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.
Title: Understanding South Carolina Compensation for Change Orders and Builder Allowance Underage Introduction: In South Carolina, compensation for change orders and builder allowances underage is a crucial aspect of construction projects. This informative article provides a detailed understanding of what these terms entail, their importance, and different types of compensation available in South Carolina. Keywords: South Carolina, compensation, change orders, builder allowances, underage, construction projects 1. South Carolina Compensation for Change Orders: Change orders refer to alterations made to the original scope of a construction project after the contract is signed. They often arise due to unforeseen circumstances, design modifications, or client requests. In South Carolina, the following types of compensation are associated with change orders: — Cost-Plus: Under a cost-plus compensation structure, the contractor receives reimbursement for the actual costs incurred, including labor, materials, and overhead expenses. Additionally, a predetermined percentage or fixed fee over the total cost may be added as profit. — Lump Sum: In this compensation method, a fixed amount is agreed upon between the parties for the change order. This type of compensation is beneficial when the scope of the change is well-defined and quantifiable. — Time and Materials: With this approach, compensation is based on the actual time spent by the contractor and the materials used, as specified in the change order. The contractor receives compensation for labor at an agreed-upon hourly rate and the cost of materials used. 2. South Carolina Builder Allowance Underage Compensation: Builder allowances, also known as contingency allowances, are funds set aside within a construction contract to accommodate future selections and upgrades made by the client. When these allowances are not fully utilized, the client may be entitled to compensation for the unused builder allowance. In South Carolina, there are two common types of compensation related to builder allowances underage: — Cash Back: If the total cost of selections and upgrades made by the client falls below the predefined builder allowance, the client may be eligible to receive a cash reimbursement for the difference. — Credit Towards Other Costs: Alternatively, if the client does not fully utilize the builder allowance, the remaining amount can be credited towards other costs within the project, such as closing costs or additional upgrades. Conclusion: Understanding compensation for change orders and builder allowances underage is crucial for both contractors and clients involved in construction projects in South Carolina. The three primary types of compensation for change orders are cost-plus, lump sum, and time and materials. Similarly, clients may be entitled to cash back or credit toward other costs when the builder allowance is not fully utilized. By comprehending these compensation methods, parties can ensure fair and transparent financial arrangements while undertaking construction projects in South Carolina. Keywords: South Carolina, compensation, change orders, builder allowances, underage, cost-plus, lump sum, time and materials, cash back, credit
