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 Mexico Compensation for Change Orders and Builder Allowance Underage New Mexico features specific compensation guidelines for change orders and builder allowances, ensuring fair treatment and protection for both homeowners and builders. These regulations aim to address any changes or unforeseen circumstances that may arise during the construction process, while also acknowledging the importance of upfront allowances for the builder's work and materials. Here, we'll delve into the details of New Mexico's compensation rules, highlighting the various types of compensation for change orders and builder allowances that exist. 1. Change Order Compensation: Change orders refer to modifications, additions, or alterations to the original construction plans approved by the homeowner. In New Mexico, the compensation for change orders involves the following aspects: — Pricing: Change order pricing must be clearly outlined and agreed upon by both the builder and homeowner before any work commences. The pricing can be based on a time and material basis or a predetermined fixed price, depending on the agreement. It is important for both parties to carefully consider the scope and impact of the change order to avoid any misunderstandings or disputes in the future. — Documentation: Proper documentation is crucial when it comes to change orders. Any changes must be documented in writing and signed by both parties to ensure clarity and avoid misinterpretation. This documentation should include detailed descriptions of the changes, associated costs, and revised timelines. — Approval process: Prior to initiating any change order, the builder must obtain written approval from the homeowner. This ensures that both parties are in agreement regarding the change and associated costs, preventing any surprises later on. 2. Builder Allowance Underage: Builder allowances are predetermined amounts within the construction contract that are specifically assigned for certain items or materials. These allowances are designed to account for the homeowner's choices and preferences regarding fixtures, finishes, or other customizable elements. In New Mexico, there are different types of builder allowances, including: — Material allowance: This refers to a specific amount dedicated to materials that are yet to be determined by the homeowner. It allows the homeowner to select materials within the budgeted amount while ensuring transparency and cost control. — Fixture allowance: Fixture allowances cover certain fixtures like lighting, plumbing, or appliances, where the exact choices have not been finalized. The homeowner can make selections within the allocated budget, providing flexibility while maintaining fiscal responsibility. It's essential that both builders and homeowners in New Mexico understand and adhere to these compensation guidelines for change orders and builder allowances. By following these regulations, effective communication and cooperation can be achieved, minimizing conflicts and promoting a successful construction experience for all parties involved.
