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.
Louisiana Compensation for Change Orders and Builder Allowance Underage refers to the legal provisions and financial arrangements that govern the payment and compensation for changes made to construction projects and allowances granted to builders in the state of Louisiana. These mechanisms ensure fair compensation and allowances for builders when changes are required or authorized during the construction process. Compensation for change orders in Louisiana relates to modifications, additions, or deletions to the original construction plans or contract terms. When such changes occur, the compensation mechanism ensures that the builder is properly reimbursed for any additional costs incurred or for the work performed beyond the initial scope. Different types of Louisiana Compensation for Change Orders include: 1. Stipulated Sum Change Orders: In this type, a fixed or stipulated sum is agreed upon in the original contract to compensate for any authorized changes. The builder is entitled to receive the stipulated sum for each agreed-upon change order that falls within the terms of the contract. 2. Cost-Plus Change Orders: With this category, compensation is determined based on the actual costs incurred by the builder, including materials, labor, and overhead, along with an additional agreed-upon percentage or fee. The builder is reimbursed for all documented expenses, ensuring transparency in the pricing structure. 3. Unit Price Change Orders: In this type, changes are priced according to pre-determined unit rates specified in the original contract. The compensation for change orders is calculated by multiplying the unit price by the quantity of work performed or the additional units required. Builder allowance underage, on the other hand, refers to the provision for an allowance granted to builders for certain items or aspects in the construction plans that are not fully determined or specified during the initial contract phase. This allowance allows the builder flexibility in making decisions and selecting appropriate materials, finishes, or equipment within a predetermined budget. The different types of builder allowances underage in Louisiana include: 1. Material Allowance: Builders are granted a specific budget to select and purchase materials such as flooring, cabinetry, appliances, or fixtures to meet the project requirements. The builder may provide transparent pricing and documentation for the actual cost of materials selected within the allowance. 2. Finish Allowance: This type of allowance pertains to the selection of finishes such as paint colors, trim, or decorative elements. Builders are typically given a budget to work within for these finish selections, ensuring adherence to the overall project aesthetics and quality standards. 3. Equipment Allowance: Builders receive an allowance for selecting specific equipment required for the project, such as HVAC systems, electrical fixtures, or plumbing fixtures. This allowance ensures that builders have flexibility in accommodating project-specific needs while working within a predetermined budget. In conclusion, Louisiana Compensation for Change Orders and Builder Allowance Underage ensures fair reimbursement for builders' additional work and costs due to authorized changes, while also providing allowances for flexible decision-making within predetermined budgets. It allows builders to adapt to unforeseen circumstances and make necessary adjustments, contributing to successful construction projects in the state.
