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.
Utah Compensation for Change Orders and Builder Allowance Overages can be a complex topic in the construction industry. It involves various elements and considerations when it comes to making changes or allowances during a construction project. Understanding the types of compensation available is crucial for both builders and homeowners. Change Orders in Utah compensation refer to any modifications or additions made to the original construction contract, which deviates from what was initially agreed upon. These changes can arise due to unforeseen circumstances, design alterations, or the owner's requests. However, it is important to note that change orders typically require additional time and resources, impacting both the builder and the homeowner. Different types of Utah Compensation for Change Orders include: 1. Fixed Fee Markup: In this type of compensation, a fixed percentage or dollar amount is added to the cost of the change order as a fee for managing the change and ensuring smooth project execution. This fee is typically agreed upon beforehand and is meant to cover the builder's administrative and logistical expenses. 2. Time and Materials: This type of compensation is used when the specifics of the change order are uncertain, making it difficult to estimate its cost accurately. The builder charges the homeowner for the actual time and materials expended, along with a prepared markup percentage to cover overhead costs. 3. Lump Sum: Lump sum compensation is used when the cost and scope of the change order can be accurately determined upfront. Both the builder and homeowner agree on a fixed amount for the change, which is then added to the existing contract sum. This approach provides a clear picture of the financial impact of the change order. Builder Allowance Overages, on the other hand, pertain to situations when the actual cost of an allowance exceeds the amount initially estimated in the construction contract. Allowances are typically budgeted amounts set aside for specific items like fixtures, finishes, or materials whose final selection is made by the homeowner. When a builder allowance exceeds the budgeted amount, compensation for overages becomes necessary. Different types of compensation for Builder Allowance Overages in Utah include: 1. Negotiated Settlement: The builder and homeowner negotiate a fair and reasonable amount to cover the excess cost of the allowance. This usually involves discussions to find a middle ground that is acceptable to both parties. 2. Percentage Markup: In some cases, a pre-determined percentage markup may be applied to the overage amount to compensate the builder for the extra time, effort, and coordination required to accommodate the homeowner's choice. 3. Change Order Process: If the excess cost of an allowance is substantial, it may be treated as a change order. In this scenario, the builder and homeowner negotiate the compensation using similar methods mentioned earlier for Change Orders. In conclusion, Utah Compensation for Change Orders and Builder Allowance Overages involves various forms of compensation, including fixed fee markup, time and materials, lump sum, negotiated settlement, and percentage markup. It is crucial for both builders and homeowners to carefully review and discuss these compensation options to ensure a transparent and fair outcome for all parties involved. (Possible keywords: Utah Compensation, Change Orders, Builder Allowance Overages, Fixed Fee Markup, Time and Materials, Lump Sum, Negotiated Settlement, Percentage Markup)
