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.
Arkansas Compensation for Change Orders and Builder Allowance Overages can vary based on the construction project and contract terms. Change orders refer to modifications made to the original scope of work after the initial agreement has been signed. Builder allowance overages, on the other hand, relate to instance where the actual cost of items exceeds the pre-determined allowances outlined in the contract. In Arkansas, compensation for change orders and builder allowance overages is typically determined through contractual agreements between the construction parties involved, such as the owner or developer and the builder or contractor. These agreements lay out the procedures and guidelines for handling change orders and allowance overages and help ensure that both parties are fairly compensated for any changes or additional expenses incurred during the construction process. When it comes to change orders, Arkansas recognizes that modifications to the original project scope may arise due to unforeseen circumstances, design errors, or client-driven changes. The compensation for these changes is typically based on factors such as the extent of the change, labor costs, additional materials required, and any associated project delays. It is essential that change orders are properly documented, approved, and signed by the relevant parties to avoid any disputes in the future. Builder allowance overages, on the other hand, occur when the actual cost of a particular item or element exceeds the predetermined allowance amount specified in the contract. For example, if the contract outlines an allowance of $5,000 for kitchen cabinets, but the actual cost ends up being $6,000, there is an overage of $1,000. The compensation for these overages may vary depending on the contractual arrangements. Some contracts may state that the builder is responsible for covering the overage, while others may require the owner or developer to pay the difference. It's important for both parties to be aware of the potential for change orders and allowance overages and to thoroughly review and negotiate these terms during the contract drafting stage. Clear communication and documentation are key to prevent misunderstandings and ensure that proper compensation is provided for any changes or overages that arise during the construction process. In summary, Arkansas Compensation for Change Orders and Builder Allowance Overages involve contractual agreements between the construction parties and are designed to address modifications to the original project scope and any cost overruns. These agreements help determine fair compensation for additional work, materials, or excess costs and must be properly documented and approved to avoid disputes.
