Methodology
Construction Change Order Pricing Planner methodology
Educational only: Business decision support, not accounting, tax or legal advice.
Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.
Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral small-business planning using your own assumptions.
1. Formulas and units
addedDirectCostExTax = added labour + materials + subcontractors + equipment and travelWhere
- equipmentAndTravelCostExTax
- Equipment and travel (currency units/change order, ex tax)Source: Business record
- addedDirectCostExTax
- Added direct cost (currency units, ex tax)Source: Calculated output
scheduleDelayCostExTax = site overhead per day * delay daysWhere
- siteOverheadPerDelayDayExTax
- Site overhead per delay day (currency units/delay day, ex tax)Source: Business record
- scheduleDelayDays
- Schedule delay days (whole delay days/change order)Source: Business record
- scheduleDelayCostExTax
- Schedule delay cost (currency units, ex tax)Source: Calculated output
contingencyExTax = (added direct cost + delay cost) * contingency rateWhere
- taxRate
- User-entered tax rate (decimal fraction of change-order price added as tax)Source: Business record
- addedDirectCostExTax
- Added direct cost (currency units, ex tax)Source: Calculated output
- contingencyExTax
- Change contingency (currency units, ex tax)Source: Calculated output
protectedChangeCostExTax = added direct cost + delay cost + fixed overhead + contingencyWhere
- fixedOverheadExTax
- Fixed change overhead (currency units/change order, ex tax)Source: Business record
- addedDirectCostExTax
- Added direct cost (currency units, ex tax)Source: Calculated output
- contingencyExTax
- Change contingency (currency units, ex tax)Source: Calculated output
- protectedChangeCostExTax
- Protected change cost (currency units, ex tax)Source: Calculated output
requiredChangeOrderPriceExTax = protected change cost / (1 - target margin)Where
- targetChangeOrderMargin
- Target change-order margin (decimal fraction of change-order price)Source: Business record
- protectedChangeCostExTax
- Protected change cost (currency units, ex tax)Source: Calculated output
- requiredChangeOrderPriceExTax
- Required change-order price (currency units, ex tax)Source: Calculated output
requiredChangeOrderPriceIncTax = required change-order price * (1 + entered tax rate)Where
- taxRate
- User-entered tax rate (decimal fraction of change-order price added as tax)Source: Business record
- requiredChangeOrderPriceExTax
- Required change-order price (currency units, ex tax)Source: Calculated output
- requiredChangeOrderPriceIncTax
- Required price including tax (currency units, ex tax)Source: Calculated output
retentionHeldExTax = required change-order price * retention rateWhere
- taxRate
- User-entered tax rate (decimal fraction of change-order price added as tax)Source: Business record
- requiredChangeOrderPriceExTax
- Required change-order price (currency units, ex tax)Source: Calculated output
- retentionHeldExTax
- Retention held from change (currency units, ex tax)Source: Calculated output
initialCollectibleExTax = required change-order price - retention heldWhere
- requiredChangeOrderPriceExTax
- Required change-order price (currency units, ex tax)Source: Calculated output
- retentionHeldExTax
- Retention held from change (currency units, ex tax)Source: Calculated output
- initialCollectibleExTax
- Initially collectible amount (currency units, ex tax)Source: Calculated output
revisedContractValueExTax = original contract value + required change-order priceWhere
- originalContractValueExTax
- Original contract value (currency units/original contract, ex tax)Source: Business record
- requiredChangeOrderPriceExTax
- Required change-order price (currency units, ex tax)Source: Calculated output
- revisedContractValueExTax
- Revised contract value (currency units, ex tax)Source: Calculated output
Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.
2. Worked example
Input assumptions
The worked rows below are evaluated at render time by the same shared engine and visible default fixture as the interactive workflow.
