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Building Design and Construction Handbook - Merritt - Ventech!

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CONSTRUCTION PROJECT MANAGEMENT 17.37<br />

17.14.1 Methods of Payment for Change Orders<br />

Either an owner or a contractor may request a change order. Changes or extras may<br />

be priced in any of the following ways:<br />

Unit Prices. At the time of either the bid or the signing of the contract, unit prices<br />

are listed by the contractor for various classes of work that may be subject to<br />

change. Usually, unit prices are easily administered for such trades as excavation,<br />

concrete, masonry, <strong>and</strong> plastering. The task of the purchaser is to obtain unit prices<br />

from subcontractors for various classes of work for the same trades that are in the<br />

contract. Although usually the same unit price is agreed for both added <strong>and</strong> deducted<br />

work, occasionally the unit prices for deducted work will be agreed to be<br />

10% less than those for added work.<br />

Cost of Labor <strong>and</strong> Materials, plus Markup. Another method of computing the<br />

value of changes or extra work is by use of actual certified costs, as derived from<br />

record keeping as the project proceeds. Rates for wages <strong>and</strong> fringe benefits must<br />

be verified, <strong>and</strong> the amount of percentage markup must be agreed to either in the<br />

contract or before the work is started. Usually, the general contractor is allowed a<br />

markup over <strong>and</strong> above subcontractors’ costs <strong>and</strong> markup, but the general contractor’s<br />

markup is less than the subcontractor’s allowance in such cases.<br />

FIGURE 17.17 Daily work-report certification by a general contractor for changes made or extra<br />

work performed.

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