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A 12,000 change on a 180,000 contract
The original contract sum is 180,000. Earlier change orders add 6,000. This change order’s price is 12,000, and the extra cost to do the work is 9,000. The 9,000 is an example cost. G701 does not ask for your cost. The 180,000, the 6,000, and the 12,000 follow the form’s addition.
Original contract sum: 25% lower
Change original contract sum to 135,000 while keeping the other example values the same.
Original contract sum: 25% higher
Change original contract sum to 225,000 while keeping the other example values the same.
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Quick answer
What does the Change order profit calculate?
What profit is left on this change to a signed contract? This calculator uses original contract sum, earlier change orders, this change order’s price, and cost of this change to estimate added price minus the cost of the change immediately in your browser.
With the values currently entered, the result is $3,000.00 — profit on this change. It also shows cost of this change, margin on this change, contract sum before this change, and new contract sum.
How to use the Change order profit
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Original contract sum
- Earlier change orders
- This change order’s price
- Cost of this change
Change order profit formula
Profit = this change order’s price - its cost. New contract sum = original sum + earlier change orders + this change order’s price.
Assumptions
- AIA Document G701-2017 records the original contract sum, the net change from earlier change orders, the contract sum prior to this change order, the increase or decrease from this change order, and the new contract sum. The prior sum is the original plus the earlier net change. A construction change directive stays off those lines until the parties agree and sign a change order.
- IRS Publication 334, chapter 7, figures gross profit as net receipts minus cost of goods sold. The receipt here is the change order price you type, and the cost is the extra cost you type. G701 records the price. Profit is that price minus the cost.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Records the original contract sum, the net change by previously authorized change orders, the contract sum prior to this change order, the increase or decrease from this change order, and the new contract sum. A construction change directive is omitted until the parties agree and sign a change order.
Figuring gross profitUS Internal Revenue Service — Publication 334Scope: US Schedule C small-business tax guide; method is generalChapter 7 figures gross profit as net receipts minus cost of goods sold. It then tests accuracy as that profit divided by net receipts, compared with the markup policy.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Change order profit example and edge cases
Change order profit is the extra price on a signed change, minus what the change costs you. AIA G701 rolls the price into the contract sum. Publication 334 turns that price and your cost into gross profit.
Example: A 12,000 change on a 180,000 contract
The original contract sum is 180,000. Earlier change orders add 6,000. This change order’s price is 12,000, and the extra cost to do the work is 9,000. The 9,000 is an example cost. G701 does not ask for your cost. The 180,000, the 6,000, and the 12,000 follow the form’s addition.
- Original contract sum
- 180,000
- Earlier change orders
- 6,000
- This change order’s price
- 12,000
- Cost of this change
- 9,000
Calculated result$3,000.00profit on this change
The contract sum prior to this change is 186,000. The new contract sum is 198,000. Profit on the change is 3,000, which is 25 percent of the 12,000 price.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the 3,000 first. It is 12,000 minus 9,000. The 198,000 is the new contract sum, which is price, not profit. G701 stops at that sum.
- The whole job, including the original scope, is the project profit calculator. This page only subtracts the cost of the change from the price of the change.
Edge cases worth checking
This change order is a credit
Type the price as a negative number when you and the owner agree to a credit. A price of -4,000 and a cost of 0 lowers the new contract sum by 4,000, and the result is -4,000 because that receipt is gone. A cost you still incur makes the result lower still.
A directive is not a signed change order yet
G701 says a construction change directive stays out of the net-change line until both parties agree and you sign a change order. Leave that amount out of the 6,000. Putting it in the prior box and again in this price counts it twice.
What changes the result most
Original contract sum
Use a current amount for original contract sum. Include fees or recurring costs that belong in the same figure.
Earlier change orders
Use a current amount for earlier change orders. Include fees or recurring costs that belong in the same figure.
This change order’s price
Use a current amount for this change order’s price. Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Original contract sum: 25% lower
135,000$3,000.00profit on this change
Original contract sum: 25% higher
225,000$3,000.00profit on this change
Earlier change orders: 25% higher
7,500$3,000.00profit on this change
Common mistakes
Check original contract sum
AIA Document G701-2017 records the original contract sum, the net change from earlier change orders, the contract sum prior to this change order, the increase or decrease from this change order, and the new contract sum. The prior sum is the original plus the earlier net change. A construction change directive stays off those lines until the parties agree and sign a change order. Make sure this matches the number you enter.
Keep cost of this change consistent
IRS Publication 334, chapter 7, figures gross profit as net receipts minus cost of goods sold. The receipt here is the change order price you type, and the cost is the extra cost you type. G701 records the price. Profit is that price minus the cost. Use the same units and time period throughout the calculation.
Do not rely on one change order profit scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What profit is left on this change to a signed contract?
It does not replace a quote, contract, accountant, or local employment guidance.