- Original contract value
- 480,000 currency units/original contract, ex tax
- Incremental site labour
- 4,200 currency units/change order, ex tax
- Incremental materials
- 7,600 currency units/change order, ex tax
- Incremental subcontractors
- 3,100 currency units/change order, ex tax
- Equipment and travel
- 1,800 currency units/change order, ex tax
- Fixed change overhead
- 1,200 currency units/change order, ex tax
- Site overhead per delay day
- 850 currency units/delay day, ex tax
- Schedule delay days
- 3 whole delay days/change order
- Sequencing and delay contingency
- 0.1 decimal fraction of changed-scope direct cost
- Target change-order margin
- 0.22 decimal fraction of change-order price
- Contract retention rate
- 0.05 decimal fraction of approved change-order price withheld
- User-entered tax rate
- 0 decimal fraction of change-order price added as tax
Calculation and outputs
Added direct cost
addedDirectCostExTax = added labour + materials + subcontractors + equipment and travel- Incremental site labour
- 4,200 currency units/change order, ex tax
- Incremental materials
- 7,600 currency units/change order, ex tax
- Incremental subcontractors
- 3,100 currency units/change order, ex tax
- Equipment and travel
- 1,800 currency units/change order, ex tax
Engine result: 16,700 money
Schedule delay cost
scheduleDelayCostExTax = site overhead per day * delay days- Incremental site labour
- 4,200 currency units/change order, ex tax
- Fixed change overhead
- 1,200 currency units/change order, ex tax
- Site overhead per delay day
- 850 currency units/delay day, ex tax
- Schedule delay days
- 3 whole delay days/change order
- Sequencing and delay contingency
- 0.1 decimal fraction of changed-scope direct cost
Engine result: 2,550 money
Change contingency
contingencyExTax = (added direct cost + delay cost) * contingency rate- Equipment and travel
- 1,800 currency units/change order, ex tax
- Site overhead per delay day
- 850 currency units/delay day, ex tax
- Schedule delay days
- 3 whole delay days/change order
- Sequencing and delay contingency
- 0.1 decimal fraction of changed-scope direct cost
- Contract retention rate
- 0.05 decimal fraction of approved change-order price withheld
- User-entered tax rate
- 0 decimal fraction of change-order price added as tax
- Added direct cost
- 16,700 money
- Schedule delay cost
- 2,550 money
- Protected change cost
- 22,375 money
Engine result: 1,925 money
Protected change cost
protectedChangeCostExTax = added direct cost + delay cost + fixed overhead + contingency- Equipment and travel
- 1,800 currency units/change order, ex tax
- Fixed change overhead
- 1,200 currency units/change order, ex tax
- Site overhead per delay day
- 850 currency units/delay day, ex tax
- Schedule delay days
- 3 whole delay days/change order
- Sequencing and delay contingency
- 0.1 decimal fraction of changed-scope direct cost
- Added direct cost
- 16,700 money
- Schedule delay cost
- 2,550 money
- Change contingency
- 1,925 money
Engine result: 22,375 money
Required change-order price
requiredChangeOrderPriceExTax = protected change cost / (1 - target margin)- Equipment and travel
- 1,800 currency units/change order, ex tax
- Fixed change overhead
- 1,200 currency units/change order, ex tax
- Target change-order margin
- 0.22 decimal fraction of change-order price
- Added direct cost
- 16,700 money
- Schedule delay cost
- 2,550 money
- Change contingency
- 1,925 money
- Protected change cost
- 22,375 money
- Required price including tax
- 28,685.897436 money
- Retention held from change
- 1,434.294872 money
Engine result: 28,685.897436 money
Required price including tax
requiredChangeOrderPriceIncTax = required change-order price * (1 + entered tax rate)- Fixed change overhead
- 1,200 currency units/change order, ex tax
- Sequencing and delay contingency
- 0.1 decimal fraction of changed-scope direct cost
- Target change-order margin
- 0.22 decimal fraction of change-order price
- Contract retention rate
- 0.05 decimal fraction of approved change-order price withheld
- User-entered tax rate
- 0 decimal fraction of change-order price added as tax
- Change contingency
- 1,925 money
- Protected change cost
- 22,375 money
- Required change-order price
- 28,685.897436 money
- Retention held from change
- 1,434.294872 money
Engine result: 28,685.897436 money
Retention held from change
retentionHeldExTax = required change-order price * retention rate- Fixed change overhead
- 1,200 currency units/change order, ex tax
- Sequencing and delay contingency
- 0.1 decimal fraction of changed-scope direct cost
- Target change-order margin
- 0.22 decimal fraction of change-order price
- Contract retention rate
- 0.05 decimal fraction of approved change-order price withheld
- User-entered tax rate
- 0 decimal fraction of change-order price added as tax
- Change contingency
- 1,925 money
- Protected change cost
- 22,375 money
- Required change-order price
- 28,685.897436 money
- Required price including tax
- 28,685.897436 money
Engine result: 1,434.294872 money
Initially collectible amount
initialCollectibleExTax = required change-order price - retention held- Fixed change overhead
- 1,200 currency units/change order, ex tax
- Target change-order margin
- 0.22 decimal fraction of change-order price
- Contract retention rate
- 0.05 decimal fraction of approved change-order price withheld
- Change contingency
- 1,925 money
- Protected change cost
- 22,375 money
- Required change-order price
- 28,685.897436 money
- Required price including tax
- 28,685.897436 money
- Retention held from change
- 1,434.294872 money
Engine result: 27,251.602564 money
Revised contract value
revisedContractValueExTax = original contract value + required change-order price- Original contract value
- 480,000 currency units/original contract, ex tax
- Fixed change overhead
- 1,200 currency units/change order, ex tax
- Target change-order margin
- 0.22 decimal fraction of change-order price
- Contract retention rate
- 0.05 decimal fraction of approved change-order price withheld
- Change contingency
- 1,925 money
- Protected change cost
- 22,375 money
- Required change-order price
- 28,685.897436 money
- Required price including tax
- 28,685.897436 money
- Retention held from change
- 1,434.294872 money
Engine result: 508,685.897436 money
Example
The worked rows below are evaluated at render time by the same shared engine and visible default fixture as the interactive workflow.
- Added direct cost
- 16,700 currency units
- Schedule delay cost
- 2,550 currency units
- Change contingency
- 1,925 currency units
- Protected change cost
- 22,375 currency units
- Required change-order price
- 28,685.9 currency units
- Required price including tax
- 28,685.9 currency units
- Retention held from change
- 1,434.29 currency units
- Initially collectible amount
- 27,251.6 currency units
- Revised contract value
- 508,685.9 currency units
The exact engine-derived outputs are shown in the labelled rows below.
