What is the difference between a change order and a claim?

A change order is an agreement; a claim is a dispute. When a change is identified and the parties settle the cost and time, it becomes an executed change order, and everyone moves on. A claim is what happens when they cannot agree, or when a contractor believes it is owed more money or time than the owner will grant: it is a formal demand, made under the contract's claims procedure, for compensation the other side has not accepted. Most changes should be resolved as change orders. A claim means the normal process has broken down, which is why disciplined projects work hard to keep changes from aging into claims.

Can a contractor back charge without notice?

It is risky and often not allowed. Most contracts require the party intending to back charge to give notice first, telling the other party what the problem is and giving it a chance to fix the issue itself before costs are incurred and deducted. A back charge imposed without notice, where the general contractor simply hires someone else to redo a sub's work and deducts the cost, is frequently challenged and sometimes thrown out, because the sub was never given the opportunity to cure. The defensible back charge is documented: notice given, opportunity to cure provided, actual costs recorded, and the deduction clearly tied to the specific failure.

What documentation supports a construction claim?

The contemporaneous project record, which is why the record matters long before anyone is thinking about a claim. A strong claim is built from dated daily reports showing what happened in the field, the RFI log showing what was asked and how long answers took, the change-order and directive history, schedule analyses showing the delay's impact on the critical path, and the cost records proving the amount. The claims that succeed are usually the ones where the documentation was kept carefully all along, not reconstructed after the fact. A gappy record defends the other side, which is the real reason disciplined logging pays off.

Construction Glossary · Change Management

Claims &Back Charges

When the normal change process breaks down, money moves two ways. A claim demands more from above; a back charge deducts from below. Both live or die on the record.

Definition

A construction claim is a formal demand for additional compensation or time beyond the contract, usually when a change could not be settled by change order. A back charge is a cost one party charges back to another, typically a general contractor deducting from a subcontractor for work or expenses the subcontractor should have borne, such as defective work, cleanup, or damage.

Which way the money flows

A general contractor sits in the middle. It makes a claim upward to the owner for cost or time it believes it is owed, and it issues a back charge downward to a subcontractor to recover costs the sub should have borne. Claims can run the other way too, an owner against a contractor, but the GC in the middle shows both directions at once.

Two instruments, one requirement: the record

Claim

A formal demand for added cost or time the other side has not accepted, made under the contract's claims procedure when a change could not be settled by change order.

Won or lost on the contemporaneous record: daily reports, the RFI log, schedule analysis, and cost backup.

Back charge

A deduction for costs one party owes another, usually a GC recovering from a sub for defective work, cleanup, damage, or equipment the sub should have covered.

Defensible only with notice, an opportunity to cure, and documented actual costs tied to the specific failure.

How POD helps build the record

Claims and back charges are won on the contemporaneous record, and that record is what POD keeps as the project runs: dated daily reports, an RFI log with response times, the change-order history, and the cost picture, all captured day to day rather than reconstructed after a dispute. The record that defends a claim is the same one POD is building anyway, which is the quiet payoff of disciplined daily logging.

Delay analysis methodologies guide

Frequently asked questions

The record is the whole game

Claims and back charges both trace back to what the field recorded day by day. It starts with the RFI that never got answered and the change that never got signed.

The Change Order Back to the Glossary

Related terms

Change Order PCO & Directives RFI NCR