Sublet Contract - PowerPoint

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					       Cal J. Gendreau
Construction Services Engineer
• Mission: „Providing a transportation system
  that safely moves people and goods‟
• 2008 Contacts: Administrated $271,633,426
  in Contract improvements
• 2008 Customer Survey: 84% Overall Satisfied
  (Residents, Motor Carriers, Government
  Officials, Business)
• Reason Foundation‟s 17th Annual Report on
 the Performance of State Highway Systems:
 North Dakota number 1 in Cost Effectiveness
• The American Recovery and Reinvestment Act
  of 2009
 • Roads and Bridges
  • 27.5 Billion Dollars
  • States must obligate 50% of the funding in 120 days
  • Remaining 50% within 1 year
  • Goal: 835,000 jobs created
  • North Dakota‟s share? $170 Million
  • 100% Federal Funded Projects
• Workload by Dollar Amount

              Estimated Construction Costs in Millions
• State Workload by Staffing

              Estimated Construction Costs in Millions
• 16 Engineers hired since January 2008
 • Special Forces: 5
 • Materials and Research: 3
 • Planning: 3
 • Bridge Division: 2
 • Minot District: 1
 • Devils Lake District: 1
 • Grand Forks District: 1
• 8 Technicians hired since January 2008
 • Fargo District: 3
 • Grand Forks District: 2
 • Bismarck District: 2
 • Valley City District: 1
• Current Pool numbers are 14
 • Transportation Engineer III: 1
 • Transportation Engineer I: 11
 • Engineering Technician III: 1
 • Engineering Technician II: 1
• Mandatory for all Transportation Engineer I‟s
• Two Training Tiers available (1 year and 2
• Rotation through Construction/District varies
  between 3 and 12 months
• Currently 8 employees that are not Special
  Forces or District hires that will need
  rotations through Districts
• NDDOT named North Dakota‟s best place to
  work in 2008
• New Engineering & Technical Training
  Manager Position established
 • Establish Training Goals and Objectives for
   Engineering and Technical training
 • Manage Training budget and contracts
 • Develop Training Aids and Manuals
 • Web-based Engineering and Technical Learning
• Past trend down seems to be improving
• No changes made after 1 year review with Industry
• 2008 Statistics: About 40% of all Contracts
                      Fuel Cost Adjustment Payments









                      Total          Diesel       Unleaded     Burner Fuel
           2007   $1,567,327.29   $1,210,424.49   $62,656.66   $294,246.14
           2008   $1,417,909.35   $1,103,748.67   $34,186.56   $279,974.12
• 2008 Reviews:
 • SS-RSS-6-032(034)130
   • Cold In-Place Recycling and Hot Bituminous Pavement
   • Contractor: Mayo Construction
   • Discussion: Ride of the recycled pavement, maintenance of
     the surface prior to overlay, cure time, gradation and
     ownership of salvaged materials

 • AC-HPP-NH-3-002(086)199
   • Widening and Whitetopping
   • Contractor: Progressive Contractors
   • Review Pending

• 2009 Projects:
 • Looking for Projects to include in the program
• Since April 2008 Bid Opening, no longer
  printing and mailing Project plans and
• Plans, Proposals, Soils Reports, Cross
  Sections and Addendum all provided
  electronically via the Web
• Current Issues: File size and downloading
• Future plans: Provide a library function after
  the bid opening to provide Public access to
  final plans and Contract documents
• New Spec Book is out
 • Quiz later
• Work Zone visibility
 • ANSI 107-2004 Class 2 or 3 vest required by all
   persons in the Right of Way
• Flaggers
 • New Flagger Handbook
 • Inspection just like any other item of work:
   • Training Certificate
   • Proper Signing
   • Flagger Actions and Responsibilities
• Subcontractors Definition (Page 16)
  „An individual, or legal entity with whom the Contractor sublets
  part of the Contract‟

• Any exclusions? (104.02)
  Any work, except for „off-site commercial production of
  materials and manufactured component products that the
  Contractor purchases or their transportation to the project‟
  requires a subcontract.

