Procore will happily tell you how to create a change event, a potential change order and a prime contract change order. What it will not tell you is which of those should touch your general ledger, when a change order becomes revenue, and what an unapproved change order is quietly doing to your percentage of completion. Those are accounting judgments, not software settings, and getting them wrong is how a job that looks profitable in the budget turns into a loss at closeout.
Every change order lives in two worlds at once. In Procore it is a workflow object with a status, a value and an approval chain. In your books it is either revenue, cost, a contingency draw, an estimate, or nothing at all. Procore controls the first world. Only an accountant controls the second, and the software will not stop you from making the wrong call.
This page is about the accounting treatment, not the sync mechanics. If you need to know how change orders travel from Procore to your accounting system, what the ERP connector posts and where it stops, that is covered on the QuickBooks and Procore integration page. What follows is the layer above that: what each change order object is, what it should and should not do to your general ledger, when the value becomes revenue, and how a pending change order distorts your percentage of completion and your work-in-progress report while nobody is looking.
The short version, stated up front so you can hold it while you read the detail. A change order is revenue when it is approved and enforceable, not when the work is done and not when you are confident you will get paid. Cost is cost the moment you incur it, approved or not. Because those two rules move at different speeds, an unapproved change order always lands cost in the job before it lands revenue in the contract, and that gap is exactly where percentage-of-completion accounting goes wrong.
Procore separates a change into distinct objects with their own statuses. The accounting treatment is different for each one, and three of the four should never touch your general ledger.
The earliest object. Someone identifies a potential change, an RFI answer, a field condition, an owner request, and logs it with a rough order of magnitude before anyone knows the price. It drives the pending cost and pending revenue columns in your Procore budget so the forecast reflects what is coming. It must not touch the general ledger. A change event is an estimate, and an estimate is not an accounting entry.
The priced version, usually generated from the change event once quotes come back from the subs. Depending on your tiered change order configuration it may roll up into a change order request and then into a prime contract change order. A PCO in a pending status is a priced estimate with a signature missing. It updates your projected cost if you will incur the work, and it changes nothing in the books.
The owner-facing document. This is the only object in the entire chain that changes your contract value. When it is approved it adds a line to the schedule of values, raises the revised contract amount, and becomes billable. Approved is the word that matters. Draft, pending, pending in review, pending revised and pending pricing all mean the same thing to your accountant: not yet revenue.
The subcontract-facing document. It revises the value of a subcontract or purchase order, raises your committed cost on the affected cost codes, and lets the sub bill against the new amount. An approved CCO is real cost exposure and it belongs in your projected cost immediately, whether or not the owner has approved the matching PCCO.
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This is the question the software cannot decide for you, so here is the answer, stated plainly.
A change order belongs in revenue when the scope change is approved and you have an enforceable right to payment for it. In practice that means a signed prime contract change order, or a written owner directive that changes the scope and creates a legal obligation to pay. Under the contract modification rules in ASC 606, a modification is accounted for once it is approved and enforceable, and approval can be written, oral, or implied by customary business practice. That last clause is where contractors get creative, and it is also where auditors get skeptical. If the only evidence of approval is a superintendent saying the owner nodded at it, you do not have revenue.
There is one honest middle case. If the scope is approved but the price is still being negotiated, the value is variable consideration. You may include an estimate of it in the transaction price, but only up to the amount for which it is probable that a significant reversal will not occur later. That constraint is not a formality. It is the mechanism that stops a contractor from booking the full value of every disputed claim and calling it revenue. If your history with this owner is that pending change orders settle at sixty cents on the dollar, sixty cents is your estimate, not one hundred.
Contingency is a line in your own budget that holds cost you expect to incur but cannot yet attribute to a specific scope. It is a cost estimate and nothing else. It never becomes revenue, it never increases the contract value, and drawing from it is not a change order. When you draw contingency into a cost code you are moving money between lines within the same total budget. If contingency is owner-funded and written into the contract as an allowance, it is already inside the contract value, so recognizing it again when you draw it is double counting.
A change event, a pending PCO, a submitted but unsigned PCCO, and every claim you intend to file are forecast items. They belong in your projected cost and in your internal revenue forecast so that you and your project managers can see what is coming. They do not belong in the general ledger, they do not raise the contract value, and they should not be billed. Keeping them visible in the forecast while keeping them out of the books is not a contradiction. It is the entire discipline.
