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.
Puerto Rico Compensation for Change Orders and Builder Allowance Underage In Puerto Rico, Compensation for Change Orders and Builder Allowance Underage are two significant aspects of construction projects. Understanding these terms is crucial for builders, contractors, and property owners to ensure fair and transparent compensation practices. Let's dive into each of them in detail. Puerto Rico Compensation for Change Orders: A change order refers to any modification, alteration, or adjustment required during the course of a construction project that deviates from the original contract's specifications. It is a formal written document that outlines the proposed changes, associated costs, and potential schedule adjustments. In Puerto Rico, compensation for change orders is crucial to protect both parties involved in the construction process. There are different types of Puerto Rico Compensation for Change Orders, including: 1. Fixed Fee Change Orders: In this type, the compensation for change orders is predetermined and remains unchanged regardless of the actual incurred costs. 2. Time and Material Change Orders: These change orders involve compensation based on the actual time and material required for the modifications. Payment is often calculated by multiplying the hourly rate of labor and the cost of materials incurred. 3. Percentage Change Orders: In this case, the compensation for change orders is a percentage of the original contract value. The percentage is predetermined and applied to any approved change order. Builder Allowance Underage in Puerto Rico: Builder allowances are predetermined amounts of money included in a construction contract to cover the cost of specific items that are yet to be selected by the property owner. This gives the owner the freedom to choose preferred finishes, fixtures, or materials during the construction process. In Puerto Rico, there are specific regulations regarding builder allowance underage. For instance, if the property owner selects an item that is more expensive than the allocated allowance, the difference in cost might be considered underage. The underage amount is the additional expense that exceeds the allowance provided in the contract. In such cases, the property owner is responsible for covering the underage amount. To ensure fair compensation practices, it is vital to document the builder allowance underage and any associated costs accurately. This documentation should be done in writing and include details about the item selected, its cost, the original allowance, and the underage amount. In summary, Puerto Rico Compensation for Change Orders and Builder Allowance Underage are essential components of construction contracts. Different types of compensation for change orders include fixed fee change orders, time and material change orders, and percentage change orders. Builder allowance underage refers to the additional expense incurred when the property owner selects items exceeding the allocated allowance. Understanding these terms and their implications is crucial to maintain transparency and avoid disputes in construction projects in Puerto Rico.
