Unapproved change orders in a draw package are one of the fastest ways to trigger a lender rejection. When an invoice includes work that is not in the original Schedule of Values and not covered by an approved change order, the lender has no basis to release funds for it. The fix is a change order log that is current, complete, and connected to both the SOV and the draw package before you submit.
Why Change Order Tracking Is Critical for Draw Packages#
A construction project's scope changes. It is not a question of whether change orders will occur but how many. The problem for draw packages is that change orders affect three separate records simultaneously: the SOV (which must be updated to include the new line or revised amount), the contract sum (which increases or decreases by the change order value), and the AIA G702/G703 (which must reflect the updated totals).
If any one of those three records is not updated, you get a discrepancy. The inspector or lender reviewer sees a G702 line 2 that does not match the change order log. The SOV shows a line item amount that does not match the approved change order. The invoice total exceeds the current authorized contract sum. Each of these is a flag, and any one of them can reject the draw.
Change Order Log Template: Column Structure#
One row per change order. Update this log as soon as a change order is approved — not at draw prep time.
- Change order number — Sequential number, consistent with how the GC and owner number them
- Date submitted — When the change order was submitted for approval
- Date approved — When the owner (and lender if required) approved it
- Description — Brief description of the scope change (1 to 2 sentences)
- Reason / cause — Owner-directed, unforeseen conditions, design error, code requirement
- Amount — Dollar value, positive for additions, negative for deductions
- Cumulative contract sum — Running total of original contract plus all approved changes through this row
- SOV line affected — Which G703 line item(s) this change order modifies or adds
- SOV updated — Checkbox: has the G703 been updated to reflect this change order
- Status — Pending, Approved, Rejected, Incorporated in draw
- Backup attached — Yes/No: is the signed change order document in the draw package
- First draw it appears in — Draw number or month when this change order is first included in billing
- Notes — Any disputes, pending approvals, lender authorization requirements
The Change Order Authorization Sequence#
Some construction loans require lender approval for change orders above a certain dollar threshold — often $25,000, $50,000, or a percentage of the loan amount. Drawing funds for an unapproved change order on a loan that requires lender sign-off is a default trigger in some loan agreements, not just a rejection trigger.
Know your loan agreement's change order authorization requirements before the first change order comes in. Update your log with a column that flags whether lender approval was required and obtained for each change order that exceeded the threshold.
Connecting Change Orders to the SOV#
Every approved change order should be incorporated into the G703 before the next draw. The two most common ways to do this:
Option 1 — Add a new SOV line: Add a new row to the G703 for the change order scope. This is clean and easy to audit. It is the preferred approach when the change order involves genuinely new scope that does not fit an existing line item.
Option 2 — Increase an existing SOV line: Increase the scheduled value on an existing line item to incorporate the change order. This is acceptable when the change is a scope increase within the same trade or cost category. It is harder to audit but fewer lines make the SOV less cluttered.
In both cases, the Column C total on G703 must equal the Contract Sum on G702 after all approved change orders. If it does not, the package will not balance.
Pending Change Orders in Draw Packages#
Do not include pending (unapproved) change orders in your draw amounts. This seems obvious, but the scenario that catches teams is a change order that has been verbally approved but not yet formally signed. Include only formally approved, signed change orders in the G702/G703. Note any pending change orders in your cover letter as a disclosure item — this builds lender trust rather than hiding scope growth.
Change Order Log Review Before Submission#
Before each draw, run three checks against your change order log:
- Every approved change order through this draw period is reflected in G702 Line 2. Sum your cumulative approved change order total and confirm it matches.
- Every approved change order has been incorporated into the G703 — either as a new line item or as an increase to an existing line. Confirm the Column C total equals the updated contract sum.
- Every change order included in the current draw billing has a signed approval document attached to the draw package. The lender reviewer will check.
For a complete pre-submission checklist that includes change orders as one section, see the construction draw request checklist.
The River construction draw workflow cross-references change orders against the SOV and G702 automatically, flagging any draw that includes unapproved scope or has a change order total that does not balance.