This section is presented to provide information and guidelines for the proper method of measurement of completed items of work and the proper payment to the contractor. This section is divided into the following parts:
· General Information
· Daily Diary
· Project Approval of Estimates
· District Office Approval of Estimates
· Method of Measurement
· Basis of Payment
In the administration of construction projects, it is the policy of the Department to provide the Contractor with prompt payment for all completed and accepted work. After an item of work is completed, but before payment is made, a determination must be made based on the quantities of the various items of work performed. This will be the basis for final settlement between the Contractor and the Department. It is the responsibility of the Engineer to assure this determination of quantities is performed. The Project Inspector is likewise responsible for making the detailed inspections necessary to measure, document, and turn in for payment the determined quantities.
As promptly as everyone expects their paycheck, the contractor is entitled to prompt and accurate payment for all completed and accepted items of work. As outlined in the Ohio Revised Code Sections 126.30 and 5525.19 and the Policy 27-016(P), "Payment for Contract Work" the Department has the obligation to pay for completed items of work promptly. This payment must be made to the contractor within thirty (30) days of the first estimate date after the completion of the work, except for additional quantifies found during the finalization process. Failure to meet the progressive payment time will result in interest being paid to the contractor from monies deducted from the District's budget. To assure prompt payment, the measurement of quantities and the recording for payment must be performed on a daily basis as the items of work are completed.
Project personnel are responsible for preparing documentation to support payment for work performed by the contractor by measurement of completed and accepted quantities of work. This documentation serves two important purposes:
It provides validation that the quantity for payment has been determined in accordance with contract requirements (contract proposal, plans, specifications) with the necessary measurements, calculations, weight, etc. This is further detailed under the next section entitled "Method of Measurement".
It also verifies that the work was done in close conformity (as defined in Section 101.03 of the C&MS) to the plans and specifications.
Details on project documentation can be found throughout in this manual.
This Manual is not intended to alter or replace the specifications, its purpose is to supplement the specifications and provide assistance to the project personnel in the interpretation of the specifications. As such, this manual is not part of the contract by which the contractor bids the project. This manual does provide the recommended minimum documentation requirements and guidelines with respect to measurement of quantities and basis of payment.
The daily accumulation of the information entered on the project is found in CA-D-3 and/or CA-D-4. These forms will become, when entered into the Construction Management System (CMS), the Construction Daily Diary. This Construction Daily Diary in the Construction Management System consists of five (5) individual screens altogether.
· Contractor Work (DDCON)
· Contractor Equipment Usage (DDCEQ)
· State Employees Hours Worked (DDHRS)
· Weather and Pay (DDWAP)
· Daily Remarks and Engineer Approval (DDRMK)
Contractor Work - DDCON
All information contained on the CA-D-3 / CA-D-4 forms are transferred by the project personnel to one of these screens. For purposes of payment of completed items of work, pay items listed on the CA-D-3 / CA-D-4 forms are entered on the "Weather and Pay" (DDWAP) screen.
Once all information is entered on the various screens of the Construction Daily Diary and the diary is completed, the Engineer, or alternate who has update authority, reviews the diary and if found acceptable, approves the diary. This approval is performed by changing the "N" on the "Project Engineer/Supervisor Approval" line on the "Daily Remarks and Engineer Approval" (DDRMK) screen to a "Y”.
Once approval of the Daily Diary takes place, the CMS system automatically transfers any quantities turned in for payment on the DDWAP Screen to the "Paybook" Screens (PBOOK). This CMS screen lists details about individual reference number quantities completed for payment. Any amount shown on this screen as being completed, but not previously paid will now be picked up for payment when the next estimate is generated.
It is the District Construction Engineer's responsibility to establish the first estimate date for a project. This first estimate date, in general, should be (2) weeks after the first day of work or as otherwise agreed to by the contractor at the preconstruction meeting. Once the first estimate date is established, a second estimate will automatically be generated fifteen (15) days later. Estimates will continue to be automatically generated on the same two (2) dates per month as long as the project is under construction and the automatic generation of estimates remains actuated in the system.
Below are examples of the two (2) screens created automatically by the CMS from information contained on the various " Paybook'' reference screens for a project.
· Estimate Information (EST) screen. It displays overview information and adjustments for generated estimates. This screen allows both the project personnel and the District Construction Personnel to delete or approve the estimate.
· Estimate References (ESTR) Screen. It displays the list of references having quantities for payment. This screen allows all individuals with update authority the ability to review individual reference quantities, adjust/delete quantities when necessary, and/or add other reference quantities that may have previously been omitted. Any quantity added to the ESTR Screen requires comments to be added on screen and will automatically be posted back to the "PBOOK" Screen.
Estimate Screen - EST
Estimate Screen – ESTR
The Engineer is responsible for the electronic approval of their project's estimate on each estimate day. Before this approval takes place at the project level, the Engineer must be assured that:
· The pay quantities and delivered material quantities entered into CMS are correct.
· That any liquidated damages due to failure to meet an interim completion date are entered into CMS.
