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. Most contracts cap your OH&P somewhere between 10% and 20% — common defaults:
- 10% on subcontractor work you're passing through
- 15% on self-performed labor + material
- 20% on T&M (time + materials) under the change-order article
Read your contract. AIA A201 has a default OH&P table that owners often modify in the supplementary conditions — check supplementary conditions before you price.
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. Typical multiplier on the worker's gross wage:
- 1.35×–1.45× for non-union commercial work
- 1.55×–1.75× for union commercial
- 2.0×+ for prevailing-wage public work
If your foreman's gross wage is $32/hr and your multiplier is 1.45×, you're burdening at $46.40/hr — and that's before OH&P markup. If you bill the change order at $32 + 15% = $36.80, you just lost $9.60/hr.
The four mistakes
1. Pricing the change without pricing the schedule.Every CO has a schedule impact line. Owners sign price; courts read schedule. 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.