Discussion Topics

1. Discussion Topics • Construction Contract Administration • Other Construction Issues • Questions? / Comments (Anytime)

2. Non-conforming Materials Subsections 105.3 and 105.7(1) of Std Specs 105.3.2.1 Engineer-Accepted Nonconforming Work (1) If the work does not conform to the contract, the engineer will determine the circumstances under which that nonconforming work may be accepted and allowed to remain in place… 105.7 Authority and Duties of Project Engineer (1) The engineer authorizes the project engineer to reject defective material and to suspend all work being improperly performed… CMM 2.18.1 Authority of the Engineer

3. Non-conforming Materials As a general rule – Do not allow non-conforming materials to be incorporated into the work. The engineer has the authority to reject nonconforming materials – the contractor does not have the right to incorporate nonconforming materials into the work at a reduced price.

4. Non-conforming Materials Price reductions are assessed in situations where nonconforming materials are inadvertently incorporated into the work. If it is decided to allow nonconforming materials to be incorporated – agree on adjusted price prior to utilizing materials in work. If a price adjustment cannot be agreed upon – reject the material.

5. Nonconforming Materials CMM 8-10.5 and 8-10.6 Guidance When proposing a significant or controversial price reduction for non-testing or nonconforming materials – BTS and BPD needs to know. Contact Regional Oversight Engineer. Regional Oversight Engineer will advise whether BTS and BPD involvement is necessary.

6. Issues/Claims The standard specifications prescribe a process to be followed to resolve issues and claims. Subsection 104.3 addresses issues before becoming a formal claim. Subsection 105.13 addresses the procedures to follow when an issue is not resolved and has become a claim.

7. Issues Subsection104.3 • If the contractor and department mutually agree, the department will get a third party advisory opinion. Recommendation is not binding. • Subsection 104.3.6 (3) “If the contractor does not agree with the project engineer’s decision…if the contractor and department mutually agree… the department will get a third party advisory opinion…” • Contact Regional Construction Oversight Engineer

8. Issue  Claim Subsection105.13 If the contractor does not agree with the engineer’s decision on a contract change, the contractor may pursue a claim as specified in 105.13. Prime contractor must certify all claims. Not good enough to have subcontractor certify the claim. Department expects that prime is satisfied with the validity of their subcontractor’s claim.

9. Issues / Claims Feds request claim information on a regular scheduled basis. Complete Claim Submittal Form (pantry software)  Construction Oversight Engineer.

10. Contract Modification Does the change affect the controlling item? Does this change affect contract time? If no, say so in the Contract Modification. If yes, provide info as to how new contract time was or will be determined. Always address contract time.

11. 109.4 Price Adjustments for Contract Revisions 1. Contract Bid Prices 2. Minor Contract Revisions Not Covered by Contract Bid Prices (removed in 2014 edition) 3. Negotiated Prices 4. Force Account

12. Force Account (Std Spec 109.4.5) • Final option for price adjustments of CCO’s. • Very specific / detailed procedure to follow. • Engineer may direct contractor to perform revised work under force account at any time. • Contractor submits proposal • Labor • Materials • Equipment • Work schedule • Contractor and inspector compare records at end of each workday.

13. Force Account Per subsection 109.4.5, the contractor is required to submit a force account proposal. Avoid conflicts/misunderstanding later. Require contractor to submit a force account proposal prior to beginning force account work. Proposal should include: when work will be performed, whether work will be done utilizing OT, classifications of workers, equipment needed or on standby, materials to be used, subsistence, estimated time to complete work, time extensions, etc.

14. Force Account Common for contractors to add 1% to force account total. Provisions do not provide for a separate markup for the contract bond and should not be paid.

15. Force AccountEquipment on standby If equipment is on site for FA work, but not in operation, do not pay in-operation rate – pay standby. If a truck is idle, it is not in-operation and should only be paid as standby. If equipment is idle it is not consuming fuel, oil, grease or experiencing wear and tear. Standby is intended to pay for a portion of ownership costs only not operating costs that are being incurred.

16. Force Account • Work by subcontractors • Prime contractor allowed markup on work performed by subcontractor • Markup 10% on first $10,000 • Markup 2% on work in excess of $10,000 • Markup does not apply for first tier subs or lower tier subcontractors – only the prime receives the prescribed markup. These specific markups only apply to Force Account work. Negotiated prices for contract revisions includes “a reasonable allowance for profit and applicable overhead”.

