Final Estimates Level 2 - CTQP Home Page Estimates 2/03-Mod_01-Contract...regarding pay items, ......

11/1/2017 FDOT Final Estimates Level 2 Release 11, Module 1–1

Florida Department of

TRANSPORTATION

Final Estimates Level 2

Module 1- Contract Language

November 20171-1



Module Content

• Contract Documents– Order of Precedence– Types of Contracts:

• Conventional Contracts

• Joint Program Agreement (JPA) Contracts

• Alternative Contracts

– Retainage– Contract Modifications– Cost Saving Initiative Proposals– Liquidated Damages– Claims

These contract documents are important to Final Estimates. As we go through this chapter we will cover the role they play in the estimate process.


November 20171-2



Contract Documents

• Contracts can refer to:− Construction− Consultant CEI

• For the purpose of this module, we will only refer to Contractsas defined by Standard Specification 1‐3 “between the Department and the Contractor”.

Contracts are not limited to construction projects. They can also be used for other contracts such as Consultant CEI.


November 20171-3



Contract documents:1. Guide the Contractor

• How to perform the work

2. Guide Department Personnel(In‐house and Consultant) • How to manage the contract,

inspect, document and pay for the work performed

3. Must be clearly understood by all parties• Important in preparing the

final estimate

Contract Documents


November 20171-4



READ YOUR CONTRACT

Contract Documents

Reading your contract can’t be emphasized enough! If you arrive in the middle of a project it is especially important to review all of the contract documents thoroughly.

MAKE SURE TO HAVE ALL CONTRACT DOCUMENTS.

“Contract Documents”, per Section 1-3 of the current Standard Specifications, has the meaning described below:

The term “Contract Documents” includes: Advertisements for Proposal, Proposal, Certification as to Publication and Notice of Advertisement Proposal, Appointment of Agent by Nonresident Contractors, Non collusion Affidavit, Warranty Concerning Solicitation of the Contract by Others, Resolution of Award of Contract, Executed Form of Contract, Performance Bond and Payment Bond, Specifications, Plans (including revisions thereto issued during construction), Addenda, or other information mailed or otherwise transmitted to the prospective bidders prior to the receipt of bids, work orders and supplemental agreements, all of which are to be treated as one instrument whether or not set forth at length in the form of contract.


November 20171-5



Contract Documents

1. Special Provisions

2. Technical Special Provisions

3. Plans

4. Design Standards

5. Developmental Specifications

6. Supplemental Specifications

7. Standard Specifications

In case of discrepancies, what is the

Governing order of Contract Documents

at FDOT?

Also, computed dimensions govern over scaled dimensions.

After receiving the contract, it is good practice to tab any Special Provisions, Technical Special Provisions, Development Specifications and Supplemental Specifications for quick and easy reference. Keep your Contract Plans, Design Standards and Standard Specifications easily available as well.


November 20171-6



Order of Precedence

Standard Specification 5-2: Coordination of Contract Documents dictates the governing order of contract documents.

• Special Provisions- Specific clauses adding to or revising the Standard Specification, setting forth conditions varying from or additional to the Standard Specifications, for a specific project.

• Technical Special Provisions – Specifications prepared, signed and sealed by an Engineer registered in the State of Florida other than the State Specifications Engineer, or his designee, which are made part of the Contract as an attachment to the Specifications Package.

• Plans – The approved plans, including reproductions thereof, showing the location, character, dimensions and details of the work to be done.

• Design Standards – Some sheets in the Plans are “standard” sheets that are not designed specifically for this individual project. An example of this type of sheet is the Pile Sheet Index Drawing 600.

• Developmental Specifications – A specification developed around a new process, procedure, or material and designated as a developmental specification.

• Supplemental Specifications – Approved additions and revisions to the Standard Specifications.

• Standard Specifications – The directions, provisions and requirements contained herein, together with all our stipulations contained in the plans or in the contract documents, setting out or relating to the method and manner of performing the work, to the quantities and qualities of materials and labor to be furnished under the contract.


November 20171-7


Standard Specification 1-3 defines Special Provision; as:Specific clauses adopted by the Department that add to or revise the Standard Specifications or Supplemental Specifications, setting forth conditions varying from or additional to the Standard Specifications applicable to a specific project.


November 20171-8


The definition for ‘Technical Special Provisions’ can be found in Standard Specifications 1-3. It is common practice for the "Method of Measurement" or the "Basis of Payment" to be modified in a Technical Special Provision.


November 20171-9



Contract Documents

3. Contract Plans−Provide detailed instructions for construction implementation, such as:− Alignment, right‐of‐way, landscaping, grades, cross sections, drainage and bridge detail

− Includes a summary of estimated quantities for each project

− Both general and pay item notes appear on the plans

− Plan notes have the same precedence as the plans themselves

Special notes within the plans call attention to a particular construction pay item or unusual conditions of measurement and payment of work.

Plan notes have the same precedence as the plans themselves but govern over both the Standard and Supplemental Specifications.


