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.
North Carolina Compensation for Change Orders and Builder Allowance Underage: In North Carolina, compensation for change orders and builder allowance underage refers to the provisions and guidelines set in place to address modifications in construction contracts and to provide adequate allowances for unforeseen expenses during a project. These compensation measures ensure that contractors, builders, and homeowners are fairly compensated for additional work or costs incurred due to changes or unforeseen circumstances during the construction process. Change orders, in the context of construction contracts, are modifications or adjustments made to the original agreement due to changes requested by homeowners, design alterations, or unexpected circumstances that may arise during the building process. These modifications often require additional labor, supplies, or materials, which were not initially accounted for in the contract. In North Carolina, compensation for change orders is typically negotiated between the contractor and the homeowner, and the terms are documented and agreed upon in writing to avoid any disputes or misunderstandings. Builder allowance underage refers to instances where the allocated allowances for certain building materials or fixtures, such as flooring, cabinets, or lighting, prove insufficient to cover the actual costs. The allowance is an estimated amount that is predetermined in the contract, which provides the homeowner with the opportunity to select their preference within a predetermined price range. In some cases, the actual cost of the materials or fixtures may exceed the predetermined allowance, leading to an underage situation. North Carolina compensation for builder allowance underage is based on fair market pricing and is usually handled through negotiations and amendments to the original contract to properly compensate the builder or contractor for the additional expenses incurred. In North Carolina, there are several types of compensation for change orders and builder allowance underage, including: 1. Unit Price Change Orders: These are change orders where compensation is determined based on a predetermined unit price for specific construction tasks or materials. Unit price change orders provide clarity and consistency for both parties involved. 2. Time and Material Change Orders: When the scope of work or materials required cannot be fully determined at the start of the project, time and material change orders allow compensation based on actual time spent and material used, along with an agreed-upon markup percentage to cover overhead and profit. 3. Negotiated Change Orders: In some cases, change orders may require negotiation between the contractor and homeowner to determine a fair compensation. The terms of these change orders are typically documented in writing to avoid any disputes later on. 4. Allowance Adjustment: If the actual cost of materials or fixtures selected by the homeowner exceeds the predetermined allowance, an adjustment is made to compensate the builder or contractor for the difference. This ensures that the builder does not bear the entire burden of the additional costs. 5. Change Order Management Fees: In certain situations where significant changes or modifications are requested by the homeowner, a change order management fee may be applied. This compensates the contractor or builder for the additional administrative work, documentation, and potential delays caused by the change orders. Overall, North Carolina provides various avenues for fair compensation for change orders and builder allowance underage to ensure that construction projects run smoothly, and all parties involved are adequately compensated for any modifications or unexpected expenses.
