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.
West Virginia Compensation for Change Orders and Builder Allowance Underage: A Comprehensive Overview Introduction: West Virginia Compensation for Change Orders and Builder Allowance Underage is a significant aspect of construction contracts and residential build projects in the state. This detailed description aims to provide a comprehensive overview of the types of compensation available in West Virginia for change orders and builder allowance underage. Key concepts, regulations, and relevant keywords will be covered to facilitate a better understanding of these compensation arrangements. 1. Change Orders: In construction projects, change orders refer to modifications or alterations made to the original plans, specifications, or scope of work. These modifications are often necessary to accommodate unforeseen circumstances, design changes, or owner's requests. West Virginia recognizes the importance of compensating builders for the additional costs incurred due to change orders. The compensation process ensures fairness and accountability between all parties involved. 1.1 Types of West Virginia Compensation for Change Orders: a. Cost-Plus Method: Under the cost-plus method, builders are compensated for the actual costs incurred, including labor, materials, and any direct expenses related to the change order. Compensation is typically agreed upon in advance based on an agreed-upon percentage markup or a fixed fee added to the costs. b. Lump Sum Method: In the lump sum method, builders are provided a fixed amount of compensation for the change order, regardless of the actual costs incurred. This type of compensation is agreed upon by both the builder and the owner before the work commences. It offers simplicity and certainty in terms of payment. c. Unit Price Method: The unit price method involves determining the cost of the change order based on predefined unit prices. These unit prices are agreed upon in advance and typically depend on the quantity and type of additional work required. Builders are compensated based on the final quantity of work completed. 2. Builder Allowance Underage: Builder allowance underage refers to instances where the actual costs of specific materials or finishes selected by the owner fall below the budgeted amount agreed upon in the construction contract. In such cases, the builder is entitled to compensation for the difference. 2.1 West Virginia Compensation for Builder Allowance Underage: Builders in West Virginia are entitled to compensation for builder allowance underage based on the following methods: a. Direct Reimbursement: Under this method, the builder is directly reimbursed for the actual costs incurred, as long as they are below the budgeted amount. The reimbursement accounts for the difference between the budgeted amount and the actual cost of materials or finishes. b. Credit Towards the Owner: Alternatively, the builder may provide a credit to the owner for the difference between the budgeted amount and the actual costs. This credit can be applied towards other agreed-upon project elements, reducing the overall cost to the owner. Conclusion: West Virginia Compensation for Change Orders and Builder Allowance Underage incorporates various methods to ensure builders receive fair compensation for additional work or variations from the initial construction plans. The cost-plus, lump sum, and unit price methods allow builders to be properly reimbursed for change orders. Similarly, direct reimbursement or credit towards the owner compensate builders for builder allowance underage. These compensation arrangements offer transparency, fairness, and a balanced approach to construction contracts in West Virginia.
