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.
Maryland Compensation for Change Orders and Builder Allowance Underage In the construction industry, change orders and builder allowances are two important aspects that need to be considered to ensure fair compensation and smooth project execution. In Maryland, specific guidelines and regulations are in place to govern compensation for change orders and builder allowances, ensuring transparency and accountability. Let's delve into these two concepts in detail. Change Orders Compensation in Maryland: Change orders in construction projects refer to any modifications made to the original plans or scope of work agreed upon by the contractor and the client. These changes can occur due to various reasons, such as design modifications, unforeseen site conditions, client preferences, or regulatory requirements. In Maryland, compensation for change orders is determined by considering several factors, including: 1. Cost Implication: The pricing for change orders is typically based on the costs incurred due to the change, including additional materials, labor, and project management expenses. The contractor is entitled to fair compensation for the extra work performed as a result of the change. 2. Timelines: Time is money in construction projects. Contractors may be compensated for any delays caused by change orders, including extended project durations and increased overhead costs due to idle labor or equipment. 3. Documentation: Proper documentation is crucial when it comes to change orders compensation. Contractors in Maryland should maintain detailed records of change orders, including written change orders, revised plans, and any associated costs. These records serve as evidence for reimbursement claims. Builder Allowance Underage in Maryland: Builder allowances are predetermined amounts of money allocated by the client to the contractor for specific items or finishes that have not been selected or finalized during the contract negotiation phase. These allowances allow for flexibility in decision-making during the construction process. However, when it comes to underage allowances, there may be limitations or restrictions in place, such as: 1. Maximum Allowance Amount: Maryland may have a specified maximum allowance value, beyond which the contractor may need to seek additional approval or renegotiation with the client. 2. Approval Process: Before utilizing the allowance, the contractor might require written consent from the client. This ensures that both parties are fully informed and agree upon the selections made. 3. Cost Coverage: Maryland may have guidelines specifying whether the underage allowance covers labor costs associated with the item or finish, or if it is limited to materials only. It's essential to be clear about the extent of compensation provided. Overall, Maryland's compensation for change orders and builder allowances underage aims to balance the interests of both parties involved in a construction project. Adhering to the stated guidelines and regulations helps establish fair compensation practices, maintain project transparency, and facilitate successful project completion. Keywords: Maryland, compensation, change orders, builder allowance, underage, construction industry, modifications, cost implication, timelines, documentation, builder allowance amount, approval process, cost coverage, project completion.
