Relating to change order limits for certain construction contracts.
The implementation of HB386 is expected to have significant implications for local governments and contractors. By establishing clearer parameters for change orders, the bill aims to enhance fiscal responsibility and improve financial planning within construction projects. It is particularly relevant for municipal projects that often face budgetary constraints and administrative challenges when dealing with construction contract modifications. The changes would require local officials to become more cognizant of budget limits imposed by the bill, expecting municipalities to adjust their procedures accordingly.
House Bill 386 aims to revise the limits on change orders for certain construction contracts in Texas. One of the main changes is that for contracts originally priced at $5 million or more, no increase may exceed 25 percent. For those with original prices less than $5 million, contract increases are capped at 50 percent or $1 million, whichever is greater. The bill also modifies the authority granted to local officials regarding approval amounts for change orders, increasing the cap for essential changes from $50,000 to $250,000, thereby streamlining the process for smaller modifications.
However, there may be points of contention surrounding the bill, especially from smaller contractors who might argue that the raised limits could lead to fewer checks and balances on larger contracts, potentially allowing for financial discrepancies. Furthermore, local governments might express concerns that the increased authority for officials to approve higher change orders without broader oversight could inadvertently lead to misuse or mismanagement of public funds.
The provisions in this bill will take effect on September 1, 2025, and will apply only to contracts entered into after this date, ensuring that existing contracts follow the regulations that were in place at the time of signing.