Change Order Variance Thresholds

Change Order variance thresholds are as follows:

 

$ Range

% Cap

$ Cap

Commodity

All dollar values

 

10%

 

$5,000

Applicable to most good purchases

All dollar values

10%

$15,000

Applicable to most service purchases

 

Please note that the lower of the two cap amounts between a % Cap and a $ Cap is what governs as the cap threshold, over which a change order is required.

 

Examples (non-Facilities):

 

Example #1

Original Purchase Order dollar value = $10,000

Submitted invoice = $12,000

Dollar Variance = $2,000

Percentage Variance = 20%

Next Step: A Change Order would be required to process this payment as the lower CAP amount in this case would be 10% or $1,000 since the lower CAP will indicate threshold.

 

Example #2

Original Purchase Order dollar value = $10,000

Submitted invoice = $10,500

Dollar Variance = $500

Percentage Variance = 5%

Next Step: this is OK to process through Accounts Payable without a Change Order as it is within 10% of the specific dollar range and this is the lower CAP amount.

 

Example #3

Original Purchase Order dollar value = $100,000

Submitted invoice = $110,000

Dollar Variance = $10,000

Percentage Variance = 10%

Next Step: this is OK to process through Accounts Payable without a Change Order as it is within 10% of the specific dollar range and this is the lower CAP amount.

 

Example #4

Original Purchase Order dollar value = $4,000

Submitted invoice = $4,600

Dollar Variance = $600

Percentage Variance = 15%

Next Step: A Change Order would be required to process this payment as the lower CAP amount in this case would be 10% or $400 since the lower CAP will indicate threshold.