standards of practice course contract administration

CONTRACT ADMINISTRATION

© Construction Management Association of America. Do Not Duplicate or Reproduce.

Review of Delivery Methods Forms of Compensation The Construction Contract Contract Administration by project phase Project Documentation Q+A

The practice of professional management, applied to the planning, design, and construction of projects, from inception to completion, for the purpose of controlling time, cost, and quality.


A management approach that focuses on the delivery of professional services.

Implementation of the terms and

conditions of all the contracts

associated with a project, based upon

established systems, policies, and

procedures (laws, rules, and regulations).



To manage critical construction parameters - Time

- Cost

- Quality

- Information

To satisfy the owner’s goals and objectives

for the project


Traditional: Design–Bid–Build Multiple Prime CM at Risk Design-Build


OWNER

DESIGNERGENERAL

CONTRACTOR

CONSULTANTS SUBCONTRACTORS

SUPPLIERS

Advantages - Widely applicable - Understood - Owner retains control - Owner “knows” the cost prior to the start of construction - Others?


Disadvantages - Relatively slow - Owner is liable for design

- Constructabilty issues

- Adversarial relationships

fostered

- Others?


OWNER

DESIGNER PRIME

CONSULTANTSSUPPLIERS

PRIME PRIME

SUBS SUBS SUBS

Advantages - Increased Owner control - Work easily fast-tracked - Save GC markups - Some states require it - Others?


Disadvantages - Owner has risk of

controlling time and

coordination - Multiple accountability for

performance

- Unknown “final” cost at

construction start

- Same Owner risks as

traditional approach

- Others?


OWNER

DESIGNER

CONSULTANTS

CM at Risk

SUPPLIERS

SUBS SUBS SUBS SUBS

Advantages - Well-suited for fast-tracking

- Contractor (and subcontractor) input on design alternatives

- Better cost info

- Permits “picking” of the builder

- Others?


Disadvantages - Changes of CMs

accountability after GMP

is signed

- Tempted to sign GMP

“too soon”

- Variations in procurement

methods

- Others?


OWNER

DESIGN-BUILDER

DESIGNCONSULTANTS

SUBCONTRACTORS

SUPPLIERS

Advantages - Accountability for project delivery

- Reduced disputes

- Can cut time / cost

- Builder can have input to design / constructability

- Budget established early on

- Others?


Disadvantages - Early definition of the

program required

- Owner’s loss of control

during design

- Potential for quality to be

compromised

- Others?


Bid Negotiated Fixed Price Reimbursable


Different combinations are possible:

Bid

Fixed Price

Negotiated

Reimbursable

Advantages - Well-known - Competitive - Fair and transparent - Produces “lowest” price - Contractor assumes risk for completion


Disadvantages - No consideration of any

qualification except price

- Work must be well

specified

Advantages - “Best Value” selection - Freedom to pick subs - Easier choice of alternatives - Paying for design errors reduced - Others?


Disadvantages - Potential abuse

- May not be legal

- Requires expertise on the

part of the owner (or their

consultants)

- May not be legal

- Others?


Lump Sum GMP, Guaranteed Maximum Price Unit Price Cost Plus a Fixed Fee T&M, time and materials

Fixed

Reimbursable


When is a reimbursable contract most

appropriate / best suitable? - Unknown quantities of work

- Risky work

- Work that is impossible to define


What constitutes the contract documents? - The Agreement

- Drawings

- Specifications

- Addenda (changes issued prior to the bid)

- Modifications (changes issued after the bid)

- Any documents incorporated by reference


Use standard forms Use customized forms Use a combination of both


Advantages: - Increase the predictability of project outcomes

- Increase the consistency of pricing

- Simplify management

- These forms are regularly updated by the entities that issue

them, to keep consistent and current with industry practice


Most commonly used forms - AIA, American Institute of Architects (A101, A 201, etc)

- AGC, Associated General Contractors

- CMAA, Construction Management Association of America

- DBIA, Design Build Institute of America

- Owner-specific


When making modifications, consider: - Seek advice of legal counsel

- Assure modifications are properly coordinated with other

project documents

- Think ahead: how will modifications be received?

