OVERVIEW OF MDOT CONSTRUCTION ISSUES

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OVERVIEW OF MDOT

CONSTRUCTION ISSUES

CONTACT MODIFICATION PROCESS

& ELECTRONIC SIGNATURES

October 2011 October 2011

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PRESENTER

R. Jason Clark, PE, MBA

MDOT Construction Contracts Engineer

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PRESENTATION OVERVIEW

¾

Contract Modification Process

_{Contract Modification Process}

¾

New MDOT CM BOHIM

_{New MDOT CM BOHIM}

¾

Field Manager Software Updates

_{Field Manager Software Updates}

¾

E

_E

-

sign BOHIM

¾

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Construction Contract Modifications

Former Process Issues

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¾ Modifications sometimes not drafted until months after work occuModifications sometimes not drafted until months after work occurredrred

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¾ Approval process sometimes took in excess of 3 months to authori_{Approval process sometimes took in excess of 3 months to authori}ze and ze and make payments

make payments

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¾ Approval process complicated (BOHIM 2004_{Approval process complicated (BOHIM 2004}--11)11)

¾

¾ Overrun Status Overrun Status –– Spot all further payments to prime after 15% overrunSpot all further payments to prime after 15% overrun

¾

¾ Mailing delays / lost documents_{Mailing delays / lost documents}

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¾ Multiple Board Approvals Required (SAB Multiple Board Approvals Required (SAB –– STC STC –– T&NR)T&NR)

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¾ Attorney General review_{Attorney General review}

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¾ Office of Commission Audit reviewOffice of Commission Audit review

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¾ Delays to get placed on board agendas (monthly meetings)_{Delays to get placed on board agendas (monthly meetings)}

In general construction contract modifications requiring STC

approval would often not be authorized for payment to contractor

until 3

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Goals of the CM Process

Improvement

s

_s

¾

Statewide alignment of construction process

_{Statewide alignment of construction process}

¾

Expedite CM approval process

_{Expedite CM approval process}

¾

Reduction in bureaucracy/redundancies

_{Reduction in bureaucracy/redundancies}

¾

Streamline entire process (simplify)

_{Streamline entire process (simplify)}

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Improve oversight (seems counter to above)

_{Improve oversight (seems counter to above)}

¾

Shorten or eliminate Board approvals

_{Shorten or eliminate Board approvals}

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Improve document routing (all parties)

_{Improve document routing (all parties)}

¾

Start CM generation process sooner

_{Start CM generation process sooner}

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Goals of the Process Improvement

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Simplification

_{Simplification}

z

z ExtrasExtras z

z OverrunsOverruns z

z ChangesChanges z

z ModifiedModified z

z AdjustmentsAdjustments

¾

All simplify to one measure = % $ over budget

_{All simplify to one measure = % $ over budget}

In short

–

to streamline the entire process,

expedite processing times, and increase

oversight to reduce risk.

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Steps Achieved to Date

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¾ CM Team formed to develop new Contract Modification CM Team formed to develop new Contract Modification approval process and MDOT BOHIM 2004

approval process and MDOT BOHIM 2004-14-14

¾

¾ Effective Removal State Ad Board from MDOT CM _{Effective Removal State Ad Board from MDOT CM} process

process

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¾ Statewide alignment Statewide alignment –– new Bureau of Field Services new Bureau of Field Services

¾

¾ ReRe--organization of MDOT staff and hiring region organization of MDOT staff and hiring region construction engineers

construction engineers

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¾ State Attorney General approval of the use of digital State Attorney General approval of the use of digital electronic signatures throughout MDOT

electronic signatures throughout MDOT

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¾ Field Manager updates/changes_{Field Manager updates/changes}

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¾ E_E--sign Team developing BOHIM, standards, pilot sign Team developing BOHIM, standards, pilot projects, etc

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Overview of New MDOT CM BOHIM

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¾ Provide as much or more internal MDOT Provide as much or more internal MDOT oversight/checks/balances as SAB process oversight/checks/balances as SAB process

¾

¾ Tiered or layered approval process to increase scrutiny _{Tiered or layered approval process to increase scrutiny} as the dollar values increase. (0

as the dollar values increase. (0-5% TSC, 5-5% TSC, 5--10% 10% Region, 10%+ C&T)

Region, 10%+ C&T)

¾

¾ Statewide alignment _{Statewide alignment}–– same process in all regionssame process in all regions

¾

¾ Increased Region oversight via region construction Increased Region oversight via region construction engineers

engineers

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¾ Reduce approval time in process.Reduce approval time in process.

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¾ Streamline process and reduce overhead_{Streamline process and reduce overhead}

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¾ Maintain flexibility while at the same time centering most _{Maintain flexibility while at the same time centering most} project authority on the delivery engineers

project authority on the delivery engineers

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¾ Improve speed of payments to contractors for accepted Improve speed of payments to contractors for accepted work and have a more predictable process (time).

