Change Orders are instructions to revise construction plans after they have been completed. Change orders are common to most projects, and very common with large projects. After the original scope (or contract) is formed, complete with the total price to be paid and the specific work to be completed, a client may decide that the original plans do not best represent his definition for the finished project. Accordingly, the client will suggest an alternate approach.
Common causes for change orders to be created are:
" The project's work was incorrectly estimated;
" The customer or project team discovers obstacles or possible efficiencies that require them to deviate from the original plan;
" The customer or project team are inefficient or incapable of completing their required deliverables within budget, and additional money, time, or resources must be added to the project; and
" During the course of the project, additional features or options are perceived and requested.
Houston, Texas Compensation for Change Orders and Builder Allowance Overages Change orders and builder allowance overages are an integral part of any construction project, and Houston, Texas is no exception. In the construction industry, change orders refer to modifications or additions made to the original scope of work specified in the initial contract, while builder allowance overages pertain to the excess costs incurred when the budget allocated for specific items or materials exceeds the actual expenditure during construction. Houston, being a bustling and vibrant city, witnesses a significant number of change order requests and builder allowance overages on construction projects due to various factors such as design revisions, unforeseen circumstances, code compliance issues, or the desire for upgrades and enhancements. Several types of compensation for change orders and builder allowance overages exist, aiming to ensure fair and equitable resolution for both the contractor and the client. Some common types of compensation in Houston, Texas include: 1. Fixed Fee Compensation: This type of compensation involves the establishment of a predetermined amount for change orders and builder allowance overages. The fixed fee is typically calculated as a percentage of the original contract value and is agreed upon before the commencement of construction. This method provides clarity and predictability for both parties, allowing them to plan and budget accordingly. 2. Time and Material Compensation (T&M): T&M compensation involves reimbursing the contractor based on the actual costs of labor, materials, and equipment, along with an agreed-upon markup. When change orders or builder allowance overages occur, the contractor keeps track of the additional expenses incurred and submits detailed records for reimbursement. T&M compensation ensures that the contractor is fairly compensated for the extra work or materials required. 3. Lump Sum Compensation: Lump sum compensation involves negotiating a fixed amount for specific change orders or builder allowance overages instead of reimbursing based on actual costs. This method is often used when the scope of work changes significantly or there is a clear understanding of the expected costs involved. It provides a straightforward approach to compensation and reduces the administrative burden of tracking and documenting expenses. 4. Negotiated Compensation: Depending on the complexity and nature of the change orders or builder allowance overages, contractors and clients in Houston, Texas may opt for negotiated compensation. This involves discussions between both parties to reach a mutually agreeable resolution. Negotiated compensation allows flexibility in finding a fair and balanced solution that considers the interests of both the contractor and the client. Effective management of change orders and builder allowance overages is crucial to maintain the financial health and smooth progression of construction projects in Houston, Texas. Contractors, clients, and other relevant stakeholders should establish clear guidelines and agreements regarding compensation methods at the outset, minimizing the potential for disputes and ensuring a collaborative approach throughout the construction process.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
