What is the purpose of a change order in a contract?

A change order serves a specific and crucial purpose in the context of a contract, particularly in construction and home improvement projects. Its primary function is to modify the terms of the existing contract, which includes adjustments to the contract price and potentially the scope of work due to changes in materials or other project modifications.

When unforeseen circumstances arise or when a client requests alterations to the original project specifications, a change order documents these requests and establishes agreement on the new terms. This ensures that both parties have a clear understanding of how the changes affect the overall project. The change order becomes a formal record that protects the rights of both the contractor and the client, ensuring that the contractor is compensated for additional costs incurred from changes, and that the project remains aligned with the client's expectations.

In essence, it formalizes necessary adjustments while maintaining the contractual relationship, promoting clear communication and accountability throughout the project lifecycle. Thus, the option highlighting the adjustment of the contract price due to changes in materials accurately captures the significance and intent of change orders within contract management.