The G701 is where scope changes become contract changes. Every dollar on this form affects your G702 Line 2 and your G703 continuation sheet, and a CO that is not tracked cleanly will cost you money every month until closeout.
The AIA G701 Change Order form is the standard document used to formally modify a construction contract. It records the change in scope, the resulting adjustment to contract price, and any impact on the contract schedule. Once signed by the owner, contractor, and architect, it becomes a binding contract modification. From that point forward it is no longer a request or a proposal. It is part of the contract sum, and it flows into your billing cycle exactly like the base scope.
Most contractors handle change orders loosely. They track them in a spreadsheet, bill them when they feel like it, and let the G701 paperwork catch up later. That approach works until the owner rejects a pay application, the auditor flags a billing, or closeout arrives and the CO log does not reconcile. Treating the G701 as a billing document, not just a scope document, is what keeps your monthly draw clean.
How the G701 Connects to Billing
When a G701 is approved, three things happen in your billing system. First, G702 Line 2, Net Change by Change Orders, increases by the CO amount. Second, G702 Line 3, Contract Sum to Date, increases by the same amount. Third, a new line item is added to your G703 continuation sheet with the CO's scheduled value. From that point, you bill on the CO just like any other schedule of values line item.
This is the part most estimators and project managers get wrong. A change order is not billable the day the work is done. It is billable the day the G701 is fully signed and the new line item exists on the G703. If you do the work first, sign the G701 second, and try to bill it third, you will have a gap where the work is in the ground but the dollars are not on the pay app. That gap is where revenue gets delayed and margins get squeezed.
Adding the CO to Your Schedule of Values
Every approved G701 needs a corresponding line on the G703 continuation sheet. The scheduled value on that line is the CO amount. The prior column should be zero on the first billing cycle after approval, the work in place column reflects the percent complete, the stored materials column is used if applicable, and the completed column carries the total to date. Treat the CO line with the same discipline as the base scope lines. If the CO is 50,000 dollars and you have completed 20,000 dollars of that work, the line should show exactly that.
Do not fold the CO into an existing SOV line. If you bury a 30,000 dollar electrical change into the base electrical line, you lose the ability to track the CO independently, the owner cannot tell what was base scope and what was added, and the closeout reconciliation turns into a forensic exercise. One CO, one line, always.
Common Change Order Tracking Errors
Billing before approval: Including CO amounts on your G702 and G703 before the G701 is fully signed by all three parties. Owners will reject the pay application and question your integrity. Even if the work is complete, you cannot bill it until the G701 is executed.
Missing from the SOV: Approving a CO but forgetting to add it as a line item on the G703. The money is approved in the contract sum but never gets billed, and you carry the work without the revenue until someone notices months later.
Cumulative errors on G702 Line 2: Line 2 should be the net total of all approved COs to date, not just the latest one. Getting this wrong throws off Lines 3, 6, 8, and 9, and the entire pay application will not foot. Reconcile Line 2 against the CO log every month before you submit.
Losing track of the CO log: The CO log should match the G701 stack, the G703 lines, and G702 Line 2. If those three views disagree, you have a tracking problem. Find it before the owner or the auditor does.
Pricing and Markup on the G701
The G701 carries the CO price, and that price is built from the same components as the base contract: labor, material, equipment, subs, overhead, and profit. The markup on change orders is a frequent source of dispute. Most contracts allow overhead and profit on COs, but the allowed percentages vary. Many AIA contracts, including A102 and A201, reference a stated overhead and profit percentage for change order work. Read your general conditions before you price the CO so you know what is allowed and what is not.
Time and material COs should carry the actual rates, the daily labor summary, the material invoices, and a markup that matches the contract. Lump sum COs should carry a build up that the owner can audit. Never hand the owner a one line CO with no backup. A CO with no backup invites a deduction and a dispute, and disputes on change orders are what drag projects into claim territory.
Keeping a Clean Change Order Log
Keep a single CO log on every project and update it weekly. The log should carry: CO number, description, date submitted, date approved, amount, status, and the G703 line it lives on. Every entry on the log ties to a signed G701 in the file, a line on the G703, and a row in your billing system. When the log, the G703, and G702 Line 2 all agree, your pay applications will sail through. When they disagree, every pay application becomes a fight.
The G701 is not a formality. It is the mechanism that converts a field conversation into contract dollars, and the discipline you apply to it shows up directly in your monthly cash flow. Sign the CO before you bill the CO, give every CO its own line on the G703, and reconcile the log against Line 2 every month. That is how change orders stop being a source of margin loss and start being predictable revenue.