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.
Florida Compensation for Change Orders and Builder Allowance Overages is a significant aspect of the construction industry in Florida. When it comes to construction projects, change orders and builder allowance overages can often arise due to unexpected circumstances, design modifications, or unanticipated costs. To ensure fairness and proper compensation, Florida has specific guidelines and regulations in place. Change orders refer to alterations or modifications made to a construction project's original plans or specifications after the contract has been signed. These changes can arise due to various reasons, such as unforeseen structural issues, client requests for customization, or changes in code requirements. In such cases, compensation for change orders becomes crucial. Florida's law mandates that change orders must be agreed upon in writing and signed by both the contractor and the client, clearly outlining the nature of the change, the costs associated with it, and any adjustments to the project's timeline. This ensures transparency and accountability in the compensation process. Builder allowance overages, on the other hand, pertain to situations where the cost of materials or labor exceeds the initial estimated allowance that was specified in the contract. For instance, if a builder sets an allowance of $10,000 for kitchen cabinets, but the actual cost ends up being $12,000, an overage occurs. Florida's compensation for builder allowance overages varies depending on the terms set forth in the contract. Some contracts might include provisions for cost-sharing, where the difference in the overage amount is divided between the builder and the client. Other contracts may require the client to bear the entire burden of the overage. It is crucial for both parties to clearly define and agree upon the compensation terms related to builder allowance overages in the initial contract to avoid any misunderstandings or disputes later on. In Florida, there are different types of compensation methods for change orders and builder allowance overages, including: 1. Fixed fee or Lump Sum: This compensation method involves a predetermined fixed fee or lump sum amount which is agreed upon during the contract negotiation. Regardless of the actual costs incurred, the contractor receives the fixed amount for addressing change orders or allowance overages. 2. Cost Plus Fee: In this compensation method, the contractor is reimbursed for the actual cost of addressing change orders or exceeding the builder allowance, plus a predetermined fee or percentage for their services. The fee is usually determined based on the contractor's overhead costs and profit margin. 3. Time and Materials: This compensation method involves the contractor being paid for the actual time spent and materials used to complete the change order or address the allowance overage. The contractor typically provides detailed records, including labor hours, materials purchased, and associated costs. It is essential for both contractors and clients in Florida to understand their rights and obligations regarding change orders and builder allowance overages. Hiring an experienced construction attorney or consultant who is familiar with Florida's laws and regulations can ensure that both parties are protected and properly compensated in such situations.