November 20171-10



Order of Precedence

4. Design Standards• An electronic document “eBook” issued by the Department for design, construction, maintenance & utility operations on State Highway Systems

• Provides guidelines and technical drawings for design and construction

• Provides limits of payment for some items

Design Standards are issued by the Department and are available for viewing, printing or download on the Department’s website:http://www.fdot.gov/rddesign/DesignStandards/Standards.shtm


November 20171-11



Order of Precedence

5. Developmental Specifications• A specification developed around a new process, procedure,

or material.


November 20171-12



Order of Precedence

6. Supplemental Specifications• Approved additions and revisions to the Standard Specifications, applicable to all Department Contracts

• They are created to always govern over the Standard Specifications

• Published by the Department to identify and describe the changes to the Standard Specifications

Available for viewing, printing or download on the Department’s website within the Workbook.http://www.fdot.gov/programmanagement/Implemented/SpecBooks/default.shtm


November 20171-13



Order of Precedence

7. Standard Specifications• Published by the Department to describe:

– The Contractor & the Department’s responsibilities

– Construction details for all major work items

– Specifications and criteria for materials incorporated in the work

– Method of measurement and basis of payment for completed work

Standard Specification 1-3 defines ‘Standard Specifications’ as:“Standard Specification for Road and Bridge Construction” an electronic book, applicable to all Department Contracts containing adopted requirements, setting out or relating to the method or manner of performing work, or to be the quantities and qualities of materials and labor.

Available for viewing, printing or download on the Department’s website:http://www.fdot.gov/programmanagement/Implemented/SpecBooks/default.shtm


November 20171-14



Types of Contracts

• Conventional Contracts

• Joint Participation Agreements (JPA)

• Alternative Contracts


November 20171-15



Conventional Contracts

•Conventional contracts are paid using pay items and their respective units. The resources used for these projects include:• Standard Specifications• Basis of Estimates (BOE) Manual • Construction Project Administration Manual (CPAM)

Conventional Contracts are projects that contain Pay Items and are paid for with their respective units (i.e. SY, ton, CY, LF, EA, LS, etc). READ YOUR CONTRACT regarding pay items, measurements, submittals, etc.

The Standard Specifications are designed for all conventional projects. This is a contract document.

The Basis of Estimates Manual is also another reference to conventional projects for all the pay items, their description, units, etc.

The CPAM is a reference for Construction personnel. It contains instructions for administering Department of Transportation Construction contracts and describes requirements and procedures for Final Estimate preparation associated with those contracts. See CPAM Sections 5.11 thru 5.16, and CPAM Chapter 11 for references to Final Estimates.


November 20171-16



Joint Program Agreement Contracts

• Contracts between the Department and other government or private entities

• Commonly used for:– Utility Work– Other work to be reimbursed to the participant

A JPA can be work that has been added to the construction contract, such as utility relocation or utility installation, and is paid for by the utility owner. The work is bid and included in the construction contract to prevent conflict and delay; therefore saving time and money.

A Locally Funded Agreement (LFA) is a type of JPA. This agreement is designated if money is received from the participant. A LFA could also be the cost difference between a regular item (such as a standard pay item at FDOT) and a decorative item (such as a preferential item that the owner would rather use). The Owner would pay the difference in cost through a LFA.


November 20171-17



Joint Program Agreement Contracts

JPAs are usually part of a larger State contract with a separate financial project ID number

– For example: FPID: 257163‐1‐56‐01

– Cannot be closed out by itself. Must be closed out with the remaining projects it is grouped

One way to determine if the project is a JPA is by looking at the FIN number. If the number “56” is included in the FIN, as seen above, then a JPA is within the project.

The JPA specifications are added to the contract as attachments. These attachments outline the roles and responsibilities of each parties involved.

A JPA is a part of the Contract as a whole, and cannot be “closed out” by itself. For example, if a contract has four projects with one being a JPA, the contract cannot be finalized until all projects including the JPA are reconciled.

For JPA’s that are ready to be finalized, projects will get concurrence from the Contractor and JPA owner on final quantities. This process is called the “Reconciliation of the JPA”. Specific letters need to be received as part of the reconciliation package and once reconciled, the JPA reconciliation package will be submitted to Central Office.

A letter signed by the contractor, JPA owner and the Department that concur on the final quantities and contract amount must accompany the final estimate package.


November 20171-18



Alternative Contracts

There is a long history of Alternative Contracting but the

primary goals are:– Improve the construction project

– Speed project delivery

– Improve the project delivery without compromising safety or quality

– Timely project completion which results in reduced disruptions and inconveniences to the traveling public, affected businesses and property owners, thus supporting the Department’s mission


November 20171-19




READ YOUR CONTRACT! Example of how things change: Contract Documents (STANDARD SPECIFICATIONS JULY 2015)

5‐2 Coordination of Contract Documents.

