What action must a builder take if there are changes to the labor or material costs?

Prepare for the Mississippi Residential Builders License Test. Use flashcards and multiple choice questions with detailed explanations, designed to help you pass the exam successfully!

When there are changes to labor or material costs, a builder must notify the homeowner and issue a change order. This process is essential for maintaining transparency and ensuring that both parties are in agreement regarding any adjustments in the project. A change order formally documents any modifications to the original contract, which can include changes in scope, costs, or timelines.

By issuing a change order, the builder ensures that the homeowner is fully aware of how these changes will affect the overall budget and timeline of the project. This step helps prevent misunderstandings and disputes later on, and it establishes a clear record of what has been agreed upon. Additionally, it protects the builder by ensuring that they can account for any additional expenses incurred due to the changes in labor or material costs.

The other options do not align with standard industry practice or the principles of effective project management, as absorbing costs or doing nothing would be unprofessional, and waiting until project completion could lead to a lack of communication and possible conflicts.

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