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.
New Hampshire Compensation for Change Orders and Builder Allowance Overages: Change orders and builder allowance overages are common aspects of construction projects in New Hampshire. These terms refer to modifications or additions made to the original scope of work and budget allowances specified in the contract between the homeowner and the builder, resulting in potential compensation adjustments. In New Hampshire, compensation for change orders and builder allowance overages may vary depending on several factors, such as the nature of the change, its impact on the project, and the agreed-upon terms in the contract. 1. Change Orders: Change orders in New Hampshire construction projects occur when modifications or alterations to the original scope of work are requested by either the homeowner or the builder. These changes can be due to design modifications, unforeseen site conditions, or additional requirements that arise during construction. Typically, compensation for change orders is negotiated between the homeowner and the builder. The agreed-upon compensation may include adjustments to the contract price, change in the project timeline, and modifications to the project specifications. It is essential to carefully document change orders to ensure transparency and prevent any disputes. 2. Builder Allowance Overages: Builder allowance overages refer to situations where the budget allocation specified in the contract for certain items, materials, or finishes is exceeded. When homeowners select upgrades, premium materials, or deviate from the costs initially estimated by the builder, allowance overages may occur. In such cases, compensation for builder allowance overages depends on the agreed-upon terms in the contract. Builders usually have an established procedure to address allowance overages, which may involve additional charges to cover the increased costs. It is crucial for homeowners to have a thorough understanding of the allowances outlined in the contract to prevent surprises or misunderstandings. 3. Specific New Hampshire Compensation Types: a. Lump-Sum: In some cases, compensation for change orders and builder allowance overages may be negotiated as a lump-sum amount. This fixed amount is agreed upon between the homeowner and the builder, providing a clear and straightforward resolution to any modifications or budget overages. b. Cost-Plus: Another compensation method used in New Hampshire is the cost-plus approach. This method entails compensating the builder for any additional costs incurred due to change orders or allowance overages. The homeowner reimburses the builder for the actual costs spent, including any agreed-upon builder's profit and overhead. c. Percentage-Based: In certain instances, compensation for change orders and allowance overages may be determined based on a percentage of the project's total cost. This approach provides a clear formula for calculating the additional compensation, ensuring fairness and consistency. In conclusion, compensation for change orders and builder allowance overages in New Hampshire involves negotiating adjustments to the contract price, timelines, and specifications. Different compensation methods such as lump-sum, cost-plus, and percentage-based may be utilized. It is crucial for homeowners and builders to have open communication and comprehensive documentation to ensure a smooth resolution of these adjustments while maintaining transparency and fairness throughout the construction project.
