CO-003 — Change-Order-CO-003.pdf
CO-003 ($24,027) covers structural work (wall removal, LVL beam, pantry partition) triggered by an owner-requested change. Two items (LVL beam and demolition) are well-supported and consistent with the contract. However, the change order applies an 18% overhead/profit markup against a 10% cap in §4.2, bills project supervision that §2.2 explicitly includes in the Contract Sum, includes a $2,500 unitemized 'miscellaneous' charge, bills overtime without the advance written authorization required by §4.4, and includes two lump-sum items over $1,000 (repaint, electrical) without the subcontractor quotes required by §4.3. Recommended payable amount now is $10,738.20, with the remaining ~$13,289 held pending documentation, scope clarification, or removal.
Flags (8)
The change order applies an 18% overhead and profit markup ($3,665) on $20,362 of direct cost. Contract §4.2 caps combined overhead and profit at 10% of direct cost, i.e. $976.20 on the documented direct costs below.
“Overhead and profit (18%): $3,665”
Contract §2.2 states project supervision, site management, and coordination of subcontractors are included in the Contract Sum and shall not be billed separately on any change order. This $1,800 charge should be removed in full.
“Project supervision and coordination during structural work — $1,800”
Base scope §2.1(d) already covers two-coat interior painting of all renovated areas, including the kitchen. Without a breakdown separating kitchen (likely already covered) from dining room (new area), this $1,950 lump sum risks double payment.
“Repaint kitchen and dining areas affected by the work — $1,950”
This is a $3,200 lump-sum item exceeding $1,000; §4.3 requires a supporting subcontractor quote for lump-sum items above that threshold, which was not provided.
“Electrical rough-in relocation for 4 outlets and 2 switches — lump sum $3,200”
No unit, quantity, or description is provided beyond 'miscellaneous materials and supplies, as required.' This directly conflicts with the itemization requirement in §4.3.
“Miscellaneous materials and supplies, as required — $2,500”
Contract §4.4 makes overtime reimbursable only when the Owner requests it in writing in advance. No such authorization is referenced, and the line item itself has no hours, rate, or basis.
“Overtime as required to maintain schedule — $1,150”
The $12/sf rate for framing is not tied to any quote or cost breakdown, though the item does comply with §4.3's requirement to state unit, quantity, and unit price.
“Framing of new pantry partition wall — 140 sf @ $12/sf = $1,680”
"Project supervision and coordination during structural work" has no unit, quantity, or basis.
“coordination”
Line items (10)
| # | Description | Amount | Fair amount | Flags |
|---|---|---|---|---|
| 1 | Demolition of existing wall between kitchen and dining, incl. debris removal Matches the agreed laborer rate of $48/hr in contract §5.1. Properly itemized with unit, quantity, and unit price per §4.3. 24 hr @ $48 | $1,152 | $1,152 | — |
| 2 | Supply and install 3.5in x 11.875in LVL beam, 16 ft, incl. temporary shoring Lump sum over $1,000 is supported by an attached subcontractor quote from Lone Star Structural, satisfying §4.3. — lump sum | $4,850 | $4,850 | — |
| 3 | Framing of new pantry partition wall Format complies with §4.3 (unit, quantity, unit price stated), but the $12/sf rate has no supporting cost breakdown or quote in the record. 140 sf @ $12 | $1,680 | $1,680 | No substantiation |
| 4 | Drywall, tape, and level-4 finish at new partition and beam enclosure Applies to new construction (new partition and beam enclosure), not pre-existing renovated area, so it is additional scope rather than an overlap with §2.1(c). Properly itemized. 320 sf @ $7 | $2,080 | $2,080 | — |
| 5 | Repaint kitchen and dining areas affected by the work Kitchen is a base-scope renovated area already covered by two-coat interior painting under §2.1(d); repainting the kitchen portion may be a double charge. Dining room repainting may be legitimate new-scope work due to the wall removal, but no sf breakdown between the two areas is given, and the lump sum exceeds $1,000 without the subcontractor quote required by §4.3. | $1,950 | $0 | Scope overlapNo substantiation |
| 6 | Electrical rough-in relocation for 4 outlets and 2 switches Lump sum exceeds $1,000 with no subcontractor quote attached, violating §4.3. Contract states an electrician rate of $95/hr (§5.1) but no hours are itemized here. — lump sum | $3,200 | $0 | No substantiation |
| 7 | Miscellaneous materials and supplies, as required No unit, quantity, description, or basis is given ('miscellaneous... as required'). This is exactly the type of open-ended item §4.3's itemization requirement is meant to prevent. | $2,500 | $0 | Vague itemNo substantiation |
| 8 | Project supervision and coordination during structural work Project supervision, site management, and coordination of subcontractors are explicitly included in the Contract Sum per §2.2, which states they 'shall not be billed separately on any change order.' This item should be removed entirely. | $1,800 | $0 | Scope overlap |
| 9 | Overtime as required to maintain schedule Per §4.4, overtime premiums are reimbursable only when requested in writing by the Owner in advance. No evidence of prior written authorization is included, and the item has no hours, rate, or other basis. | $1,150 | $0 | Vague itemNo substantiation |
| 10 | Overhead and profit (18%) Combined overhead and profit markup is capped at 10% of direct cost per §4.2. Recalculated at 10% of the adjusted (documented) direct cost of $9,762 = $976.20. | $3,665 | $976 | MarkupOver cap |
Counterproposal
Assumptions
- The 18% markup stated on the change order exceeds the 10% overhead-and-profit cap in contract §4.2; recalculated markup is based only on documented/approved direct costs.
- Item 8 (project supervision, $1,800) is assumed fully non-billable and set to $0 fair amount because §2.2 explicitly includes it in the Contract Sum and prohibits separate billing.
- Item 7 (miscellaneous, $2,500) is assumed to have $0 defensible fair amount because it has no unit, quantity, or basis whatsoever, in violation of §4.3.
- Item 9 (overtime, $1,150) is assumed to have $0 fair amount absent evidence of the advance written owner authorization required by §4.4.
- Item 5 (repaint, $1,950) is assumed to partially overlap base-scope kitchen painting under §2.1(d); with no sf breakdown provided between kitchen and dining, it is conservatively held at $0 pending documentation rather than estimating a split.
- Item 6 (electrical relocation, $3,200) is held at $0 fair amount pending the subcontractor quote required by §4.3 for lump-sum items over $1,000, since no basis (hours, materials) is stated.
- totalAdjusted ($10,738.20) reflects only currently substantiated/compliant items (1-4) plus a recalculated 10% markup; it excludes items 5-9 pending further documentation.
- fairPriceHigh ($16,403.20) is a scenario where items 5 and 6 are later substantiated with quotes at their currently claimed amounts and markup is recalculated at 10%; items 7, 8, and 9 are excluded in both the low and high scenarios because they are non-billable under §2.2/§4.4 or lack any factual basis under §4.3 regardless of documentation.
- Item 1's unit price ($48/hr) and item 2's lump sum are treated as fully substantiated based on matching the contract's §5.1 labor rate and an attached subcontractor quote, respectively.
- Item 3's $12/sf rate and item 4's $6.50/sf rate are treated as provisionally acceptable because they meet §4.3's format requirement (unit, quantity, unit price), even though no cost backup is attached.