These Specifications, the Plans, Special Provisions, and all supplementary documents are integral parts of the Contract; a requirement occurring in one is as binding as though occurring in all. All parts of the Contract are complementary and describe and provide for a complete work. In addition to the work and materials specified in the Specifications as being included in any specific pay item, include in such pay items additional, incidental work, not specifically mentioned, when so shown in the plans, or if indicated, or obvious and apparent, as being necessary for the proper completion of the work under such pay item and not stipulated as being covered under other pay items.

In cases of discrepancy, the governing order of the documents is as follows:

• 1. Special Provisions.

• 2. Technical Special Provisions.

• 3. Plans.

• 4. Design Standards.

• 5. Developmental Specifications.

• 6. Supplemental Specifications.

• 7. Standard Specifications.

• Computed dimensions govern over scaled dimensions.

Contract Documents (DESIGN BUILD “BOILER PLATE”– SPECIAL PROVISION ‐ JULY 2015)

5‐2 Coordination of Contract Documents.

These Specifications, the plans, Special Provisions, and all supplementary documents are integral parts of the Contract; a requirement occurring in one is as binding as though occurring in all. In addition to the work and materials specifically called for in the Contract Documents and any additional incidental work, not specifically mentioned, when so shown in the plans, or if indicated, or obvious and apparent, as being necessary for the proper completion of the work, will be included in the Contract Lump Sum Price.

In cases of discrepancy, the governing order of the documents is as follows:

• 1. Request for Proposal Packages

• 2. Special Provisions

• 3. Technical Special Provisions

• 4. Plans

• 5. Design Standards

• 6. Developmental Specifications

• 7. Supplemental Specifications

• 8. Standard Specifications

• Computed dimensions govern over scaled dimensions.

A brief example of how your Contract can change through Special Provisions is shown above. This is an example of Standard Specifications (on the left) and a “Design Build” Special Provision (on the right). The Special Provision has precedence over the Standard Specification.

Notice that the number one document governing order of the Design Build contract documents is the Request for Proposal Packages (RFP) and not the SpecialProvisions.


November 20171-20




Examples of Alternative Contract Special Provisions which expand Standard Specifications Section 8‐13 of the Contract can include:

– Liquidated Savings– Lane Rental– No Excuse Bonus– A + B Bidding– Lump Sum– Design Build

The contracts listed above are the most common Alternative Contracting Methods used within the Department.

Some of the lesser additional Alternative Contracts are:Performance Based Contracting (Maintenance Contracts only)Statute 337.025 (Innovative Highway Projects)Bid Averaging Method (State Funded Only)SEP‐14 (Special Experimental Projects)Construction Management at RiskIncentive / Disincentive


November 20171-21




Liquidated Savings Contracts– Encourages the Contractor to finish a project early by providing a financial incentive

– Rewards the Contractor for each calendar day the contract is completed and accepted prior to the end of the contract time

Contract time can be adjusted for time extensions under this concept.

The amount of incentive or reward will be based on the direct saving to the Department (and the public) related to the Construction Engineering Inspection and Contract Administration costs.

The Daily Report of Construction (Form No. 700-010-13) and the Engineer Weekly Summary (Form No. 700-010-14) in SiteManager will serve as the support documentation for payment. Each will show the following statements:

1) Today is the first day or the beginning milestone day of the Liquidated Savings phase of this contract.

2) Today is the last day of the Liquidated Savings phase of this contract.


November 20171-22




Lane Rental – Designed to shorten the amount of time in which a contractor is actually closing lanes of traffic

– Lane rental fees can be charged only for days in excess of the number of lane rental days bid by the Contractor

The lane rental fee is based on the estimated cost of delay or inconvenience to the road user during the rental period. The lane rental technique allows Contractors bidding on a lane rental project to determine the number of days that a lane will be closed during work and use this determination in their bid process. The total lane rental bid will be added to the standard bid to decide the award. Contractors using more lane rental days than which they bid will be charged lane rental fees.

The lane rental concept requires a fee to be established during design and placed in the contract to be assessed for each day or half-day of lane closure(s) in "excess” of the number of total lane rental days originally bid by the Contractor. Once the lane rental days exceeds the total number of lane rental days bid the predetermined lane rental fee will be multiplied by the excessive time and the result will be deducted from the monthly estimate’s payment. The Contractor shall only be charged lane rental days on chargeable workdays. The fee is deducted from the monthly progress payments.

Lane Rental Specifications can be found under Special Provisions (SP0020501LR)


November 20171-23




Lane Rental – Damage Recovery can also be assessed if all lanes are not open to

traffic as outlined in the Traffic Control Plans– This is in addition to lane rental fees

The Lane Rental Site Source Record form documentation shall be submitted with the Final Estimates reflecting both the Inspector and Contractor signature agreeing to the total days charged.

