Part of the Ontario construction contracts guide for owners.
Change orders are where most construction budgets quietly leak. Here is how to manage construction change orders from the owner's side, using the CCDC process most Ontario projects already run on.
Why changes happen
Almost every change traces back to one of three sources:
- Design gaps. Errors, omissions and coordination conflicts in the drawings. On stipulated price work, these are the owner's risk.
- Owner decisions. New requirements, tenant requests, late selections and value engineering that arrives after tender.
- Site conditions. Concealed or unknown conditions. Under CCDC 2, these are handled under their own general condition with its own notice rules, separate from ordinary changes.
Our contrarian point: the change order process is not where you control changes. It is where you price them. Control starts earlier, with complete drawings, frozen requirements and a disciplined decision calendar.
Change Order vs Change Directive under CCDC
Under CCDC 2, GC 6.1 lets the owner change the work by either a Change Order or a Change Directive. The difference is whether the price has been agreed.
A Change Order is made where the parties agree to the adjustment. The owner, through the consultant, advises the contractor in writing that a change is required; the contractor proposes the cost and time impact; if the parties agree, a Change Order is issued and signed.
A Change Directive is issued by the owner when the parties cannot agree on the adjustment but the work must proceed. The contractor must proceed promptly. The adjustment is then valued on the contractor's expenses in carrying out the change, plus an allowance for overhead and profit, and disputed amounts go to the consultant for determination.
The 2020 edition of CCDC 2 tightened this: costs count toward a Change Directive only if they contribute directly to implementing it. Owners should hold contractors to that wording.
Reviewing the price
Most overpricing is not fraud. It is unchecked assumptions. For every proposal, ask for:
- A breakdown of labour hours and rates, materials, equipment and subcontractor quotes.
- Markups shown separately and checked against the rates in the contract.
- Credits for deleted work, not just additions.
- A schedule impact supported by the current schedule, not a round number of days.
Compare the quantities with the drawings yourself or through your cost consultant. If the contractor will not support the number, that is the moment to consider a Change Directive rather than signing under schedule pressure.
Approval thresholds that actually work
Every owner needs a written delegation of authority before the first change arrives. Public owners do this routinely; one provincial Change Directive form we reviewed includes a signature block for a "Delegated Financial Signing Authority" alongside the owner's project manager.
Set tiers by dollar value and by cumulative impact: a project manager approves small items, a director approves larger ones, and anything that pushes total changes past the approved contingency goes to the executive who owns the budget. Agree turnaround times too, because slow approvals create delay claims.
What to do: a change order control checklist
- Agree change pricing rules, markups and unit rates in the contract before signing.
- Number every potential change the day it is raised, even before pricing.
- Keep one log with status: raised, priced, under review, approved, directed, rejected.
- Record cause on each item: design, owner, site condition. Patterns tell you where to act.
- Report cumulative approved plus pending plus directed changes against contingency every month.
- Set a deadline for pricing each Change Directive and track it until it is valued.
- Reconcile the change log with each progress claim before you certify payment.
Owners who skip steps 5 and 7 are the ones who discover the overrun at closeout. We have seen that story play out in our construction cost overrun audit lessons.
Contract wording and amendments vary, so confirm how your supplementary conditions change GC 6 with your lawyer.
Frequently asked questions
What is the difference between a Change Order and a Change Directive?
Under CCDC 2, a Change Order records an agreed adjustment to price and time. A Change Directive instructs the contractor to proceed with a change when the adjustment has not been agreed, with valuation to follow.
Does a Change Directive mean the owner loses control of the cost?
No. It is valued on the contractor's expenses plus overhead and profit, and under the 2020 edition only costs that contribute directly to the change count. You still need to audit the records.
How much contingency should I carry for changes?
It depends on design completeness, building type and whether it is new construction or renovation. Set it deliberately at budget approval and track changes against it monthly.
The bottom line
Change orders are inevitable; uncontrolled change orders are not. Price every change against evidence, use Change Directives to keep work moving without surrendering the number, and track the cumulative total every month so nothing surprises you at closeout.
If your change log is growing faster than your contingency, book a 30-minute call and we will help you get it back under control.
Sources: Clark Wilson LLP, Changes in the Contract Work - CCDC 2's General Condition 6; BLG, CCDC 2: Updates to the stipulated price contract; Government of Manitoba, Change Directive form (CCDC 2); CCDC, CCDC 2 - 2020 Stipulated Price Contract. This article is general information, not financial or legal advice.