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.
South Dakota Compensation for Change Orders and Builder Allowance Underage: South Dakota's compensation guidelines for change orders and builder allowances underage are crucial aspects of construction projects in the state. When changes or modifications are made to a construction plan after it has been approved, a change order is required. Similarly, builder allowances are predetermined amounts set aside by the developer or homeowner to cover unforeseen expenses or upgrades during the construction process. In South Dakota, compensation for change orders ensures that contractors and subcontractors are fairly compensated for any additional work, materials, or labor that deviates from the original project scope. These change orders are made to accommodate modifications requested by the owner, architect, or other involved parties. South Dakota emphasizes transparency and clarity in change order documentation to avoid disputes between the parties involved. Additionally, builder allowances underage refer to the funds reserved for incorporating upgrades or addressing unforeseen issues that may arise during the construction process. This allowance provides flexibility to the builder and homeowner to make necessary changes without disrupting the project timeline or incurring excessive costs. Builder allowances underage can cover various aspects such as upgraded fixtures, appliances, flooring materials, or additional structural modifications. Different types of compensation for change orders and builder allowances underage may include: 1. Change Order Compensation: a. Time and Materials — Contractors are reimbursed based on the actual time spent on the project and the cost of materials used. b. Lump Sum — A predetermined fixed amount is agreed upon for the change order, regardless of the actual time or materials required. c. Unit Price — Compensation is calculated based on the unit cost specified in the original contract or a subsequent agreement. 2. Builder Allowance Underage: a. Fixed Amount — A predetermined sum is allocated for unforeseen expenses or upgrades during the construction process. b. Percentage of Project Cost — The builder allowance is determined based on a percentage of the overall project cost, providing flexibility for adjustments based on the scale and complexity of the project. It is essential for all parties involved in construction projects in South Dakota to have clear and detailed contracts outlining the compensation for change orders and builder allowance underage. This ensures fair compensation for contractors and provides the necessary flexibility for homeowners and developers to meet their evolving needs during the construction process.
