Procedures For Managing Subcontracts Brown Book)

Contract/Subcontract
Management User Guide
Copyright  1999. All Rights Reserved.

TOC TABLE OF CONTENTS *
1 INTRODUCTION
Purpose
Scope
Related Manuals
2 RESPONSIBILITIES
Assignment of Tasks
3 INITIAL TASKS
Pre-Award Activities
Pre-Construction Meeting
Filing System
Correspondence and Correspondence Control
Insurance and Bonds
Schedule Submittals
4 PERFORMANCE
Changes
Commitment Approvals
Schedule
Requests for Information (RFI'S)
Technical Transmittals
Claims
Backcharges
5 MONITORING/REPORTING
Daily Report
Progress Review and Coordination Meetings
Progress Measurement and Payment
Quality Surveillance
Safety and Health
Environmental
6 CLOSEOUT
TABLE OF CONTENTS Page i of v

CONTRACT/SUBCONTRACT MANAGEMENT MANUAL
6.1 Contract Closeout

6.2 Beneficial Occupancy
6.3 Substantial Completion
6.4 Punch List
6.5 Warranty
7 SPECIAL TOPICS
7.1 Contract Law
7.2 Basis for Claims
7.3 Negotiation
7.4 Interface Coordination
7.5 Labor and Industrial Relations
7.6 Force Accounts
7.7 Liquidated Damages
7.8 Delays and Extension of Time
7.9 Acceleration
7.10 Suspension of Work
7.11 Differing Site Conditions
7.12 Terminations
7.13 Project Environmental Controls
INDEX
FORMS
TABLE OF CONTENTS Page ii of v

Introduction
TABLE OF CONTENTS
1.1 Purpose......................................................................................................................................1
1.2 Scope.........................................................................................................................................1
TABLE OF CONTENTS
SECTION 1. INTRODUCTION Page i
1 INTRODUCTION
1.1 Purpose This Guide establishes standard practices for managing subcontracts.
1.2 Scope This Guide provides procedures for managing subcontracts.
Many of the procedures in this Guide include a work practice Checklist to

provide a quick overview of the key requirements of contract management.
A clear understanding of the terms and conditions of the contract being

managed as well as those of the prime contract is required before any action
prescribed by these procedures is taken.
This Guide should be used in conjunction with approved Project procedures

manuals.
SECTION 1. INTRODUCTION Page 1 of 1

Responsibilities
TABLE OF CONTENTS
2.1 ASSIGNMENT OF TASKS.......................................................................................................1

2.1.1 Purpose ..................................................................................................................................1
2.1.2 Background ............................................................................................................................1
2.1.3 Procedure ...............................................................................................................................1
2.1.4 Exhibit ...................................................................................................................................1
TABLE OF CONTENTS
SECTION 2. RESPONSIBILITIES Page i
2 RESPONSIBILTIES
2.1 ASSIGNMENT OF TASKS
2.1.1 Purpose The purpose of this section is to provide a comprehensive list of tasks which
should be performed to manage a contract successfully.
2.1.2 Background Effective management of a contract includes making sure that each of the
essential task is assigned and performed. The complexity and size of the
individual contract and available project resources will affect the decision of
which tasks are essential for the contract. However, certain tasks should be
considered essential for all contracts (e.g., daily reports, change control
procedures, correspondence log and files, insurance and safety/health
requirements.
Contract management is a team effort. Optimizing a project’s personnel

resources requires that administrative responsibilities be delegated through the
project organization, independent of a group’s discipline responsibilities.
2.1.3 Procedure The method of communicating and assigning the functional responsibilities for
each contract is by a Division Of Responsibility (DOR) Matrix (Exhibit
2.1.3.).
The generic DOR Matrix in this procedure is a guideline for development of a

project or contract-unique DOR to ensure that each of the identified tasks is
assigned to specific project personnel. A small project may have one DOR
for the entire job or a large project may have separate DORs for each
contract.
2.1.4 Exhibit Division of Responsibility (DOR) Matrix (Exhibit 2.1.3)