· That any pay item deficient in material approval and not eligible for override be deleted from the estimate.
· Obtain from the Contractor an executed Contractor Progress Payment Certification CA-D-11 form.
With respect to delivered materials, payment is allowed in accordance with Section 109.07 of the C&MS and ORC Section 5525.19. Payment is limited to approved, durable items that have a significant value in comparison to the total price of the contract and shall not be in excess of what is required to do the contract work. The unit costs allowed are the invoiced material costs and any reasonable delivery charges less any contractor's discounts. The allowed unit cost shall not exceed the applicable contract unit price. Delivered material invoices shall be kept in the project file. Costs for stockpile materials may be established by documents other than invoices.
Payment for approved materials outside the vicinity of the project may be made if it is determined that it is not practicable to deliver the material to the project site. This should apply to only bulky material that represents approximately $5000 or more for related items of work. For small projects, payment for materials less than $5000 may be made at the discretion of the District Construction Engineer. These materials are intended to include but not be limited to, guardrail, fence, aggregates, structural steel, precast concrete, light/strain poles, etc. Materials that have established shelf life or are temperature susceptible shall be protected in accordance with the manufacturer's recommendations. Small warehouse items shall not be included. Certain additional requirements also must be met before payment of delivered material off the project takes place.
· The storage site of the material must be approved and documented in writing. This can be performed by the project personnel or other ODOT individuals (in cases where it is more practical for other Districts or Central Office Plant Inspectors to perform the inspection and provide the documentation).
· The material must meet the same level of approval at the storage site as that required of material at the project.
· The existence of the stored material must be verified and documented provided that it is designated or reserved for the particular project. This can also be performed by personnel from another District or Central Office when warranted by the location of the material.
· Payment for off site storage of material must also be supported by invoices kept on file in the project records.
Liquidated damages due to the failure of the contractor to meet the project completion date are automatically accounted for by CMS. The Engineer must however, enter into CMS any liquidated damages as a result of failure to meet an interim completion date such as a road closure limitation required by the plan notes. This is performed by entering the dates subject to liquidated damage and the amount per day into the "Liquidated Damages" (LIQID) Screen in CMS. Both automatic and manual Liquidated Damages are then automatically posted to the "EST" Screen for inclusion into the estimate total. CMS automatically checks to see if enough materials have been reported, approved, and entered into CMS to cover the amount paid at the time the estimate was generated. If a deficiency occurs, the estimate is "flagged" by means of a "Y" indicator under the Matl/Tst column on the "ESTR" Screen for the affected reference number. It is the responsibility of the Project Engineer/Supervisor to delete the affected quantity from the estimate if it is determined that the material lacks approval. If the Engineer establishes that the material in question is approved and the "flag" is caused by the approval not being processed in time for the estimate, then the "unjustified flag" can be overridden. Overriding of "unjustified flags" is performed at the District Approval Level by the District Construction Engineer or back up person. The Engineer should provide on screen remarks to the DCE or backup person to indicate why the flag is not warranted so that the "unjustified flag" can be overridden.
Once the Engineer has determined all the above has been accomplished, electronic approval of the estimate at the project level can take place. This is accomplished by changing the "N" indicator by "PE/PS Approval" on the EST Screen to a "Y" indicator. The estimate is now ready for the District Level Approval.
District Level Approval is the responsibility of the DCE or back up person. Before this level of approval takes place, all "unjustified flags" must be overridden. This includes the previously discussed "flags" related to deficient material approvals. This also includes "flags" associated with deficient payrolls.
CMS automatically checks to see if payrolls submitted by the prime and any subcontractors for a project are up to date. Payrolls are entered for both prime and subcontractors into CMS on the "Payroll" (PAYRL) screen. This is done after the payrolls are reviewed and approved for prevailing wage compliance by either the Engineer, District Wage Rate Coordinator, or other assigned by the DCE. Once an estimate is generated, CMS automatically checks to see that payrolls have been entered into the system to cover the prime contractor and any subcontractor that would have worked on the project between the time span of the previous two (2) estimate dates. If a deficiency exists, the estimate will be "flagged" by a "Y" indicator beside "Deficient Payrolls" on the "EST" screen. If this occurs, the estimate is held at the District until the deficiency is resolved. The DCE or backup person can override the "flag" once it is determined that all required payrolls have been submitted, reviewed, and found acceptable. This is accomplished by changing the "Y" indicator to an "N".
Once all "unjustified flags" have been overridden, the DCE or back up person can now approve the estimate. This is accomplished by changing the "N" indicator by "District Approval" on the "EST" Screen to a "Y" indicator. The estimate is now automatically forwarded to the Office of Accounting in Central Office for further processing and payment to the prime contractor.
