my neighbor wants to know can he rewrite a contract he signed with contractor on water damage

I'm not sure what you mean by "rewrite", but if your neighbor has a valid contracthe can only change it with the consent of the other contracting party or parties.  Depending on what type of contract it is (there are some statutes that give people the right to back out of certain contracts within a short period of time) and what the contract provides, however, he may be able to terminate the contract and then try to renegotiate better terms.