CONSTRUCTION DIVISION

Transcription

1 VIRGINIA DEPARTMENT OF TRANSPORTATION CONSTRUCTION DIVISION INSTRUCTIONAL AND INFORMATIONAL MEMORANDUM GENERAL SUBJECT: Cntract Change Management NUMBER: SPECIFIC SUBJECT: Change Orders DATE: June 15, 2018 SUPERSEDES: IIM-CD APPROVED: A Kerry. A. Bates, P.E. State Cnstructin Engineer EFFECTIVE DATE This Instructinal and Infrmatinal Memrandum (lim) is effective upn receipt. CHANGE ORDER GUIDANCE 1. DEFINITION A Change Order frmally establishes changes t the cntract. A Change Order may be used t add, mdify, r delete: pay items, cntract time, r ther terms f the cntract. There are tw types f Change Orders. A Bilateral Change Order is mutually agreed upn by VDOT and the Cntractr and is used when bth parties agree n the cst and time impacts assciated with the changed cnditin. A Unilateral Change Order is issued by VDOT t make a cntract change when bth parties cannt agree n the time and cst impacts. It is imprtant t nte that a Change Order shall nt be used t implement a change slely fr the cnvenience f the Cntractr r a ne-time csts savings fr the cntract. In these circumstances, the changes t quality and life-cycle impact f the prduct being cnstructed must be cnsidered.

2 Instructinal & Infrmatinal Memrandum IIM-CD Sheet 2 f8 2. ENTITLEMENT Entitlement must be established t validate the changed cnditins frm the riginal cntract dcuments and shall be clearly dcumented n the Frm C-1 0. The reasn fr entitlement f the Change Order can be due t ne r mre f the fllwing: Significant Changes in the Character f Wrk (Sectin b) caused by: Character f wrk differing materially frm riginal cntract, Increase r decrease f a majr item (r piling) by 25% r mre, r Increase r decrease f a minr item by 200% r mre Value Engineering Prpsal (Sectin c) Differing Site Cnditins (Sectin ) Type I Type II Fr design-build prjects, entitlement cannt be established fr increases r decreases t majr r minr items because they are lump sum cntracts. In additin, entitlement cannt be established fr a Type I Differing Site Cnditin n design-build prjects after the expiratin f the Scpe Validatin Perid. 3. APPROVAL OF CONCEPT After entitlement has been established, the Cntractr and the Area Cnstructin Engineer, r his/her designee, shuld discuss the prpsed scpe f wrk fr the changed cnditins. The Area Cnstructin Engineer, VDOT's Respnsible Charge Engineer fr cnstructin, must apprve the cncept fr the Change Order n the Apprval f Cncept Frm C-1 OA. Apprval f the Cncept shuld be given t the Cntractr in writing, based n plans r ther available data, and describe the wrk t be added r deleted frm the cntract. It shuld be clearly dented that this is the Apprval f Cncept and nt apprval f the Change Order. The cncept must be apprved by FHWA n Prjects f Divisin Interest (POOl). Fr any additinal wrk, the Apprval f Cncept shall clearly indicate whether the scpe is: Clearly Defined Nt Clearly Defined The cncept shuld be categrized int ne f the fllwing categries t better understand the need fr the change: UTIL- delays r extra wrk caused by utilities CHAR - changes t the character f wrk as nted abve ADD - additinal wrk r scpe, nt riginally planned PLAN- plan errr r missin CONT- errr r missin in cntract dcument VALU- cntractr value engineering prpsal LEG - lcal, state r federal gvernment prpsal POL- VDOT plicy r guidance changes that result in changes r additinal wrk VDOT - delayed NTP r VDOT caused errr/delay MISC - changes that d nt fit int the abve categries NBID- items specified int cntract with set unit price, nt bid n by the Cntractr RENW- renewing/extending time limit n a renewable/n-call cntract

