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 Dakota Compensation for Change Orders and Builder Allowance Overages: In North Dakota, compensation for change orders and builder allowance overages refers to the system in place for managing and compensating for any adjustments or additions made to the original construction plans or budget. These changes could be required due to unforeseen circumstances, design modifications, or client preferences. When construction plans deviate from the original blueprint, change orders are issued to document the alterations and ensure all parties involved are aware of the variations. North Dakota provides clear guidelines for compensating contractors for these change orders, ensuring a fair and transparent process. There are different types of compensation for change orders and builder allowance overages in North Dakota: 1. Time and Material: One method is the time and material approach, which compensates contractors based on the additional time and materials they have to invest due to the change order. This method accounts for the excess labor, equipment, and materials required for completing the alteration. 2. Cost Plus: Another commonly used method is the cost plus approach, which compensates contractors for the direct additional costs incurred due to the change order. This includes materials, labor, and equipment expenses directly associated with the alteration. The compensation is calculated by adding a prenegotiated percentage or fixed fee on top of the actual costs. 3. Fixed Price: In some cases, change orders may be issued with a fixed price, which means the compensation for the alteration is predetermined and agreed upon before starting the project. This method provides clarity and stability for both the contractor and the client by eliminating potential disputes over pricing after the change is made. 4. Builder Allowance Overages: Builder allowance overages refer to compensation related to exceeding the allocated budget for specific items, finishes, fixtures, or materials. In such cases, contractors will document the additional costs incurred due to the client's chosen products or upgrades exceeding the original allowance. Compensation for these overages may follow similar approaches mentioned above, depending on the agreement between the parties. It is crucial for all parties involved, including contractors, clients, and architects, to have a comprehensive understanding of these compensation methods and to communicate effectively throughout the change order process. Clear documentation and proper record-keeping are essential to ensure fair compensation and eliminate any ambiguity or conflicts related to these alterations. In conclusion, North Dakota provides various mechanisms for compensating contractors when changes or overages occur in construction projects. Whether using time and material, cost plus, fixed price, or handling builder allowance overages, these compensation methods aim to maintain transparency, fairness, and open communication between all parties involved in the construction process.
