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.
Georgia Compensation for Change Orders and Builder Allowance Underage: In the construction industry, change orders and builder allowances often come into play when unexpected alterations or modifications are needed during a construction project. Georgia's law provides certain guidelines and compensation options for change orders and builder allowances, ensuring fairness and transparency in these circumstances. Change orders refer to any modifications or adjustments to the original scope of work specified in the construction contract. These changes can include design alterations, additional materials or labor requirements, or unforeseen issues that arise during construction. Georgia's compensation for change orders is governed by state laws and the terms agreed upon in the contract between the owner and the builder. When a change order is issued, it is essential for both parties to carefully document the changes made and promptly communicate the associated costs and time implications. Georgia's law mandates that any change orders must be discussed and approved by both parties involved in the contract. This ensures that all parties are aware of the modifications made and the compensation required. Compensation for change orders in Georgia can be determined in several ways. Firstly, the change order may specify a fixed price for the additional work or materials necessary. In this case, the owner and the builder agree on a set amount that will be added to the original contract price. This fixed amount compensates the builder for the extra labor, materials, or other resources required for the change. Alternatively, compensation for change orders can be calculated based on time and materials. This method involves tracking the actual hours worked and the cost of materials used for the change. The builder is then paid for their time at an agreed-upon rate, with the cost of materials reimbursed separately. Builder allowance, also known as a contingency or a contractor's contingency allowance, is a specific sum of money set aside within the construction budget to cover unforeseen expenses or changes that may arise during the project. This allowance provides the builder with the flexibility to make certain adjustments without having to seek approval for each change. The builder allowance underage refers to any remaining funds from the builder allowance after the completion of the project or at specific project milestones. In Georgia, builder allowances can be determined in several ways. It can be a percentage of the total contract cost, typically ranging between 5% to 10%. Alternatively, the allowance may be a fixed sum agreed upon by both parties. Builder allowances are often used to cover minor changes or variations requested by the owner during the construction process, eliminating the need for frequent change orders for small adjustments. In summary, Georgia compensation for change orders and builder allowances underage are essential components of construction contracts in the state. By having clear guidelines and compensation methods, both builders and owners can navigate unforeseen changes or adjustments during the construction process while ensuring fairness and transparency. Effective communication, documentation, and adherence to Georgia law are vital to ensuring a successful construction project with minimal disputes.
