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.
Maine Compensation for Change Orders and Builder Allowance Overages: In the construction industry, change orders and builder allowance overages are common occurrences that can significantly impact the overall project cost. Maine, like other states, has specific compensation regulations in place to address these situations and ensure fair compensation for contractors and homeowners alike. Change orders refer to modifications or additions requested by the owner (homeowner) during the construction process, which deviate from the original contract plans. These changes can arise due to design alterations, unforeseen site conditions, owner preferences, or other factors. Understandably, change orders often involve extra time, labor, and materials, leading to additional expenses for the contractor. Maine recognizes the need for fair compensation regarding change orders and therefore emphasizes the importance of written agreements between contractors and homeowners. These agreements outline the change order's scope, associated costs, and any potential extensions to the project timeline. Contractors are typically entitled to receive payment for the documented additional work and expenses incurred due to the change order. It is crucial to maintain clear communication between the parties involved to ensure mutual understanding and agreement on the modified terms. Similarly, builder allowance overages pertain to situations when the homeowner exceeds the predetermined builder allowance for certain materials or finishes specified in the original contract. For example, if a homeowner opts for high-end countertops or flooring that exceeds the agreed-upon builder allowance, additional costs will be incurred. In this case, the homeowner is responsible for covering the overage and paying the difference. To mitigate disputes and ensure transparency, it is vital for contractors and homeowners in Maine to have a comprehensive contract that outlines the builder allowances and specifies the possible repercussions of exceeding those allowances. By clearly setting the expectations and financial consequences, both parties can approach these situations with clarity and understanding. Different types of compensation for change orders and builder allowance overages in Maine may vary depending on the specific circumstances and contracts. Some common methods of compensation include: 1. Unit cost method: This approach involves assigning a predetermined unit cost to specific items or services detailed in the change order or exceeding builder allowances. The contractor charges the homeowner based on the quantity of additional units required, such as additional square footage or item quantities. 2. Time and material method: In situations where it is challenging to estimate costs accurately, the contractor may charge based on time and materials. This method involves tracking the additional time, labor, and materials required for the change order or exceeding builder allowances and charging the homeowner accordingly. 3. Lump-sum method: Occasionally, when change orders or builder allowance overages are relatively straightforward, a fixed lump-sum amount may be agreed upon by both parties in advance. This method provides a clear, single payment for the additional work, eliminating conflicts over individual itemized costs. It is crucial for both contractors and homeowners in Maine to familiarize themselves with the specific compensation methods and regulations described in their contract or any state-specific laws. By understanding their rights and obligations regarding change orders and builder allowance overages, both parties can work together efficiently and effectively in navigating these situations.
