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 York Compensation for Change Orders and Builder Allowance Overages: A Detailed Description Change orders and builder allowances are an integral part of construction projects in New York. These terms refer to modifications or additions made to the original scope of work or budget. When these changes occur, it is essential to understand how compensation is handled to ensure fair and transparent transactions between parties involved. Compensation for Change Orders in New York: Change orders in construction projects refer to modifications or additions to the original contract scope of work. In New York, compensation for change orders is typically determined either through a lump-sum agreement or via time and material (T&M) reimbursement. 1. Lump-Sum Agreement: Under a lump-sum agreement, the compensation for change orders is prearranged and stated in the original contract. Any changes or additions requested by the client are assessed, and their associated costs are negotiated and agreed upon in advance. This ensures that all parties involved are aware of the financial implications and any adjustments required to the project timeline. 2. Time and Material (T&M) Reimbursement: Alternatively, compensation for change orders in New York may be based on time and material reimbursement. In this case, the contractor is compensated for all additional labor, materials, and equipment required for the change order. The rates for labor and materials should be clearly defined and agreed upon beforehand to maintain transparency and prevent disputes. Builder Allowance Overages in New York: Builder allowances generally cover certain items in a construction project, such as flooring, fixtures, or finishes, where the exact selection is not known at the time of contract signing. However, there are scenarios where the cost of the selected items may exceed the originally allocated budget. In New York, these instances of builder allowance overages are typically addressed through the following methods: 1. Additional Payment: If the cost of selected items exceeds the allocated budgeted amount, the client may be required to pay the difference as an additional payment. This additional payment should be agreed upon between the client and the contractor, ensuring transparency and avoiding any misunderstandings. 2. Negotiation for Alternatives: In certain cases, when the builder allowance overages are significant, the client and contractor may engage in negotiations to find alternative options that meet the original project's standards while staying within the budget. This may involve exploring different suppliers, materials, or products that can be substituted without compromising quality. In conclusion, New York compensation for change orders and builder allowance overages can be handled through lump-sum agreements, time and material reimbursement, additional payments, or negotiations for alternatives. These approaches ensure that both parties are aware of the financial implications of modifications and allow for fair and transparent transactions in construction projects.