• Subcontractor Approval (104.02)
  „The Contractor shall not sublet, sell, transfer, assign, or dispose
  of any portion of the Contract or Contracts without written
  consent of the Engineer.‟
• Requests to Sublet Approval
 • Standard Form SFN 5682
 • Maximum percentage that can be sublet is 70%
 • Items of work, and quantities of each item must be
   shown. Partial items must be explained.
 • A copy of the subcontract agreement must be provided
 • A Subcontractor must be either a Qualified contractor, a
   Registered subcontractor, or a Certified DBE. These
   current lists are provided on NDDOT website
 • District Engineer has approval authority for all Requests
   to Sublet
• Subcontractor Registration
 • Standard Form SFN 52243
 • Required yearly
 • Goal:
   • Maintain some basic subcontractor information
   • Data is recorded by NDDOT and used to fill
     Subcontractor fields in CARS
 • Approval process both local and central
   • Some regular subcontractors file this each year
     automatically with Construction Services
   • Some don‟t file it until the first subcontract of the year
• If you receive a Request to Sublet for a
  subcontractor that is not registered:
 • Ask the subcontractor to fill out the Registration
 • Review the form for completeness, notary and
 • If the form is complete, the registration can be
   considered approved. Same District Engineer
   approval authority as the Request to Sublet.
 • Mail the Registration form together with the
   Request to Sublet to Construction Services for
• Subcontract Form Processing:
 • After approval of a Request to Sublet, and if
   necessary, a Subcontractor Registration form, make
   a copy and send the original forms to Construction
 • Construction Services then scans the original Sublet
   form and provides a electronic Filenet copy under
   the Project number
 • Originals forms are maintained in the Division‟s
   paper file
 • Questions?
• Definition
 • A change is the difference between the contract
   requirements at the time of bid and the actual
   requirements imposed during construction

 • Why is the time of bid important in establishing
   whether a difference occurred?

• Change is inevitable in this kind of work
 • Design-Bid-Build contracts include a changes
   clause. Standard Specification 104.03
• $271,633,426 in Contractor payments made

• 360 Change Orders issued

• + $5,393,563 Change Order total

• + 2.0% Increase due to Change Orders
     2008 Change Orders by Approval Level
Change Order   Approval     State and          County            Total
  Amount        Level        Federal

$0 to            Project
                                  224             18           242 (67%)
$10,000         Engineer

$10,000 to       District
                                  80               7           87 (24%)
$50,000         Engineer

$50,000 to      Office of
                                  20               0            20 (6%)
$100,000       Operations

                Office of
> $100,000     Operations         11               0            11 (3%)
Total                            335              25             360
                            1   FHWA approval on Full Involvement Projects
                                Typically NHS projects > $5,000,000
           2008 Change Orders by Classification
        Class         State          City         County       Total

Design Changes      $ 4,150,097    $ 764,137      $ 87,397   $ 5,001,631

Major Changes
                      $ 264,999     $ 95,870           $0      $ 360,869
in Project Limits
Changes in
                     $ (140,482)            $0     $ 7,415    $ (133,067)
                       $ 53,631             $0         $0       $ 53,631
                        $ 6,108             $0    $ 37,793      $ 43,901
                          $ 969      $ 9,825           $0       $ 10,794
Design Changes

Total               $4,335,322     $ 869,832     $ 132,605   $5,337,759
• Unresolved Change can lead to disputes,
  which can lead to claims
 • Contractor does not agree with the Owner‟s
   determination on the difference between the
   contract requirements and the actual requirements
 • Contract requires notice of unresolved change
   (Standard Spec 104.06 A)

 • Why is timely notice important?

 • Why is a timely reply to notice also important?
              2005       2006      2007        2008      2009

Resolved       18         21         11         12         0

Unresolved      0          1         1           8         2

Total          18        22         12         20         2
• 2008 Claims
   • 1 claim received. It was resolved by Change Order before a
     formal response was required.

• 2008 Arbitration
   • 1 arbitration hearing for a 2007 claim was held.
• Three Basic Steps
 • Entitlement
   • Determine if a change has occurred
   • When a change has occurred, next determine who has
     caused the change or is liable for the change
 • Impacts
   • Where the owner has caused a change, the next is to
     determine the impacts of the change. These may
     include extra work, delays, reduced efficiency,
     increased material costs, etc.
 • Damages
   • Once impacts are defined, determine the associated
     damages. Damages can be additional compensation
     and/or additional time
•   Significant Changes in Character of Work*
•   Differing Site Conditions*
•   Suspension of Work*
•   Extra Work
•   Eliminated Work
    * Required by FHWA for all Federal Aid work changes clause
• Standard Specification 104.03 A

  „The term “significant change” shall be construed to
  apply only to the following circumstances:
  1. When the character of the work as altered differs
     materially in kind or nature from that involved or
     included in the original proposed construction, or
  2. When a major item of work, as defined in Section
     104.03 B, is increased in excess of 125 percent or
     decreased below 75% of the original Contract
• Standard Spec 104.04
 • Latent (hidden) physical conditions that differ
   materially from:
  • those indicated in the contract, or
  • those ordinarily encountered