- Place responsibility and authority with the party best able to

perform duties and control the risks


Intent: to provide documents that: - Provide contractually-specified duties

- Avoid concurrent or undefined responsibilities

- Minimize conflicts between the CM, designer, and contractor(s)


Document A-1: agreement between the

Owner and the construction manager Document A-2: between the owner and

the contractor Document A-3: general conditions of the

contract Document A-4: between the owner and

the designer


Document CMAR-1: agreement between the

Owner and the construction manager Document CMAR-2: between the CM and

the contractor Document CMAR-3: general conditions of the

contract Document CMAR-4: between the owner and

the designer


Comparable to the CMAA Agency Series - A101/CMa, 1992; Owner & contractor

- A201/CMa, 1992; general conditions

- B141/CMa, 1992; Owner & architect; CM as agent to the owner

- B801/CMa, 1992; Owner & CM as agent

Comparable to the CMAA At-Risk Series - B141, 1997

- A121/CMc, 1991

CMAA A1-A4 - 1 or more construction contracts - CM is the owner’s personal agent - The CM handles the contract administration - The designer handles the design


AIA B141, B801 - 1 or more construction

contracts

- The designer is the owner’s

principal agent

- The designer handles the

contract administration

- The designer handles

the design


The CM is employed prior to the designer(s) The CM helps select the designer(s) CM does a Construction Management Plan The Owner approves the plan; the designer

may comment or suggest revisions CM is the Owner’s principal agent; the

designer is responsible for design


The CM and the designer agree to cooperate The CM and the designer can rely on each

other’s work, products, and services CM prepares cost estimates of the project Designer has sole responsibility for design

and specifications for materials & equipment Designer’s basic services during construction

are relatively limited


The designer’s additional services include site

visits to become familiar with the work, review

of progress payments, design changes

resulting from changes in the project The CM determines the contractor’s

compliance with the contract documents The CM approves the contractor’s request for

payments

CMAA CM at Risk - CMs extensive professional services during design

- Self-perform work only if low bid, owner approves, and a separate GMP contract is signed

- Owner may reject GMP; CM may continue as agent

- Owner may require additional services after GMP is signed


AIA B141, A121 - CMs limited professional

services during design

- CM may self-perform work

at their own discretion

without submitting bids

- No option for owner to reject

GMP & continue CMs services

- No option for owner to require

additional services after GMP

is signed


Prior to GMP, the CM functions as the

agent of the Owner Upon the Owner’s acceptance of the GMP,

the CM assumes the role of the GC - Responsible for the cost of the project

- Must bid (and be low bidder) on work to be self-performed;

must sign separate contract

- Project team concept to be maintained


If Owner rejects the GMP, the Owner

has options: - Terminate the project “for convenience”

- Continue with the designer and CM as agents; modify

the agreements

- Procure construction services through a re-bid (or negotiation)

of the work to third parties


General conditions of the Agency series:

details - Responsibilities of the Owner, CM, designer, and contractor

- Site safety

- Responsibilities / duties to subcontractors and suppliers

- Owner’s right to perform work / issue separate contracts

- Monitoring time and progress of the work

- Providing a vehicle for making changes to the contract price

and time

- General conditions do not define the scope of the work!


General conditions of the Agency series:

details - Inspection, testing, and rejection of non-conforming work

- Procedures for progress payments, withholding payments,

and issuing final payment

- Insurance requirements for the contractor and the owner

- Avenues for contract termination: for convenience; for default

- Defining a mechanism for dispute resolution


Take some time to review and think about: - CM Agency

- CM at Risk


Part of the Contract Administration phase Important from a CA perspective Must support, not violate, contracts Should have Owner’s support Ultimate goal: - To develop a collaborative culture; a project team that relies

on each other’s strengths, and compensates for each other’s

weaknesses


Objectives are to control: - Time

- Cost

- Quality

- Information

- Safety


Pre-design Design Procurement Construction Project Close-Out


Develop the following: - Construction Management Plan

- Project Procedures

- Management Information System

- Quality Management Plan

- Communications Procedures

- A master schedule, a milestone schedule

Identify possible project delivery methods Manage designer selection / contract form


Feasibility studies Conceptual studies Pre-design cost studies Environmental analyses Other items?

At this point you are establishing the foundation for the success (or failure) of the project


Team building / leadership development Administration of design contract(s) Fulfill CM contract requirements Assist in developing contract specs Develop contracting strategy / bid package /

contract formats Develop the procurement plan Prepare bid/award documents and schedule


Develop bidders list Bidders interest campaign Bidder pre-qualification Bid advertisement Distribution of bid documents Addenda Pre-bid conference Information to bidders


Bid opening and evaluation - Procedures

- Review

- Exceptions / Conditions / Alternatives

Notice of award Pre-award meeting Notice to Proceed (NTP) Schedule and budget adjustments


Pre-construction conference - Attendees

- Coordination with utilities / Owners / others

- Schedule

- Submittals

Partnering Existing conditions Owner-furnished items


Deliverables checklist Permits, insurance, labor agreements, bonds Communications Meetings Verify GCs procurement process Claims mitigation / evaluation


Review / process contract modifications Oversee on-site safety program compliance Administer progress payment process Ensure as-built record drawings maintained Fulfill reporting requirements Ensure retention requirements are fulfilled Other items?


