Measurement and Payment Module #5

1. Measurement and PaymentModule #5 Prepared by Dr. Randy R. Rapp July 2005

2. Contractual Payment • Lump-sum or fixed-price • Unit-price • Fixed-price with cost incentives • Time and materials (T&M) 2005, Randy R. Rapp

3. Progress Payments • Typically monthly • Contractor request maybe 10 days prior • Lump-sum vs. unit-price verification • Inspector role • Measure quantity and type of work • Claims for extra work and change orders • Calculate payment due, minus retention • Prepare and forward recommendation • Lump-sum vs. unit-price payment basis 2005, Randy R. Rapp

4. Conflicting Bases of Payments? • Specification writer misunderstands? • Lump-sum contract • Schedule of values OR • Cost-loaded critical path method (CPM) network • Unit-price • Neither schedule of values NOR • Cost-loaded CPM 2005, Randy R. Rapp

5. Payment Request Evaluation • Lump-sum: completed work package • Discernable fraction thereof is usually OK • Consider change orders, if any • Unit-price: quantity x unit-price • Measurement accuracy absolutely essential • Renegotiate unit-price, if quantity exceeds allowable variation (15% to 25%) • Equipment and materials delivered but not yet installed • Maybe pay actual cost for long-lead, high-cost items • Only if contract specifically stipulates 2005, Randy R. Rapp

6. Force Account Day work • Measurement and Payment section OR • Changes and Extra Work section • “Reasonable” allowance for overhead and profit? • Categories • Labor • Materials • Equipment • Payment is full compensation for the work 2005, Randy R. Rapp

7. Force Account (Cont’d) • Labor • Trade classification wage rate and numbers • Foremen included, not general supervisors • Any allowances? • Materials: cost and freight • Equipment • DOT rates or Rental Rate Book • Active and standby times • Markups (p.85) 2005, Randy R. Rapp

8. Payment for Extra Work • Often detailed in Supplementary General Conditions 2005, Randy R. Rapp

9. Payment for Mobilization • Lump-sum contracts • Not included as a bid item: likely inflated • Include as a calculated allowance in separate technical section, per contract requirements • Not a matter of Measurement and Payment • Unit-price contracts • Properly in Measurement and Payment • Lump-sum amount stipulated in extended column 2005, Randy R. Rapp

10. Partial Payments • Partial waivers of lien (subs’ waivers maybe one payment behind prime contractor’s) • Total cost pricing of change orders • Forward pricing of change orders • Retainage • Liquidated damages 2005, Randy R. Rapp

11. Field Measurement for Payment • Pipeline lengths • Beware delivered vs. plan or in-place • If in-place, measure centerline on top • Earth and rock volume • Bank vs. compacted • Weight vs. volume (survey profile prior to work) • Curbs: top edge toward street • Sewers: do not include manholes • Fence: plan or top rail in-place 2005, Randy R. Rapp

12. Field Measurement for Payment (Cont’d) • Pavement • Areas or weights • Unit-prices for handwork vs. equipment • Retaining walls • Inside vs. outside surface measurement • Calculate non-overlapping prism volumes 2005, Randy R. Rapp

13. Final Payment • Additional requirements • Pay all project debts • Submit receipts, releases, waivers of lien • Obtain consent of surety • Besides retainage • Liquidated damages • Punch list work (1.5 to 2 times value) • Liens already filed • Upon filing Notice of Completion or Substantial Completion • Sometimes time limitation to announce intent to file lien • Time limitation to actually file 2005, Randy R. Rapp