Michigan Residential Builders License Practice Test

What should be included in your contracts for construction projects?

1. Change orders

2. Forecast of profits

3. Long-term warranties

4. General terms and conditions

The correct answer is: Change orders

Including change orders in construction contracts is essential because they document any modifications to the original scope of work. Change orders serve as official agreements between the builder and the client regarding any alterations, which can include changes in design, materials, or timelines. They help to maintain clarity and avoid disputes by ensuring that both parties have a clear understanding of the changes made and their implications on the project’s cost and schedule. By specifying change orders in the contract, builders can ensure that they have a formal process in place for handling adjustments, which helps maintain the project's integrity and budget. This documentation is crucial for protecting both the builder and the client’s interests, as it establishes a mutual agreement on how changes will be managed throughout the construction process.