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.
Iowa Compensation for Change Orders and Builder Allowance Underage typically refer to legal mechanisms that are in place to address any modifications or alterations made to construction contracts or agreements in the state of Iowa. These provisions ensure that the parties involved in a construction project are compensated fairly for any changes or additional work that may arise during the course of construction. Change Orders: A change order is a written document that states any modifications, alterations, or additions to the original scope of work agreed upon by the parties involved in a construction project. The Iowa Compensation for Change Orders regulation ensures that these changes are properly documented and that both parties receive fair compensation for any additional work or materials required. It addresses issues such as how change orders are initiated, the process for pricing and approving change orders, and the method of payment for the added work. Builder Allowance Underage: Builder allowance underage is another aspect of Iowa compensation that deals with changes made to prepared allowances mentioned in a construction contract. These allowances typically cover specific items such as fixtures, finishes, or appliances that the homeowner or client can choose within a predetermined allowance limit. However, if the selected items go over the agreed budget, the builder allowance underage provision comes into play. It stipulates how any excess costs will be handled, whether the homeowner or client will be responsible for the additional expenses or if the builder will cover the difference. Types of Iowa Compensation for Change Orders and Builder Allowance Underage: 1. Cost Plus Fixed Fee: In this compensation model, the builder or contractor is reimbursed for the actual costs incurred, including labor, materials, and overhead expenses related to the change order. A fixed fee or percentage is added to these costs as a profit margin for the builder. 2. Lump Sum: Under the lump sum compensation method, an agreed-upon sum of money is set for each change order, regardless of the actual costs or time spent on the additional work. This type of compensation provides certainty in terms of cost and allows both parties to plan accordingly. 3. Unit Price: The unit price compensation model involves establishing predetermined rates for specific items or components in a construction project. If a change order affects one of these units, the compensation is calculated based on the unit price previously agreed upon. 4. Guaranteed Maximum Price (GMP): GMP compensation is used when change orders may affect the overall project budget. This method sets a maximum limit for additional costs, ensuring that any changes made beyond this limit are the responsibility of the builder or contractor. In conclusion, the Iowa Compensation for Change Orders and Builder Allowance Underage provisions aim to regulate fair compensation practices for modifications made during construction projects. By establishing clear guidelines and methods for compensation, these regulations promote transparency and prevent disputes between parties involved in the construction process.