Damage Recovery is outlined in Special Provisions SP0081300LRDR, Section 8-13.1:

In addition to the Daily Lane Rental Fee provided in 2-5.1, a damage recovery/user cost will be assessed against the Contractor if all lanes are not open to traffic during the times as shown in the Traffic Control Plans. Costs will be assessed beginning at the appropriate time as shown in the Traffic Control Plans and continue until all lanes are open as recorded by the Engineer. This assessment will be in the following amounts:

First 30 minutes and under: $________Each additional 30 minute period or portion thereof: $________Such costs will not exceed $________ over a 24 hour period.

At the discretion of the Engineer, damage recovery/user cost will not be assessed for failure to open traffic lanes if such cause is beyond the control of the Contractor, i.e., catastrophic events, accidents not related or caused by the Contractor’s operations. The Department will have the right to apply as payment on such damages any money which is due to the Contractor by the Department.


November 20171-24




Lane Rental Form


November 20171-25




No Excuse Bonus• Incentive to complete a project within an absolute time

frame with no extensions

• Can be tied to milestone, final completion date or both

The No Excuse bonus provides the contractor with substantial incentive to complete a project within a specified time frame regardless of any problems or unforeseen conditions that may arise.

The bonuses are intended to reward the Contractor for early completion, thereby reducing disruption and inconvenience to the public. Due to the accelerated work schedule, CEI parities may need to increase staffing or work overtime. FDOT may establish contingency funds to cover this additional workload.

Time extensions are only allowed for catastrophic events such as hurricanes that directly impact the Contractor’s performance.

The Daily Work Report & Diary of Construction in SiteManager will serve as the support documentation for payment. Each will show the following statements:

1) Today is the first day or the beginning milestone day of the No Excuse Bonus phase of this contract.

2) Today is the last day of the No Excuse Bonus phase of this contract.


November 20171-26




Time plus money bidding (A+B)• This bidding concept can potentially shorten the contract time by allowing each contractor to bid the number of days in which the work can be accomplished

What does A + B mean? The A + B bidding concept is designed to shorten the total contract time by allowing each contractor to bid the number of days in which the work can be accomplished. The cost or “A” component is “the traditional bid” for the contract items and is

the dollar amount of all work to be performed under the contract. The A portion of the bid consists of the total of all quantities multiplied by the associated unit price quoted by each contractor.

The time or “B” component is a “bid” of the total number of calendar days required to complete the project, as estimated by the bidder. This portion consists of pre-established dollar value for each contract day multiplied by the number of contract days quoted by each contractor. The number of contract days is provided by the contractor as part of the bid.

Contracts are awarded based on the combination of the bid for the contract pay items (that is the “A” portion of the bid) and the associated cost of the time needed to complete the work (the “B” portion of the bid.)

The Daily Work Report & Diary of Construction in SiteManager will serve as the support documentation for payment. Each will show the following statements:

1) Today is the first day or the beginning milestone day of the A+B Bidding phase of this contract.

2) Today is the last day of the A+B Bidding phase of this contract.


November 20171-27




Bonus Payments• Read your alternate contract language

• Communicate with your District Final Estimate Office (DFEO)• Understand the funding for your bonus payment

• Encumbrance of funds

As previously mentioned, bonuses can be tied to specific milestones, a final completion date, or both.

On some alternative Contracts the bonus payment may require encumbrance of funds. Read your contract, contact the DFEO and discuss the programming, encumbrance and payment process for any bonus. This will help understand what the process will be and how much time will be needed to make a bonus payment.

In SiteManager it is a contract adjustment from the pull down menu. The adjustment is made after the estimate has been generated but before you have approved it.


November 20171-28




Lump Sum Projects• Bid as one lump sum with the Contractor having the

responsibility to calculate quantities

• Schedule of Values must be submitted with in 21 days of contract award or pre‐con

Lump Sum projects were created to reduce the costs of design and contract administration associated with quantity calculation, verification and measurement. This contracting technique requires the Contractor to submit a lump sum price to complete a project as opposed to bidding on individual pay items with quantities provided. The Contractor will be provided a set of bid documents (plans, specifications, etc.) and will develop a Lump Sum bid for all work specified in the contract drawings.

Within 21 calendar days after contract award or at the preconstruction conference, whichever is earlier, the contractor will prepare and submit a schedule of values to the Engineer for approval prior to invoicing.


November 20171-29


Shown above is a portion of the Lump Sum Schedule of Values Form. To see the entire form, go to: http://www.fdot.gov/construction/LumpSum/LumpSumMain.shtm.

The schedule of values will be the basis for determining monthly payments. Quantities will be compared with the project schedule to determine the percentage earned. The percentage shall be that portion of the work completed as compared to the total work contracted.


November 20171-30




Lump Sum Projects

• Measurement and Payment Special Provision (SP0090103LS) for Lump Sum Projects

• Monthly payment based on a Contractor’s Monthly Estimate– Including Fuel & Bituminous Adjustments

Special Provisions (SP0090103LS) provides instructions for properly implementing lump sum projects with regards to Measurement and Payment. This includes revisions to the following sections within the Standard Specifications:

Section 9-1.3: Determination of Pay ReductionSection 9-2: Scope of Payments

(including Fuels, Bituminous Material and Adjusted Pay Tables)Section 9-5.5.2: Partial Payment AmountSection 9-11: Submittals

All adjustments and deficiencies will be accomplished using the Tables provided in the Lump Sum specifications. For Fuel & Bit Adjustments, the Contractor will use the forms and indexes provided on the Construction website to show the calculated adjustments.