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New MDOT CM BOHIM

General Info

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Divided into seven (7) sections

_{Divided into seven (7) sections}

¾

Modernized the BOHIM layout

_{Modernized the BOHIM layout}

¾

Interactive hyperlinks to quickly find

_{Interactive hyperlinks to quickly find}

relevant information

¾

Table of Contents (also hyperlinked)

_{Table of Contents (also hyperlinked)}

¾

Sample documents included

_{Sample documents included}

¾

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SECTION

–

I

Executive Summary & Terms

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MDOT had used many specific terms that were

_{MDOT had used many specific terms that were}

sometimes defined differently than in other

states, FHWA or industry. In addition, some

types of changes even had separate evaluation /

threshold criteria.

¾

Section I

_{Section I}

-

Re

-

defines all contract work changes,

No more different evaluations or criteria for

various types of changes in work such as:

z

z Overruns, Extras, Changes, Adjustments, Overruns, Extras, Changes, Adjustments,

Modifications, Change orders, etc Modifications, Change orders, etc

¾

To align with 2012 spec book, all contract

_{To align with 2012 spec book, all contract}

changes are now referred to as:

“

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SECTION

–

II

Contract Modification Development

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¾ Synchronizes Negotiations with contractor to 2012 spec book guid_{Synchronizes Negotiations with contractor to 2012 spec book guid}elineselines

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¾ Must come to agreement on price / scope prior to Starting the wo_{Must come to agreement on price / scope prior to Starting the wo}rk. rk.

¾

¾ This may mean estimated amounts, estimated units, budget for for_{This may mean estimated amounts, estimated units, budget for for}ce ce account, etc but the extent of the contract revision and an agre

account, etc but the extent of the contract revision and an agreed upon ed upon method of compensation must be agreed upon prior to starting the

method of compensation must be agreed upon prior to starting the work.work.

¾

¾ A contract modification must be generated by the engineer no latA contract modification must be generated by the engineer no later than er than seven (7) calendar days after the work commences and send to

seven (7) calendar days after the work commences and send to

contractor for signature.

¾

¾ Contract time must be addressed in the contract modification. TContract time must be addressed in the contract modification. The he revised work may not impact contract time, if this is the case j

revised work may not impact contract time, if this is the case just ust indicate so in the description.

indicate so in the description.

¾

¾ Key Points:Key Points: •

• Price agreed on before work startsPrice agreed on before work starts •

• Contract modification generated within 7 days of work starting aContract modification generated within 7 days of work starting and send to nd send to contractor for signature

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SECTION

–

III

Generating Contract Modifications

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¾ Gives list of key information needed in each area of Gives list of key information needed in each area of contract modification document

contract modification document

¾

¾ Provides standard layout of information and samples_{Provides standard layout of information and samples}

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¾ Provides detailed information on the 4 contract _{Provides detailed information on the 4 contract} modification types in the field manager software: modification types in the field manager software:

z

z Original Pay itemOriginal Pay item z

z Modified Original Modified Original z

z Extra WorkExtra Work z

z AdjustmentsAdjustments

¾

¾ Provides easy to follow instructions for each type to the Provides easy to follow instructions for each type to the last section which contains a step by step series of items last section which contains a step by step series of items

that must be answered for each work code that must be answered for each work code

¾

¾ Identifies the thresholds (Generally $25k) for some work Identifies the thresholds (Generally $25k) for some work items codes to require more detailed information

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SECTION

–

IV

Approval Thresholds

¾

Gives overview, table & detailed info on

_{Gives overview, table & detailed info on}

the new tiered con

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SECTION

–

V

Authorization Paths

¾

Gives detailed information on each step of

_{Gives detailed information on each step of}

the approval process from creation to final

approval at each tier

¾

Outside MDOT review/approvals include:

_{Outside MDOT review/approvals include:}

z

Preparer

z

Consultants

z

Contractors

z

Federal Highway (FHWA)

z

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SECTION

–

V (cont)

Sample Contract Mod

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¾ More Signature More Signature blocks for greater

blocks for greater

flexibility on

specific projects

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¾ MDOT side in MDOT side in signature order

signature order

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¾ Upcoming FM _{Upcoming FM}

enhancements

will automate

more of process

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SECTION

–

V

Authorization Paths (cont)

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Gives detailed information on each of the three

_{Gives detailed information on each of the three}

tiers of MDOT approval:

z

z Tier I Tier I –– TSC ApprovalTSC Approval z

z Tier II –Tier II – Region ApprovalRegion Approval z

z Tier III Tier III –– Bureau of Field Services ApprovalBureau of Field Services Approval