Payroll - PAYRL
In determining the proper method of measurement for a particular item of work encountered on a project, several sources of information exist. Section 109.01 of the C&MS provides general information for the determination of various units of measurement. These include items measured by weight, those measured by cubic meter (cubic yard) and those measured by the liter (gallon). In addition, specific information can be found for every listed pay item, with few exceptions. Every item number in the C&MS contains a unique section entitled "Method of Measurement" which provides this specific information. For example:
603.14 Method of Measurement. The Department will measure conduit by the number of feet (meters), measured from center-to-center of appurtenant small structures or between open ends inclusive of lengths of pipe bends and branches. The Department will not deduct for catch basins, inlets, or manholes that are 6 feet (2 m) or less across, measured in the direction of flow. Where the location of an appurtenance or an open end is changed with the approval of the Engineer to accommodate full conduit sections, the Department will measure the length placed. Conduits placed on slopes steeper than 3:1 or with beveled or skewed ends will be measured along the invert.
When the pay item calls for concrete encasement, payment for furnishing and placing the concrete encasement, and for any additional excavation required shall be included in the unit bid price for the pertinent conduit. When the pay item calls for a new conduit to be field paved, payment for the field paving, including all work and materials necessary for the item, shall be included in the unit bid price for the pertinent conduit.
The Department will measure field paving of existing pipe by the number of feet (meters).
The few exceptions includes: items 402,403,404,412,446, and 448. These are all asphalt concrete items with the "Method of Measurement" for all these items described under Section 401.21. Likewise Section 641.12 provides the "Method of Measurement" for all the pavement stripping items, 642,643,644, and 645. No specific section exists for the Items 441, 499, 501, 502, 505, 506, 508, 510, and 623. These are all general specifications, items involving lump sum payment, or items not paid separately, but included in other items for payment.
For items of work not covered in the C&MS, other sources can be utilized to determine the proper "Method of Measurement". Supplemental Specifications are individual documents which describe the construction and material specifications for items whose requirements are changing from year to year, are still in the development or experimental stage, or are used only occasionally. These can be identified by their 800 series number. Just like the C&MS, these Supplemental Specifications contain a unique section entitled "Method of Measurement" which provides the specific information for measurement purposes.
Items listed as "Special", having no item number, also have specific information with respect to proper measurement. This is likewise included in a section entitled "Method of Measurement" and is incorporated in either the plan notes or listed in the specific proposal for the project.
Another possible source of information with respect to "Method of Measurement" are items listed "as per plan". Reference items with an "as per plan" designation have been modified in some way from what would normally be required by the Specifications, Proposal, Standard Drawings, etc. This modification will be found in a plan note within the contract plans. The project personnel must investigate these "as per plan" modifications to determine what has been changed with the item.
For those projects designed in metric units, specific information with respect to measurement can be found. Section 109.02 of the C&MS provides information with respect to "Metrification" along with a list of conversion factor for converting English to metric.
As per Section 109.03 " Scope of Payment' in the C&MS, payment to the contractor for an item of work performed by the contract shall be full payment for furnishing all materials and performing all work under the contract in a complete and acceptable manner. The "Basis of Payment" for any item of work details that the unit bid price is full compensation for certain work and/or materials essential to that item. As such, this work and/or material will not also be measured or paid for under any other pay item which may appear elsewhere in the plans or Specifications. Like "Method of Measurement", with few exceptions, every item number in the C&MS contains a unique section entitled "Basis of Payment" which provides specific information as to what is covered by the pay item. The following example is provided:
604.09 Basis of Payment. The Department will pay for accepted quantities at the contract prices as follows:
Item Unit Description
604 Each Manholes
604 Each Inlets
604 Each Catch Basins
Likewise, for items of work not covered in the C&MS, the same type sources exist. As with "Method of Measurement", item numbers in the 800 series are covered under Supplemental Specification.
Items listed as "Special" also have a unique section entitled "Basis of Payment". These are found either in plan notes or the proposal.
Likewise "as per plan" modifications need to also be investigated by the project personnel. These modifications could change the "Basis of Payment" of the particular item of work.
The purpose of this section is show how modifications are made to ODOT construction contracts by change order. We will discuss reasons for change orders, pricing, preparation and processing and record keeping.
ODOT contracts are unit price contracts using estimated quantities of work. Simply by the nature of this type of contract, change orders will occur if for no other reason than to adjust estimated quantities to the quantities of work actually performed. Change orders amend the contract by adding or deleting work, making reimbursement for additional costs incurred, making material substitutions, changing specifications, etc.
The Director is empowered by Section 5525.14 of the Ohio Revised Code to amend contracts for highway improvements by change order. This authority has the following statutory limitations:
· Any original bid item can be increased to the lesser of 5% of the total original contract amount or $100,000.00.
· A new item of work can be added to a contract to a value of the lesser of 5% of the original contract value or $100,000.00.
Additions beyond these limitations must be approved by the State Controlling Board. However, the director can exceed these limits if there are circumstances that warrant the declaration of an emergency. These circumstances could include a threat to public safety, idled equipment costs, delay costs, etc.
Guidelines for preparation of change orders are given in:
· ODOT Policy 27-010 (P), and Standard Procedure 510-010(SP)
The necessity for a change orders to an ODOT construction contract may arise for many reasons. The most common causes for change orders are discussed below.