3 Instructinal & lnfnnatinal Memrandum The apprpriate categries shuld be identified n the executed C-1 0 and C-1 OA frms. Sheet3 f8 Bth the Cntractr and VDOT will use the scpe f wrk identified in the Apprval f Cncept t estimate all csts assciated with the Change Order fr cncepts that have a clearly defined scpe. 4. INDEPENDENT GOVERNMENT ESTIMATE FOR CONCEPTS THAT HAVE CLEARLY DEFINED SCOPE Fr Change Order cncepts that have a clearly defined scpe, the Department must develp an independent gvernment estimate (IGE) prir t receiving the Cntractr's estimated price. The Area Cnstructin Engineer, r his/her designee, will estimate the cst f the Change Order by clearly detailing the changed cnditins frm the riginal cntract using: Estimated quantities and assciated unit prices derived frm the cntract's Schedule f Items whenever pssible (except as therwise directed in Sectin f the Rad and Bridge Specificatins), Estimated quantities and assciated unit prices derived frm bid histries fr cmparable prjects with cmparable quantities if the required bid items are nt included in the cntract's schedule r items, and/r Itemized cst breakdwns f wrk packages that utilize ther industry resurces when the use f estimated quantities and unit prices is nt feasible. Other industry resurces may include R.S. Means and the Equipment Watch Blue Bk. Blue Bk rates are available n the VDOT internal website; hwever, it shuld be nted that Blue Bk rates are maximum rates, and as such are nt well suited t establish a basis fr negtiating additinal wrk. In all cases, the apprpriate adjustment factrs fr year and regin must be applied. Fr areas utside f the Respnsible Charge Engineer's expertise, ther prfessinals in the relevant subject matter shuld be cnsulted t help estimate the csts. Fr example, design csts assciated with changes n Design Buildprjects can be estimated by a designer. N csts assciated with a cmpensable delay shuld be included in the IGE. These csts cannt be cnsidered until a Time Impact Analysis is submitted, reviewed, accepted and the delays are determined t be slely the fault r respnsibility f VDOT. After the Area Cnstructin Engineer, r his/her designee, has develped, signed, dated, and dcumented the IGE, the Cntractr's estimate can be received and cmpared t the IGE fr negtiatin. 5. FORCE ACCOUNT FOR CONCEPTS THAT DO NOT HAVE CLEARLY DEFINED SCOPE Fr Change Order cncepts that d nt have a clearly defined scpe, a Frce Accunt may be utilized t determine the cst impacts f the changed cnditins frm the riginal cntract. Prir t cmmencing any wrk assciated with the Frce Accunt, the Department and the Cntractr must agree upn rates fr the labr, equipment, and materials t be used utilizing VDOT Frm C-115 (Cntract Frce Accunt Authrizatin). In additin, the VDOT Frm C-115 must be apprved by FHWA in advance fr any prjects that are cnsidered PODI.