SECTION 2. RESPONSIBILITIES Page 1 of 11
Contract No.
Contractor
DIVISION OF RESPONSIBILITY MATRIX✶ (Exhibit 2.1.3)
Contract Input to Material Development of Coordinate Input to pricing Prepare Material Identify company Develop and Review bids,
Formation - Assignment proforma package and proposal Requisition (MR), or customer provide schedule provide input to
Regional Office Schedule document and development, section technical scope, furnished utilities, requirements and bid evaluation
Issued Contracts determination of pre-bid meeting specifications and facilities and cost estimates for criteria, bid
mandatory prime and drawings services contract package evaluation and
contract bidding/award of bid clarification
flowdowns contract meeting
Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Pre-bid Meeting Develop agenda; Chair and Review change Review quality Cover site Describe cost and Explain Safety
bidding conduct meeting; management, control, field operational schedule reporting and Health Plan,
procedure; cover project insurance, engineering requirements, labor requirements and project
commercial scope, work progress requirements relations, contractor requirements
aspects; prepare rules, general reporting and interface and
meeting minutes conditions; ethics payment coordination
and code of documentation
conduct
Assigned to:__________
Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
✶
For contracts which the company is managing on behalf of a customer, the DOR should be modified to include customer representative interfaces.
Notes:
1. The Project Manager or Site Manager, in conjunction with the Contracts Manager, is responsible for assignment of the functions listed in this matrix. All tasks must be assigned and the
responsible employee trained and familiar with the task.
2. If the nature of the contract or available project resources dictate that a task will not be assigned and performed, indicate "Not Performed" in the "Assigned To" box.
3. All employees are responsible for providing the necessary support to an employee assigned responsibility for a given task or function.

Division of Initial Updates Historical file

Responsibility assignments
Matrix (DOR) (by name)
Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Contract Review turnover Compose Monitor and Establish

Package package for punchlist of status punchlist responsibility
Turnover from completeness missing items in for resolution of
Regional Office turnover package open items
to Field
Lead:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Pre-construction Define Company Prepare agenda, Discuss Cover Labor Cover Safety and Cover schedule Cover contract Review ethics
Meeting Authorized conduct meeting construction Relations Health and progress administrative and code of
Representative operations requirements requirements reporting requirements conduct
requirements requirements including
such as facilities, submittals and
equipment, invoicing
coordination
Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Pre-construction Prepare meeting Monitor and

Meeting minutes and status
(continued) action/open items action/open
list items
Lead________ Assigned to:__________ Assigned to:__________

Labor Relations Administer Coordinate labor Receive Record nature,

Project Labor issues with contractor's duration and
Agreement, if contractor notices of impact of work
applicable actual/potential stoppages
labor disputes
Assigned to:
Lead _______________ Labor Relations Dept. Assigned to:__________ Assigned to:__________ Assigned to:__________
Correspondence Designate Log Assign actions Report and Prepare outgoing Review outgoing Review and sign Archiving and
and Notices recipient for all correspondence follow up open correspondence, correspondence all outgoing permanent
contract and maintain files action items log and monitor for compliance correspondence storage
correspondence open items with contract and
(except as noted procedures
below)
Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__ALL_____ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Requests for Designate Log RFI's, Assign action Report and Review and sign Review RFI's "after
Information recipient maintain Files follow-up open outgoing responses the fact" for
(RFI's) action items commercial
impact
File/Route Contract files Drawings Technical Schedule Payment files Expediting reports Inspection reports Progress
Miscellaneous documents submittals photos
Documents (other than
drawings)
File/Route Safety / Security

