Change Order/Credits
Change Order/Credits
(OP)
When a contractor applies for a change order, overhead and profit are applied to their extra. How about when they issue the Owner a credit? Shouldn't the Owner receive the overhead and profit associated with that item as well? Has anyone ever done this, seen it done, or seen it explained in AIA/EJCDC documents?





RE: Change Order/Credits
"e. the amount of credit to be al¬lowed by Contractor to Owner for any change which results in a net de¬crease in cost will be the amount of the actual net decrease in cost plus a deduction in Contractor's fee by an amount equal to five percent of such net decrease; and"
Most of the time the Contractor will not give you the full cost back on a change. Typically they will the cost without the overhead and profit. There is some justification for this practice since there is some cost and effort in preparing the credit.
RE: Change Order/Credits
I had one in particular, on a very fast paced design-bid-build project, where I redesigned the drainage system and saved about $200,000. The subcontractor, who I had a pretty good relationship with, called me up complaining about the significant changes and I told them to put a charge on the deductive change order for a reasonable rate and time for repricing. They charged about $500, if I remember correctly, which was pretty fair.
RE: Change Order/Credits