The quantities of work actually performed differ from the quantities originally estimated and established in the contract for the following reasons:
· Final measurements/calculations
· Quantity changes to meet field conditions
· Plan errors
Existing field conditions differ from the plan to the extent that performance of additional or non bid work is required for the following reasons:
· Differing subsurface conditions
· Presence of any conditions not shown in the plan
Changes to the project that are so far reaching that they can be considered outside the original intent of the work can be caused by:
· Significant changes in the quantities of work
· Significant alteration of the work due to:
o sequence of construction
o method of construction
Changes in the work ordered by the owner to meet the needs of the owner. The following changes are typically not required for the proper construction of the project:
· Addition of new work or deletion of work
· Change in Materials
· Suspension of Work
Restriction, regulation or delay imposed on the contractor beyond the terms of the contract by an entity who is not a party to the contract can be caused by:
· Utility Companies
· Regulatory agencies
· Local governments
The actual process for generating and processing a change order will vary from district to district depending on the level to which authority or responsibility has been delegated within the district. The process usually begins with the recognition of a need for a change order at the project level. This need is usually communicated to the District Construction Office which will either grant or obtain concurrence or authorization. A decision is then made as to the type of change order that is needed, a District Change Order or an Extra Work Change Order, and the change order is entered into CMS via the "CO" screen by the Project Engineer or the District Construction Office. CMS then generates both an electronic and a paper change order. The paper change order is signed by the District Construction Engineer and/or the District Deputy Director and submitted to the contractor for signature. Once the contractor signs and returns the change order the required approvals are then entered into CMS via the "CO" screen and the change order is electronically approved and is ready for payment.
ODOT construction contracts are modified using two types of change orders, a District Change Order and an Extra Work Change Order. Guidelines for use, authorization limits and requirements and approval authority for each type are given in ODOT policy 27-010(P), and standard procedure 510-010(SP).
Practically every change order will contain the following elements:
· Project Identification: Project Number, County, Route, Section, Federal Number, Federal Acceptance Type.
· Change Order Identification: Change Order Number, Type of change order.
· Work Item information: Reference Number, Participation Code, Item Code, Item Description, Units of Measure.
· Cost Information: Unit Price/Lump Sum Amount, Reference Total, Addition/Non performance, Change Order Total Addition /Non performance.
· Reference Number Identification: Reference Number, Extra Work Number Participation Code.
· Reason Code: Mandatory field in CMS "EXPL" screen for each reference. CMS contains a list of 22 reason codes to choose from.
· Explanation of Necessity.
· For request and approval by the Department.
· For agreement by the contractor.
· For agreement by the Local (when applicable).
· Emergency Declaration, Preliminary Approval, or Final Measurement request as approved by the Director.
· Support Documentation: Additional information describing need for the change order.
· Cost Documentation: Cost analyses, Comparative pricing information, etc.
· Forms and detailed instructions are available on the Division of Construction Management webpage.
Once the need to perform extra work on a project has been identified a basis of payment for this work must be established. Pricing for extra work is usually established using one of the following methods.
This method of pricing is used when the extra work can be broken down into measurable units. The number of units necessary to perform the work is estimated and a unit price is determined and agreed upon as described below. Final payment is based upon the final measurement of the number of units of work actually performed:
· Unit prices already established in contract.
· Comparative pricing. Contract unit prices for similar work on other projects (CMS database).
· Use force account type analysis (Appendix V).
A force account method is used when the work cannot be broken into measurable units or when a unit price cannot be agreed upon. This method reimburses the contractor the actual costs of labor, equipment and materials incurred in the performance of the work including allowable overhead and markup. This method requires a significant amount of record keeping and is described in Section 109.05 of the CM&S.
This method usually requires the preparation of two change orders both of which use the same format. The first change order is known as an "Estimated Cost Force Account" and is established so that money can be encumbered and payments can be made to the contractor as the work is performed. The second change order is known as an "Actual Cost Force Account" and represents the final accounting of the cost of the performance of the work and is used to reconcile the "Estimated Cost Force Account" change order.
This method of pricing is a negotiated amount and can be used when the extra work can be identified as something that is usually paid as a "lump sum". The "Agreed Lump Sum" can also be used as an alternate to the force account method:
· Prepare lump sum using force accounts style analysis
· Maintain force account record of the work for a period of time and use to develop lump sum
· 3rd party billing
· Lump Sum Adjustment
The performance of extra work or additional quantities of work may warrant an extension of contract time. Extensions of contract time may involve additional direct project overhead costs.
Record keeping is an integral part of contract administration and is especially important when considering change orders. Adequate records must be maintained to document the need for changes and to establish pricing for extra work.
Measurements of the quantities of work in the units prescribed by the plan actually performed by the contractor must be recorded by the project personnel. Change orders must be prepared to make adjustments for any differences between contract quantities and the quantifies actually performed.
Issues of efficiency or other similar factors may arise that may impact unit costs when the quantities actually performed differ significantly from those shown in the plan. For these occasions the quantity records must be thorough enough to determine actual production rates and other such items.
