Ask ten contractors to explain the difference between a change order and a claim and you’ll probably get ten different answers.
Some use the terms interchangeably.
Others assume a claim is simply a larger change order.
The reality is a little more nuanced.
Understanding the difference is important because it affects how project issues are managed, documented, negotiated, and ultimately resolved.
Every Claim Usually Starts As A Change
Construction projects change.
That isn’t unusual.
Plans evolve.
Field conditions differ from expectations.
Owners make decisions.
Utilities appear where they weren’t expected.
Designs require clarification.
The question isn’t whether change will occur.
The question is how the parties respond when it does.
A change order is simply the mechanism used to address a change in scope, time, cost, or project conditions.
In an ideal world, the contractor identifies the issue, the owner evaluates it, both parties reach an agreement, and the change order is executed.
The project moves forward.
No conflict.
No dispute.
No claim.
Where Things Begin To Break Down
Problems arise when the parties disagree.
The contractor believes additional compensation is justified.
The owner disagrees.
The contractor believes additional time is warranted.
The owner disagrees.
The contractor believes the issue was caused by the owner.
The owner believes responsibility lies elsewhere.
At that point, the issue is no longer just a proposed change.
It begins evolving into a dispute.
And that dispute may eventually become a claim.
Claims Are About Unresolved Disagreements
A claim generally represents a formal request for relief that has not been resolved through normal project processes.
The parties have reached an impasse.
Informal discussions have failed.
Project-level negotiations have failed.
Documentation is assembled.
Contract provisions are cited.
Formal procedures are initiated.
The issue has moved beyond administration and into dispute resolution.
That’s why the word “claim” often carries a negative connotation.
It signals that the normal mechanisms for resolving the issue have broken down.
The Escalation Ladder
Most contracts contain a structured process for resolving disagreements.
The specifics vary, but the progression is often similar.
Step 1: Project-Level Resolution
The contractor submits a request.
The owner evaluates it.
The parties attempt to reach agreement.
Most issues should be resolved here.
Step 2: Formal Review
If agreement cannot be reached, the issue may be elevated to a contracting officer, claims reviewer, dispute review board, or similar authority.
The issue receives a more formal evaluation.
Step 3: Formal Claim
If the dispute remains unresolved, formal claim procedures are initiated.
Additional documentation is assembled.
Legal requirements become more important.
Timelines become critical.
Step 4: Litigation, Arbitration, or Mediation
If all previous efforts fail, the dispute may ultimately enter a formal legal process.
This is where costs increase significantly for everyone involved.
Why Contractors Should Care
Understanding where an issue exists on this escalation ladder changes how it should be managed.
A contractor who treats every issue like a claim can create unnecessary conflict.
A contractor who treats a developing claim like a routine change order may fail to preserve critical rights.
The key is recognizing when an issue is transitioning from one stage to the next.
That awareness drives better documentation, better communication, and better decision-making.
The Real Goal
Too often, construction professionals focus on winning claims.
A better goal is preventing them.
Most owners don’t want claims.
Most contractors don’t want claims.
Most project teams would rather spend their time building infrastructure than preparing exhibits for mediation.
The most successful projects are not the ones that avoid change.
They’re the ones that manage change effectively before it becomes a dispute.
Final Thoughts
Every claim begins with a disagreement.
Most disagreements begin with a change.
That’s why understanding the distinction matters.
A change order represents a problem being managed.
A claim represents a problem that has escaped management.
The sooner issues are addressed, documented, and resolved, the less likely they are to evolve into something larger.
Because in construction, a claim is often nothing more than a change order that nobody could agree on.
Volume 1 of the Build America Guides: Starting a Successful Construction Business.