These adjustments will be submitted with the Monthly Estimate and after approval by the Engineer, payment will be made, less an amount retained or withheld per provisions included in the Contract. The monthly payments will be approximate only and subject to reduction for overpayments or increase for underpayments on preceding payments to the Contractor, subsequent estimates and/or the final estimate and payment.

In module 2 we will discuss some of the documentation required for Lump Sum projects, including the Pay Item Summary and Certification sheet generated in SiteManager.


November 20171-31




Design Build (DB) Projects• One contract that includes both the design and construction awarded to one firm

• Special Provisions specifically for DB projects

• Boiler Plate language available on FDOT Construction website

Design-Build projects assigns the design and construction to one firm, sometimes allowing construction to begin before plans are complete. This provides a single point of contact for quality, cost and schedule from design through construction, thus reducing change orders and claims due to errors and omissions. Compared to a traditional contract procurement, time is saved when the project construction begins during design. Design-Build is innovative in that it allows the contractor maximum flexibility to choose innovative designs, materials and construction techniques.

Due to the unique nature of these projects, FDOT has developed specifications and boiler plate contract documents specific to Design-Build projects. These documents not only distinguishes these contracts from conventional or lump sum, it also allows for equal implementation to all DB projects.

Contract documents, rules, procedure and general information is available on the Construction web site at: http://www.fdot.gov/construction/DesignBuild/Design-Build.shtm

Likewise, Design Build specifications can be located at:http://www.fdot.gov/programmanagement/Implemented/DesignBuild/Default.shtm


November 20171-32




Design Build (DB) Projects• Monthly payment based on a schedule of values. Include

all adjustments specified in Section 9 of the Special Provisions

• Final payment will vary; check your specific contract, design‐build guidelines, specifications, and procedures

The Schedule of Values is developed by the Contractor, submitted for review (see next slide), accepted by the engineer and included in the Special Provisions package. Check the schedule of values and make sure the project is not front loaded. Estimates are paid based on the Contractor’s Monthly Estimate and checked against the Schedule of Values.

Partial Payments for Progress Estimates under $5,000 will be included in subsequent estimates or the final offering. CPAM Chapter 6, will guide you on method of payment and documentation required for these alternative contracts. Remember to submit the Contractor’s Monthly Estimate with the Final Estimate.

Design Build major projects include bridges where the estimated construction cost of $10 million and over, buildings and rail corridor projects. Design Build minor projects are bridges under $10 million and other transportation projects (i.e. resurfacing) not previously allowed under Section 337.11(7), Florida Statutes.


November 20171-33


A portion of the DB Schedule of Values (SOV) is shown above. To see the complete form go to: http://www.fdot.gov/construction/DesignBuild/DBDocuments/DBDocsMain.shtm

The DB SOV differs from the Lump Sum SOV due to the inclusion of preconstruction activities such as design, geotechnical, survey services, etc.


November 20171-34



Retainage

Retainage will be held when: • The percent of allowable contract time used exceeds

75% AND

• The difference in the % of contract time used exceeds the % of contract amount earned by more than 15%

• If both criteria are met, withhold 10% of the amount due on the current progress estimate

The amount withheld on any progress estimate will not be released until final acceptance.

The amount retained may be reduced and/or released after final acceptance in accordance with the Standard Specifications, Section 9-5.1


November 20171-35



Retainage Example

Should retainage be held on the following project given the information below? If so, what should be withheld?

Given:– Total Contract Time = 625 days– Days Used = 600 days – Original Contract Amount = $15,355,868.30– Work Completed to Date* = $12,284,694.64– Progress Estimate #25 (most recent) = $591,337.07

* Work Completed to Date = Total work completed to date prior to any adjustments


November 20171-36



Retainage Example Solution

• Step 1: Determine if the contract time exceeds 75%

600 days625 days

100 = 96%

• Step 2: Determine if the difference between % contract time used exceeds % of contract amount earned by more than 15%

Contract Amount Earned = $12,284,694.64$15,355,868.30

x 100 = 80%

Difference = 96% ‐ 80% = 16% (Qualifies for Retainage)

• Step 3: Determine the retainage given Estimate #25 = $591,337.07

Retainage = $591,337.07 x 0.10 = $59,133.71


November 20171-37



• Supplemental Agreements (SA)

• Work Orders (WO)

• Unilateral Payment

Contract Modifications

Once the contract is executed, the only way to modify the contract documents is through:


November 20171-38




Supplemental Agreements• Work of a different general character from that shown in the original plans and contract

• Reasons for Supplemental Agreements:

– Alteration of the original contract to extend the original scope of work

– To clarify the plans & specifications

– To provide for unforeseen work

– To make the project functionally operational in accordance with the intent of the original contract

Standard Specification Section 4-3.4 “Conditions Requiring a Supplemental Agreement or Unilateral Payment” provides further clarification on what a supplemental agreement can be used for and how. Additional reasons for requiring a Supplemental Agreement are: grade changes, alterations in plans or the physical limits of construction, settlement of claims, Cost Saving Initiative Proposals (CSIP’s) and to add additional Pay Items to the contract.

