a change to the contract scope, and indicate that a formal PCO with pricing will follow. Use certified mail, courier with proof of delivery, or whatever method the contract specifies. A text message to the superintendent’s personal phone does not count under most contract notice provisions.
When the Owner Tells You to Just Start
Pressure to begin changed work before the PCO is approved is common, often accompanied by threats of back charges or liquidated damages for schedule delays. Many contracts state explicitly that performing work without a signed change order waives any right to additional compensation, even if the owner gave a verbal directive. Treat that risk seriously.
Two legitimate contract mechanisms exist for proceeding without a fully signed Change Order, and one legal doctrine may protect you if neither was used properly.
A Construction Change Directive is the formal tool. Signed by the owner and architect only, a CCD directs the contractor to proceed while the price and time terms get resolved later. Under AIA A201, the cost adjustment can be set by mutual agreement on a lump sum, by unit prices already in the contract, or by a cost-plus method with a negotiated fee. If the parties can’t agree, the architect determines the adjustment based on reasonable expenditures, with the overhead and profit amount specified in the agreement. The contractor has to proceed regardless of the cost dispute, which makes meticulous daily records of labor hours, material deliveries, and equipment use the contractor’s main protection.
A constructive change is the fallback doctrine. When an owner or architect informally instructs the contractor to do something outside the original scope without issuing a formal directive, the law may treat the instruction as a change implied from conduct. Two elements have to be shown: the contractor performed work beyond the original scope, and the owner or their authorized representative effectively directed that work through their actions or instructions. Examples include rejecting a product or method that the contract actually permits, demanding inspection standards stricter than the specifications require, or insisting on the original completion date despite granting time-eligible delays. The contractor has to prove the directive came from someone with actual authority, that the extra work was performed, and that it increased costs. Most contracts also require written notice identifying the instruction and expressly stating the contractor regards it as a change. Absorbing the extra work and raising it at closeout rarely works.
If you’re being pushed to proceed without approval, three steps preserve the claim. Document every informal instruction in writing by sending a follow-up email that restates what you were told and by whom. Check whether the project’s course of conduct has established a pattern of accepting informal change approvals; if the construction manager has previously paid for work performed before formal sign-off, that precedent weakens a later waiver argument. Look at whether the instruction fits a field work order or an alternative contract provision with less rigid procedures.
None of those positions is as strong as following the change order procedures from the start. The safest response to pressure is a written letter stating that you consider the instruction a change, you’re preparing a PCO, and you will begin the work upon receiving authorization through the contractual process. That letter alone often accelerates approval.
Keeping the PCO Log
On a project with real change volume, the PCO log becomes one of the most important documents on the job. Each entry should track the PCO number, date submitted, description, requested cost and time adjustment, current status, and the Change Order number it was eventually rolled into. Without the log, reconciling the final contract value at closeout turns into an archaeology project.
At closeout, the owner, contractor, and architect reconcile every approved change against the final contract sum. Any gap between the PCO log and the signed Change Orders creates a dispute that can delay final payment for months. Keep the log current in real time, not at the end. The contractor who did is the one who closes out first.