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.
Keywords: Virgin Islands, compensation, change orders, builder allowance overages Description: Virgin Islands Compensation for Change Orders and Builder Allowance Overages refer to the policies and processes in place to ensure fair compensation for any modifications or additions to a construction project and any overages incurred in the builder allowance. These regulations aim to protect both the contractor and the client, ensuring transparency, accountability, and fair financial dealings during the construction process in the Virgin Islands. There are different types of compensation for change orders and builder allowance overages in the Virgin Islands, including: 1. Change Order Compensation: Change orders may arise when modifications, adjustments, or additions to the original scope of work are requested or required during the construction process. Clients may have specific preferences, architectural modifications, or unforeseen site conditions that necessitate such changes. The compensation for change orders covers the additional costs incurred due to these modifications, such as labor, materials, and project management costs. 2. Builder Allowance Overages Compensation: Builder allowances are budgeted amounts set aside for specific items or materials in the construction project. However, if the actual cost for those items exceeds the budgeted allowance, it results in an overage. Compensation for builder allowance overages covers the excess costs incurred beyond the originally allocated amount. To mitigate disputes and ensure a fair compensation process, the Virgin Islands typically follow a systematic approach. The process usually involves the following steps: 1. Change Order or Overage Request: The client communicates the need for a change order or reports a builder allowance overage to the contractor. This includes providing detailed information about the proposed changes or the overage incurred. 2. Evaluation and Analysis: The contractor evaluates the requested change or overage and conducts a thorough analysis to determine the associated costs. This analysis includes the labor, materials, equipment, and other resources required to complete the change or compensate for the overage. 3. Pricing and Negotiation: The contractor provides an estimate of the additional costs associated with the change order or overage. This estimate is shared with the client for review and potential negotiation. Both parties aim to reach a fair agreement on the compensation amount. 4. Written Agreement: Once the compensation amount is agreed upon, a written change order or overage agreement is prepared, documenting the scope of change, the associated costs, and the timeline for completion. This agreement is signed by both parties to ensure mutual understanding and consent. 5. Implementation: The construction project proceeds with the changes or adjustments specified in the change order or with the necessary actions to compensate for the overages. The contractor ensures that the modifications or additional work are completed to the client's satisfaction. By implementing a comprehensive compensation system for change orders and builder allowance overages, the Virgin Islands aims to maintain a fair and transparent construction industry, protecting the interests of both clients and contractors.