•

• Construction Contracts ReviewConstruction Contracts Review •

• Commission AuditCommission Audit •

• Attorney GeneralAttorney General •

• State Transportation CommissionState Transportation Commission •

• State Ad Board (only if nonState Ad Board (only if non--conforming to BOHIM)conforming to BOHIM) ¾

¾

Addresses other issues such as later dropping

_{Addresses other issues such as later dropping}

down a level of approval

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SECTION

–

V

Authorization Paths (cont)

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¾ Shows each _{Shows each}

separate possible

path and interaction

of key steps

¾

¾ Engineer is key to Engineer is key to process

process

¾

¾ General timeframesGeneral timeframes

¾

¾ Full size of chart Full size of chart included in the back

included in the back

of your handout

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SECTION

–

VI

Digital Electronic Signatures

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More detailed information in the E

_{More detailed information in the E}

-

sign BOHIM

¾

For specific use of e

_{For specific use of e}

-

sign on contract

modifications:

z

z Document Routing: inside and outside MDOTDocument Routing: inside and outside MDOT z

z Signature authorization sheet (sample next screen)Signature authorization sheet (sample next screen) z

z Pre-Pre-approved Backup signers (vacations, etc)approved Backup signers (vacations, etc) z

z Notification of forthcoming change to require e-Notification of forthcoming change to require e-sign sign

on all MDOT bid project contract modifications in near on all MDOT bid project contract modifications in near future

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SECTION

–

VI (cont)

Authorized Signature Form

¾

¾ Required prior to Required prior to pre

pre--con meetingcon meeting

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¾ Only those shown Only those shown can legally sign

can legally sign

documents

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¾ Backups identified _{Backups identified}

(vacations, etc)

¾

¾ Makes e_{Makes e}--sign sign validation step

validation step

very easy

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SECTION

–

VII

Records Retention

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Gives detailed information on construction

_{Gives detailed information on construction}

project documentation records retention.

¾

Specific information on electronic

_{Specific information on electronic}

documents

¾

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MDOT CM BOHIM

Appendixes

¾

Appendix A

_{Appendix A}

–

Authorization Flow Chart

¾

Appendix B

_{Appendix B}

–

Authorized Signature Form

¾

Appendix C

_{Appendix C}

–

Sample Contract Mod

¾

Appendix D

_{Appendix D}

–

STC Approvals

(hopefully temporary)

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CM BOHIM Key Points

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¾ Authorized signers and backups for all parties Authorized signers and backups for all parties identified/established at Pre

identified/established at Pre-construction meeting.-construction meeting.

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¾ Integral use of E_{Integral use of E}--sign in process (more on esign in process (more on e--sign later)sign later)

¾

¾ Time limits on CM generation, contractor pricing, _{Time limits on CM generation, contractor pricing,}

approval times. (contractor final price before work starts) approval times. (contractor final price before work starts)

¾

¾ No one person signing in more than one locationNo one person signing in more than one location

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¾ Multiple people reviewing all CMsMultiple people reviewing all CMs

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¾ MDOT Engineer and MDOT Manager review all CMs_{MDOT Engineer and MDOT Manager review all CMs}

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¾ Emphasis on establishing scope/cost prior to work start_{Emphasis on establishing scope/cost prior to work start}

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¾ Focus on producing CMFocus on producing CM’’s as the work is identified in s as the work is identified in order to also begin approval process.

order to also begin approval process.

¾

¾ Faster payments to contractors for work done as Faster payments to contractors for work done as requested

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Digital Electronic Signatures

¾

Authorized for use by MDOT September

_{Authorized for use by MDOT September}

2011 by State Attorney Generals Office

¾

MDOT E

_{MDOT E}

-

sign BOHIM in region review,

expected publication in November 2011

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E

-

_-

Sign

_Sign

State Attorney General

State Attorney General’’s Office has granted formal s Office has granted formal approval for MDOT to utilize Digitally Encrypted approval for MDOT to utilize Digitally Encrypted

Electronic Signatures on MDOT processes. Electronic Signatures on MDOT processes.

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E

-

_-

Sign

_Sign

¾

Clarify: These are not scanned or faxed

_{Clarify: These are not scanned or faxed}

signatures (which are still not allowed in the

State of Michigan as valid signatures)

¾

E

_E

-

sign is like a stamp that is physically

embedded into an electronic PDF document.

¾

E

_E

-

sign is unique to each person, password

protected, embeds key information, etc

¾

Electronic signatures can not legally be treated

_{Electronic signatures can not legally be treated}

differently than hand written signatures.

¾

Easy to use, immense potential uses/impacts,

_{Easy to use, immense potential uses/impacts,}

and millions in potential savings to the State.