Supplemental Agreements shall be dated and effective on the same date as the date of Execution by the Department.

A Supplemental Agreement (SA) for extending the physical limits of a project shall not exceed $100,000.00 or 10% of the original contract price, whichever is greater. Authorization is required. See CPAM Section 7.3.6.2 for requirements.

Remember SAs must: be approved by the District Secretary or designee, have an entitlement analysis, an engineers estimate, be coded correctly and have time and money divided into Federal Aid and Non-Federal Aid.

Details for coding contract changes are outlined in CPAM Section 7.3. All coding must be approved by the DCE or designee.


November 20171-39




Supplemental Agreements• Price Adjustments only for major items of work

• Quantity Overruns

– Manually track overruns

– SiteManager does not show encumbrance funds

Any price adjustment for a significant change involving an increase in quantity to a Major Item of Work (as defined in Standard Specification 1-3) will apply only to that portion of the work in excess of 125 percent of the original contract quantity for that item. In case of a decrease in the original contract quantity below 75 percent of the original contract quantity, the price adjustment will apply to the actual amount of work performed. Such adjustments must be documented on a fully executed Supplemental Agreement.

Make sure to encumber money for a SA.

Encumbrance money is not shown in SiteManager. You must manually track overruns.


November 20171-40




Supplemental Agreements• Quantity Overruns

– Resident Level Responsibilities

• Funds must be encumbered prior to overrunning the current contract amount

• There is an exception to the above statement for Contracts under $5 million. Contact your District Construction Office regarding their requirements

To manage the potential overrun of quantities on contracts, the Department has implemented the following procedure, per CPAM Section 7.3.6.4:

Resident Level Responsibilities:Contracts with an original contract amount of $5 million or less:

a. Without encumbering any additional funds, overruns may incur to the current contract amount up to the Allowable Unencumbered Overruns Amount (AUOA) which is calculated as follows. To find the AUOA, the Initial Contingency Pay Item amount is subtracted from the

Original Contract amount and the result is multiplied by 2.5%. b. Although overruns up to the AUOA may be paid as unencumbered disbursements,

management encourages project managers to program and encumber additional funds for any outstanding unencumbered overrun amount prior to the expenditures exceeding the contract amount.

c. Overruns in excess of the AUOA must have additional funds encumbered prior to the authorization of the work that will cause the contract (not pay item or project) to overrun.

For Contracts with an original contract amount > greater than $5 million:a. Projects are required to have additional funds encumbered to cover overruns to the

contract (not pay item or project) on regular work prior to the authorization of the work that will cause the contract (not pay item or project) to overrun.

b. Contingency funds may not be used for overruns.


November 20171-41




For Supplemental Agreements, what happens if funds are not approved or encumbered before an overrun of the current contract amount on contracts greater than $5 million?

An after‐the‐fact memo to the Department’s Comptroller from the Turnpike Executive Director or District Secretary/Assistant Secretary, as appropriate, will be required.

The letter should request authorization for an after-the-fact funds approval detailing the situation, cause of non-compliance and the measures put into place to prevent a repeat occurrence.


November 20171-42




What if the net overrun exceeds the Allowable Unencumbered Overruns Amount on contracts of $5 million or less?

Again, an after‐the‐fact memo to the Department’s Comptroller from the Turnpike Executive Director or District Secretary/Assistant Secretary, as appropriate, will be required.

The letter should also request authorization for an after-the-fact funds approval detailing the situation, cause of non-compliance and the measures put into place to prevent a repeat occurrence.

AUOA: Allowable Unencumbered Overruns Amount


November 20171-43




Supplemental Agreements

• Quantity Overruns

– District Level Responsibilities

• District Federal Aid Coordinator initiates additional federal funding through Authorization Request

• FHWA Approval is mandatory

• Contract Funds Management System will allow the encumbrance of funds once the authorization is approved

• Code 240 will be used for monitoring and tracking expenditures related to overruns

The District Federal Aid Coordinator will request federal funds approval by initiating a federal Authorization Request through the Federal Aid Management Office in the Office of Work Program.

A justification for these changes must be given to the Federal Aid Coordinator for all adjustments to the initial authorization. The justification does not need to be in detail but should include all major pay items that are overrun, such as asphalt, etc., (not 20 pcs of guardrail, 60 lag bolts, 30 posts).