 • Does not reduce the Contractor‟s obligation to
   perform a reasonable pre-bid investigation
• Standard Specification 104.05
 • Allows the Owner to stop the work
 • Allows for an adjustment for cost and/or time
   required to perform the work where the suspension
   • Caused by conditions beyond the control of and not
     the fault of the Contractor, and
   • Not caused by weather.
• Standard Specification 104.03
 • Provides for an adjustment in compensation and
   time when extra work is required to complete the
 • New specifications on preference for compensation
   • Unit bid prices
   • Price schedule for miscellaneous items (PS-1)
   • Either agree to a negotiated unit price or complete the
     work under Force Account (109.04)
 • Specifies the allowable markup for subcontract
• Impact Determination
 • Extra work
  • What is different from what was bid?
  • What equipment and labor was added or changed?
 • Delays
  • Was the work critical?
  • Excuseable delay? (Both unforeseen and not the
    contractor‟s fault)
  • Compensable delay? (Time and cost recovery)
 • Reduced Efficiency
  • How does the productivity compare between
    unimpacted work and impacted work (measured mile)
• NDDOT Contracts specify how damages are
  to be calculated
 • Compensation
  • Unless agreed upon in advance to use Force Account
    (109.04), costs are calculated according to Standard
    Specification104.06 – Claim for Extra Compensation

 • Time
  • Standard Specification 108.04 – Determination and
    Extension of Contract Time
• Open, frequent, and continued
• Partnering
• Careful preparation of design documents
• Careful preparation of contract documents
• Procedure for Pre-bid questions
• Proper project documentation
• Dispute Resolution procedures
• How have federal regulations changed with
  regards to weekly payrolls?
  • Removed the requirement that weekly payrolls
    contain employee‟s social security numbers and
    home addresses

  • Required that certified payrolls include a unique
    employee identification number for each employee
    and that Contractors maintain records of employee‟s
    social security numbers and home addresses

  • Required that the Contractor provide any required
    employment records upon request of the agency
• True or False?
  All Contractor‟s Requests to Sublet forms
  shall be submitted with a Subcontractor
  Registration form?


  If a subcontractor is currently on the Qualified
  Contractor‟s list, the Registered
  Subcontractor‟s list or the Certified DBE list, a
  registration form is not required.
Prompt Payments Requirements
• How often must the Engineer make partial payments
  based on the value of the work performed and materials
  delivered by the Contractor?
   Answer: At least once every 30 days (109.05 A)

Prompt Payment Requirements
• How often must the Contractor make partial payments
  based on the value of the work performed and materials
  delivered by a subcontractor?
   Answer: The Contractor must pay the subcontractor for
   work done or services rendered within 20 calendar days of
   receipt of payment from the Agency (109.05 B)
True or False?
• If the Contractor withholds payments from a
  subcontractor, the Contractor must
  immediately notify the subcontractor and the
  Engineer in writing the reasons for
  withholding the payment.
  True. (109.05 B)
Extra Work
• What are the specified methods for payment of extra
  work in order of preference?
   Answer: (104.03)
   1. Unit Bid Prices
   2. PS-1 Price Schedule for Miscellaneous Items
   3. Force Account or Negotiated Unit Price

Extra Work
• Is extra work completed by a subcontractor at unit bid
  prices eligible for additional Contractor reimbursement
  for profit and overhead?

  Answer: No (104.03)
Significant Change – Quantity Underrun
• Can the Contractor payment for a major item,
  that underruns the plan quantity by 25% or
  more, exceed 75% of the original contract
  Answer: No (104.03 B. 2. Revised 2008)
Environmental Protection - Erosion Controls
• On grade widening and selective grading
  project, construction operations shall be
  limited to ________ miles until erosion control
  measures have been started in the first mile.

  Answer: Five (110.06)
Partial Payment – Payment for Materials on Hand
• In order to pay a Contractor for stockpiled materials, is
  the Contractor required to furnish a paid invoice for the
   Answer: No. Contractor has 35 days from the
    stockpile payment date to submit an invoice for
    stockpiled materials that have not been incorporated
    into the work (109.06)

Fuel Adjustment Clause – Payment for Materials on Hand
• Are stockpiled material payments included in the
  monthly total of work done to date for the purposes of
  calculating the fuel adjustment clause?
   Answer: No (SP – Fuel Cost Adjustment Clause)

Description: Sublet Contract document sample