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 Overages: A Comprehensive Guide When undertaking construction projects in South Dakota, it is crucial to understand the regulations surrounding compensation for change orders and builder allowance overages. This detailed description aims to provide valuable insights regarding the various types of compensation available and relevant keywords to guide your understanding of the subject. Keywords: South Dakota, compensation, change orders, builder allowance overages, construction projects. 1. Change Orders: In South Dakota, change orders refer to any alterations or modifications made to the original construction plans and specifications. These changes can arise due to unforeseen circumstances, client requests, design flaws, scope creep, or other project-related issues. Compensation for change orders ensures fairness for both the contractor and client involved in the building process. Types of South Dakota Compensation for Change Orders: a) Unit Cost Basis: Compensation is determined based on a prepared unit price for each specific change order. This pricing method considers the cost of materials, labor, and associated expenses incurred for executing the change. b) Time and Materials Basis: Compensation for change orders is calculated based on the actual time spent and materials used in implementing the requested modification. The contractor adequately documents all expenses and charges the client accordingly. c) Lump Sum Basis: In some cases, a predetermined lump sum amount may be established for anticipated change orders. This approach allows for ease of financial planning and avoiding frequent cost negotiations. 2. Builder Allowance Overages: When constructing a building, allowance amounts are typically set aside for specific items like flooring, fixtures, finishes, or appliances. These allowances are based on the expected cost of the item or service. However, in certain situations, the actual cost may exceed the initial allowance amount, resulting in builder allowance overages. Types of South Dakota Compensation for Builder Allowance Overages: a) Fixed Allowance: The client and contractor agree on a fixed allowance amount during project planning. If the actual costs surpass the determined allowance, compensation discussions are initiated to resolve the overage. b) Percentage-Based Allowance: This compensation method designates a percentage of the total construction cost as an allowance for specific items. If the actual cost exceeds the allocated percentage, negotiations are required to compensate for the overages. c) Negotiated Allowance: Here, compensation for builder allowance overages is determined through negotiations between the client and contractor. Both parties work towards a fair solution to address budget deviations. Understanding the compensation requirements for change orders and builder allowance overages ensures a smoother construction process while protecting the interests of all involved parties in South Dakota. Disclaimer: The information provided is for informational purposes only and should not be regarded as legal advice. Always consult with a professional to understand the specific laws and regulations applicable in South Dakota for compensation related to change orders and builder allowance overages.
