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.
Missouri Compensation for Change Orders and Builder Allowance Overages is a legal framework that governs the financial aspects of construction projects in the state of Missouri. It addresses situations where changes or modifications need to be made to the original construction contract, as well as instances where the cost of allowances provided to the builder exceeds the estimated budget. The main purpose of this compensation system is to account for any additional expenses incurred due to changes in the project scope or exceeding budgeted amounts for builder allowances. In Missouri, Change Orders refer to specific written requests for alterations or modifications to the original construction contract. These changes can arise due to various reasons such as design revisions, unforeseen site conditions, or client preferences. Change Orders are typically documented, acknowledged, and authorized by both the contractor and the client before any work commences. Compensation for Change Orders in Missouri involves a fair and reasonable adjustment to the contract price based on the additional costs incurred due to the change. This compensation is determined through a negotiation process between the contractor and the client, ensuring that both parties reach an agreement on the cost implications of the change. It is crucial for all changes to be properly documented to avoid any disputes or misunderstandings in the future. In addition to Change Orders, Missouri also addresses the issue of Builder Allowance Overages. Allowances are predefined amounts of money allocated within the contract to cover specific items such as fixtures, finishes, or materials. These allowances serve as placeholders within the budget and are intended to provide flexibility for the client to make selections during the construction process. Builder Allowance Overages occur when the actual cost of the items chosen by the client exceeds the allocated allowance. For example, if the allowance for kitchen cabinets is set at $10,000, but the client selects cabinets that cost $12,000, it results in a $2,000 Builder Allowance Overage. In such cases, the compensation process in Missouri ensures that the additional cost is accounted for and properly addressed. To handle Builder Allowance Overages, the contractor and client must communicate effectively and agree on how to handle the overspending. This can involve the client covering the additional expenses out-of-pocket, adjusting the contract price accordingly, or seeking alternative cost-saving solutions to stay within the budget. Overall, Missouri Compensation for Change Orders and Builder Allowance Overages aims to establish a fair and transparent system for addressing modifications and budgetary deviations in construction projects. It encourages open communication, collaboration, and a mutual understanding between the contractor and the client, thus minimizing potential conflicts and ensuring successful project completion.