4 Instructinal & Infrmatinal Memrandum Once Frce Accunt wrk has cmmenced, daily recrds f all assciated labr, equipment, and materials must be maintained by inspectin staff reprting t VDOT. These recrds shall be cmpared and recnciled with the Cntractr n a daily basis and recrded n VDOT Frm C-116. Additinal requirements fr payment by Frce Accunt are identified in Sectin (b) f the Rad and Bridge Specificatins. Sheet4 f8 After the agreed upn Frce Accunt wrk is cmpleted, the VDOT Frm C-116 can be used as supprting dcumentatin fr the change rder. 6. EXTENSION OF TIME An extensin f time may be cnsidered fr a cncept with a scpe that is clearly defined r a cncept with a scpe that is nt clearly defined. The extensin f time may cnsider revisins t dates that are eligible fr early cmpletin incentives and/r the fixed cmpletin date fr the prject. The requirements fr cnsidering an extensin f the prject's fixed cmpletin date are identified in Sectin f the Rad and Bridge Specificatin r the assciated special prvisin. A request fr a time extensin must cme frm the Cntractr in writing. If the Cntractr requests a time extensin, the prpsed time extensin will nly be cnsidered if the Cntractr prvides detailed supprting data, such as a Time Impact Analysis (TIA), fr the Change Order. The changed cnditin frm the riginal cntract must be clearly demnstrated in the supprting data as a cntrlling wrk item that affects the critical path fr btaining early cmpletin incentives r prject cmpletin. After the Area Cnstructin Engineer, r his/her designee, has reviewed the supprting data and determined the actual delays t the critical path in writing, the time impact can be cnsidered fr a time extensin. The Engineer may give cnsideratin fr an extensin f time when a delay ccurs due t unfreseen causes beynd the cntrl f r withut the fault r negligence f the Cntractr. Hwever, cnsideratin will nt be given t extensin f time attributable t nrmal adverse weather cnditins r cnditins resulting frm nrmal adverse weather. The time extensin cannt exceed the number f days f actual delay t the prject's critical path. Fr POOl prjects, the Area Cnstructin Engineer will crdinate ptential time extensins with the FHWA Area Engineer prir t requesting apprval f the Change Order. All cst and schedule impacts fr a change t the cntract shall be identified n the same Change Order. 7. APPROVAL AUTHORITY The Chief Engineer has the apprval authrity fr all increases t the cntract budget. The cntract budget is identified as the ttal amunt allcated fr the cnstructin phase f the prject n the Fund Distributin Sheet. Befre additinal funding can be added t the cntract budget, the Chief Engineer (r designee) must apprve the increase in writing n Frm C-11. If the Chief Engineer (r designee) grants apprval t increase the cntract budget, it is the District Engineer's respnsibility t wrk with the Asset Management and/r Infrastructure Investment Divisins t identify apprpriate funding

5 Instructinal & lnfnnatinal Memrandum surces and allcate any additinal funds needed t cmplete the cnstructin phase f the prject within the increased cntract budget. Sheet 5 f8 The apprval authrity fr executing change rders varies based n the dllar amunt assciated with the change rder. The maximum apprval authrity fr individual Change Orders is as fllws: Area Cnstructin Engineer - $250,000; District Cnstructin Engineer - $1,000,000 (requires Assistant State Cnstructin Engineer cncurrence n Apprval f Cncept); and District Engineers - all Change Orders exceeding $1,000,000 (requires State Cnstructin Engineer cncurrence n Apprval f Cncept) The Maximum Apprval Authrity des nt apply t change rders that renew n-call r renewable cntracts. FHWA must apprve any Change Order n Prjects f Divisin Interest (POOl). Fr any federally funded prject n the Natinal Highway System (NHS), with an riginal estimated cst f $10 millin r mre, the FHWA Area Engineer must be ntified when the actual cntract expenditures plus cnstructin engineering csts exceed the riginal estimated cst by mre than 25%. The riginal estimated cst is calculated by taking the FHWA-apprved Engineer's Estimate f cntract expenditures at Plans, Specificatins & Estimates (PS&E), subtracting ut any cntingency amunts, and then adding in the estimated cnstructin engineering csts. 8. NEGOTIATION OF CHANGE ORDERS FOR CONCEPTS THAT HAVE CLEARLY DEFINED SCOPE Requirements regarding payment fr cntract changes fr cncepts that have a clearly defined scpe are identified in Sectin (a) f the Rad and Bridge Specificatins. The Cntractr cannt be given directin t begin wrk assciated with Change Orders fr cncepts that have a clearly defined scpe until a Bilateral Change Order is executed r a Unilateral Change Order is issued. Once the Cntractr submits their estimated cst and time impacts fr the changed cnditin, they must be analyzed by the Area Cnstructin Engineer. If the Area Cnstructin Engineer agreed t a time extensin, then they must determine in writing whether r nt the delay was cmpensable. Cmpensable delays are delays t the critical path that are slely the respnsibility f VDOT. In rder fr a delay t be cnsidered cmpensable, there cannt be a cncurrent delay t the critical path that is nt cmpensable. Types f cmpensable delays and nn-cmpensable delays are identified in Sectin (e) f the Rad and Bridge Specificatins. Calculatins t determine field ffice verhead (FOOH) and hme ffice verhead (HOOH) assciated with cmpensable delays are als utlined in this sectin. An apprpriate amunt f FOOH and HOOH and ther delays csts attributable t cmpensable delays may be added t the IGE nce the duratin f the cmpensable delay is determined. The Cntractr's estimated cst impact will be cmpared t the IGE by the ACE, r his/her designee. It is imperative that VDOT nt share IGE details r ttal dllar amunt with the Cntractr until the Cntractr has submitted pricing and negtiatins have begun. If the Cntractr's estimated cst impact is within 110% f the IGE, then a Bilateral Change

