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.
Kentucky Compensation for Change Orders and Builder Allowance Overages: A Comprehensive Guide In Kentucky, compensation for change orders and builder allowance overages is an essential aspect of the construction industry. Change orders refer to any modifications or revisions made to the original construction plans, while builder allowance overages pertain to the additional costs incurred for exceeding the predetermined allowances. There are several types of Kentucky compensation for change orders and builder allowance overages, each with its own specific characteristics: 1. Fixed Sum Change Orders: This type of compensation involves a predetermined fixed amount agreed upon by the property owner and the builder for any change order. The fixed sum remains constant, regardless of the actual costs incurred. 2. Cost-Plus Change Orders: Cost-plus change orders provide compensation based on the actual costs incurred, including labor, materials, and overhead expenses. The builder receives an agreed-upon percentage on top of the total costs, acting as compensation for their efforts. 3. Time and Material Change Orders: Time and material change orders compensate the builder based on the actual time spent and materials used for implementing the changes. An agreed-upon hourly rate for labor and the cost of materials is determined beforehand. 4. Unit Price Change Orders: This compensation method is utilized when it is possible to determine a fixed unit price per specific construction components or services. The unit price is agreed upon in advance and multiplied by the total number of units required for the change order. To ensure a fair and transparent compensation process, Kentucky has established specific guidelines regulating change orders and builder allowance overages, including: 1. Written Agreement: A written agreement is crucial to outline the compensation terms, scope of work, and any changes or modifications made during the construction process. Both parties must agree to and sign the agreement before commencing any change orders or exceeding allowances. 2. Documentation: Builders must maintain accurate documentation of all change orders, including receipts, invoices, and labor records. These documents serve as evidence for justifying the compensation requested. 3. Prevailing Wage Rates: Kentucky abides by prevailing wage rates, which determine the minimum compensation levels for construction labor. Builders should be aware of these rates and ensure compliance to prevent any legal issues. 4. Dispute Resolution: In cases where disputes arise concerning change order compensation or allowance overages, the parties may seek resolution through mediation, arbitration, or legal action if necessary. Understanding Kentucky compensation for change orders and builder allowance overages is crucial for both property owners and builders involved in construction projects. By adhering to the established guidelines and utilizing appropriate compensation methods, fairness and transparency can be maintained, ensuring successful project completion.