Interpretation
A defensible change price includes incremental sequencing and delay effects, not direct inputs alone.
3. Validation and boundary checks
- All inputs must be finite and inside the visible validation boundaries.
- Rates are retained as decimal values and shown as percentages only at the presentation boundary.
- The worked fixture must expose every declared result: addedDirectCostExTax, scheduleDelayCostExTax, contingencyExTax, protectedChangeCostExTax, requiredChangeOrderPriceExTax, requiredChangeOrderPriceIncTax, retentionHeldExTax, initialCollectibleExTax, revisedContractValueExTax.
- Scenario comparison changes one declared driver while holding the remaining industry records constant.
- Original contract value minimum
originalContractValueExTax โฅ 0 currency units/original contract, ex taxโ A lower value is rejected before calculation.- Original contract value maximum
originalContractValueExTax โค 10,000,000 currency units/original contract, ex taxโ A higher value is rejected before calculation.- Incremental site labour minimum
incrementalSiteLabourExTax โฅ 0 currency units/change order, ex taxโ A lower value is rejected before calculation.- Incremental site labour maximum
incrementalSiteLabourExTax โค 10,000,000 currency units/change order, ex taxโ A higher value is rejected before calculation.- Incremental materials minimum
incrementalMaterialsExTax โฅ 0 currency units/change order, ex taxโ A lower value is rejected before calculation.- Incremental materials maximum
incrementalMaterialsExTax โค 10,000,000 currency units/change order, ex taxโ A higher value is rejected before calculation.- Incremental subcontractors minimum
incrementalSubcontractorsExTax โฅ 0 currency units/change order, ex taxโ A lower value is rejected before calculation.- Incremental subcontractors maximum
incrementalSubcontractorsExTax โค 10,000,000 currency units/change order, ex taxโ A higher value is rejected before calculation.- Equipment and travel minimum
equipmentAndTravelCostExTax โฅ 0 currency units/change order, ex taxโ A lower value is rejected before calculation.- Equipment and travel maximum
equipmentAndTravelCostExTax โค 10,000,000 currency units/change order, ex taxโ A higher value is rejected before calculation.- Fixed change overhead minimum
fixedOverheadExTax โฅ 0 currency units/change order, ex taxโ A lower value is rejected before calculation.- Fixed change overhead maximum
fixedOverheadExTax โค 10,000,000 currency units/change order, ex taxโ A higher value is rejected before calculation.- Site overhead per delay day minimum
siteOverheadPerDelayDayExTax โฅ 0 currency units/delay day, ex taxโ A lower value is rejected before calculation.- Site overhead per delay day maximum
siteOverheadPerDelayDayExTax โค 10,000,000 currency units/delay day, ex taxโ A higher value is rejected before calculation.- Schedule delay days minimum
scheduleDelayDays โฅ 0 whole delay days/change orderโ A lower value is rejected before calculation.- Schedule delay days maximum
scheduleDelayDays โค 10,000 whole delay days/change orderโ A higher value is rejected before calculation.- Sequencing and delay contingency minimum
sequencingAndDelayContingencyRate โฅ 0 decimal fraction of changed-scope direct costโ A lower value is rejected before calculation.- Sequencing and delay contingency maximum
sequencingAndDelayContingencyRate โค 1 decimal fraction of changed-scope direct costโ A higher value is rejected before calculation.- Target change-order margin minimum
targetChangeOrderMargin โฅ 0 decimal fraction of change-order priceโ A lower value is rejected before calculation.- Target change-order margin maximum
targetChangeOrderMargin โค 0.99 decimal fraction of change-order priceโ A higher value is rejected before calculation.- Contract retention rate minimum
contractRetentionRate โฅ 0 decimal fraction of approved change-order price withheldโ A lower value is rejected before calculation.- Contract retention rate maximum
contractRetentionRate โค 1 decimal fraction of approved change-order price withheldโ A higher value is rejected before calculation.- User-entered tax rate minimum
taxRate โฅ 0 decimal fraction of change-order price added as taxโ A lower value is rejected before calculation.- User-entered tax rate maximum
taxRate โค 1 decimal fraction of change-order price added as taxโ A higher value is rejected before calculation.
4. Assumptions and source classification
- Costs, capacity, contract terms, tax rates and targets are supplied by the user.
- No provider default, jurisdictional rule or industry benchmark is embedded.
- The shared engine retains full precision and display formatting never feeds calculation.
This planner has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.
5. Limitations
- Results are only as reliable as the timing, scope and basis of the entered records.
- The workflow does not predict demand or establish accounting, tax, contractual or legal treatment.
This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.
6. Update and evidence policy
Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this planner. Commercial inputs remain user-supplied because they vary by business and contract.
Change history
- : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.
Related reading
Guides to interpret the decision and its assumptions.
- Scope Change Quote Checklist
Record and cost added work, compare absorb, partial-charge and full re-quote paths, then stop for approval.
Read guide