17. Force Account • Read CMM 2.46 Force Account Work • Provides good info for documenting and tracking costs. • Provides example of contractor’s itemized statement of actual costs. • Provides an example of cost breakdown for CCO’s. READ Std Spec 109.4.5 Force Account

18. Cost Reduction Incentives (CRI’s) • FHWA has asked Department to track CRI’s • Types • Acceptance (Approved or Denied) • Costs • Send copy of ALL CRI’s to Construction Oversight Engineer. Include (cc) in response. • Some CRI’s are NOT true CRI’s (little or no info being provided in contractor concept and/or proposal to evaluate). Also, if conditions are different than those anticipated when developing the plans which leads to changes – not a CRI. Please contact the Regional Oversight Engineer concerning significant CRIs.

19. Buy America In addition to item specific BA certification required, an umbrella (Blanket) certification is now required upon completion of project. “ Upon completion of the project certify to the engineer, in writing using department form WS4567, that all steel, iron, and coating processes for steel or iron incorporated into the contract work conform to these "Buy America" provisions...”

20. ASP 4 – Prompt Payment 10 days per tier to pay subcontractors. “Just Cause” required within10-day window if contractor intends to withhold payment. Department no longer needs to provide approval. Prime contractor to certify that all subcontractors have been paid in full (includes release of retainage) prior to submittal of final estimate. “Within 30 calendar days of receiving the semi-final estimate from the department, submit written certification that subcontractors at all tiers are paid in full for acceptably completed work and that no routine retainage is being withheld.”

21. Maintenance and Repair of Haul Roads We always pay the item. Contractor may incur costs when employing mitigating measures to limit damage to haul road instead of making physical repairs.

22. Finals Process for Let Project Closeout Developed to provide step-by-step guidance for staff involved in the Final Process for Let Project Closeout. Goal - increase the number of regional and local program projects that closeout within six months.

23. Finals Process for Let Project Closeout PROCESS DEFINITION The Finals Process includes the process steps required to close out a construction contract within 6 months, beginning when the department determines that work under the contract is Substantially Complete and ending on the date the department approves the Final Estimate for payment.

24. Finals Process for Let Project Closeout Assigns roles and responsibilities. Provides standard definitions for terms utilized in the finals process. Assigns timeframe to complete distinct process steps in the finals process. Flow chart – Responsible parties, tasks, and process steps. Includes tracking system.

25. Finals Process for Let Project Closeout Snapshot at end of June (fiscal year) Goal – 45% of projects finaled within 6 months of substantial completion.

26. Progress Schedules • CMM 1.65.2.2 Acceptance of Progress Schedules • Answers to questions must be YES to accept contractor’s schedule. • CMM 1.65.2.3 Progress Payments • No progress payments (except materials) until schedule is accepted. • Updates • Important to administration of contract • Important in claims

27. CMM 1.65.2.2

28. Significant Changes

29. Significant Changes Altered work typically involves Directed Changes Changed Quantities involve variations from estimated quantity due to inherent quantity variations (not due to a directed change)

30. Significant Changes Altered Work vs Changed Quantities (Quantity Variations) If the work is altered by a directive, quantity variation thresholds do not need to be met. Exceeding a quantity threshold alone does not establish entitlement to additional compensation.

31. Eliminated Items Subsection 109.5 Eliminated Items is mobilized when work is eliminated through a directive, not due to an inherent quantity variation. A quantity variation does not trigger 109.5 unless the variation is due to a directed elimination of work.

32. Changes If in doubt how to categorize the change – contact the Regional Construction Oversight Engineer for assistance.

33. Pile Quantity Variations Most piling quantity variations are not subject to the altered work clause but may be subject to the quantity variation clause of 104.2.2.2. Quantity variation must meet the applicable thresholds in order to be considered as a significant change eligible for a price adjustment. If quantity variation meets thresholds, contractor must be able to demonstrate that there was an increase in cost due solely to the quantity variation – typically would be due to under-recovered fixed costs. Mobilization would not be considered – costs should be in the mobilization item.

34. Timely Decision Making Line of Communication Designated Materials Person 3-Week Look-ahead Schedule Request for Information (RFI) Evaluations

35. Timely Decision Making Expectation is that projects will employ the tools incorporated into the Timely Decision Making Guidelines. Guidelines can be found at: http://roadwaystandards.dot.wi.gov/standards/admin/index.htm

36. Start Notice / Notice to Proceed Subsection 108.3 states, “The department will issue a written notification to begin or resume work for all … contracts. Do not begin or resume work before receiving the engineer’s notification.”

37. Conditional Start Notice FDM 19-10-30.3 Factors Influencing Contract Time Exclusions from Contract Time Charges include, but are not limited to: Construction Staking, initial layout before grading work begins. Move-in of equipment by the contractor. Delivery, installation and removal of temporary traffic control devices.

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