What should contractors aim for when providing a change order due to increased costs?

When contractors provide a change order due to increased costs, seeking a profit of 20% on the change is a strategic approach. This figure reflects the need for contractors to cover not only the additional direct costs incurred from the change but also to maintain a reasonable profit margin. Change orders often arise from unforeseen circumstances or modifications requested by the client that require additional resources.

Applying a profit margin like 20% ensures that the contractor remains financially viable while also recognizing the additional work and resources needed to meet the client's revised expectations. It is important for contractors to establish clear pricing strategies that reflect both the market standards and the inherent risks associated with changes in a project scope.

In comparison, aiming to break even or having only standard profit margins would not adequately compensate for the increased expenses and could risk the contractor's profitability and sustainability. Aiming for a higher profit, like 30%, may be viewed as excessive and could potentially alienate clients or lead to disputes over what is considered fair compensation for the additional work. Thus, a target of 20% aligns well with industry standards and practices for change orders, balancing client needs and contractor profit.