A case that concerns almost every construction site
A drywall contractor settled its contract with a final invoice of more than 4.2 million euros net — alongside the main contract works it contained 39 change orders (Nachträge) and almost 192,000 euros of hourly work. The principal, a property developer, cut the settlement apart: it challenged the pricing of the extra work and deducted percentage levies from the invoices for site electricity, water, a sanitary container, heating and “site coordination”. The contractor demanded payment security under § 650f BGB — and the dispute reached the Kammergericht.
The judgment of 18 July 2025 (21 U 176/24) answers three questions that come up on every larger project: how extra work is priced, how it has to be documented and how much the principal may deduct from invoices as a flat percentage. An appeal is pending before the Federal Court of Justice (VII ZR 133/25), so the last word has not been spoken — but the reasoning of Berlin’s construction senate already sets the standard worth invoking in negotiations and in court.
Pricing a Nachtrag: actual additional costs plus a markup
Under a VOB/B contract the principal may unilaterally change the design and order works not provided for in the contract. The remuneration follows § 2(5) and (6) VOB/B: the parties are to agree a “new price taking into account the additional or reduced costs”. For decades the dominant method was the so-called continuation of the tender calculation (vorkalkulatorische Preisfortschreibung): the new price was derived from the line items of the calculation the contractor had drawn up before signing.
The Kammergericht calculates differently — and consistently. The basis of the additional remuneration are the actual costs caused by the change: the costs of execution after the change are compared with the costs that would have arisen without it. For entirely new works never provided for in the contract, the equation simplifies to the actual costs of that additional work. The tender calculation remains a mere auxiliary tool — where it does not reflect the actual costs or is disputed, the facts decide, not spreadsheets from before signature. It is the same logic the Federal Court of Justice adopted for increased quantities under § 2(3) VOB/B (judgment of 8 August 2019, VII ZR 34/18): neither party is meant to gain or lose from the unexpected change in the scope of the works.
On top of the actual costs comes a reasonable markup for general company overheads, risk and profit. The margin negotiated in the contract does not evaporate with changes — that is the meaning of the formula “a good price stays a good price, a bad price stays a bad price”: whoever signed with a healthy margin keeps it for the extra work, and whoever went in below cost will not repair the contract through change orders.
How high is the markup — and what must not go into it
The most natural markup is the one that follows from the agreed remuneration set against the actual costs — the contractor can demonstrate it by reference to his calculation until the other side refutes it. Where such a derivation is missing, the court may estimate the markup — the Kammergericht considers a range of roughly 1.05 to 1.2 reasonable, that is 5 to 20 per cent on the additional costs.
One important caveat: site overheads (Baustellengemeinkosten — site facilities, site protection, site management) do not belong in the markup. They are already covered by the contract price. If the change genuinely increased such costs — say, the project ran longer and the containers stood for extra months — the contractor can claim them, but must account for them concretely, item by item, not as a flat percentage.
Documentation: material, plant, labour
A coherent presentation of the additional remuneration generally requires a breakdown of the expenditure at least by cost type: material, plant and labour. An exception applies to simple, transparent items where the description alone shows what inputs were needed — that is how the Kammergericht assessed most of the disputed drywall positions, knowing the company’s hourly rate and material prices that are easy to verify.
Exceptions are no strategy, though. Whoever breaks his change-order offers down into material, plant and labour from the start does not have to hope for the court’s indulgence. Properly run hourly work also paid off: almost 192,000 euros of Stundenlohnarbeiten survived scrutiny because the principal’s site management had ordered the work and the principal’s staff signed the time sheets (Stundenzettel) as the work progressed. How to document works with a dispute in mind is covered in our article on the burden of proof on German construction projects.
Security under § 650f BGB covers change orders too
A building contractor may demand that the principal provide security for his remuneration (Bauhandwerkersicherung, § 650f BGB) — and that includes extra work: agreed change orders as well as unilaterally ordered changes. So the Federal Court of Justice in its judgment of 20 October 2022 (VII ZR 154/21), which the Kammergericht follows. On top of the secured amount comes 10 per cent for ancillary claims.
The bar is higher than for the main contract price, however: the disputed basis of the change order must be proven in the security proceedings — that the principal commissioned or ordered the works. For the amount, a coherent presentation along the lines described above suffices. In the Berlin case it helped that the principal had formally commissioned most of the change-order offers and had itself ordered and signed off the hourly work. Worth knowing too: a retention for defects (Gewährleistungseinbehalt) does not reduce the security — it is only a temporary withholding.
The outcome also shows how documentation discipline translates into money: of the more than 311,000 euros of security demanded, the court awarded 105,000 — the rest was consumed by positions that could not be coherently demonstrated and by payments already credited.
A change order that holds up in court
The order or instruction for the change — always in writing, before you start the works. The change-order offer broken down into material, plant and labour, with the company’s hourly rate. Hourly work only with an instruction and time sheets signed as you go by the principal’s representative. A register of all change orders kept in parallel with the project, not reconstructed at final invoice. The percentage deductions in the negotiation protocol — add them up and check whether they are valid at all before accepting them in the settlement.
