In the recently closed 2018 legislative session, CSA worked with the General Law Committee to introduce HB 5370, “AN ACT CONCERNING CHANGE ORDERS IN CONSTRUCTION CONTRACTS.” The bill sought to set a floor for the amount that contractors or subcontractors could charge for overhead and profit on change order work to 15% (minimum). The original bill would have applied to both public and private projects (excluding small residential work).
At the eleventh hour, a small but dedicated group of House Republicans — purportedly at the behest of several unnamed “large contractors”— opposed the bill and threatened to bog down the House in extended debate. Although there were plenty of votes to pass it, this stalling tactic effectively killed the bill for the session.
In 2018, CSA will work to pass legislation that will require a baseline amount of 15% for combined overhead and profit to be included in any change order work for private commercial and public construction projects.
This level of 15% for overhead and profit is widely recognized in the industry as a “break even” level for contractors performing extra work.
If passed, this legislation will ensure that when contractors and subcontractors are required by owners to perform extra work via “change orders,” the contractors will actually get paid fairly for that work.
Presently, many construction contracts include mandatory clauses that require subcontractors to perform “extra work” with minimal overhead and profit paid above the direct cost of performing that work. These contractual provisions confer an unfair windfall upon the project owner, and impose losses on the contractors who must perform this extra work. The harm to the contractors and their employees can be substantial.
To succeed with this legislative initiative, CSA needs all of the state’s subcontractors to help support the lobbying effort financially, and with calls and letters to state legislators.
Please click here to let us know which legislator you will contact about this initiative and/or to make a donation to the lobbying fund.
Click here to read the full legislative proposal.