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.
Hennepin County, located in Minnesota, offers compensation options for change orders and builder allowance overages to address any additional costs that may arise during a construction project. These compensation mechanisms ensure that the builder is adequately compensated for extra expenditures beyond the original project scope. Here are the various types of compensation available in Hennepin County: 1. Change Order Compensation: In construction projects, change orders refer to any modifications made to the original contract's scope of work. These changes may arise due to design changes, unforeseen circumstances, or customer requests. Hennepin County provides fair compensation for the added costs associated with change orders, such as labor, materials, and subcontractor fees. This compensation ensures that builders are adequately reimbursed for the extra work performed. 2. Builder Allowance Overages Compensation: While working on a construction project, builders often provide clients with an allowance to choose certain materials or upgrades. However, if the selected materials exceed the allotted allowance, additional costs may incur. Hennepin County compensates builders for these overages to cover the expenses incurred due to the use of materials above the allowance. This compensation ensures that builders do not bear the sole burden of these unforeseen expenses. 3. Time and Material Compensation: In some cases, changes or overages may not have a fixed cost associated with them. Hennepin County offers time and material compensation, which accounts for the builder's additional hours spent on project modifications, as well as the cost of materials exceeding the allowance. This compensation helps the builder recoup their additional expenses based on the actual time and materials utilized. 4. Competitive Compensation Rates: Hennepin County ensures that the compensation rates for change orders and builder allowance overages remain fair and competitive. These rates are regularly reviewed and updated to reflect the prevailing market conditions and industry standards, guaranteeing that builders receive adequate remuneration based on the actual costs incurred. By offering various forms of compensation, Hennepin County supports builders in managing unforeseen changes and additional expenses encountered during construction projects. These compensation options protect builders from incurring significant financial burdens and encourage the completion of quality projects within the county.
