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.
Oregon Compensation for Change Orders: In Oregon, compensation for change orders refers to the payment or remuneration given to builders or contractors for any modifications or alterations made to a construction project after the initial agreement has been signed. Change orders can arise due to various factors such as unforeseen circumstances, design revisions, or client requests for additional features or upgrades. It is crucial for both builders and clients to understand the compensation terms involved in change orders to avoid any disputes or misunderstandings. Under Oregon law, compensation for change orders is typically addressed in the original construction contract. The terms and conditions may outline the procedure for requesting a change order, including written notices, cost estimates, and approvals. The compensation amount for change orders is usually determined through a negotiation process between the builder and the client, taking into consideration factors such as material costs, labor charges, overhead expenses, and profit margins. It is advisable for both parties to maintain a transparent and detailed documentation of all change orders and associated compensation throughout the project to ensure clarity and accountability. Different Types of Oregon Compensation for Change Orders: 1. Time and Material (T&M): This type of compensation method is commonly used for change orders that involve uncertain or unplanned tasks. Builders are compensated based on the actual time spent on the change order, including labor costs, plus the cost of materials and any additional expenses incurred. T&M compensation is best suited for small-scale change orders with a relatively short duration. 2. Lump Sum: In some cases, builders and clients may agree on a fixed lump sum compensation for change orders. This approach simplifies cost calculations and eliminates the need to track and document detailed time and material expenses. The lump sum compensation is determined based on a thorough evaluation of the change order's complexity, scope, and estimated costs. Oregon Builder Allowance Underage: In Oregon, a builder allowance refers to a specific amount of money allocated within the construction contract for the client to spend on selecting certain finishes, fixtures, or additional features. However, underage in this context typically means a violation or discrepancy between the actual expenses incurred by the client and the allocated builder allowance. When underage occurs, it means that the total amount spent by the client on the specified items exceeds the builder allowance initially agreed upon. In such cases, the client is responsible for covering the additional costs beyond the allowance. Clients should be aware of the builder allowance limitations outlined in the contract and carefully track their expenses to avoid any unexpected financial burdens.