¾

AG decision was not limited to specific

_{AG decision was not limited to specific}

processes or departments. (wide open use)

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E

-

_-

Sign

_Sign

¾

¾ Feds have been using since 2003Feds have been using since 2003--2005 and have 2005 and have sophisticated fillable forms with e

sophisticated fillable forms with e-signatures.-signatures.

¾

¾ New records retention/storage issues to address (the _{New records retention/storage issues to address (the}

electronic file is the original copy, a printed out hard copy electronic file is the original copy, a printed out hard copy

is meaningless (MDOT will use ProjectWise) is meaningless (MDOT will use ProjectWise)

¾

¾ All or nothing, not possible to mix hand written All or nothing, not possible to mix hand written signatures with e

signatures with e--sign on same document. sign on same document.

¾

¾ Will become mandatory for Field Manager, Pay Will become mandatory for Field Manager, Pay Estimates, CM, etc (in near future)

Estimates, CM, etc (in near future)

¾

¾ Solves Design Coversheet PE stamp/signature issues Solves Design Coversheet PE stamp/signature issues (all electronic projects)

(all electronic projects)

¾

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E

-

_-

Sign

_Sign

Issues:

_Issues:

¾

¾ Validation of sender_{Validation of sender}’’s identity (reason for MDOT signature authority form)s identity (reason for MDOT signature authority form)

¾

¾ Federal stds for Signature Verification_{Federal stds for Signature Verification} (min two criteria met)(min two criteria met)

¾

¾ (Trivia Q: what Decade did the US Federal Gov first accept an el_{(Trivia Q: what Decade did the US Federal Gov first accept an el}ectronic ectronic signature on a contract?)

signature on a contract?)

¾

¾ Some concern over software cost. (full version of Adobe is $115Some concern over software cost. (full version of Adobe is $115 or less)or less)

¾

¾ Per Adobe technician; the free reader version is capable of ePer Adobe technician; the free reader version is capable of e--sign with sign with an additional module download (MDOT has not been able to test ye

an additional module download (MDOT has not been able to test yet)t)

HOWEVER

HOWEVER –– if you are using the free (home use) reader version of if you are using the free (home use) reader version of Adobe for business purposes, you may already be violating the te

Adobe for business purposes, you may already be violating the terms of rms of the license agreement. (Bid Express/online plans/proposals/etc)

the license agreement. (Bid Express/online plans/proposals/etc)

¾

¾ Working to facilitate eWorking to facilitate e--sign approval use on handheld devices, sign approval use on handheld devices, blackberries, tablets, and smart phones. (Adobe does not curren

blackberries, tablets, and smart phones. (Adobe does not currently tly support e

support e--sign on portable devices, but a great deal of 3sign on portable devices, but a great deal of 3rdrd _{party software}_{party software} does.

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Samples of Signatures

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Samples of Signatures

¾

¾Wide range of potential uses including:Wide range of potential uses including:

¾

¾LettersLetters

¾

¾CorrespondenceCorrespondence

¾

¾Certified mailingsCertified mailings

¾

¾Certified payrollsCertified payrolls

¾

¾Contractor performance evaluationsContractor performance evaluations

¾

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FHWA Oversight Approval Form 1365

(Sample E

-

_-

sign Form)

_{sign Form)}

--””smartsmart”” electronic formelectronic form

(Any changes to text or

unchecking a box will

“

“unlockunlock”” the electronic the electronic signatures.)

signatures.)

--Has spell check!Has spell check!

--Legally the same as an Legally the same as an ink signature on paper. ink signature on paper.

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FHWA Oversight Approval

Form 1365

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MDOT E

-

_-

Sign

_Sign

“

_“

How To

_{How To}

”

_”

¾

D

_D

r

a

ft

-

MDOT E

-

Sign Instructions

Shortcut to draft - MDOT E-Sign Instructions RJC (3).doc.lnk

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MDOT Construction

Update Summary

Many positive changes are underway at MDOT

SAB changes are complete, STC is in process

New FHWA Con

New FHWA Con--Mod BOHIM published 9Mod BOHIM published 9--1313--20112011 E

E--sign has been approved and will spread into many parts of MDOT sign has been approved and will spread into many parts of MDOT MDOT internal CM approval process and new BOHIM are in final

MDOT internal CM approval process and new BOHIM are in final

stages of review, and will soon be published.

E

E--sign Team working on smart phone integration and developing sign Team working on smart phone integration and developing training videos

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QUESTIONS??

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MDOT Construction Contracts Unit

R. Jason Clark, P.E. R. Jason Clark, P.E.

Construction Contracts Engineer Construction Contracts Engineer

Michigan Department Of Transportation Michigan Department Of Transportation

(517) 322

(517) 322--6630 (Office)6630 (Office) [email protected] [email protected]