An analysis of the contract and an explanation of the work or material required shall be included for anticipated future overruns. Failure to comply with this will prolong the process for obtaining approval from FHWA, and reimbursement for costs could be jeopardized.

In some cases a FHWA Oversight project may require more detailed information in order for the Authorization Request to be approved by FHWA.

The Authorization Request must be in one of the following status states: Reviewed, Certified, Transmitted or Approved in order to encumber the funds though the Contract Funds Management system (CFM).

The CFM system will check Financial Management system (FM) daily to see if the authorization has been approved and if so, CFM will change the encumbrance to Status 10 (available for payment).

Payments for contract overruns will not be made until the Authorization Request is approved by the Federal Highway Administration (FHWA). In order to ensure prompt payment on these projects, the Federal Aid Coordinator must be informed of the expected payout date.

Function (work activity) code 240 must be used for monitoring and tracking expenditures related to overruns. Requests for additional funding must be based on an analysis of the project and calculated estimated overruns.

The District Federal Aid Coordinator must submit an Authorization Request for changes to the project costs.


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Work Orders– Written agreement issued by the Department which modifies

the contract within the original limitations– Reasons for Work Orders:

• Include time and/or money

• Cover additional unforeseen work

• Minor changes in the plans within the scope of the contract

• Avoid delays to the progress of the work

• Avoid potential delay claims

A Work Order (WO) is a written agreement between the contractor and the Department modifying the contract within the limitations set forth in the Specifications. Funds for work order agreements are drawn against the Initial Contingency Pay Item or a Contingency Supplemental Agreement.

WOs are Similar to SA’s but cannot be used in all instances. They are used to include additional work into the original contract. Make sure you check the appropriate boxes on the work order form. Work orders must be completely executed prior to allowing the contractor to begin the work and they must also be submitted with the Final Estimate Package.

Numbering for Work Orders:Supplemental Agreement Number = N/A when funding by contingency pay item** Number Work Orders on a Contingency Pay item sequentially beginning with 01, 02, 03, etc. For each subsequent Contingency Supplemental Agreement (CSA) restart the numbering of the Work Orders on that CSA sequentially beginning with 01, 02, 03, etc.

Like SAs, Work Orders must: be approved by the District Secretary or designee, have entitlement analysis, have engineers estimate, be coded correctly and have time and money divided into Federal Aid and Non-Federal Aid.

Note: Work Orders are sometimes audited by the Inspector General’s Office, therefore, it is very important that they are used properly.


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Work Orders are funded through:– Initial Contingency Amount Pay Item

• Included in a contract prior to bidding under Pay Item 999‐25. They cannot be overrun.

• Once funds are expended then a CSA will need to be issued

– Contingency Supplemental Agreements (CSA)

• Utilizes Form No. 700‐010‐79; the form cannot be executed until funds are obtained through CFM

• Cannot be issued until at least 50% of the Initial Contingency Amount Pay Item funds are expended

• Included under Pay Item 9999‐21 (first CSA), or 9999‐22 (second CSA), etc.

A Work Order must not be dated or executed prior to the commitment of funds. CPAM Section 7.4 provides further clarification of work orders, initial contingency amount pay items, and contingency supplemental agreements.

The following funding limits have been established for all Contingency Supplemental Agreements and the Initial Contingency Amount Pay Item.

(1) If the Original Contract Amount* is $5,000,000 or less, the amount authorized shall not exceed five percent (5%) of the Original Contract Amount or $50,000, whichever is less.

(2) If the Original Contract Amount is more than $5,000,000, the amount shall not exceed one percent (1%) of the Original Contract Amount or $150,000, whichever is less.

*When calculating the Original Contract Amount for the purpose of establishing maximum funding limits for Contingency Supplemental Agreements or the Initial Contingency Amount Pay Item, include only amounts programmed as Phases 52 and 56. Amounts programmed as other Phases (i.e. Phase 58) should not be considered as part of the Original Contract Amount.

Any justifiable time associated with the unforeseen additional work should be included on these documents.


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$0.00 Work Orders– Documents that modify the Specifications with no dollar value

– Extension of the material acquisition– Extends of the flexible start time after issuance of Notice

to Proceed– Revises the submittal time for Project Schedule and

Quality Control Plan– Work Orders: Do’s and Don’ts!

Work Order Don’ts:1. Shall not be written to include normal overruns of existing contract items for work at

established contract unit prices shown in the contract documents. 2. They shall not be used to settle certified claims or certified requests for equitable

adjustment3. They shall not be used to reconcile any agreement made with the Contractor

subsequent to the completion of work related to a previously executed and processed Unilateral Payment document.

4. Work Orders shall not be used to settle costs associated with unforeseen utility work during construction, unless the Utility Agency/Owner has funded the contingency item up on which the Work Order will be drawn.

5. Work Orders should not include lump sum items without a detailed itemization stating the quantities and unit prices the lump sum item was based on.

