Question 14

A change order will be written to cover the additional cost.

When an owner exceeds the amount of the allowance, a change order is necessary to document and authorize the additional expenses incurred beyond the initial budget.

A) the contractor may choose less expensive items

This option is incorrect because it does not address the situation where the owner has exceeded the allowance. The contractor's decision to choose less expensive items does not resolve the issue of additional costs incurred by the owner.

B) a change order will be written to cover the additional cost.

This option is correct as it directly relates to the process that needs to occur when the allowance is exceeded. A change order serves as an official document that allows for the adjustment of costs associated with the owner's additional expenditures.

C) the owner may request that the overage be arbitrated.

This option is incorrect as it implies a dispute resolution process rather than a financial adjustment. Arbitration is typically used for resolving conflicts, not for authorizing additional expenses incurred by the owner.

D) the owner must pay the overage in cash within 30 days.

This option is incorrect because it imposes a payment timeline without addressing the need for formal documentation through a change order. While the owner may ultimately be responsible for the additional costs, the process requires proper authorization before payment.

Conclusion

The correct answer, B, highlights the importance of formalizing additional costs through a change order, which is essential in construction contracts to ensure all parties are aware of and agree to the adjustments in financial obligations. The other options fail to adequately address the necessary procedural steps that must be taken when an allowance is exceeded.