Statewide Construction Administration Javad Hosseini P E Bureau

Statewide Construction Administration Javad Hosseini, P. E. Bureau of Project Development Construction Oversight Engineer NER Construction Training March 22, 2018

Discussion Topics l Construction Contract Administration _ Non-Conforming Materials _ Issuing Contract Change Orders _ CRI Evaluation l Questions? / Comments (Anytime)

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

Non-conforming Materials If you decided to allow the non- conforming work or materials to remain, you must document your rationale and your engineering decision. 4

Non-conforming Materials/QMP If proposing a significant or controversial price reduction for non testing or nonconforming materials – BTS and BPD needs to know. Contact Regional Oversight Engineer will advise whether BTS and BPD involvement is necessary 5

104. 2. 2 Issuing Contract Change Orders 6

Contract Modification Need to ask yourself: _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. 7

Contract Modification Justification (CMJ): • Attach an initial independent cost analysis supporting the estimated extra work prior to the approval request. • CMJ has to be written and approved prior to execution of contract mod. • Attach all backup documentation, approved by the project leader, which may include materials supplier quotes, computations of labor and equipment costs, applicable white sheet labor rates, average unit prices, Bid Express sheets, etc. to the CMJ. 8

Required documentation • Be sure to attach any hard copies of e-mails approving the work before the work is done with your record of the contract mod. • Be sure to document all Wis. DOT verbal/written communication for Prior Approval before the start of Contract Mod work • Show the rationale behind the proposed lump sum or unit cost, such as average unit price history, or labor, equipment, materials and time estimates and identify the method you used to convince yourself that the costs are reasonable. 9

Price Adjustments for Contract Revisions • 109. 4. 2 Contract Bid Prices • 109. 4. 4 Negotiated Prices • 109. 4. 5 Force Account • 109. 4. 6 Non-Allowable Charges for Adjustment of Contract Prices 1. Profit in excess of that specified in 109. 4. 2 through 109. 4. 5. 2. Loss of anticipated profit. 3. Home office overhead. 4. Consequential damages, including loss of bonding capacity, loss of bidding opportunities, and insolvency. 5. Indirect costs. 6. Attorneys fees, claims preparation expenses, or costs of litigation. 7. Interest. 10

Negotiation Process • Use for item quantity changes that significantly change character of work (104. 2. 2. 4). • Use for all revisions not covered by contract bid prices or not covered by agreed lump sum for minor changes. • Project Leaders should provide an independent estimate of revised work before performing the work including, any delay, associated costs, plus reasonable allowance for profit and applicable overhead. To help support verification of the estimate computation, the average unit price list is available on WISDOT’s HCCI site and WISDOT’s Bid Express may be utilized for comparisons if available. This estimate should be attached to the contract modification justification when submitted. Project Leaders may request proposed labor time, material accounting, equipment cost and time accounting and material supplier quotes. Force Account markup should not be part of this accounting. Equipment Watch, Rental Rate Blue Book sheets assist for quick comparison. • The prime contractor use of force account markups /any mark ups are not allowed as part of that work estimate performed by a subcontractor. • Price adjustments using the negotiation process should not be estimated by or made by “force account procedures”. If labor, equipment, and materials costs are used to estimate a price adjustment there should be no force account markups applied. 11

Force Account • There should be no reservation to direct the contractor to perform revised work under force account if the work is required and there is no agreement on price adjustment. • A written proposal is required for the work including planned labor, equipment, materials, and work schedule prior to performing any revised work and should be attached to the contract modification justification. • A daily accounting and comparison of all work performed under a force account must be made by the contractor’s representative and the inspector. Both must sign daily report. • The contractor submits an itemized statement for all costs in accordance with 109. 4. 5 of the Standard Specifications to perform the revised work. • If a subcontractor performs force account work the prime contractor is allowed a mark up on work subcontractor performs in accordance with 109. 4. 5. 6. 12

Contract Change Order Checklist Contract change order: A written order or authorization the engineer executes covering work not otherwise provided for in the contract, revisions in or amendments to the contract, or conditions specifically prescribed in the specifications as requiring contract change orders. The change order document becomes a part of the contract when executed by the department. Issuing Contract Change Orders Change Order for Extra Work? Change Order for Differing Site Conditions Change Order for Engineer-Ordered Suspensions Change Order for Significant Changes in the Character of the Work: Altered Work Changed Quantities (Normal Increases and Decreases are not a justification for a CCO) Change Order for Eliminated Bid Items Change Order for Revisions to Contract time When issuing a CCO, you must ensure: Fair bidding practices are not compromised Quality materials and acceptable construction practices are utilized The work in question is reasonable in consideration of project budget and schedule The work in question can be accomplished in accordance with National Environmental Policy Act (NEPA), including non-attainment conformity requirements To notify and consult with the designer Issue an error and omission notice, if necessary 13

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