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Best Practices for Construction Contract Administration

This guide provides best practices for successful construction contract administration from project initiation to payment processes. It covers topics such as pre-construction planning, contractor management, invoicing, and handling changed conditions. Helpful tips and examples are included to ensure smooth project execution.

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Best Practices for Construction Contract Administration

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  1. Construction Contract Administration

  2. Randy Over District Construction Engineer, ODOT District 12 Ohio Department of Transportation

  3. Construction Contract Administration • Getting Contract Administration off on the Right Foot….. Prior to PreCon • DBE Goals • ODOT Qualified DBE’s • Total $s Meet Goal or…. • Approved Waiver • Qualified Staff • Names and qualifications of engineers and inspectors • Testing Lab is AMRL certified

  4. ConstructionContractAdministration • Getting Contract Administration off on the Right Foot….. Prior to PreCon • Make sure District Construction & LPA Coordinator are involved in PreCon planning, 2 weeks prior to meeting, invitations sent • Draft invoice from District Construction, review funding amounts and categories w/DCE or designee • Hold stand alone PreAward meeting if LPA and/or consultant is new to process, project is unique, etc., otherwise complete by phone or combine w/PreCon

  5. Construction Contract Administration • Getting Contract Administration off on the Right Foot….. Prior to PreCon • Last, but not least DBE/EEO/Prevailing Wage personnel understand Federal and State requirements, District personnel available to answer questions, “shadow” LPA/consultant personnel

  6. ConstructionContract Administration Example PreCon/PreAward Letter

  7. Construction Contract Administration Example PreAward Outline

  8. Construction Contract Administration • Having a successful PreCon…. Best Practices • Contractor comes prepared with…. • List of subcontractors • List of suppliers (ODOT approved) • List of proposed JMF’s • Proposed schedule showing important milestones • Everyone prepared with…. • Contact info and sign-in sheet • Contractor’s and LPA/Consultants Decision Trees and hierarchy to resolve disputes • LPA/Consultant • Tape recorded and/or minutes taken and circulated • Rep of Design Consultant, Testing Lab, ODOT CM, ODOT LPA Coordinator, District EEO/DBE/Prevailing Wage, LPA EEO/DBE/Prevailing Wage personnel

  9. Construction ContractAdministration • The First Shovel of Dirt Has Moved….Best Practices as the project moves forward • Weekly submissions of payrolls • Completion of Daily Diaries • Weekly, Biweekly or Monthly Progress Meetings including Construction Monitor (CM) • Materials are checked against ODOT certified materials lists • JMF’s are ODOT approved

  10. Construction Contract Administration Example Job Mix Formula (JMF)

  11. Construction Contract Administration • The First Shovel of Dirt Has Moved….Best Practices as the project moves forward • Through District Testing, OMM involved for steel fab, concrete beam shop approvals, if there is a timely request and staff is available • Track disposition of failed materials • Track materials use against PreCon suppliers

  12. Construction Contract Administration • Getting Everyone Paid….Best Practices for submitting invoices and getting approvals • Aim for a 30 day turnaround for all parties…. • Daily Diaries w/quantities • LPA, Consultant and ODOT reviews in parallel • 10 working days for ODOT to approve and submit for reimbursement or direct pay • Central Office turnaround 10 working days • Include only approved change orders • Don’t pay for it if it isn’t acceptable (don’t rely on retainage) • Don’t include retainage • Clearly note 100% local items

  13. Construction Contract Administration • Getting Everyone Paid….Best Practices for submitting invoices and getting approvals • Consultant & LPA Staff Invoices • ODOT approved overhead rates • Summary sheet • Include timesheets and/or monthly reports • Request for increases must be accompanied by justification, project completion date extended, extensive extra work, change in overhead rate mid-project, etc. • Should be in the range or 10-15% of contractor payments • Requests to District Construction Offices • Plan for Encumbrance Increases in advance….. • Proof of matching funds paid

  14. Construction Contract Administration Example Invoice for Contractor

  15. Construction Contract Administration Example Invoice for Consultants & LPAs

  16. Construction Contract Administration • So there is a changed condition, what next…. • Extend existing bid items…. • Extra Work…. No existing bid item • Funding Caps and Contract limits? • Contractor won’t agree to a price? • Hope and pray….. • Justification to ODOT for additional funds….

  17. Construction Contract Administration • Justification to ODOT for additional funds…. • Establishment of a fair price…. • Extend bid items • Establish a new bid item, similar work on other contracts, cost analysis • Last choice, force account • Required to complete project as scoped • Doesn’t impact environmental approvals/permits • Communication to CM before work begins • Approval can be verbal, but noted in writing, via email or by letter • Summary of smaller changes so costs “reconcile”

  18. Construction Contract Administration • And the Contractor Yells, “Unless I am paid for the claim right now, I’m walking off the job!” What to do if you can’t agree….. And how to not get there in the first place…… • Make everyone follow an administrative process established prior to bid, preferably as part of the contract • Use comparatives, historical data such as days in the bid for traffic control, prorate the days…. • Resolve the changed condition if at all possible without stopping work, otherwise home office overhead claims could occur, keep the contractor working

  19. Construction Contract Administration • Claims solutions and avoidance • Pay estimates and changes promptly • Seek third party assistance, experts that both parties trust • Use formal Partnering • Don’t write yet another letter when a phone call or a personal visit has a chance to break the deadlock • Completing by the completion date is to everyone’s benefit, don’t be afraid to pay for some OT, MS concrete, etc., it builds goodwill with the public and the contractor • Before the attorneys take control, consider mediation, arbitration, etc., ODOT has names

  20. Construction Contract Administration • And one last comment on Claims….. • A contract is overall, an equally shared agreement although various specific responsibilities are not equally shared. If there is no clear solution yet there is agreement there was a changed condition, split shared responsibility items in half.

  21. Construction Contract Administration Example Justification Letter

  22. Construction Contract Administration • Adequate DBE/EEO & Prevailing Wage Contract Administration…… • Weekly payroll submissions and wage checks • Track the DBE $s against goals, approved subs and suppliers each pay request • DBEs actually doing the work, if not involve District • Monthly or quarterly DBE reports to District EEO/DBE • Jobsite EEO & Prevailing Wage Posters • Regular employee interviews, proper records • Complaint follow-through w/guidance and communication to District EEO/DBE or Prevailing Wage

  23. Construction Contract Administration Example Monthly Prevailing Wage Report

  24. Construction Contract Administration Example DBE Quarterly Report

  25. Construction Contract Administration Example EEO/DBE/Prevailing Wage Interview Form

  26. Construction Contract Administration The Project is almost complete…..

  27. Construction Contract Administration • So the project is open to traffic, but all that “paperwork” remains to final the project….. • Final Inspection by contractor, LPA, consultant, ODOT, official punchlist is developed • All claims resolved or dismissed, both with the contractor and with 3rd parties • Documentation compiled for failed materials have been removed or a deduct made • Contractor and DBE subs/suppliers sign affidavits • Final certification is signed and sealed by the CPE

  28. Construction Contract Administration Example DBE Affidavit

  29. Construction Contract Administration • Remaining “paperwork”….. • Upon completion of punchlist, ODOT completes the C-85 • Final estimate is processed when all required paperwork is completed • District notifies Central Office to close all encumbrances

  30. Construction Contract Administration Example Final Certification

  31. Construction Contract Administration Example C-85

  32. All personnel and their respective employers portrayed in this example are fictional. Any resemblance to an existing or proposed project and involved personnel is purely coincidental.

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