Is there a difference between original contract revenue and change order revenue? Or are you of the opinion that once a change order is approved it becomes original contract revenue? When subcontractors submit their monthly payment application, the subcontractor enters the original contract amount on one line and the amount of approved changes to date on another line, resulting in a “total revised” contract amount, which should match the total on the last change order received.
In essence, the total revised contract amount may be viewed as one revenue “bucket,” when there are actually two revenue buckets. My goal in writing this article is to provide a convincing argument that change order revenue is different from original contract revenue, from an operational and accounting perspective.