6 Instructinal & Infrmatinal Memrandum Order can be executed in the amunt f the Cntractr's estimated cst using standard line items, estimated quantities, and unit prices t the greatest extent practical. Unit prices shuld be reviewed t ensure that each unit price represents a reasnable and balanced cst. Sheet6 f8 If the Cntractr's estimated cst impact is mre than 110% f the IGE, then the ACE, r his/her designee, must discuss the Change Order in detail with the cntractr. It is likely that the methd the Cntractr used t estimate the cst f the Change Order is different frm the methd used by VDOT. Regardless f the methd used, the scpe f wrk as agreed upn in the Apprval f Cncept fr the Change Order shuld be similar. During discussins with the Cntractr regarding cst impacts that are mre than 110% f the VDOT IGE, the ACE, r his/her designee, may discver that the assumptins they used t determine the amunt f wrk required t perfrm the scpe f wrk identified in the Apprval f Cncept were inaccurate and resulted in an insufficient IGE. In these instances, the ACE, r his/her designee, may nte the inaccurate assumptins and revise the IGE accrdingly. The revised IGE must be clearly signed and dated by the ACE r his/her designee. Likewise, during the discussins with VDOT, the Cntractr may discver that the assumptins they used t determine the amunt f wrk required were inaccurate and resulted in an incrrect estimated cst impact. In these instances, the Cntractr may submit a revised estimated cst impact. If the Cntractr's revised estimated cst impact is within 110% f the revised IGE, then a Bilateral Change Order can be executed in the amunt f the Cntractr's estimated cst. Discussins may cntinue between VDOT and the Cntractr until the revised estimated cst impact is within 110% f the revised IGE. If the Cntractr and VDOT cannt agree n a price fr the scpe f wrk identified in the Change Order, then VDOT can execute a Unilateral Change Order in the amunt f the IGE, r direct the cntractr t prceed with the wrk while gd faith effrts t negtiate a reasnable price cntinue. Directing the cntractr t perfrm wrk withut an executed bilateral Change Order will cmmnly result in the Cntractr submitting a Ntice f Intent t File Claim (NOI). In cases where it is cst prhibitive t perfrm the additinal wrk as a change rder t the cntract, the ACE shuld determine if there are ther cst-effective means t perfrm the wrk (state frces, n-call cntracts, etc.). In any case where additinal wrk is being perfrmed withut an executed bilateral change rder, actual csts incurred by the cntractr (labr, equipment and material) must be tracked by VDOT persnnel n a daily basis. 9. EXECUTION OF CHANGE ORDERS FOR CONCEPTS THAT HAVE CLEARLY DEFINED SCOPE The Cntractr cannt begin wrk assciated with Change Orders fr cncepts that have a clearly defined scpe until a Change Order is dcumented n VDOT Frm C-10 and

