Maricopa Arizona Compensation for Change Orders and Builder Allowance Overages

State:
Multi-State
County:
Maricopa
Control #:
US-01848BG
Format:
Word
Instant download

Description

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.

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FAQ

The guaranteed maximum price is the highest amount customers would pay for the project, though if the final price is less than the maximum, the client is not obliged to share those savings with the contractor unless stipulated in the agreement.

Their differences is crucial to successfully executing project contracts. One simple, yet effective, way to remember these differences is that allowances are the known unknowns, such as underground utility conflicts, while contingencies are for the unknown unknowns, such as changes in a project's scope.

Construction allowances are a dollar amount that you include in your contract for a particular item. There are two types of construction allowances: material allowance amounts and installed allowance amounts. They are most often used when a client hasn't finished all their selections.

Based on the customer's selections, allowances are either exceeded ( referred to as an overage ) or the cost for the item is less than the allowance ( referred to as a credit ). Normally these differentials to the allowances are logged by the builder and are applied to the final settlement at closing.

Description. A construction allowance is an amount established in the contract documents to include in the total contract price intended to cover the cost of prescribed items that are not specified in enough detail.

GMP stands for the guaranteed maximum price. That refers to the highest amount of labor, materials and profit costs the contractor can charge the customer in the construction industry.

An allowance is an amount established in the contract documents for inclusion in the contract sum to cover the cost of prescribed items not specified in detail.

Unlike a lump sum contract wherein a contractor is paid a flat fee for the work, the guaranteed maximum price contract allows the owner to potentially save money if the project ends up costing less than estimated.

Contractual allowances, also known as contractual adjustments, are the difference between what a healthcare provider bills for the service rendered versus what it will contractually be paid (or should be paid) based on the terms of its contracts with third-party insurers and/or government programs.

An allowance is the price included within an estimate for an unknown condition, or yet-to-be-determined selection.

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Maricopa Arizona Compensation for Change Orders and Builder Allowance Overages