The records required for force account pricing of extra work must accurately depict all labor, equipment and materials used by the contractor to perform the work. The items that are necessary to record are as shown below:
· Description of Work
· Contractor's work force
o Employee Name
o Hours worked regular and overtime
· Contractor equipment
o Hours Worked
o Hours Idle
The purpose of this section is to explain the process by which ODOT construction contracts are closed out. We will discuss final inspections, the completion of contract requirements, the determination of the final contract value and the issuance of the final payment and release.
Following the completion of the physical work of a project a process to "closeout" the contract begins. This process ultimately leads to the final payment and release of the contractor from further responsibility for the project. This process includes gaining acceptance of the project from all participating agencies, determining the final value of the contract, the completion of all remaining contract requirements and the issuance of a final change order. It is the Department's goal that this process be completed within six months of the completion of the physical work for at least 90 percent of our projects.
When work on a project has been completed to the satisfaction of the Project Engineer/ Project Supervisor, a final inspection is conducted. The final inspection is typically conducted by a team that is headed by the District Deputy Director's Appointee for Final Inspection. This Team shall include representatives of all local participating agencies and FHWA, when applicable, ODOT maintenance personnel, the Engineer and the contractor. The Team will determine the need for any corrective or additional work and prepare a "punch list" for the project. In the case of any disagreements among the Team, the District Deputy Director's Appointee is empowered with final authority. The "punch list" is provided to the contractor in writing along with a specified time frame or a specified date for completion of the prescribed work. Final inspection must follow the ODOT policy 27-007(P), and standard procedure 510-007(SP) and generally must include the following items:
· Resolution of Punch List: It is the responsibility of the Engineer to perform any follow up necessary to assure that the contractor completes the punch list work in a timely manner.
· Obtain acceptance of project by all local agencies: Upon completion of all physical work, including punch list work, the District Construction Office must obtain a letter of acceptance of the project from all local participating agencies.
· Issuance of Report on Final Inspection: Following the completion of punch list work, if any, the District Deputy Director's Appointee for Final Inspection issues the Report on Final Inspection, form C-85. This report represents an informal acceptance of the project.
Once the physical work is completed for a project there are a number of administrative contract requirements that must be completed before final payment can be issued. These requirements may differ from contract to contract and typically include the processing of various documents or the Contractor supplying certain information:
· Payroll requirements completed
· Affidavit of Compliance Final Wage Affidavit (State Projects Only)
· Profilometer Report
· Concrete Core Report
The dates on which each of these contract requirements has been satisfied are entered and recorded in CMS on the "FINAL" screen.
A key element of the project closeout process is the determination of the final dollar value of the construction project. This is accomplished by determining the final number of units to be paid for each item of the contract and by processing all necessary change orders including a final change order.
In order to ensure timely closeout, it is strongly recommended that some of the activities that will be discussed be performed as work is completed on the project.
The Engineer is responsible for determining and preparing support documentation for the final quantity (final number of units) to be paid for every item of work contained in the construction contract. Ideally this is accomplished progressively as the items are completed during the course of construction of the project. Once the physical work has been completed for the project, the Engineer submits all project records to the District Office for an audit. This audit is performed by the District Level Reviewer for the purpose of verifying the final quantities and assuring that adequate documentation exists to support payment of those quantities. It is currently the Department's policy to audit a minimum of 25% of all projects awarded each calendar year. The District can audit additional projects at its discretion. Again, it is preferred for larger projects that the audit be performed progressively as items of work are completed and documented. Upon completion of the audit, or periodically during the audit for larger projects, a list of "approves' final quantifies is prepared and is forwarded to the contractor for concurrence. Once agreement with final quantifies has been obtained a change order is prepared to make any necessary adjustments between the final and original contract quantities. Any necessary pay estimates resulting from these change orders are initiated by the District Construction Office.
As discussed in earlier sections, all materials incorporated into construction projects must be approved for use. Once the work is completed for the project an audit must be performed to ensure that sufficient quantities of material have been approved for each reported final quantity. As the final quantity audit is being performed and final quantities are approved, the quantities are reported to the District Engineer of Tests for the material audit. The District Engineer of Tests and staff review the project testing and acceptance records to ensure that sufficient materials are approved for the final quantity for every contract item. Material deficiencies are reported to the Engineer who is responsible for resolution of the deficiency. Once all material deficiencies are resolved, the District Engineer of Test generates the Letter of Certification of Materials for the project. This letter is signed by the District Engineer of Tests and the District Highway Management Administrator and included in the final estimate package.
The project closeout process is modified as follows for projects constructed under the material acceptance process described in Policy 515-001(P).
Under this policy the Engineer prepares a material certification for the project and submits it along with the final contract quantities to the District for an audit. The final quantity documentation is audited by the District Level Review Team as described earlier. The District Engineer of Tests now only audits the Engineer’s material certification using project audit guidelines similar to those used by the District Level Review Team. Deficiencies identified by the District Engineer of Test's audit are reported to the Engineer who is responsible for their timely resolution.