Print this and tape it to the wall. Most change order accounting errors are a row from this table being ignored.
| Procore object and status | What it actually is | What it should do to the budget | What it should do to the general ledger |
|---|---|---|---|
| Change event, open | A scope change identified, not yet priced | Shows as pending cost and pending revenue in the forecast columns | Nothing |
| PCO, pending | Priced, quoted by the subs, not approved | Updates projected cost if you will incur the work | Nothing |
| PCCO, pending or in review | Submitted to the owner, not signed | No change to contract value or the schedule of values | Nothing. Track it as exposure, not revenue |
| PCCO, approved | Signed and enforceable | Contract value and SOV increase; revised contract amount updates | Revenue base increases; the new SOV line becomes billable |
| PCCO, rejected or void | The owner said no | Remove it from projected revenue | Nothing, but any cost already incurred stays in the job as a loss |
| CCO, pending | Sub change order not yet approved | No change to committed cost | Nothing |
| CCO, approved | Subcontract value revised | Committed cost and projected cost increase | The commitment value changes in the accounting system; the sub can bill against it |
| Budget modification or contingency draw | Reallocation within the same total budget | Moves dollars between lines; total budget unchanged | Nothing. This is not a transaction |
Most contractors on long-term contracts recognize revenue using cost-to-cost percentage of completion. Cost incurred to date divided by estimated total cost gives you percent complete, and percent complete multiplied by the contract value gives you earned revenue. Both inputs move when a change order shows up, and they move at different times. That is the whole problem, and it is easiest to see with numbers.
Contract value is $2,000,000. Estimated total cost is $1,700,000, so estimated gross profit is $300,000, a 15 percent margin. Cost to date is $850,000, which puts the job at 50 percent complete. Earned revenue is $1,000,000, you have billed $1,000,000, and there is no over or under billing. Everything is clean.
The owner directs the work. The field builds it, because the field always builds it. The costs post to the job. The PCCO sits pending in Procore for the next sixty days.
Nobody updates the estimated total cost, because the change order is not approved yet and updating estimates feels like admitting something. Cost to date is now $1,020,000 against an estimated total cost still showing $1,700,000. Percent complete jumps to 60 percent. Earned revenue is 60 percent of $2,000,000, or $1,200,000. You have just recognized $200,000 of revenue for which no contract exists, purely because your cost went up. The projected gross profit on the job still reads $300,000 while $170,000 of unrecovered cost is sitting inside it. And your WIP shows a $200,000 underbilling that looks like a routine timing item instead of what it actually is: an unfunded change order you may never collect.
Update the estimated total cost to $1,870,000 the moment you know you will incur it. Cost is cost. Leave the contract value at $2,000,000 until the PCCO is approved. Percent complete is now $1,020,000 divided by $1,870,000, or 54.5 percent. Earned revenue is 54.5 percent of $2,000,000, or $1,090,909, against $1,020,000 of cost. Earned gross profit at this stage is $70,909, down from $150,000 at the same point before. The margin fade is real and it is telling you the truth: you performed $170,000 of work you have not been paid for and are not yet contractually entitled to.
When the PCCO is finally approved, contract value goes to $2,200,000, the estimated total cost stays at $1,870,000, and the margin restores to $330,000. Revenue catches up in the period the change order is signed. That catch-up is not an error to be smoothed away. It is the correct picture of a job whose scope grew and whose paperwork lagged, and it is a far more useful signal to an owner than a budget that pretended nothing happened. This is the same mechanism we describe in Procore WIP reporting, viewed from the change order end of the pipe.
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A change order changes the total. A budget modification does not. That single sentence is the whole distinction, and confusing the two is one of the fastest ways to make a project budget permanently useless.
A budget modification moves dollars between lines inside the same total budget. Concrete came in under buyout, drywall is running hot, so you move $40,000 from one to the other. The total budget is unchanged. Nothing happens in the general ledger, because nothing has happened. It is a reallocation of your own estimate. A contingency draw is the same species: you move money from the contingency line into the scope line that consumed it, and the total stands still.
