Change Order Aging: Why Approved COs Quietly Lose Money
The pay application goes out on the 25th. It looks short. The controller pulls the job cost report and finds nine change orders that were approved weeks ago and never posted to the GL. Two are more than a month old. Both will miss this billing cycle.
The COs were priced correctly. The owner signed off. The work is done. None of that moves money until a CO becomes a posted, billable line on a pay application, and these are not.
This is the change order problem nobody talks about. It is not slow pricing. It is not bad estimating. It shows up after the estimate is right and the approval is signed. It lives in the gap between approved and posted. That gap has a name: aging. And for electrical contractors running active portfolios with dozens of changes per job, CO aging is one of the most expensive invisible line items on the schedule.
The Change Order Does Not End When It Is Priced
Most conversations about change orders focus on speed to price, getting the number in front of the owner quickly and moving on. Getting that price right from accurate, current job data is the necessary first step. But the work after approval gets far less attention, and it is where the margin actually shows up or disappears.
A priced CO has to be submitted, approved by the owner's rep, signed, posted to the job cost ledger, and rolled into the next pay application. Every one of those steps is a handoff. Every handoff is a place where a CO can sit.
In a healthy process, the gap between priced and posted is a few days. In most contractors' real-world workflows, it is two to four weeks. Sometimes longer.
Why Aging Is the Right Way to Think About It
AR teams have been tracking invoice aging for decades. The logic is simple: the older an unpaid invoice gets, the less likely it is to be collected in full. Buckets at 30, 60, 90, and 120 days drive collection priorities.
Change orders deserve the same discipline. CO aging is the time between when a CO is priced and when it is a posted, billable line on the job. The longer that window, the more risk piles up.
Owners forget the context behind the change, and disputes get easier. Field conditions shift, and documentation becomes harder to assemble. Subcontractor markups stack—nested COs from subs sit because yours is sitting. And cash that should be in your pay application is not.
For electrical contractors, the volume problem makes this worse. A single job can generate dozens of small COs across the life of a project. Nested COs from subs amplify the count. If even a quarter of those age past two weeks, the aggregate cash drag adds up fast.
What Aging COs Actually Cost
The visible cost is unpaid work. The hidden costs are harder to spot until they show up in a quarterly review.
Cash flow. Revenue earned but not invoiced is revenue not financing the job. Pay applications go out short. Working capital tightens. The contractor borrows to cover what should already be billable.
Job costing accuracy. WIP reports understate revenue and overstate variance until the CO posts. Anyone looking at the job before posting sees a worse picture than reality. Bad data drives bad decisions.
Forecasting. PMs run one number in their heads. Accounting runs another. The owner sees a third. None of them line up until the CO clears.
Owner pushback. A CO submitted within a week of the change is easy to defend. A CO submitted three weeks later, after the work is done and the cost is sunk, invites scrutiny. Some get reduced. Some get rejected.
Subcontractor friction. When your CO sits, your sub's CO sits. They feel the delay in their pay application. The next time you negotiate, that memory is in the room.
The Four Reasons COs Age
Most aging COs trace back to one of four causes. Each has a structural fix.
1. Documentation gaps. The CO is priced, but the supporting field documentation is incomplete. Photos, time entries, signed RFIs, or T\&M tickets are missing. The owner's rep asks for more, and the CO goes back.
The fix is tying field documentation directly to CO creation so the package is complete before it leaves the field. That principle starts with how change requests are documented in the first place.
2. Approval chain ambiguity. Nobody knows who signs next. A CO sits in an owner's inbox because three people think someone else is reviewing it. The fix is a pre-defined approval workflow for every project, agreed at kickoff and built into the system.
3. The accounting handoff. The PM marks a CO approved. The post to the GL still has to happen. If that step lives in a manual email, the CO sits until someone in accounting has time. The fix is real-time integration between project tools and the general ledger so posting is automatic, not a task on a to-do list.
4. No visibility into aging. Nobody is watching aging until it becomes a problem. By the time a CO crosses 30 days, the cost is already real. The fix is a live view of every open CO with days-since-priced as a sortable column. If a PM can see that CO 14 has been sitting for eleven days, they can make a phone call. If they cannot see it, they cannot act on it.
How a Modern Construction ERP Closes the Aging Gap
Most of these causes are structural, which means procedural fixes like more follow-up emails and more check-ins only go so far. The more durable fix is a system that removes the manual handoffs.