Miscellaneous files
Documents
(Cont'd) Assigned to:__________

Insurance and Obtain and re- Verify validity of Verify insurance Maintain tickler
Bonds view Insurance Insurance and bonding system for
Certificates and Certificates and companies are policy
bond commit- letters on company's expirations
ment letters for approved list
contract
compliance
Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Contractor Develop list of Receive and log Assign action Conduct or Conduct or Approve Monitor closure
Technical contractor contractor items and coordinate coordinate cost and contractor of contractor
Submittals submittals submittals monitor status technical schedule reviews of submittals submittal
of open items reviews technical submittals requirements
Contract Set Milestone Obtain initial Verify schedule Coordinate sub- Approve schedule Monitor progress Obtain/review Review claimed
Schedule dates contractor submittal meets mitted schedule submittal against approved periodic schedule impacts
schedule contract with project contract schedule updates from affecting critical
requirements schedule contractor path/
milestones
Lead:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Contract Process Evaluate whether Issue Change Issue notices if Direct acceleration Direct
Schedule company or 3rd contract Order to confirm contract to recover schedule acceleration to
(Cont'd) Party milestone date justified and milestone dates advance
backcharges changes are agreed upon are in jeopardy milestone dates
arising from late justified changes relative to contract
schedule to contract dates
performance schedule
Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

Progress Obtain, review for Establish method Review, Approve

Payment compliance with and verify compare to quantity
Schedules contract quantity or work contract progress
measurement schedule and calculations
methods develop cash
flow curve
Invoices and Check invoices Verify billed work Verify contract Verify proper Approve payments
Payments for accuracy and agrees with requirements are deductions
that pricing is approved met before made for
according to progress payments issued retention,
contract backcharges or
other offsets
Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Technical Receive copies of Sign Change Assemble and

Transmittals transmittals, Notices prepare
from Engineer prepare Change transmittals to
Notices contractor
Contract Initiate requests Review requests Prepare Change Sign Change Issue, control and Track costs for all Negotiate
Changes for changes for changes Notices, Change Notices monitor Change changes pending changes
Orders and Notices negotiated settle-
Amendments ments

Contractor Receive and log Evaluate Evaluate Evaluate Prepare responses Authorize Plan and conduct Approve final
Proposals contractor technical merit schedule merit commercial to contractor negotiation limits negotiations settlements
proposals merit
Contractor Prepare cost and

Proposals commitment
(continued) changes and
obtain approvals
Daily Reports Observe, Review Daily Review Daily Log and retain
assemble and Reports for Reports for Daily Reports
report significant commercial Project
information significance significance
(Prepare Daily
Reports)
Contractor's Obtain reports Review and Log and retain

Force, Equipment analyze reports reports
Utilization and
Material Usage
Reports
Contractor Obtain copy of Analyze, review Resolve open

Quality Program program and approve action items
Lead:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

Quality Inspect work in Inspect off- Verify inspec- Determine Review contractor's Determine best Monitor close-out
Surveillance progress and site/shop tions comply acceptance or proposed remedial of open quality
coordinate with fabrications with contract rejection of work remedial actions action and direct issues
contractor requirements contractor
Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Daily Report of Obtain reports Summarize data Approve reports Retain originals
Force Account from contractor and report with contractor
invoices
Backcharges Identify scope of Determine if Prepare notices Obtain Establish unique Summarize daily Approve
backcharge work; work is of backcharge contractor cost code for data and reports backcharge
prepare summary backchargeable approvals backcharge work settlements
and verify work is
properly coded
Safety and Health Obtain copy of Monitor Obtain name of Identify and Prepare notices to Sign/approve Transmit notices, Verify
Contractor's contractor comp- designated evaluate contractor violation notices maintain log and contractor
Safety and liance with Safety contractor violations monitor status of corrective
Health Program and Health employee for violation notices actions
Program safety & health