The Highway Management Administrator approves the material certification and it is included in the final estimate package.
A final change order is required for every construction project. Change orders for all quantity adjustments, extra work, additional costs, price adjustment or contract amendments must be processed prior to the issuance of the final change order. Approval of the final change order signifies that all necessary changes have been made to adjust the contract from the original bid condition to the final "as built" condition.
Following the approval of the final change order, the final estimate is prepared and processed and the contractor is released from any further responsibility for the project in accordance with C&MS Section 109.12.
A final estimate package is prepared for the project and includes the following items:
· Final estimate (reconciles payment to final quantities)
· Letter of Certification of Materials
· Certification of Payroll Affidavit (100% State projects only)
· Letter of Acceptance from Participating Agency
· Affidavit as to Non Specified Materials (when applicable)
· Receiving ticket for Salvaged Materials (when applicable)
· Signed Contractor Certification Form CA-D-12
The final report is certified by the District Construction Engineer and the District Deputy Director. The final estimate is approved by the District Deputy Director.
Once submitted the final estimate package is audited and approved for payment. Following this approval the District Construction Office generates a letter to the contractor advising of the final value of the contract and of their release. This letter also serves as the Department's formal acceptance of the project.
ODOT, by the nature, volume and complexity of the work which it does, is subject to claims by Contractors who perform the work. The underlying "rules of the game" between ODOT and a Contractor exist in the Contract (the Proposal), the Specifications and the Plans. These are the stated terms. There are certain terms which are not stated in the contract documents. These are known as implied terms. For instance there is an implied warranty that the plans and specifications are free from defects and, unless stated otherwise, that there will be safe and continuous access to all areas within the project's boundaries. Claims arise from both stated and implied terms.
The words “dispute” and “claim” are often used interchangeably but the words, as used in ODOT contract language, do have different meanings. A “dispute” is a disagreement and/or a difference of opinion between ODOT personnel and the Contractor. A “dispute” matures into a “claim” when an issue in dispute cannot be resolved at the Project or District level. A “dispute” officially becomes a “claim” when the Contractor files a Notice of Intent to File a Claim or a Notice of Intent to Appeal to the Dispute Review Board. At this time the Contractor will be asked to “certify” the claim. The Contractor must certify under oath, by signing in front of a notary, that the claim is made in good faith, that it is accurate and complete and that it represents the actual costs incurred both in time and money.
On Federal Oversight projects, once the dispute becomes a claim, ODOT is responsible for providing all subsequent documentation involving that claim to the Federal Highway Administration. The Department’s Claims Coordinator is responsible for these submittals.
The only entity that can assert a claim against the Department is the legal contractor of record. If the project is being performed by a joint venture then only the joint venture can assert a claim. Likewise, a subcontractor cannot assert a claim directly against the Department but can make a claim against the Contractor who in turn can assert a claim against the Department for damages incurred by the subcontractor. Do not discuss a dispute resolution with a subcontractor without having the Contractor’s responsible representative present.
Every claim has two distinct elements:
· Entitlement is the theory under which the Contractor asserts the claim. Examples of this would be: differing site conditions, conflict between plans and specifications, delays, etc.
· Damages are the monetary and/or time impacts incurred by the Contractor which are a direct result of the claim event.
Most construction contracts, including ODOT’s, include a requirement for the contractor to provide prompt notice of circumstances that may require a revision to the Contract Documents. This notice of the existence of a potential change to the contract is required before the Contractor begins any changed or extra work. Failure to give prompt notice could defeat an otherwise properly documented claim.
The purpose of requiring early notice is so the owner has the option of proceeding with the work, redesigning the work, and/or otherwise reducing the effect of a claimed event. Early notice also allows the owner the opportunity to begin keeping careful and specific records of the contractor’s activities, manpower, equipment and materials which are related to the claim.
Certain types of disputes by their nature are those which are most likely to result in a claim. The most common claims deal with:
· Acceleration (109.06)
· Inefficiencies (109.07)
Delays may be associated with some of the claims listed above, and may require careful analysis to determine who is responsible for the delay. It is important to keep the following principles in mind when evaluating a Delay Claim:
The contractor must demonstrate that the delay was critical. It must be shown that the delay in question affected the overall project schedule and was a controlling operation with respect to project completion.
Excusable Delays (108.06.B) Are those delays which are unforeseeable and beyond the control of the contractor. Excusable Delays may be either compensable or non-compensable.
Excusable/Compensable (108.06.D) These are delays caused by the owner.
Examples include: lack of site access, late shop drawing approval, redesign etc.
Excusable/Non Compensable (108.06.B) These are delays caused by third parties outside the contractors' control. Examples include: area wide labor disputes, floods, transportation industry delays, fire, vandalism etc.
Non Excusable (108.06.E) Non Excusable delays are always non-compensable. These delays are caused by the contractor or under his control. Examples are: subcontractor delay, late mobilization, production takes longer than scheduled, equipment breakdowns etc.
