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.
Rhode Island Compensation for Change Orders and Builder Allowance Underage: A Comprehensive Guide In Rhode Island, Compensation for Change Orders and Builder Allowance Underage refers to the financial arrangements made to address changes or modifications to construction contracts. It ensures fair compensation to contractors and builders who encounter unexpected extra work due to changes requested by the property owner. This comprehensive guide will outline the different types of compensation methods available in Rhode Island and provide insight into the legal aspects associated with change orders and builder allowances. 1. Rhode Island Compensation for Change Orders: In the construction industry, change orders refer to alterations, modifications, or additions to a construction project that deviate from the original contract or plans. When change orders occur, contractors may incur additional costs, such as labor, materials, and equipment, which deserve fair compensation. Rhode Island provides several compensation methods for change orders: a) Time and Material: Under this compensation method, contractors are paid based on the actual hours worked and materials used to complete the change order. The rates for labor, overhead costs, and materials are pre-determined and agreed upon in the construction contract. b) Unit Price: This approach involves compensating contractors based on pre-determined unit prices for specific items or tasks. For example, if a change order involves the installation of extra windows, the contractor may be compensated based on the unit price per window. c) Lump Sum: This compensation method involves negotiating a fixed amount for the change order before the work begins. It is commonly used when the scope of the change order is well-defined, allowing both parties to agree on a fair lump sum payment. 2. Rhode Island Builder Allowance Underage: Builder allowances, also known as owner allowances, are specific amounts of money set aside in a construction contract by the property owner to cover the cost of certain items or materials. The builder or contractor is responsible for purchasing and installing the items covered by the allowance. If the actual cost of the items exceeds the allowance, the property owner is responsible for paying the difference. Builder allowances are typically categorized into different types: a) Material Allowances: This type of allowance covers the cost of materials required for certain aspects of the construction project, such as flooring, cabinetry, or fixtures. The property owner and contractor agree on a specific amount to be allocated for each category. b) Upgrade Allowances: Upgrade allowances are set aside to cover the additional cost of upgraded or higher-quality items that the property owner chooses instead of the standard options provided in the original contract. The allowance amount is agreed upon before construction begins. c) Design Allowances: Design allowances are intended for the property owner to select and purchase specific design elements, such as tiles, countertops, or lighting fixtures, within a predetermined budget. The contractor is responsible for installing these elements. It is essential for both property owners and contractors in Rhode Island to have a thorough understanding of compensation for change orders and builder allowances. Engaging in clear communication, establishing well-defined contracts, and adhering to the state's regulations will ensure fair compensation and smooth construction processes for all parties involved.
