AVOIDING RISK AND SAVING MONEY ON YOUR MODERNIZATION PROJECT

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Presented by

Craig Misso, Ontario-Montclair School District

Chris Lawrence, HMC GROUP

Barbara Gadbois of Gibbs, Giden, Locher & Turner, LLP

AVOIDING RISK AND SAVING

MONEY ON YOUR

MODERNIZATION PROJECT

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

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Overview

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Planning/Bidding Phase

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Construction Administration Phase

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Project Closeout Phase

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Planning/Bidding - Overview

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Project Launching

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Selection of Professional Services Firms

Contract Considerations

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Planning/Bidding Phase

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Project Launching

– Project concept – Project budget

– Roles of district’s planning team

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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

Planning/Bidding Phase

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Professional Services Firms Contract

Considerations

– Errors and omissions and general liability

insurance

– Poor performance/plan provision

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Planning/Bidding Phase

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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

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Planning/Bidding Phase

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Project Document Contract

Considerations (cont.)

– Bid advertisement

– Environmental conditions

– Pre-bid conference

– Change order pricing options

– Payment applications

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Planning/Bidding Phase

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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

Planning/Bidding Phase

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Risk Avoidance Techniques (cont.)

– Allow adequate time for bid review – Investigate listed major subcontractors – Maintain open contracts with third parties

• Environmental consultants • Testing labs

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Construction Administration

Phase

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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

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Role of District in Reducing Risk

– Clear and timely decisions

– Coordination of campus operations – Timely payment to contractor

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Construction Administration

Phase

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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

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Agency Prior to Bidding

– Preliminary approval

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Construction Administration

Phase

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Project Schedule

– Unrealistic timelines provoke the contractor to generate delay claims

– Require a network analysis schedule – Identify concurrent vs. critical path work

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Interpretation of Contract Documents

– The architect’s role, not the contractor’s – Job site decisions can be uninformed – Fair play

Construction Administration

Phase

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Submittals

– Require a submittal schedule – Process submittals quickly – Require complete submittals

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Substitutions

– Minimize, minimize, minimize

– Contractor to pay for resulting changes and engineering

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Construction Administration

Phase

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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

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Construction Administration

Phase

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Unforeseen Conditions

– Expect them

– “As-builts” are not always available or accurate – Have contingency funds

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Change Orders

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Construction Administration

Phase

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Meeting Minutes

– Does not replace an RFI

– Records direction to the contractor – Less is less

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Construction Managers

– Agree to be a team

– Establish roles at the inception of the project – District involvement to remain

Construction Administration

Phase

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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

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Construction Administration

Phase

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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

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Project Closeout Phase

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Make Sure You Get What You Pay

For in Closeout of 3 Major Areas:

– Site Conditions

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Project Closeout Phase

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Site Conditions

– Punch list completion

– Clean-up/restoration of areas impacted

– Removal of contractor facilities

Project Closeout Phase

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Project Specifications

– Written warranties and bonds

– Operations & maintenance manuals and training – Inspection and testing reports

– Attic stock/spare parts

– Complete record/as-built drawings

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Project Closeout Phase

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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

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Project Closeout Phase

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Withhold Sufficient Funds

– Retention

– Labor Enforcement Notices – Stop Notice claims

– Liquidated damages – Disputed work

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Project Closeout Phase

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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

Project Closeout Phase

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Completion/Notice of Completion

– Civil Code

§ 3086 Acceptance by Board

– Civil Code

§ 3093 Notice of Completion

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Project Closeout Phase

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Assess Liquidated Damages

– Government Code § 53069.85

– 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

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Project Closeout Phase

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Release of Retention and

Withholding

– Public Contract Code § 7101

– Definition of completion

– Withhold disputed/release undisputed

– Penalties for wrongful withholding

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Project Closeout Phase

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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

Project Closeout Phase

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Dispute Resolution

– Public Contract Code

§ 20104

– Alternative dispute resolution

– Utilize documentation prepared during

contract administration

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Internet Sites

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Architect

www.dsa.ca.gov