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.
District of Columbia Compensation for Change Orders and Builder Allowance Overages is a crucial aspect of construction projects within the District of Columbia (D.C.). Change orders refer to any modifications or alterations made to the original construction plans and specifications after the contract has been awarded. The District of Columbia government recognizes the need for change orders in construction projects, as unforeseen circumstances and adjustments might arise during the construction process. To ensure smooth project completion and fair compensation for the additional work or materials required, the District of Columbia has established specific guidelines and procedures. There are various types of compensation methods for change orders in D.C., including: 1. Time and Material (T&M) — This compensation method allows contractors to be reimbursed for additional labor, materials, or equipment required for change orders based on the actual costs incurred. The contractor must provide detailed documentation of all expenses, including invoices, receipts, and time sheets. 2. Lump Sum — In some cases, change orders might be agreed upon and compensated with a predetermined lump sum amount. The District of Columbia evaluates the change request and determines an appropriate fixed payment for the modifications. 3. Unit Price — When change orders involve a specific quantity or unit of work, such as additional square footage or specific installations, a unit price is used for compensation. The contractor receives payment based on the pre-determined rate per unit multiplied by the quantity of work completed. To address builder allowance overages, which refers to situations where the costs of construction items or materials exceed the originally allocated allowance amounts, the District of Columbia also has compensation mechanisms in place. These overages can result from unforeseen price fluctuations, design changes, or upgrades chosen by the homeowner. The compensation for builder allowance overages in D.C. involves the following processes: 1. Change Order Request — The contractor or homeowner submits a change order request for the excess costs incurred over and above the allocated allowance amounts. The request includes detailed documentation explaining the reasons for the overage. 2. Evaluation and Approval — The District of Columbia evaluates the change order request, validating the legitimacy of the overage and ensuring it falls within the accepted guidelines. Once approved, the additional costs will be considered for compensation. 3. Compensation Calculation — To determine the compensation amount for builder allowance overages, the District of Columbia might employ various methods, including the T&M, lump sum, or unit price approaches mentioned earlier. The chosen method depends on the nature of the overage and the intricacies of the particular project. Overall, the District of Columbia understands the dynamic nature of construction projects and aims to maintain fairness and transparency in compensating contractors for change orders and builder allowance overages. By following the established guidelines and documentation requirements, builders and homeowners can ensure cooperation and proper compensation throughout the construction process.