7 Instructinal & lnfnnalinal Memrandum II M-CD executed by a VDOT Representative with the apprpriate apprval authrity t d s. On Prjects f Divisin Interest (POD I), FHWA must apprve the Change Order as well. Sheet 7 f8 Amng ther things, the VDOT Frm C 1 0 must clearly dcument: A descriptin f the additinal (r reduced) wrk Entitlement Agreed upn ttal price increase (r decrease) fr the wrk being added (r deleted) by the Change Order Breakdwn f the ttal price int items, quantities, units, and unit prices Agreed upn time extensins specifying any changes t the fixed cmpletin date r dates that are eligible fr early cmpletin incentives 10. EXECUTION OF CHANGE ORDERS FOR FORCE ACCOUNT WORK The Cntractr may begin wrk assciated with Change Orders fr Frce Accunt wrk nce the C 115 has been apprved. The Change Order Frm C-10 will frmalize infrmatin captured n the C-116 and will be executed by a VDOT Representative with the apprpriate apprval authrity t d s. On Prjects f Divisin Interest (POOl), FHWA must apprve the Change Order as well. Amng ther things, the VDOT Frm C-10 must clearly dcument: A descriptin f the additinal (r reduced) wrk Entitlement Agreed upn ttal price increase fr the wrk being added by the Change Order Breakdwn f the ttal price int items, quantities, units, and unit prices supprted by the C-115 and C-116 Agreed upn time extensins specifying any changes t the fixed cmpletin date r dates that are eligible fr early cmpletin incentives 11. DOCUMENTATION Supprting dcumentatin must be maintained fr all Change Orders. The supprting dcumentatin is nt made available t the Cntractr and is slely fr the purpses f verifying that all requirements f this lim were fllwed. Supprting dcumentatin shall include cpies f the fllwing, as applicable: Executed C-1 0 Any ntes, mems, r messages n file that clearly explain the cncept f the change rder Dcumentatin f cmmunicatin with the designer f recrd Area Cnstructin Engineer apprval f the cncept clearly indicating: Whether the scpe f wrk is clearly defined r nt clearly defined, and Whether an extensin f time fr the changed cnditin is anticipated FHWA apprval f the cncept The Department's IGE, including: The date the IGE was perfrmed The bid histry f specific prjects used t justify unit prices Surce infrmatin fr detailed estimates Any revisins, including revised assumptins Executed C-115 All executed C-116

8 Instructinal & Infrmatinal Memrandum Sheet 8 f8 Cntractr's request fr extensin f time Cntractr's supprting data fr the request fr extensin f time (such as a TIA) VDOT's review cmments and analysis f actual delays t the critical path fr the time extensin request Dated crrespndence with the Cntractr clearly indicating their prpsed price fr the Change Order Any crrespndence between VDOT and the cntractr ntifying f a changed cnditin, requesting equitable adjustment r prviding ntice f intent t file claim Any crrespndence between VDOT and the Cntractr that demnstrates a negtiatin f price and establishes the final price fr the Change Order Plan changes shall fllw the prcess set frth in the Field Change Dcumentatin Instructinal and Infrmatinal Memrandum (IIM-CD ). 12. GLOBAL SETTLEMENT CHANGE ORDERS All change rders fr additinal wrk must meet the requirements f this lim. As such, Glbal Settlement Change Orders that d nt establish entitlement fr all csts are nt permitted. It is acceptable, hwever, t issue a single change rder that reslves multiple independent change rder requests r pen items. In these instances, csts and entitlement f each independent item must be delineated separately and captured per this lim. 13. SUBMITTAL FOR CONSTRUCTION DIVISION REVIEW The Cnstructin Divisin will make Prject Cntrls staff available t prvide assistance, guidance, r t review ptential Change Orders in advance f their executin. All field staff are encuraged t utilize this resurce as circumstances allw. All executed Change Orders and supprting dcumentatin must be submitted t the State Prject Cntrls Engineer within 14 days f executin. The State Prject Cntrls Engineer will review executed Change Orders fr cmpliance with this lim. Any significant cncerns n individual Change Orders will be brught t the attentin f the next highest apprval authrity. Any prgrammatic cncerns regarding Change Orders executed by a specific District will be brught t the attentin f the State Cnstructin Engineer.