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.
Colorado Compensation for Change Orders and Builder Allowance Underage refers to the legal provisions and regulations governing the compensation given to builders and contractors in Colorado for change orders and builder allowances in construction projects. These provisions are essential in ensuring fair and reasonable compensation for any additional work or expenses incurred during the construction process. Change orders are modifications to the original construction plans agreed upon by the owner and the builder. They typically arise when there is a need for alterations due to unforeseen circumstances, design changes, or owner's requests. Colorado Compensation for Change Orders ensures that builders are adequately compensated for the additional work, materials, and labor required to complete these changes. The compensation is usually negotiated and agreed upon between the builder, owner, and any other relevant parties involved. Builder allowances underage, on the other hand, are a specific category of allowances provided to builders in Colorado. This allowance covers the costs incurred by builders when they are required to perform work for which they are not licensed or properly qualified. It may include tasks like plumbing or electrical work, where licensed professionals are typically responsible. This allowance recognizes the contribution of builders in handling certain specialized tasks, which would otherwise require hiring separate licensed contractors. Different types of Colorado Compensation for Change Orders and Builder Allowance Underage include: 1. Fixed Fee Compensation: This type of compensation involves a predetermined fixed amount agreed upon by both the builder and the owner for specific change orders or underage work. The fixed fee is typically based on the estimated scope of work and serves as a lump sum payment. 2. Cost-plus Compensation: Cost-plus compensation is calculated by adding the actual costs incurred by the builder, such as materials, labor, and overhead costs, to a percentage-based fee agreed upon in the contract. This method ensures that builders are reasonably compensated for the actual expenses they've borne in executing change orders or underage work. 3. Time and Material Compensation: In this type of compensation, the builder is reimbursed based on the actual time spent and materials used to complete the change orders or underage work. The builder provides detailed records of labor hours and material costs, and the owner compensates them accordingly. 4. Allowance Allocation: This type of compensation involves the owner and builder agreeing to allocate a specific budget for change orders or underage work. The builder submits their expenditures for each change order or underage task, and the compensation is provided based on this budget. It's vital for builders and owners to have a clear understanding of these compensation provisions to ensure transparency and fairness throughout a construction project in Colorado. Adhering to these guidelines helps establish strong working relationships and mitigate disputes related to payments and compensation.
