On a construction project, the scope of work rarely survives contact with the site. When conditions change, subcontractors often skip the formal change order and just send an invoice for the extra work. That leaves the general contractor to recognize the invoice as a change order, price it, and get it into the owner contract so the money comes back. APARBooks does that in a couple of clicks.
Why subcontractor invoices become the GC's problem
A general contractor holds one contract with the project owner and separate subcontracts with each subcontractor. Every one of those agreements is built on a scope of work set by the architect's and engineer's estimates. During construction, real conditions force changes, and those changes are change orders.
The problem starts when a subcontractor performs work beyond the original agreement and, instead of submitting a formal change order, sends an invoice for the added materials or labor. Now the general contractor has to identify and categorize that invoice as a change order, then record the change order against the contract with the project owner so the owner recognizes the added cost and releases the funds for it.
What it costs to get change orders wrong
Misidentifying a change order, or failing to record one, has a direct financial cost:
- Inaccurate budgeting and forecasting. Unrecorded change orders create discrepancies in the project budget and make future cost forecasts unreliable, which can push the job into overrun.
- Payment delays and penalties. Late recognition of a change order delays payment to the subcontractor, which can trigger penalties and interest that inflate project cost.
- Legal disputes and liabilities. Failing to document and manage change orders can be treated as a breach of contract, opening disputes with owners and subcontractors.
- Claims and liens. A subcontractor who is not paid on time for extra work can file a claim or a lien against the project, which complicates ownership and financing.
- Extended overheads. A longer timeline raises overhead such as site management, equipment rental, and labor, and those costs eat into profit.
How APARBooks records a subcontractor invoice as a change order
APARBooks lets a general contractor flag an invoice as a change order at the moment it is entered. When you record an invoice, check “This bill is a contract Change Order” and APARBooks categorizes it as a subcontractor change order. You can set whether the bill is fully or partially a change order.
To carry that change order through to the owner, check the box that records the bill as a project change order to submit to the project owner. APARBooks then reflects it in both the subcontractor agreement and the owner contract, so the additional payment is recognized on both sides.
Frequently Asked Questions
What is a change order in construction accounting?
A change order is a formal document that modifies the original scope of work in a construction contract. It reflects changes such as additional labor, materials, or design modifications and usually results in extra costs or extended timelines.
Why do subcontractors sometimes skip submitting formal change orders?
Subcontractors often face tight schedules and send invoices directly for additional work without initiating a formal change order. That bypasses the documentation and leaves the general contractor to identify and reconcile the unapproved costs.
What are the risks of not properly managing change orders?
Improper handling can result in budget overruns, payment disputes, delays in owner reimbursements, legal liabilities, and potential liens from unpaid subcontractors.
How does APARBooks help with change order tracking and management?
APARBooks lets contractors flag an invoice as a change order during entry. You can mark it as a full or partial change, link it to a subcontractor agreement, and submit it for project owner approval in a few clicks.
What happens if change orders aren't recorded in the contract with the owner?
If a change order is not formally added to the owner contract, you may not receive reimbursement for the additional work, which directly affects project cash flow and profitability.
Can APARBooks prevent subcontractor disputes over unpaid change orders?
Yes. APARBooks creates a transparent audit trail for every change order, who requested it, when it was logged, and its approval status, which reduces confusion and helps resolve subcontractor disputes.
How does APARBooks help with budgeting and forecasting around change orders?
Once a change order is categorized, APARBooks updates project budgets and forecasts in real time, which allows accurate financial projections and immediate identification of cost impacts.
Is APARBooks suitable for small to mid-size contractors managing multiple subs?
Yes. APARBooks is designed to be scalable and user-friendly, which suits general contractors managing complex workflows across multiple subcontractors and frequent change orders.
Built for Contractors. Built for Construction Accounting.
APARBooks is purpose-built construction accounting software for general contractors and bookkeepers. Manage job costing, AIA progress billing, subcontractor payments, retainage, change orders, lien compliance, and WIP reporting in one place.
