Glossary · Activities & Property
Component
In short
One part of a larger whole. The term exists to make replacement work — swapping a component is replacement, whatever the contract is worth.
In full
One of the parts of a compound or complex whole, helping to make up the whole of something. A component may itself be part of a system. ADOR's examples are replacing the faucets on a sink, or replacing a sink in a bathroom.
The term carries no independent tax consequence. It exists because the statutory definition of replacement is built on three objects — a component, a system, or tangible personal property installed in existing property — and identifying a charge as work on one of the three is what makes it replacement rather than alteration.
That is the whole of its usefulness, and it is considerable: replacement carries no threshold at any contract size, while alteration does.
ADOR MRRA Contracting page; ADOR Evaluating Mixed Construction Contracts worksheet, step 1a