The pricing formula every CO uses
Direct cost + OH&P markup = CO sum. Direct cost is labor + material + equipment. OH&P is overhead and profit, applied as a percentage — and that percentage is a contract term, not an industry constant. Your change-order article will usually set more than one rate:
- a rate for subcontracted work you pass through
- a rate for work you self-perform
- often a separate rate for T&M (time + materials)
Read your contract — and read the right part of it. A201-2017's General Conditions set no OH&P percentage anywhere. Its Change Order article (§7.2) only defines what a Change Order is: the change in the Work, the amount of the adjustment, the extent of the time adjustment. On a negotiated CO the price is simply what the parties agree, so your rate has to come from the Agreement's change-order provisions or the supplementary conditions that amend them — never from the General Conditions.
There is one place A201 speaks to OH&P, and it is not the change-order path: §7.3.4, inside the Construction Change Directivearticle. A CCD is what the Owner issues when there is no agreement on terms and the work has to start anyway. If you don't respond promptly or you disagree with the method of adjustment, §7.3.4 has the Architect determine it — including “an amount for overhead and profit as set forth in the Agreement, or if no such amount is set forth in the Agreement, a reasonable amount.” Read that as the warning it is: if your Agreement names no rate, someone else decides what “reasonable” means, after your crew has already done the work. Pull every rate off the page before you price the first CO on a job.
Where labor cost actually comes from
Burdened labor rate isn't the worker's hourly wage. It's wage + payroll taxes (FICA, FUTA, SUTA) + workers' comp + GL allocation + benefits + supervision allocation.
Your multiplier is whatever those components add up to on your own payroll. It moves with trade mix, state, your comp mod rate, and whether the job is union or prevailing-wage — which is why a borrowed number is always wrong in the direction that costs you. Compute it once a year from last year's actual burden and use your own.
The arithmetic is what convinces people. Take a $32/hr gross wage. Run your own burden on it — say it lands at $46/hr. Bill the change order at $32 + 15% = $36.80 and you are nine dollars an hour underwater before you've made a cent of profit, on every hour of change-order labor, invisibly, on every CO. Substitute your real burden and your real contract markup; the shape of the answer doesn't change.
The four mistakes
1. Pricing the change without pricing the schedule.Every CO has a schedule impact line. Owners sign the price; the schedule impact is what gets argued later. Don't leave it blank.
2. Skipping the cleanup time. The re-mobilization time for a small CO is real. Bill it.
3. Letting the architect's “clarification” slide.If a clarification adds scope, it's a CO, not a clarification. Push back politely with the cost attached.
4. Trying to pad the CO with a hidden fudge. Owners catch this once and never trust your COs again. Be honest, charge real OH&P, document everything.
What owners push back on
- OH&P over the contract's stated cap
- Self-performed work priced higher than competing sub quotes you have on file
- Schedule impact without a critical-path argument
- T&M without daily timesheets attached
- Material markup over actual invoice (charge cost, mark up via OH&P, not by inflating the invoice)
How neuroBLDR prices a CO
Open a change order, the brain pulls in your prior similar work (so you can copy a known-good price structure), the Change Order Agent drafts the description from a rough note, and the math is automatic — direct cost + OH&P at your workspace default + schedule impact in days. Submit as a CR (change request), the magic-link client portal handles approval, and approved COs auto-update the contract sum on the next pay app.