A change order changes the total. An approved commitment change order raises your total committed cost. An approved prime contract change order raises your total contract value. Both are real events with real accounting consequences, and both belong in a column that is distinct from your original budget.
Here is the mechanical rule that saves you. Once the budget is finalized, lock it. Procore keeps the original budget amount as its own column precisely so that every later movement, approved change, modification, contingency draw, is recorded in a separate column with a source and an audit trail. The moment somebody edits the original budget amount directly to absorb a change, the baseline is gone. You can no longer answer the only question a budget exists to answer: how does this job compare to what we bid.
The damage compounds. Buyout savings can no longer be measured, because the original number moved. Estimating never learns anything, because the historical unit costs it would learn from were overwritten. Variance reporting becomes circular, comparing actuals to a budget that was already adjusted to match them. And when the numbers stop tying to your accounting system, the cause is often exactly this, a budget that was edited rather than modified. We walk through the full diagnosis on why your Procore budget does not match QuickBooks, and the underlying code structure that has to be clean before any of it works is covered in how Procore job costing works.
A prime contract change order is a revenue event. A commitment change order is a cost event. They describe the same physical change to the building, and they almost never get approved on the same day. That timing gap is the single most expensive thing about change order accounting, and it is invisible unless you go looking.
The sub will not swing a hammer without a signed change order, so you issue the CCO immediately. Your committed cost rises the same week. The owner takes sixty days to sign the PCCO, so your contract value does not move for two months. In between, your Procore budget shows a projected overrun on the affected cost codes that is not real, your WIP shows margin fade that is really a paperwork delay, and your project manager, who can read a budget, starts making decisions based on a loss that exists only because the owner has not signed yet.
The accounting discipline is not to hide the gap. It is to make it visible and quantified. Never issue a commitment change order for owner-directed scope without a linked change event and a matching prime contract change order in a pending status. That link is what lets your accountant pull a single number at close: total cost committed against unapproved owner change orders. That number is your unfunded exposure, and it is the most useful figure on the job that nobody produces.
A common shortcut is to net the two, on the theory that a $200,000 owner change order and a $170,000 sub change order are the same transaction. They are not. One raises revenue, one raises cost, they sit on opposite sides of the income statement, and they carry different risk. If the owner rejects the change and you have already approved the sub CCO, you own the cost with no revenue behind it. Netting them makes that outcome impossible to see coming. Track them separately, always, the same way retainage receivable and retainage payable must be tracked as two separate accounts rather than one net figure.
This is the layer where a construction accountant earns their fee, and it is what we do inside our Procore bookkeeping services: reconcile the change order register to the general ledger every month, confirm that nothing pending has leaked into revenue, quantify the unfunded exposure, and keep the original budget baseline intact so the variance reports still mean something. If the cost codes underneath are a mess, the register will never reconcile, which is why Procore cost code cleanup usually comes first. FinTruction is based in Coppell, Texas, and works remotely with commercial general contractors and specialty subcontractors across the United States. Everything in this ecosystem starts at the Procore resource hub.
Most contractors cannot answer that question, and the number is usually larger than they expect. Send us one active job and we will run a free Audit of your change order register against your books. We will tell you what has been recognized as revenue that should not have been, how much cost you have committed against change orders the owner has not signed, and what it is doing to your percentage of completion. No obligation, and you keep the findings.
Get a Free Books AuditWhen the scope change is approved and you have an enforceable right to payment, which in practice means a signed prime contract change order or a written owner directive that creates a legal obligation to pay. Not when the work is performed, and not when you are confident you will eventually collect. If the scope is approved but the price is still being negotiated, the value is variable consideration and you may only include an estimate of it up to the amount for which a significant reversal is not probable. Cost, by contrast, is recognized the moment it is incurred, approved or not.
Generally no, and doing it is one of the most common ways construction books get overstated. A potential change order or a prime contract change order sitting in a pending status is a priced estimate with a signature missing. It belongs in your projected revenue forecast, not in your general ledger. The narrow exception is approved scope with an unsettled price, where the value is treated as constrained variable consideration. If you have no approval at all, you have an exposure, not revenue.
