AVOIDING RISK AND SAVING MONEY ON YOUR MODERNIZATION PROJECT
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1 AVOIDING RISK AND SAVING MONEY ON YOUR MODERNIZATION PROJECT Presented by Craig Misso, Ontario-Montclair School District Chris Lawrence, HMC GROUP Barbara Gadbois of Gibbs, Giden, Locher & Turner, LLP 1 PREFACE The information provided in this presentation, whether written or oral, should not be relied upon as legal advise or opinion regarding any specific matter. All attendees and readers should contact professional legal counsel to obtain advice on specific projects or issues. The presenters have no liability or responsibility to any person, property, organization, whatsoever with respect to any loss or damage whatsoever caused, or alleged to be caused, directly or indirectly by the information contained in this document or by any oral statement made or additional checklists or document(s) provided in conjunction with this document. This document is provided with the understanding that the information contained in this document and any oral statements made by the presenters are for informational purposes only. Although all efforts have been made to ensure correctness, the presenters assumes no responsibility for errors, omissions, or inaccuracies. The information contained in this document, along with all oral statements made by the authors/presenters and additional check lists and documents provided, may not be suitable for use in all counties within the State of California. 2
2 Overview Planning/Bidding Construction Administration Project Closeout 3 Planning/Bidding - Overview Project Launching Selection of Professional Services Firms Contract Considerations Risk Avoidance Techniques 4
3 Planning/Bidding Project Launching Project concept Project budget Roles of district s planning team Selection of Professional Services Firms (architect & engineer, construction manager (CM) & inspector of record IOR) Qualifications & compatibility with district philosophies Work load & project team members experience Verification of required certifications and licenses 5 Planning/Bidding Professional Services Firms Contract Considerations Errors and omissions and general liability insurance Poor performance/plan provision Contract provision for special conditions Site visits by architect and engineers Internal quality assurance plan review 6
4 Planning/Bidding Project Document Contract Considerations Liquidated damages assessment level Assigned owner owned float to address unforeseen conditions Termination for convenience clause Simultaneous projects provision Prequalification criteria Bonding requirements for major subcontractors Project marketing & plans distribution Project superintendent qualifications and substitution 7 Planning/Bidding Project Document Contract Considerations (cont.) Bid advertisement Environmental conditions Pre-bid conference Change order pricing options Payment applications Define document order of precedence 8
5 Planning/Bidding Risk Avoidance Techniques Establish unit-price bids Obtain final sign-off of plans Obtain Division of State Architect (DSA) approval prior to bidding Conduct interdisciplinary plan review (IPR) Provide active representation throughout the planning phase 9 Planning/Bidding Risk Avoidance Techniques (cont.) Allow adequate time for bid review Investigate listed major subcontractors Maintain open contracts with third parties Environmental consultants Testing labs Punch list completion contractors Portable classroom providers Legal counsel 10
6 Construction Administration Role of Architect & Engineer in Reducing Risk Timely response to issues regarding drawings & specifications Interface between owner and contractor Monitors adherence to the construction documents Role of District in Reducing Risk Clear and timely decisions Coordination of campus operations Timely payment to contractor 11 Construction Administration Role of the Inspector of Record in Reducing Risk Confirm compliance with DSA approved drawings & specifications Document progress of construction Inform contractor of non-compliant work and reviews corrections Agency Prior to Bidding Preliminary approval Obtain change order approval Rapport with DSA 12
7 Construction Administration Project Schedule Unrealistic timelines provoke the contractor to generate delay claims Require a network analysis schedule Identify concurrent vs. critical path work Interpretation of Contract Documents The architect s role, not the contractor s Job site decisions can be uninformed Fair play 13 Construction Administration Submittals Require a submittal schedule Process submittals quickly Require complete submittals Substitutions Minimize, minimize, minimize Contractor to pay for resulting changes and engineering Proprietary selections 14
8 Construction Administration Requests for Information (RFI) Quantity and timing can reveal trouble Recognize frivolous claims or questions Establish turn around time in the contract documents Require all RFIs to be sent to the architect Do not use RFIs to: Approve submittals Approve substitutions Approve changes affecting contract sum or time 15 Construction Administration Unforeseen Conditions Expect them As-builts are not always available or accurate Have contingency funds Change Orders The no change order dream Minimize owner initiated changes Keep the project moving 16
9 Construction Administration Meeting Minutes Does not replace an RFI Records direction to the contractor Less is less Construction Managers Agree to be a team Establish roles at the inception of the project District involvement to remain 17 Construction Administration Dispute Resolution During Construction Sooner is better Get all the facts Check your ego at the door Establish your goals prior to meeting with the contractor A time to work together A time to hold your position 18
10 Construction Administration Communication Be available to respond Have a written response to all correspondence Verbal direction is only as good as the paper it is written on Have complete logs He who has the most paper wins Stay professional 19 Project Closeout Make Sure You Get What You Pay For in Closeout of 3 Major Areas: Site Conditions Project Specifications Contract Requirements 20
11 Project Closeout Site Conditions Punch list completion Clean-up/restoration of areas impacted Removal of contractor facilities 21 Project Closeout Project Specifications Written warranties and bonds Operations & maintenance manuals and training Inspection and testing reports Attic stock/spare parts Complete record/as-built drawings Contractor certification all systems adjusted, balanced, etc. 22
12 Project Closeout Contract Requirements Unconditional releases (Civil Code 3262) Releases/bonds for known stop notices Contractor Affidavit that all bills paid Consent of surety to final payment Insurance certificates (monitor renewal) Contractor acknowledgment that final payment is a release of all claims except those reserved in writing 23 Project Closeout Withhold Sufficient Funds Retention Labor Enforcement Notices Stop Notice claims Liquidated damages Disputed work Consider contract prescribed holdbacks 24
13 Project Closeout Handling Stop Notices Amount to withhold Funds not subject to withhold Liability for failure to withhold Pro rata distribution to multiple claimants Expiration of duty to withhold 25 Project Closeout Completion/Notice of Completion Civil Code 3086 Acceptance by Board Civil Code 3093 Notice of Completion Notice to stop notice claimants if $2 fee filed with stop notice 26
14 Project Closeout Assess Liquidated Damages Government Code Contract must be clear as to commencement and completion dates Change orders should address time Written notice to contractor as soon as deadline is missed Quantify delay and notify contractor promptly 27 Project Closeout Release of Retention and Withholding Public Contract Code 7101 Definition of completion Withhold disputed/release undisputed Penalties for wrongful withholding (2% per month, attorneys fees and costs) 28
15 Project Closeout Enforce Performance Bond Rights Require contractors to use district s bond forms (Cates decision) Investigate surety Notify surety of all contractor defaults and delays and stop notice claims Secure surety consent to final payment Surety will investigate claim and/or complete the project if default Do not release the bond 29 Project Closeout Dispute Resolution Public Contract Code Alternative dispute resolution Utilize documentation prepared during contract administration Properly drafted change orders and releases may be determinative 30
16 Internet Sites State Contractor License Board: Division of the State Architect American Institute of Architects (AIA): California Law: 31 Presenters Addresses 32
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