12.8.2 Change Order Classification

• A. Necessary. Necessary changes (which the CA or designee must document) are those that arise from:

1. Latent conditions that differ from conditions defined by the construction documents;

2. Changes in the applicable state or local codes, ordinances, etc. after:

3. Initial closing for insured advances; or

Firm Commitment for insurance upon completion.

• The Architect’s errors or omissions.

• Damage to completed construction.

• B. Betterment. Betterment changes are those that are economically justified. They must either:

1. Increase net income;

2. Reduce long-term project maintenance and/or operating expenses; or

3. Otherwise enhance the mortgage security.

• C. Equivalent. Equivalent changes are those proposed because:

1. A specified item is not readily available, and the substitution provides equivalent or better utility and performance; or

2. The proposed substitution reduces the contract price but provides equivalent or better utility and performance.

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Chapter 12 Construction Period 12.8 Change Orders – HUD Duties

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