Quality Management Plan - QA / QC roles

- Submittal procedures

- Inspection approach

Monitor compliance with the contract!


Training Testing / start-up Commissioning Pre-Final Inspection(s) Punch lists Final inspection Acceptance


As-built record drawings Operation and maintenance manuals Spare parts and warranties Final permits / occupancy Transfers of liability Move-in planning / coordination


Claims resolution Contract closeout Final payment (including retention) Call-backs


Why Document? - Conformance to the contract

- Quality in construction

- Project control

- Responsive problem solving

- Resolution of disputes / claims avoidance

- Preparation for litigation


Organization Project Documentation Tracking and follow-up Software utilized


Correspondence - Chronological master file

- By Topic: shop drawings, RFIs, etc

- By Type: letters, memos, letters of transmittal (LOTs), emails

Meeting minutes Telephone log / record of conversations Project daily diary Claims, notices of intent


Inspector’s daily reports Photos and video Contract documents - Plans and specs

- Addenda

- Notice to proceed

Submittals (shop drawings) Test reports, clarifications, invoices


Clarifications and changes - Field clarification

- Requests for Information (RFIs)

- Requests for Changes

- Requests for Proposal

- Change Orders

Certified payrolls Contractor’s progress payments Issues Book (see next slide)


Identify Issues as you go - Field conflicts

- Requests for Information (RFIs)

- Clarification

- Change Orders

- Contractor problems

Keep all documentation related to the

particular issue in one place Use notebooks with an index / numbered tabs Copy & file documents to the tabs as you go


Include - Correspondence

- Notes

- Meeting minutes

- Diary pages

- Photos

- Contract details

- Specifications

- Submittals

- Etc!


Project Diary CMs Report Field Books


Pay Quantities Contractor problems Work performed - Who, what, when, where

Work scheduled and not performed As-built schedule - Start, stop, completion

Teleconferences and meetings


Work sequence (logic): types of restraint - Structural

- Equipment

- Sequence mandated

- Arbitrary or contractor’s

Equipment and crew Production Methods of work Job conditions Extra work


Field books CMs reports Project diary Anything relevant!


F-A-T

- Factual

- Accurate

- Timely


Stick to the facts Don’t editorialize Let the facts speak for themselves Try to be objective Why is it important to be factual?


If your documentation is not accurate, it is

not credible Verify facts; don’t guess or assume Don’t rely on second-hand information Quote sources of information


Memory fades with time Record and document as you go Follow-up with oral agreements and directives


Capture images at regular intervals Always take from a standard location Record: - Working conditions

- Progress as well as problems

Be sure to identify: - Date, and where the image was taken

- What is being looked at

- Who took the image MBP J9627.012 VDOT IVHS-060, C502, B603Description: Pier No. 2 footing formwork

View Orientation: SoutheastDate: August 21, 1998

Photo No. 1D. Sawyer


Complete minutes should include: - Date, time, and location of meeting

- List of attendees

- Minutes author

- Items of discussion should be sequentially numbered

- Agreements

- Disagreements

- Problems

- Actions and decisions

- Follow-up (action item, contact person, due date)


Chronological file Copy to separate files for issues and

change orders, so all files are complete Control numbers Document logs Response (remember, FAT)


Make a written record and file Make a notation in the project diary Following a conversation, always confirm

oral directives and agreements


As-planned schedule - Nail this down early, before issues arise

CPM scheduling preferred


Review carefully and comment - Does the schedule comply with the contract?

- Are final and interim completion dates met?

- Are key milestones shown?

- Is the Critical Path identified?

- Are activities and actions by the Owner identified?

- For major materials / items, is there time factored for

submittal/shop drawing review?

- Are the durations reasonable?

- Is the sequence logical?


Actual as-built conditions, such as: - Footing depth

- Pipe inverts

- Relocated utilities

Agreed constructive changes Completion dates for structures and

sections of work


Document log Submittal log Material status report Follow-up list Change Order log RFI log Issues Book Reports Other

QUESTIONS?

standards of practice course contract administration

Documents

start of construction

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control owner

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