Percentage deductions from invoices: the 1 per cent line
The second part of the judgment strikes at a practice every subcontractor knows from German negotiation protocols (Verhandlungsprotokoll): flat percentages deducted from every invoice. Here it was 0.35 % for site insurance, 2.35 % for electricity, water and a sanitary container, 1 % for site heating and 1 % for “site coordination” — together 4.7 % of the entire settlement.
The Kammergericht first settled the fundamental point: such clauses in terms drafted by the principal are subject to judicial content review like any standard business terms — they are not a review-free price agreement. The Berlin senate consciously departed from an older position of the Federal Court of Justice from 1999 (VII ZR 365/98). And in the content review the clauses fell one after another: the 2.35 % levy for utilities — because a flat levy for utilities and sanitary facilities exceeding 1 % of the settlement total in aggregate unreasonably disadvantages the contractor, whose real consumption has no correlation with the contract value. The 1 % heating levy — because it gave no way to prove lower consumption, and the aggregate flat rate climbed to 3.35 %. And the 1 % “coordination” levy — because it was impossible to tell what it was supposed to pay for, since coordinating the works was the contractor’s own job anyway. Only the 0.35 % insurance levy survived.
The consequence matters most: an invalid clause is not scaled down to the permissible level — it falls in its entirety, and the principal deducts nothing. In this case, of almost 159,000 euros in flat deductions, less than 13,000 remained. For a contractor settling a project this is often a difference of several per cent of the entire contract value — recovered with a single objection. When checking the final account it pays to recalculate not only the work items but also the deductions — we show how to do that systematically in our article on the final invoice (Schlussrechnung).
Mind one nuance: a bare percentage discount, not tied to any specific services, may remain outside content review as part of the price. Only when the deduction is justified by concrete services — utilities, sanitary facilities, coordination — does the field of review open. That is why the label given to a deduction in the contract matters — and why every negotiation protocol deserves a lawyer’s review before signing.
What this means for your company
- Price change orders from actual costs. Collect proof of expenditure from the period of the change: purchase invoices, payroll, plant hours. The tender calculation helps, but it does not replace facts.
- Insist on the markup — it is yours. The contract margin carries over to extra work, and absent a derivation the court may assume 1.05–1.2. Keep site overheads out of the markup and account for them concretely.
- Break prices down into material, plant and labour. That is the condition of a coherent claim — exceptions exist, but no strategy should rely on them.
- Do not wait for your money without security. The § 650f BGB demand covers change orders and hourly work, plus 10 % for ancillary claims. You must be able to prove the order was given — written instructions and signed time sheets are worth gold.
- Check the percentage deductions in your contract. A flat levy for utilities and sanitary facilities above 1 % is, per the Kammergericht, invalid in its entirety — it is worth recalculating what was deducted even on projects already settled.
Frequently asked questions
The principal orders changes but will not agree a price. Should I carry them out?
Under a VOB/B contract, ordered changes must in principle be carried out — refusal is risky. The remuneration is not lost: the missing price agreement does not remove the claim under § 2(5) or (6) VOB/B. What matters is written confirmation that the principal ordered the change and contemporaneous documentation of the costs.
How do I price a change order so it survives a dispute?
Actual additional costs — broken down into material, plant and labour — plus a markup for company overheads and profit, derived from the contract price or estimated within a range of roughly 1.05–1.2. Site overheads are not added as a flat percentage.
Can I demand § 650f BGB security for extra work as well?
Yes. The security covers remuneration from agreed and unilaterally ordered change orders plus 10 % for ancillary claims. The basis of the change order must be proven in the security proceedings — for the amount, a coherent presentation suffices.
The principal deducts percentages for electricity, water and the sanitary container from every invoice. Is that legal?
Such clauses are subject to content review. According to the Kammergericht, a flat levy for utilities and sanitary facilities exceeding 1 % of the settlement total in aggregate is invalid — in its entirety, with no reduction to the permissible level. An appeal on this point is pending before the Federal Court of Justice, but the deductions are worth challenging now.
My tender price was too low. Do I have to price extra work at cost as well?
A bad price stays a bad price — the margin of an unprofitable contract carries over to the change order. The minimum, however, always stands: the actual additional costs multiplied by a reasonable markup, which the court can estimate if need be. Below the cost of the extra work you cannot be pushed.
This overview draws on the judgment of the Kammergericht of 18 July 2025 (21 U 176/24, appeal pending before the Federal Court of Justice: VII ZR 133/25), the judgments of the Federal Court of Justice of 8 August 2019 (VII ZR 34/18) and of 20 October 2022 (VII ZR 154/21) as well as §§ 305–307, 650c and 650f BGB and § 2(3), (5) and (6) VOB/B. This article is for information purposes and does not replace legal advice in an individual case.