Florida Building Contractor Business/Finance Practice Exam

Why does a contractor keep change orders on file?

1. For financial record-keeping

2. By law

3. To improve client relationships

4. For management purposes

The correct answer is: By law

A contractor keeps change orders on file primarily for financial record-keeping. Change orders document any modifications to the original contract terms, including alterations in the scope of work, materials used, timelines, or costs associated with the project. By maintaining detailed records of these changes, a contractor can accurately track all financial implications, ensuring precise billing and cost control throughout the project. Additionally, retaining change orders helps facilitate clear communication and understanding between the contractor and the client, which can positively impact client relationships, even if that is not their main purpose. Change orders also support project management by enabling effective oversight and coordination of the work as it evolves. Thus, while legal reasons may necessitate some record-keeping, the primary rationale often lies in maintaining accurate financial records.