Quote:
Originally Posted by fatlazyless
Can I ask what must be a very dum question? Like, why is the 'Original Contract' a small r-i-b, while the 'Change Order' is a much bigger and more expensive boat?
For example, let's say you do some remodel work, roof-windows-insulation, on an old waterfront cottage and the original construction contract is $25,000. Ok, then during the construction process, you see it building out and you think of a better design so's you get a better waterfront view or something, and the change order costs you an extra $1500. So's $25,000 is way more than $1500, so how's the logic behind naming the big boat 'Change Order' and the little r-i-b 'Original Contract.' In the real world of construction, it's just a contracter's myth....probably some story they like to repeat while having a beer or two or three...
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Well, in this day and age of commercial construction, many times original contract proposals are based off extremely tight margins with little or no profit with the hope of simply being awarded the job to keep your men working.
Change orders represent a change from the original contract scope of work and many times are adds by the owner of the project. Since the sub contractor is not bidding against anyone for a change order, markups are higher allowing the sub to make a profit. In many instances and especially in today's market, profit from change orders can be what a sub relies on to make a job profitable at least in commercial construction.
Dan