A change event is the earliest object: a potential change identified with a rough order of magnitude before it is priced. A potential change order is the priced version, usually generated from the change event once sub quotes come back. A prime contract change order is the owner-facing document, and it is the only object in the chain that changes your contract value. Only an approved prime contract change order should increase revenue. The other two are forecast items and must not touch the general ledger.
An owner change order, the prime contract change order in Procore, is a revenue event: when approved it raises your contract value and adds a line to the schedule of values so you can bill it. A subcontractor change order, the commitment change order, is a cost event: when approved it raises the value of the subcontract and your committed cost. They describe the same physical change but they almost never get approved on the same day, and they must never be netted against each other. If the owner rejects the change after you have already approved the sub, you own the cost with no revenue behind it.
A change order changes the total. A budget modification does not. A modification moves dollars between budget lines inside the same total, for example drawing from contingency into the scope that consumed it, and it has no general ledger impact because no transaction has occurred. A change order, once approved, raises either your total contract value on the owner side or your total committed cost on the subcontract side. Using a modification to absorb owner-funded scope corrupts the budget and hides real revenue.
Because the original budget column is your baseline, and it is the only thing that lets you answer how this job compares to what you bid. Procore keeps original budget as its own column so that approved changes, modifications and contingency draws land in separate columns with an audit trail. Lock the budget once it is finalized. If someone edits the original amount to absorb a change, buyout savings can no longer be measured, estimating never learns from historical unit costs, and variance reporting becomes circular because you are comparing actuals to a budget that was already adjusted to match them.
Change orders move both inputs to the cost-to-cost calculation, and they move them at different times. Cost hits the job as soon as the work is performed. Contract value does not move until the change order is approved. If you let cost rise without updating the estimated total cost, percent complete inflates and you recognize revenue you have no contract for. The correct treatment is to update the estimated total cost immediately, since the cost is real, and hold the contract value until approval. Percent complete falls, margin fades, and the WIP correctly shows a job that performed work it has not been paid for.
Because you have performed the work, so cost is in the job and revenue is being earned against it, but you cannot bill it until the change order is approved and added to the schedule of values. Earned revenue exceeds billings, which shows up as an underbilling in your WIP report. The danger is that it looks identical to routine billing lag. An underbilling caused by an approved change order you simply have not invoiced yet is a timing item. An underbilling caused by an unapproved change order is an exposure, and it may never turn into cash. Separating those two is exactly what a proper change order register does.
We reconcile your change order register to the general ledger every month, confirm nothing pending has leaked into revenue, update estimated total cost so percentage of completion stays honest, quantify the cost you have committed against unapproved owner change orders, and keep the original budget baseline intact so variance reporting still means something. We also handle the underlying cost code structure, because a register will not reconcile on top of broken codes. FinTruction is based in Coppell, Texas, and works remotely with commercial general contractors and specialty subcontractors across the United States.
Real results from contractors we have helped untangle their books and systems.
They didn’t just record transactions and call it a day. They built a custom chart of accounts around how a remodeling company actually runs, did a full catch-up on years of bookkeeping inside QuickBooks Online, and now stay on top of my monthly bookkeeping and payroll. Every step, they broke it down in simple terms instead of burying me in accountant talk.
FinTruction rebuilt the whole thing from the ground up, with real job costing, work in progress, and retainage. They didn’t just hand me reports and disappear; they walked me through my numbers until I understood them.
Sahil and his team handle the bookkeeping and job costing for my painting business. They cleaned up my books and set up integrations that give me accurate, timely job costing with solid weekly data. Reliable, detailed, and genuinely invested in getting the numbers right.
FinTruction is the only bookkeeping team we’ve found that truly understands construction accounting and WIP reporting. They aligned our income and costs across 21 jobs and gave us full, monthly transparency. Fast, accurate, and an indispensable partner.
When I came to FinTruction I had no financial structure. No job costing, no WIP tracking, books behind. They did a full cleanup and rebuilt job costing and WIP tracking in QuickBooks. Now I know what’s billed, what’s owed, and where every job stands.
A couple of minutes from a contractor we support, sharing what working with FinTruction has been like and what changed once their numbers finally made sense.
Tell us about your jobs and we will show you what is sitting in revenue that should not be, and how much unfunded change order cost you are carrying. No obligation.
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