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.
Oklahoma Compensation for Change Orders and Builder Allowance Overages refers to the process by which contractors and builders in Oklahoma are compensated for additional work or expenses incurred due to change orders or builder allowance overages. Change orders occur when there is a modification or alteration to the original construction plans or specifications. These changes may be requested by the homeowner or may be necessary due to unforeseen circumstances that arise during the construction process. In Oklahoma, compensation for change orders is typically guided by the terms and conditions outlined in the construction contract. Builder allowance overages, on the other hand, pertain to situations where the costs of materials or items selected by the homeowner exceed the predetermined allowance originally agreed upon in the contract. This can occur when homeowners decide to upgrade certain materials or fixtures, resulting in additional expenses beyond what was initially planned. Compensation for builder allowance overages is also covered by the terms and conditions specified in the contract. It is important to note that Oklahoma Compensation for Change Orders and Builder Allowance Overages can vary depending on the type of construction project and the specific agreement between the contractor and the homeowner. Common types of compensation for change orders and builder allowance overages in Oklahoma include: 1. Time and Material: Under this method, contractors are compensated based on the actual cost of labor, materials, and other expenses associated with the change order or allowance overage. The contractor provides detailed documentation of the additional costs incurred, and the homeowner reimburses accordingly. 2. Percentage Markup: Some contracts may specify a predetermined percentage or markup to cover additional costs related to change orders or allowance overages. This percentage is added to the original contract price, and the homeowner pays the adjusted amount. 3. Negotiated Lump Sum: In certain cases, contractors and homeowners may negotiate a fixed lump sum amount to compensate for change orders or allowance overages. This method simplifies the process and provides a clear understanding of the extra expenses involved. 4. Credit/Offset: In some instances, the additional costs incurred due to change orders or allowance overages can be offset by savings achieved elsewhere in the construction project. For example, if the contractor finds cost savings in one area, those savings can be applied to cover the additional expenses in another area. 5. Combination Method: It is also possible for contractors and homeowners to utilize a combination of the above methods to determine compensation for change orders and allowance overages. This approach allows for flexibility and customization based on the specific circumstances of the project. Understanding the contractual terms, including the provisions for compensation, is crucial for both contractors and homeowners involved in Oklahoma construction projects. Proper documentation of all change orders and allowance overages, along with clear communication between all parties, helps ensure a fair and smooth compensation process.