Work Order Do’s: 1. May be used to document the Department’s reimbursement to the Contractor for the

Contractor's fee payments made to the individual board members of a Regional Disputes Review Board (RDRB) for those board members participation in RDRB meetings held to resolve disputes related to the contract.

2. May be used, along with the appropriate approvals from the Director, Office of Construction, and the FHWA as documentation to effect a specification change or extend the physical limits of a project (see CPAM Section 7.4.9.5). The terms of the Work Order shall provide for full and complete settlement of all issues described therein.


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Unilateral Payment– When there is a dispute between the Department and the

Contractor, it is the payment due to the Contractor for work performed without waiving the right for additional money in the dispute

– When are they used?– When the Department and Contractor cannot agree on

the terms or the Contractor fails to timely execute:• A Work Order (WO)• A Supplemental Agreement (SA)

Standard Specification 1-3 defines ‘Unilateral Payment’ as a payment of money made to the Contractor by the Department pursuant to Section 337.11(12) F.S. (2009), for sums the Department determines to be due to the Contractor for work performed on the project, and whereby the Contractor by acceptance of such payment does not waive any rights the Contractor may otherwise have against the Department for payment of any additional sums the Contractor claims are due for the work.

Unilateral Payment’s require all of the same backup and coding as a Supplemental Agreement.

Unilateral Payment can address time and/or money. They shall be dated and effective on the date of Execution by the Department.

The Unilateral Payment is effective in preventing delays and delay claims. It can also be useful in preventing and limiting later claims for payment of interest by the Department to the Contractor.


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Cost Savings Initiative Proposals

• Cost change proposal to increase cost effectiveness and improve the quality of work

• Incentive of sharing of net savings between the Department and Contractor– Developed by the Contractor– Reviewed by the Department– Approved by the Engineer– Implemented through a

Supplemental Agreement

Standard Specification, Section 4-3.9 defines the Cost Savings Initiative in more detail.

The proposals shall be finalized by the execution of a Supplemental Agreement pursuant to Standard Specification 4-3.9. These Cost Saving Initiative Proposal (CSIP) SA’s will ALMOST always be negative dollar value. However, under certain circumstances SA’s may be a positive amount. An example would be when a future added value may apply therefore costing more with all the new improvements. This could make the SA a positive value.

A mandatory Cost Savings Initiative Workshop will be held prior to the Contract Time beginning for the Contractor and Department to discuss potential Proposals. For potential Proposals not discussed at the Cost Savings Incentive Workshop, a mandatory concept meeting will be held for the Contractor and Department to discuss the potential Proposal prior to development of the Proposal.

Sharing Arrangements: Per Standard Specifications, Section 4-3.9.7, if the Department approves a CSIP, the Contractor may be entitled to share in both the construction savings and collateral savings to the full extent provided for in this sub-article. The Contractor shall receive 50% of the net reduction in the cost of performance of the Contract due to the CSIP, with the exception of innovative ideas.


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Liquidated Damages

• Damages assessed on the Contractor for failure to complete work within the contract time

• Applicable on all jobs

• The daily damage charged depends on the contract amount per Specification 8‐10.2

Liquidated damages (LD’s) apply to all contracts and are applied on progress estimates as soon as they are applicable. Do not wait until the final estimate. LD’s can be refunded on the next progress estimate if a time extension is granted.

DON’T pay for additional daily items whose unit of payment is “per each/per day” during Liquidated Damages. An example of this is Maintenance of Traffic items. However, continue to document the Contractor’s certified quantities for the 102 pay items during liquidated damages period in the event a time extension is granted.


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Claims

• A Notice Of Intent (NOI) to claim must be received from the contractor before beginning work on which the claim is based

• Accurately document the work being claimed

• If valid, a Supplemental Agreement will be required to settle a claim

If a NOI is received, the Project Administrator (PA) must respond in writing to the Contractor acknowledging receipt of the NOI.

If a utility or 3rd party is involved, they too must be notified by the Project Administrator. This NOI triggers the mandatory submittal of documentation by the Contractor. The Standard Specifications Section 5-12 addresses all requirements for notification, content of claim, and required time frames for submittals and responses. Specification 100-1 requires the Contractor to submit weekly a certification accounting for all the equipment used on the project for the proceeding week.

Ultimately the District Construction Engineer (DCE) will determine dispensation (to dispose of) of the claim. If the Contractor disagrees, he may take the dispute to arbitration or litigation. Check your contract language for Regional or contract specific Disputes Review Board (DRB), some contracts require an escalation process.

Check CPAM Section 7.5, to ensure that all responsibilities and procedures, both in the field and in the office are being addressed. This could save legal fees.


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Module Review

• Contract Documents are the guidelines to successfully manage a Construction project

• Remember the Order of Precedence• READ YOUR CONTRACT!

The documents discussed in this module are the foundation of the documentation and administration that is so vital to a successful project.


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ANY QUESTIONS?


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Final Estimates Level 2 - CTQP Home Page Estimates 2/03-Mod_01-Contract...regarding pay items, ......

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