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.
Maryland Compensation for Change Orders and Builder Allowance Overages: A Detailed Description In the realm of construction projects, change orders and builder allowance overages are common occurrences that can impact the finances of both the contractor and the client. In the state of Maryland, specific compensation guidelines and regulations are in place to address these situations and ensure fair resolutions. This article will provide a comprehensive overview of Maryland's compensation policies, including the different types of compensations available. Change orders refer to any modifications or alterations made to the original scope of work agreed upon in the construction contract. These changes can arise due to unexpected site conditions, design revisions, or additional client requests. Each change order typically requires a detailed assessment of the work involved, its impact on the project's timeline, and associated costs. To mitigate disputes and uncertainties, Maryland establishes clear guidelines for compensating contractors for change orders. Maryland recognizes two primary types of compensation for change orders: time extension compensation and cost compensation. Time extension compensation seeks to reimburse the contractor for the additional time required to complete the work caused by change orders. This type of compensation helps cover overhead costs, extended labor expenses, and additional project management hours. It is essential for contractors to meticulously document any delays caused by change orders to justify the need for time extension compensation in Maryland. Cost compensation, on the other hand, aims to cover the direct expenses associated with change orders. This includes materials, equipment, labor, permits, and any other relevant costs that arise due to the modification. Contractors in Maryland must provide detailed documentation, including invoices and receipts, to substantiate their request for cost compensation. These records play a crucial role in ensuring that both parties accurately account for the financial impact of the change order. Aside from change orders, Maryland also addresses builder allowance overages. Builder allowances typically refer to predetermined amounts within the construction contract set aside for certain finishes, fixtures, or materials. However, if the actual cost of the selected items exceeds the original allowance, builder allowance overages come into play. Maryland compensates contractors for these overages if the client explicitly approves the excess expenditures and the contractor provides supporting documentation. It is essential to note that Maryland's compensation policies for change orders and builder allowance overages are subject to the specifics outlined in the construction contract. Therefore, clear and precise contract language is crucial to avoid misunderstandings and conflicts related to compensation in these situations. To summarize, Maryland's compensation for change orders and builder allowance overages revolves around time extension compensation and cost compensation. Contractors are eligible for compensation to cover additional labor, materials, and other costs resulting from change orders. Additionally, if builder allowances are exceeded, contractors can seek compensation if the client explicitly approves the overages and proper documentation is provided. By understanding and adhering to these compensation guidelines, both contractors and clients can maintain fair and effective working relationships throughout the construction process in Maryland.