Very often delays can occur from various sources at the same time. These are called Concurrent Delays (108.06.F). An ODOT caused compensable delay occurring at the same time as an excusable delay which is non-compensable should result in a time extension but no recovery of costs. An ODOT caused delay occurring at the same time as a contractor caused delay should result in a time extension but no recovery of costs. Both cases relieve the contractor from liquidated damages for the time in question.
The contractor is entitled to plan and pursue the work in order to finish ahead of the contract completion date (108.02.B.2). If ODOT delays the contractor, the contractor may be entitled to impact costs.
The Contractor and the Department must make a reasonable effort to mitigate damages resulting from a claim event, whether caused by the Department, Contractor, third party or intervening event. Mitigation might include: re-sequencing work activities, acceleration, continuing work through a planned shutdown period, etc. The contractor may be entitled to recover the costs of mitigation. Prior to implementing a change of any kind the Contractor and the Department must have agreed on the method of compensation and time responsibilities in writing.
Proof of entitlement and proof that additional costs were incurred rests solely with the contractor. The Contractor has the burden of proving BOTH entitlement and damages. If the Contractor cannot prove entitlement, the claim must be denied. Likewise, if the Contractor proves entitlement but cannot prove that it incurred any cost and/or time impacts, the claims must be denied.
Contractors utilize various approaches to present the damages associated with a claim. Below are the most common:
· Total Cost. In this method the contractor submits the Total Cost to perform the work. This method presupposes that there are no contractor inefficiencies or unanticipated contractor costs. ODOT rarely accepts this approach.
· Modified Total Cost. In this method the contractor submits his Total Cost to perform the work and then deducts an agreed upon contractor inefficiency. A little better than the Total Cost method but still not ODOT friendly.
· Force Account (Time and Materials) (109.05 C). Based on actual records and actual contractor costs. Cumbersome to assemble and check but has a certain essential fairness built in. Mark ups and determination of costs defined in the specifications.
· Measure Mile. Force Account records are kept for a specified length of time and the cost is calculated. This production rate and cost is then assumed constant throughout the rest of the work. Applicable only when a large quantity of similar extra work is to be done for an extended period of time.
· Agreed Unit Price/Agreed Lump Sum (109.04 B). Uses Unit Prices agreed upon by the Contractor and ODOT. Good for ODOT since ODOT has large amounts of data concerning unit prices. The Office of Estimating is available to provide expertise on work items not available in database.
The following step by step process should be used to analyze a claim.
· Did the Contractor give the required Early Written Notice (104.02.G)?
· What is the Contractor’s theory of entitlement?
· What do the Contract Documents say?
· Determine the actual sequence of events giving rise to the claim.
· Identify each specific claim issue.
· What is the position of both sides on each issue?
· If delay related:
· Did the claim circumstance delay work on the critical path (108.06.A)?
· Is it an excusable or non-excusable delay (108.06.B through 108.06E)?
· Is it a compensable or non-compensable delay (108.06.B through 108.06.E)?
· Were any of the delays concurrent (108.06.F)?
· Has the Contractor proven the damages directly relate to issue being claimed?
· Do ODOT records agree with the Contractor’s submitted documentation?
· Does the Contractor’s cost submittal meet the guidelines for extra work (109.05)?
· Are the damages reasonably in line with industry standard costs for the same work? If not, is there a reason why?
· Did the Contractor mitigate the monetary and time damages?
It is impossible to overemphasize the need for consistent, complete and accurate project documentation. Contemporaneous records, documents written at the time of the event, normally carry more weight in claims decision-making than records written up at the time the claim is submitted for analysis. Project documentation must be clear and legible, written in real time, be a regular practice and be sufficiently detailed to describe the writer’s thoughts. Examples of project documentation that are routinely used to support a claim position include: pre-bid, pre-construction and progress meeting minutes; daily diaries; force account records; idle equipment records; correspondence, including e-mails; RFI’s; transmittals/submittals; project schedule and changes; phone conversations; and photos and videos.
The Department as a general policy takes a proactive approach which seeks to avoid disputes. In the event claims do arise, an orderly procedure is in place to assist with managing the claims.
Each project includes a dispute resolution process designated by proposal note. The Dispute Resolution and Administrative Claims Process (PN109) is the default process and is included on all projects except those that use the Dispute Review Board Process (PN108). The Dispute Review Board (DRB) Process is used on select projects that are typically over $20 million and/or of a highly technical nature. The applicable process must be followed by the Contractor in order to seek additional compensation or contract time.
Claim avoidance, at its most basic level, is accomplished by removing or lessening the factors which contribute to claims. Discussed below are some of the methods used by the Department:
· Prequalification & Post Project Assessment of Contractors:
o Qualified, capable contractors with the resources to undertake a project can lessen the factors which lead to claims (i.e. qualified superintendents, capacity to maintain schedule, quality work). Some contractors are also very astute at recognizing claim opportunities. So, qualifications alone are not a guarantee of claim avoidance.
