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.
Tennessee Compensation for Change Orders and Builder Allowance Underage serves as a critical aspect of construction contracts and provides a framework for addressing unforeseen circumstances and modifications in the building process. It ensures that both builders and property owners are protected and fairly compensated for changes made during the construction phase. In Tennessee, change orders refer to modifications, alterations, or revisions to the original construction plans and specifications. These changes can occur due to various reasons such as design alterations, material substitutions, scope changes, or unforeseen site conditions. Compensation for change orders in Tennessee typically involves a detailed assessment of the cost implications, time impact, and ramifications on the overall project schedule. Builder allowance underage, on the other hand, refers to a predetermined financial allocation provided by the property owner to the builder for purchasing certain materials or making specific selections during the construction process. This allowance can cover various aspects, such as flooring, kitchen appliances, fixtures, or landscaping, and is usually outlined in the construction contract. The state of Tennessee recognizes different types of compensation for change orders and builder allowance underage, including: 1. Fixed Sum: This type of compensation involves a predetermined amount set aside for change orders and builder allowance underage. It provides certainty regarding the additional costs and allowances, eliminating the need for constant negotiation or fluctuation in pricing. 2. Time and Material Basis: In some cases, compensation for change orders and builder allowance underage is calculated based on the actual time spent and materials used for the modifications or selections. This method ensures a transparent and accurate calculation of the costs and allows for flexibility if the scope or requirements change significantly. 3. Percentage of Construction Cost: In certain situations, compensation for change orders and builder allowance underage is determined based on a percentage of the overall construction costs. This method provides a straightforward approach to estimating the additional expenses associated with modifications and allowances. It is crucial for both builders and property owners in Tennessee to ensure that compensation for change orders and builder allowance underage is adequately addressed in the construction contract. This includes clearly defining the procedures for issuing change orders, documenting the reasons for modifications, establishing timelines for pricing and approval, and specifying the builder's responsibilities to meet the property owner's allowances and selections. Overall, Tennessee Compensation for Change Orders and Builder Allowance Underage is a vital aspect of construction contracts, ensuring fair and equitable adjustments to the original plans and specifications while maintaining financial and schedule stability.
