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.
Nebraska Compensation for Change Orders and Builder Allowance Overages In Nebraska, compensation for change orders and builder allowance overages are crucial aspects of construction contracts. Change orders and builder allowance overages refer to modifications or additions made to the original scope of work or allowances provided in a construction project. These changes can impact the overall cost and schedule of the project, requiring a clear understanding of compensation arrangements to avoid disputes between parties involved. There are different types of compensation methods applied in Nebraska for change orders and builder allowance overages. Let's explore some of these important compensation practices: 1. Time and Materials (T&M) Method: The T&M method for compensation in change orders and builder allowance overages involves payment based on actual hours worked, labor rates, material costs, and an agreed-upon markup. This method ensures fairness as it calculates compensation by considering the actual resources expended to complete the additional work or exceed the original allowance. 2. Cost Plus Fee or Percentage of Cost Method: Under this compensation method, the contractor is paid the actual cost of labor, materials, and subcontractors, plus an agreed-upon fee or a percentage of the total cost. It provides a transparent and straightforward approach to evaluate and compensate for change orders and builder allowance overages. 3. Fixed Fee or Lump Sum Method: The fixed fee or lump sum method involves a predetermined amount or fee agreed between the contractor and the client to compensate for change orders and builder allowance overages. This method offers cost certainty to the client, easing the financial planning process, while still allowing flexibility for any modifications required during construction. 4. Negotiated Compensation: In some cases, compensation for change orders and builder allowance overages may be negotiated between the contractor and the client. This method involves open discussions and considerations of various factors to reach a mutually agreeable compensation arrangement. The negotiated compensation method allows for flexibility and tailored solutions to address specific project needs. It is essential for both contractors and clients to establish clear terms and conditions regarding compensation for change orders and builder allowance overages in Nebraska. Comprehensive contracts should include detailed information about the compensation method agreed upon, the documentation required, and the process for submitting, reviewing, and approving change orders and allowance overages. Effective communication, diligent record-keeping, and adherence to proper change order procedures are crucial to ensure fair compensation practices. These practices will help mitigate disputes, promote transparency, and maintain successful working relationships between the parties involved in Nebraska construction projects.