· Constructability Review: The Department has instituted Constructability Reviews which occur at the District level. The review team is generally designated by the DCE. The review team will:
o Review General Notes and Special Provisions.
o Review Plans
o Personnel should walk the project paying particular attention to:
§ Right of way encroachment or obstructions
§ Pavement or bridge condition (i.e. heaving, cracking, deterioration)
§ Sediment and erosion problems and other geological features
§ Stream & Stream diversions
§ Railings & Signs
§ Joint conditions
§ Impact on signals
o LISTEN to Operations personnel. They know existing problems.
o LOOK for the obvious discrepancies in location, missing information, obstructions, conditions or quantities.
· Change Order Review: At the time a change order is written its creator is required to choose a reason code for each reference item included on that change order. If the chosen reason code is (Plan) “Error or Omission” the change order is targeted for review by the Department’s Change Order Review Team. This Team reviews these change orders for recurring problems, recommends steps for correction and provides this information to the District Production Offices. This Team also identifies changes caused by plan errors or omissions on which ODOT may pursue compensation for the cost of the required change from the designer of the plan.
· Claims Tracking: Disputes and claims are tracked by ODOT to identify the causes of disputes and claims and when applicable clarify and/or correct the contract documents to avoid future disputes and claims.
The Dispute Resolution and Administrative Claims Process is a step by step sequence of events which occur following the Contractor’s Early Notice submittal described in C&MS 104.02.G. This Notice is required when the Contractor discovers a circumstance that may require a revision to the Contract Documents or may result in a dispute.
Proposal Note 109 (PN 109) sets forth the details of each of the three steps of the Dispute Resolution and Administrative Claims Process. These three steps include: On-Site Determination, District Dispute Resolution Committee and Director’s Claims Board. PN 109 sets forth specific submittal timeframes at each step which must be met by both the Contractor and ODOT personnel to move a dispute toward resolution. These timeframes are included in PN 109 as recognition that: first, the Contractor deserves timely responses; and, second, that it is easier to resolve a dispute when the events are clear in everyone’s mind rather than allowing an issue to remain until the finalization stages of a project.
Proposal Note 108 (PN 108) provides that a Dispute Review Board (DRB) be established prior to the beginning of construction of a project and exists through the life of that project. A DRB is comprised of three members, each with a minimum of 10 years experience in construction, contract administration and dispute resolution techniques. One member is chosen by the Contractor, one member is chosen by ODOT and the Chair of the Board is chosen by the other two members.
The DRB conducts quarterly meetings and is provided with monthly progress meeting minutes, project schedule updates and any other information it requests to keep up-to-date on the progress of the project. The DRB may also conduct special hearings at the third step in the Dispute Review Board Process and provide recommendations to the Director of ODOT as to the disposition of that claim.
Proposal Note 108 (PN 1089) sets forth the details of each of the three steps of the Dispute Review Board Process. These three steps include: On-Site Determination, District Dispute Resolution Committee and the Dispute Review Board. PN 108 sets forth specific submittal timeframes at each step which must be met by both the Contractor and ODOT personnel to move a dispute toward resolution.
The DRB may also be asked, by mutual agreement of both parties, to render an Advisory Opinion. An Advisory Opinion may be used to provide the parties with a preliminary assessment of the merits of each party’s position in a dispute based upon the information presented. The process is meant to be expedient, shall be primarily oral and will not prejudice a future formal DRB hearing of the dispute.
The expectations and responsibilities of the Contractor, ODOT and the DRB, as well as the agreed upon compensation of the DRB members is included in the Dispute Review Board Three Party Agreement. This contract is signed by ODOT, the Contractor and all three DRB members prior to the first DRB quarterly meeting.
§ A Special Item, Lump Sum, Dispute Review Board will be furnished in the Proposal to pay for the services of the DRB members.
§ Monthly, the Chair shall submit to the Contractor the billable time and travel expenses for each Board member.
§ The Contractor will pay the DRB members’ invoices. The Contractor will then submit the paid invoices to the ODOT Project Engineer for reimbursement payment under the above referenced pay item.
§ Under the Special Item described above, the Contractor will be reimbursed 100% of the costs associated with the quarterly meetings plus 50% of the costs associated with the development and issuance of Step 3 proceedings or advisory opinions.
§ The ODOT Project Engineer will review each paid invoices. All billable time is to be at the hourly rates agreed to in the Third Party Agreement and travel expenses are to be in accordance with Ohio Office of Budget and Management’s Travel Policy. Any adjustments necessary should be made on the subsequent invoice.
1. Check monthly DRB member invoiced hours for accuracy and reasonableness
2. Invoiced hourly rates cannot exceed hourly rates set up in Three Party Agreement
3. Invoiced travel expenses cannot exceed maximums established in Ohio Office of Budget and Management’s Travel Policy.
4. Verify all totals are mathematically correct.
5. Verify items paid at 100% ODOT and 50/50% ODOT/Contractor split are correct
6. Document monthly Contractor reimbursement total on CA-D-1B