Inside Sage Intacct construction, CO aging is a managed metric, not a quarterly surprise. Every open change order carries a live aging counter visible at the line level, the job level, and across the full portfolio—sortable by PM, by project, by days outstanding. When an owner approves a CO, that status flows to the GL automatically without a manual email or batch entry in between. T\&M changes close faster because field time posts to the job daily rather than in a weekly batch that can miss a billing cycle. The result is a CO dashboard that tells a PM exactly which approvals to chase before the pay application closes.
For electrical contractors specifically, the volume problem matters. Hundreds of small COs across a busy portfolio are not unusual. Tracking them in spreadsheets or across two disconnected systems is where aging compounds. One system, one source of truth, one set of numbers everyone trusts.
What a Healthier CO Process Looks Like
A contractor with CO aging under control runs the process on three principles.
Target aging windows are defined upfront. A reasonable target is seven days from priced to owner approval, two days from approval to posting. That gives a worst case of roughly nine days from price to billable. Without a target, aging is not a metric. It is just a byproduct of however long things happen to take.
Aging is reviewed weekly, not when someone notices a problem. A standing PM and accounting meeting that opens with the CO aging report turns aging into a managed metric instead of a quarterly surprise. If a CO has been sitting for eleven days without owner sign-off, someone needs to make a call, not find out at month close.
PMs and accounting share one number, in one system. When the project management view and the GL view show different CO statuses, someone is working from bad data. The single source of truth is the difference between a CO process that protects margin and one that bleeds it quietly across the year.
"Manual processes push change order turnarounds to 60 to 90 days. And it is a pretty common practice in construction: if you are not billed within 90 days of a change order being identified, the owner does not have to pay it."— Spencer Doak, Account Executive, Alliance Solutions Group
Get CO Aging Under Control
If your team is chasing CO approvals through email, posting to the GL once a week, or finding out about aging only when an owner pushes back, there is a better way to run this. Alliance Solutions Group works with electrical contractors to get CO workflows under control using the visibility and structure needed to keep aging short and margins protected.
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Frequently Asked Questions
What is change order aging?
CO aging is the time elapsed between when a change order is priced and when it posts as a billable line to the job. The longer that window stays open, the greater the risk of missed billing cycles, owner disputes, cash flow drag, and WIP reporting that understates where the job actually stands. Most electrical contractors do not track CO aging as a metric, which means the problem accumulates quietly until it shows up in a quarterly review or an owner pushback.
What is the 90-day contractual billing window, and does it apply to most electrical contracts?
Many construction contracts include a provision that limits the owner's obligation to pay for work not billed within 90 days of identification. If a change order is priced in week one, sits through approval delays, misses two pay applications, and is finally submitted at day 95, the owner may not be legally required to pay it. That’s a contract enforcement question, not a billing dispute. The specific language varies by contract, but the 90-day window is common enough that CO aging directly affects whether approved work gets paid. Contractors should confirm the billing provisions in each contract at project kickoff.
What is a realistic target aging window for change orders?
A reasonable target for most electrical contractors is seven days from priced to owner approval, two days from approval to GL posting. That puts the worst-case gap at roughly nine days from estimate to billable line. Contractors who hit that target consistently find that owner disputes drop, WIP accuracy improves, and pay applications go out fuller. The specific targets will vary by project size and owner sophistication, but any target is better than no target.
How does an aging CO affect WIP and job cost reporting?
Until a CO posts to the job cost ledger, the revenue it represents does not appear in WIP. The job looks less complete than it is. Cost-to-date looks worse relative to budget. The over-under calculation that drives billing decisions is working from an incomplete picture. Anyone reading the job cost report, whether it is a controller, PM, or CFO, is seeing an understated revenue position. Decisions made on that data, including pay application amounts, are decisions made on bad inputs.
What is the most common cause of CO aging in electrical contracting?
In most operations, it is the handoff between project management and accounting. The PM marks a CO approved. The GL post is a separate step that is often handled through a manual email, spreadsheet update, or periodic batch entry. Until someone in accounting acts on it, the CO is approved in theory but unposted in reality. The field and the office are tracking different statuses on the same CO. Closing that handoff through real-time integration between the project system and the general ledger removes the most common single point of delay.
