What is a change order on a home renovation?

A change order is a written modification to the original construction contract that adds, removes, or changes work scope. Most residential change orders fall into three categories: owner-requested changes (you want something different), discovered conditions (something behind a wall needs work), or design changes (the architect or designer revised the plan). A change order should always be written and signed before the work happens.

How much markup is normal on a residential change order?

Most reputable El Paso residential contractors mark up subcontractor change orders 15 to 20 percent for overhead and profit, and self-performed labor at fully loaded rates that include payroll burden. Markups above 25 percent are unusual and worth questioning. Markups below 10 percent are usually a sign the contractor is absorbing rework cost they should be billing separately.

Can a homeowner refuse to sign a change order?

Yes. If the work has not started yet, you can decline the change order and ask the contractor to find a different solution. If the change is a discovered condition (rotted subfloor, galvanized pipe behind the wall), refusing the change order usually means the work cannot proceed safely or to code. In that case, you negotiate the price, not whether the work happens.

What if the contractor does work without a signed change order?

Texas residential construction law generally requires written change orders for any change to a signed contract. If a contractor performs out-of-scope work without your signature on a change order, you are usually not legally required to pay for it. That said, the relationship breaks down fast if a contractor takes that position. The right move is to insist on signed change orders upfront, so the issue never arises.

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May 22, 2026·4 min read

How to read a residential change order before you sign it

What every El Paso homeowner should check on a change order before signing. Markup, schedule impact, payment terms, and the language that protects you when scope changes mid-project.

ByExpert Construction Group ResidentialProject Management

Filed under

residentialchange-ordercontracthomeownerel-paso

The first change order on a residential project is usually the one that tells you what kind of contractor you hired. A good one writes it in plain language, prices it before the work happens, and explains what it does to the schedule. A bad one drops a piece of paper on the kitchen counter on a Friday afternoon with a number and a signature line.

Here is what every El Paso homeowner should be checking before they sign anything mid-project.

What a real change order looks like

A complete residential change order includes seven things:

The change order number and a description of what is being added, removed, or modified
The reason for the change (owner request, discovered condition, design revision)
The detailed cost breakdown, with labor and material separated and the markup percentage stated
The schedule impact in calendar days
Updated contract value before and after
Payment terms and timing
Signature lines for the contractor and the homeowner, with a date

If any of these seven elements is missing, the change order is incomplete. Ask for the missing piece before you sign.

The markup question

The cleanest way to understand contractor markup is to think of it in two pieces: the cost of the work and the contractor's overhead and profit on top of the work.

For subcontracted work, most reputable El Paso residential contractors mark up the sub's invoice 15 to 20 percent. That covers the contractor's office costs, supervision, insurance, and a modest profit on the change.

For self-performed work, the contractor's labor should be priced at fully loaded rates (the hourly wage plus payroll burden, insurance, and overhead). The right number for an experienced finish carpenter in El Paso in 2026 is roughly $75 to $95 per hour fully loaded.

Markups above 25 percent are unusual for residential work and worth questioning. Markups below 10 percent usually mean the contractor is absorbing cost they should be billing for, which is not sustainable and often shows up as a corner cut somewhere else.

Discovered conditions are not optional

The category of change order that most homeowners struggle with is the "discovered condition" change. The contractor opens a wall and finds galvanized pipe, knob-and-tube wiring, or rotted subfloor. The original contract did not include replacing it, because nobody knew it was there. Now there is a change order.

You can negotiate the price of the discovered-condition change. You usually cannot refuse to do the work. Code requires it, your insurance requires it, or the project literally cannot move forward without it.

What you can negotiate is whether the contractor charges full markup on something they could have caught at quote time. If the rotted subfloor was visible through a hole in the existing flooring that the contractor's estimator walked past, that is not a true discovered condition. That is a missed quote item, and a fair contractor will price it without full markup.

Schedule impact

Every change order should state the schedule impact. Most homeowners skip this section and regret it.

A change that requires reordering materials adds at minimum the lead time of those materials. Custom cabinetry runs 12 to 20 weeks. Quartz fabrication runs 3 to 6 weeks. Special-order windows run 8 to 14 weeks. If a change adds two weeks to the cabinet install and your contractor wrote zero days of schedule impact, the math is wrong.

The schedule conversation often matters more than the price conversation. A change you can absorb in price might still be one you cannot absorb in calendar time.

Payment terms on changes

Read how the change order will be paid. Some contractors bill change orders on the next regular pay application. Some bill change orders separately with their own payment schedule. Some bill the full change order amount before any of the change work begins.

For changes under $5,000, billing on the next regular pay application is normal. For changes over $5,000 or those involving long-lead materials, the contractor will often want some portion (typically 30 to 50 percent) before the order is placed. That is reasonable, as long as it is written down.

What to do before signing

Read the change order twice. Ask for any of the seven elements that are missing. Verify the markup is in the normal range. Confirm the schedule impact. Confirm the payment terms.

If anything is unclear, ask. A contractor who gets impatient with reasonable change order questions is showing you what they will be like when something more serious comes up.

If a previous contractor has dropped a change order on you that does not look right, the form on the residential side of our site is a way to get a second opinion. We do not charge for reviewing another contractor's paperwork.

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