Construction Engineering 221

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Construction Engineering 221

• Contracts Contractor Procurement

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Changes

• Standard practice (expect it its a part of the
  process)
• Owner has the right (within original scope)
• Change clauses regulate how a change is suppose
  to take place
• Equitable adjustment of price and time
• If not claims and disputes procedures
• Be careful changes need to be changes
• Whos asking and are they in line w/ the scope of
  work
• Has the change clause been followed?

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Constructive Change

• What is it?

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Constructive Change

• A constructive change to the contract is the
  result of an action, or lack of action, of the
  owner or its agent that can be construed as a
  change to the contract even though the owner did
  not issue a formal, written change order. When
  the contractor is orally directed to do work
  different from, in addition to, or in a different
  manner from the mandated by the contract, a
  constructive change has taken place and the owner
  is responsible for additional cost or time.

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EXAMPLES of CONSTRUCTIVE CHANGES

• Owner gives verbal direction to change the design
  of the project
• Use wallpaper in lieu of paint on walls
• Contractor usually is required to confirm owners
  direction in writing with a request for a formal
  contract change order for additional costs

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Acceleration

• What happens when the owner creates expectations
  that the contractor must complete the project at
  an earlier date?
• Possible overtime costs to speed up work
• OR
• Add more work WITHOUT extending the completion
  date (resulting overtime, etc)

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Differing Site Conditions

• Also known as changed conditions or concealed
  conditions
• No implied contractual right exists for the
  contractor to collect for unforeseen conditions
  -- it needs to be in the contract
• Its called a changed-condition clause

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Changed Condition Clause

• Why is a change-condition clause so important?
• the purpose of a change-conditions clause is to
  reduce the contractors liability for the
  unexpected and to mitigate the need for including
  a large contingency

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Contingency

• What is contingency and what is its purpose in
  life?

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Contingency Definition

• Contingency something whose occurrence depends
  on chance or uncertain conditions a possible,
  unforeseen, or accidental occurrence.
• In construction circles the contingency is the
  sum of money that the contractor adds to their
  bid that will cover any uncertainty they forsee
  in the project.

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Owner-Caused Delays

• Why are owner-caused delays a concern to the
  contractor?

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Owner-Caused Delays

• Three Reasons
• Over all completion date not usually a problem
  (contractor gets extension)
• Ripple effect consequential damages or impact
  cost from unchanged work that resulted from
  project delays. (Can anyone give an example?)
• Work is deferred to another time period where
  costs are higher. (wages materials)

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Change Orders

• Changes scope of work
• Changes per what drawings specifications
• Itemized cost breakdown per trade
• Contract time extensions (IF any)
• Valid only when signed by BOTH owner contractor
• Technically a new contract
• Practically a revision to the original contract

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Value Engineering

• What is Value Engineering?

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Value Engineering

• Finding a better way to accomplish a construction
  project at less cost
• Can happen before and after the bid letting
• Before owner, designer and contractor work
  together
• After value engineering incentive clause
• Structures performance, safety, appearance or
  maintenance
• Contractor is able to share in cost savings
• Planning, design and constructability

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What if..

• The contractor in his original estimate of the
  project had planned to transport concrete on site
  for a small pour with motorized wheelbarrows. On
  the day of the pour the contractors concrete
  pump is now available and is able to switch
  projects and pump the concrete rather than use
  wheelbarrows.
• Is this value engineering?

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Is This Value Engineering?

• NO
• Any cost savings belongs to the contractor
• This is not a design change
• This is the contractor performing the work more
  efficiently

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Examples of Value Engineering

• Your turn

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Indemnification

• Indemnification (hold-harmless clause)
• Limited-Form
• Intermediate-Form
• Broad-Form

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Termination of the Contract

• Material breach of contract
• By owner failure to make payments or causes
  delays or owner is financially insolvent
• By contractor nonperformance, faulty
  performance, not on schedule (not showing
  reasonable progress)
• Mutual agreement both agree to end project

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Notice to Proceed

• Formal notification by owner to contractor to
  begin work
• Establishes the first day DAY 1 of the schedule
  (within 10 days of N.T.P.)
• A signed CONTRACT to build the project is NOT a
  NOTICE TO PROCEED

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Subcontract Agreements

• No contractual relationship between subcontractor
  and owner
• Retainage is usually the same as in the prime
  contract 10
• Approval by the owner disapproval not common

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Word to the Wise

• immediately in writing (page 153)
• authorized in writing (page 154)
• To proceed without written authorization may
  make it impossible (page 154)
• promptly notify the owner in writing" (page 157)
• Keep detailed and separate cost records of the
  additional work involved. (page 157)
• contractor must keep careful and detailed
  records (page 158)

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Student Chapter AGC

• First meeting
• Wednesday
• Sept. 11
• 700 PM
• Special membership deal
• at first meeting only!