Change orders are where renovation budgets go to die. Most Ottawa homeowners blow 15-30% over original contract on change orders alone. Here's how change orders work, why they're systematically inflated, and how to write your contract to limit change-order abuse.
Written description of the change scope. Cost breakdown (labour hours + materials + sub charges + markup). Schedule impact stated in calendar days. Signed by both parties BEFORE work begins. Tracked sequentially (CO-001, CO-002, etc.) and attached to original contract as amendments. Reputable contractors produce a clean change-order document for any scope change, even small ones.
Once construction is underway, you can't easily switch contractors. Contractors know this and routinely price change orders at 25-40% markup vs the 15-25% on base contract. There's no competitive bid for change orders, so margin expansion is easy. Cap change-order markup at base-contract markup in your original contract — this is the single highest-ROI clause to negotiate.
(1) Discoveries (knob-and-tube, galvanized plumbing, mould, asbestos, water damage in older homes). (2) Homeowner scope additions (after seeing rough-in, deciding to add an outlet, move a wall, upgrade finish). (3) Permit-required upgrades (inspector flags non-compliance). (4) Material substitutions (specified material out of stock, supply chain delays). (5) Site conditions (rock, water table, encountered structural issues). (6) Code changes during long-running projects.
(1) Change-order markup capped at base contract rate. (2) Change orders must be written and signed BEFORE work; no verbal-or-implied changes. (3) Material substitutions require homeowner approval (no contractor sole discretion). (4) Discovery contingency reserve held in budget for older homes (10-20% set-aside that contractor draws against, with documentation, not at full markup). (5) Right to refuse change orders (you can decline; contractor cannot proceed without your written approval). (6) Ti...
(1) Hourly labour rates higher than base contract. (2) Material costs higher than base contract spec. (3) Sub markup higher than base. (4) 'Site supervision' or 'project management' line items added beyond original O&P. (5) Mobilization/setup charges on small changes (these should be absorbed). (6) Vague scope descriptions that allow expansion mid-work. Compare every CO line item to the base contract pricing — discrepancies should be explained.
(1) Scope items the contractor should have caught in original scoping (e.g., flagging that rough plumbing needs to move but pricing it as discovery). (2) Code requirements the contractor should have priced upfront (e.g., 'GFCI required by code' on a kitchen reno — this should have been in original quote). (3) Coordination problems caused by the contractor's own scheduling. (4) Material substitutions due to contractor's supplier failure (their problem, not yours). (5) Anything where the original ...
Base contract markup typically 15-25%. Change orders typically carry 25-40% markup — unless you've capped change-order markup at base contract rate in your original contract. Always cap.
No. Contractors cannot proceed with changed work without your written approval. If you decline, the work continues per original scope (or you negotiate alternative). Beware: declining a legitimate code-required change can leave you with a non-compliant build.
Ottawa's housing stock is heavy on 1950s-1970s homes where discovery (knob-and-tube, asbestos, plumbing, structural issues) is common. Expect 10-25% in legitimate change orders on older homes. Anything beyond that range usually indicates lowballed original scope or padding.
Should not without your written approval. If they bill you for verbal-changes work, dispute the invoice in writing referencing your contract's change-order procedure. Verbal approval is unenforceable in most cases.
Industry standard contingency: cosmetic work 10-15%, mid-range 15-20%, full gut on older home 20-30%, heritage gut 30-40%. Treat contingency as a discovery reserve, not a slush fund — request documentation for each contingency draw.