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 and Builder Allowance Overages refers to the legal frameworks and processes established in Oregon to address additional costs associated with change orders and builder allowance overages in construction projects. When unexpected changes or unforeseen circumstances occur during construction, change orders may be initiated to modify the scope of work, resulting in potential cost increases. Builder allowances, on the other hand, are predetermined budgets allocated for specific items or finishes in a construction project. If the actual cost exceeds the allowance, an overage occurs. In Oregon, several types of compensation mechanisms exist to appropriately address change orders and builder allowance overages, including: 1. Change Order Pricing: Oregon's construction industry typically employs a unit price method to compensate for change orders. Contract agreements often include a unit price breakdown for various activities, enabling parties to calculate the cost of additional work based on predetermined rates. This approach ensures transparency and consistency when allocating compensation for change orders. 2. Time and Materials Compensation: Another common method used in Oregon is the time and materials approach. In this case, compensation is based on the actual time spent and materials used for the change order, including labor rates, material costs, and any associated overhead expenses. This method provides flexibility when there is uncertainty about the extent of additional work required. 3. Allowance Overages Negotiation: When a builder allowance is exceeded in Oregon, the parties involved, including the owner and contractor, often engage in negotiations to reach a fair and reasonable resolution. These negotiations may involve discussions on potential modifications to the scope of work, sharing the overage costs, or seeking additional funding if necessary. Open and constructive communication is essential to address allowance overages effectively. 4. Legal Dispute Resolution: In cases where disputes arise regarding compensation for change orders or allowance overages in Oregon, further legal action may be necessary. Parties can seek resolution through mediation, arbitration, or, as a last resort, litigation. Oregon's legal system ensures that construction contracts and the associated compensation mechanisms are upheld and appropriate remedies are provided. 5. Contractual Provisions: Construction contracts in Oregon often contain specific provisions that address compensation for change orders and allowance overages. These provisions outline the agreed-upon methods and procedures for calculating, approving, and implementing compensation adjustments. Clear contractual language helps prevent disputes and ensures that all parties are aware of their rights and obligations. In conclusion, Oregon Compensation for Change Orders and Builder Allowance Overages encompasses various approaches and mechanisms to address additional costs in construction projects. These mechanisms include change order pricing, time and materials compensation, negotiations for allowance overages, legal dispute resolution, and contractual provisions. Implementing these compensation strategies ensures fairness, transparency, and effective resolution of unexpected expenses that may arise during construction.
