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.
Ohio Compensation for Change Orders and Builder Allowance Overages refers to the financial arrangements and procedures involved in managing additional costs incurred during construction projects in Ohio. These additional costs may arise due to changes made to the original plans or specifications (change orders) or when the allowances provided to cover specific items or services (builder allowances) are exceeded. Change orders are modifications made to the construction plans or specifications after the initial agreement has been signed. These changes may be requested by the owner or may arise due to unexpected circumstances or design revisions. Ohio Compensation for Change Orders ensures that contractors are fairly compensated for the additional work, materials, or labor required to accommodate these changes. In Ohio, several types of compensation for change orders exist: 1. Cost-Plus: This method calculates the compensation by adding a predetermined percentage to the direct costs incurred due to the change order, which covers overhead and profit. 2. Time and Material (T&M): Here, the contractor is compensated for the actual time spent on the change order work and the cost of the materials used, plus a predetermined markup for overhead and profit. 3. Lump Sum: In this approach, a fixed amount is agreed upon to complete the change order work, regardless of the actual costs incurred by the contractor. Builder allowances are predetermined amounts allotted to cover specific items, fixtures, or services in a construction project. These allowances are included in the contract to allow some flexibility in choosing materials or services while still maintaining a budget. However, it is possible for the actual costs to exceed the allotted allowances. In such cases, additional compensation or negotiation is required to cover these expenses. Some types of builder allowance overages in Ohio are: 1. Material Allowance Overages: If the actual costs for materials used in the project exceed the allotted material allowance, compensation will need to be negotiated to address the overage. 2. Fixture Allowance Overages: Similarly, if the cost of fixtures (e.g., lighting fixtures, plumbing fixtures) exceeds the allotted allowance, additional compensation discussions are required. 3. Service Allowance Overages: In cases where services such as electrical or plumbing installations, landscaping, or interior design exceed the predefined allowance, negotiations for additional compensation become necessary. It is important for both contractors and clients in Ohio to thoroughly review and understand the compensation provisions outlined for change orders and builder allowance overages in a construction contract.
