Mobilization Payment Structure - Proposal

Transcription

1 Mobilization Payment Structure - Proposal The following proposal to change the mobilization payment structure is available for review and comment until December 30, Please send any questions or concerns to dotbids@state.sd.us. The question and answer document will be updated periodically as questions are received. Current Methodology for payment of Mobilization A. When the contract has been fully executed by parties thereto, an amount as determined by the following schedule will be paid. Except, payment shall not exceed 25 percent of the total contract amount for Mobilization. 1. Contract amounts up to and including $500,000. Payment in an amount equal to 1.0% of contract amount. 2. Contract amounts in excess of $500,000. Payment in an amount equal to $5,000. plus 0.6% of contract amount in excess of $500,000. B. Five percent, or more, of the original contract amount is earned an additional amount will be paid to bring the total payment for mobilization to 25% of the amount bid. C. Ten percent, or more, of the original contract amount is earned, an additional amount will be paid to bring the total payment for mobilization to 50% of the amount bid. D. Twenty-five percent, or more, of the original contract amount is earned, an additional amount will be paid to bring the total payment for mobilization to 60% of the amount bid. E. Fifty percent, or more, of the original contract amount is earned, a final payment will be made to bring the total payment for mobilization to 100% of the amount bid. Page 1

2 How does our payment structure compare to the surrounding States? Example for a project with mobilization (for illustration purposes only) North Dakota Montana Wyoming 2 Nebraska Iowa 0 Minnesota South Dakota % Complete Do other States in the Midwest have limitations? Max is defined as having an absolute maximum bid amount Limit is defined as having a limit at some point in the contract with remainder paid later Page 2

3 Comparison to other States: Comparison State #1: North Dakota: Page 3

4 Comparison State #2: Wyoming: Sample comparisons include the following scenarios: $400,000 Contract with $20,000 (5%) Mobilization $400,000 Contract with $60,000 (15%) Mobilization $10,000,000 Contract with $800,000 (8%) Mobilization $10,000,000 Contract with $2,000,000 () Mobilization Page 4

5 SDDOT Proposal: No overall maximum for mobilization, but limit to 10% of the contract paid 50% complete with remaining paid at 90% of project completion Overview: Payments made similar to existing methodology, but only up to 10% of the contract will be paid for mobilization at 50% of contract pay-out, with any remaining amount paid closer to the end of the contract. The payment for mobilization would be based on the following table: Mobilization bid at > 10% of the total contract amount Mobilization Payment Schedule Mobilization bid at 10% of the total contract amount Contract Status % of contract % of mobilization Contract Executed 2.50% 25% 10% Complete 5% 50% 25% Complete 7% 70% 50% Complete 10% 100% 90% Complete Remainder > 10% n/a Example 1: $400,000 Contract with $20,000 (5%) Mobilization Current Method Proposed Method Contract signed (1% contract) $4000 Contract signed (25% mob) $5000 5% Complete (25% mob) $5000 5% Complete (n/a) n/a 10% Complete (50% mob) $ % Complete (50% mob) $ % Complete (60% mob) $ % Complete (70% mob) $ % Complete (100% mob) $ % Complete (100% mob) $ % Complete n/a 90% Complete n/a $25,000 $20,000 $15,000 $10,000 Current Proposed $5,000 $0 0% 5% 10% 15% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Page 5

6 Example 2: $400,000 Contract with $60,000 (15%) Mobilization Current Method Proposed Method Contract signed (1% contract) $4000 Contract signed (2.5% contract) $ % Complete (25% mob) $ % Complete (n/a) n/a 10% Complete (50% mob) $ % Complete (5% contract) $20,000 25% Complete (60% mob) $ % Complete (7% contract) $28,000 50% Complete (100% mob) $ % Complete (10% contract) $40,000 90% Complete n/a 90% Complete (Remainder) $60,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 Current Proposed $10,000 $0 0% 5% 10% 15% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Example 3: $10,000,000 Contract with $800,000 (8%) Mobilization Current Method Proposed Method Contract signed (0.6%+$5k) $65,000 Contract signed (25% mob) $200,000 5% Complete (25% mob) $200,000 5% Complete (n/a) n/a 10% Complete (50% mob) $400,000 10% Complete (50% mob) $400,000 25% Complete (60% mob) $480,000 25% Complete (70% mob) $560,000 50% Complete (100% mob) $800, % Complete (100% mob) $800,000 90% Complete n/a 90% Complete n/a $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 0% 5% 10% 15% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% Current Proposed Page 6

7 Example 4: $10,000,000 Contract with $2,000,000 () Mobilization Current Method Proposed Method Contract signed (0.6%+$5k) $65,000 Contract signed (2.5% contract) $250,000 5% Complete (25% mob) $500,000 5% Complete (n/a) n/a 10% Complete (50% mob) $1,000,000 10% Complete (5% contract) $500,000 25% Complete (60% mob) $1,200,000 25% Complete (7% contract) $700,000 50% Complete (100% mob) $2,000,000 50% Complete (10% contract) $1,000,000 90% Complete n/a 90% Complete (Remainder) $2,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 Current Proposed $500,000 $0 0% 5% 10% 15% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% There is a concern about those projects that will not reach 90% pay out. This may occur when: mobilization is greater than of the contract the project is complete but the quantities paid are less than 90% of those bid A combination of greater than 10% mobilization and a reduction in the quantities paid on the contract is more than 10% of the contract amount In each circumstance, the contract may not reach the criteria of 90% pay out of the contract, resulting in nonpayment of the remaining mobilization. If this would occur, the contractor is responsible to request the final mobilization payment from the project engineer. Page 7

8 Rough Draft Specification: 9.10 MOBILIZATION - Mobilization consists of preparatory work and operations, including, but not limited to the necessary movement of personnel, equipment, and incidentals to the project site; for the establishment of offices, buildings, and other facilities necessary for work on the project; for work and operations which must be performed, and for cost incurred before starting work on the various contract items on the project site. When an item for mobilization is included in the bid proposal, the Department payment at the contract lump sum price will be considered full compensation for mobilization costs. The Department will make partial payments on the following schedule: A. When the contract has been fully executed by parties thereto, the Department will make a partial mobilization payment. The partial mobilization payment will be made at 25% of the total amount bid for mobilization except the payment will not exceed 2.5% of the total contract amount. B. When 10%, or more, of the original contract amount is earned, an additional amount will be paid to bring the total payment for mobilization to 50% of the amount bid except the payment will not exceed 5% of the total contract amount. C. When 25%, or more, of the original contract amount is earned, an additional amount will be paid to bring the total payment for mobilization to 70% of the amount bid except the payment will not exceed 7% of the total contract amount. D. When 50%, or more, of the original contract amount is earned, an additional amount will be paid to bring the total payment for mobilization to 100% of the amount bid except the payment will not exceed 10% of the total contract amount. E. When either 90%, or more, of the original contract amount is earned or when the Engineer issues the Acceptance of Field Work, whichever occurs earlier; an additional payment will be made to bring the total payment for mobilization to 100% of the amount bid. If, at any time, it becomes evident the Contractor will not reach the 90% of the original contract amount threshold and the final mobilization will not be automatically prompted, the Contractor may request the final mobilization payment from the Department. The Contractor must make the request in writing to the Engineer. If the Engineer determines the Contractor s request is valid and it is evident the final mobilization payment will not be automatically prompted, the Engineer will process the final mobilization payment. When an item for "mobilization" is not included in the proposal, this work will be considered as incidental to the various contract items. Page 8