Accounting for change orders – Why you need to handle them with care

Description

Abstract: Change orders are a fact of life in the construction industry. To help ensure a project’s success, it’s critical that contractors understand the contract’s change-order-approval procedures and follow them to the letter. It’s also important to treat change orders properly for accounting purposes, especially for construction businesses that use the percentage-of-completion method. This article describes three categories of change orders and mistakes that contractors commonly make.