Environmental Identify project Obtain copy of Prepare a Review Identify Facilitate the Monitor the Prepare a
agencies. contractor's permitting plan contractor environmental preparation and progress of Construction
environmental written or matrix permit design criteria and review process of permit acquisition Environmental
regulations and Environmental requirements incorporate into the Environmental Control Plan
constraints Compliance and monitor design basis Impact (CECP)
Program (ECP), compliance Assessment, if
if required and required
obtain name of
designated
contractor
employee for
ECP
Lead:__________ Assigned to:__________ Assigned to:__________ Assigned to:_________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:_________ Assigned to:__________
Environmental Obtain Hazardous Review Determine Monitor written Develop and

(continued) Materials and contractor whether notice to EPA or implement an
Waste List from proposed use of contractor needs state environmental
contractor and, as hazardous mater- asbestos designated training plan
appropriate, ials and monitor inspection if agency 10 days
Material Safety hazardous work includes prior to
Data Sheets materials and demolition or demolition or
(MSDS) waste storage renovation renovation as
and removal required
Monthly Provide data or Summarize and Approve and

Progress other information assemble data issue monthly
Reports and information report

Contract Chair meetings Prepare agenda, Obtain periodic Review most Evaluate near term Coordinate Resolve schedule Approve update
Progress meeting minutes updates of recent as-built (3 week/4 week) contractor's plan conflicts -ed contractor
Review/ and monitor contractor's schedule data look ahead with other working
Coordination action items working schedules contractors' plans schedules and
Meetings schedules and Company's any changes to
Plan working
schedules
Coordination Chair meetings Prepare agenda, Resolve

Meetings for meeting minutes, coordination
Contractors and monitor conflicts
action items
Liquidated Identify triggering Monitor Collect/deduct

Damages requirements performance liquidated
(e.g. submittals, damages
milestones, etc.)
Claims or Monitor and Receive and log Monitor labor, Conduct fact Evaluate technical Evaluate schedule Evaluate Prepare
Disputes mitigate potential contractor claims equipment and finding merit merit commercial merit response to
claim situations material usage contractor
on a daily basis.
Claims or Authorize Plan and conduct Prepare cost Approve final Prepare Contract Issue Contract
Disputes negotiation and negotiation and commitment settlement Change Order or Change Order or
(continued) set limits changes and Amendment (if Amendment and
obtain approvals required) obtain signatures

Final Inspection Prepare final Assemble, status Coordinate and Prepare Coordinate
and Acceptance acceptance punch list perform final Contract completion of
package walk down, Closeout Contract Closeout
recommend final Checklist Checklist
acceptance
Lead__________ Assigned to:_________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________
Release of Lien Obtain Issue final check

and Final contractor's to contractor
Payment certificate that all
subcontractors
and suppliers
have been paid
Lead__________ Assigned to:__________ Assigned to:__________
Warranty Claims Prepare warranty Notify contractor Monitor timely Evaluate Monitor completion Inspect/accept
claim response proposed of remedial action remedial action
remedial action
and direct best
solution

Initial Tasks
TABLE OF CONTENTS
3.1 PRE-AWARD ACTIVITIES ......................................................................................................1

3.1.1 Purpose ..................................................................................................................................1
3.1.2 Procedure ...............................................................................................................................1
3.1.3 Exhibits..................................................................................................................................3
3.1.4 Checklists...............................................................................................................................3
Pre-Bid Meeting Agenda [SAMPLE] (EXHIBIT 3.1.2-A) ..................................................................4
Pre-Bid And Site Inspection Visit Contracts Agenda Checklist (EXHIBIT 3.1.2-B) ............................5
Pre-Award Meeting Agenda [SAMPLE] (EXHIBIT 3.1.2-C) .............................................................6
Pre-Award Action Checklist (EXHIBIT 3.1.4) ...................................................................................7
3.2 PRE-CONSTRUCTION MEETING..........................................................................................9
3.2.1 Purpose ..................................................................................................................................9
3.2.2 Procedure ...............................................................................................................................9
3.2.3 Exhibits................................................................................................................................ 10
3.2.4 Checklist .............................................................................................................................. 10
Pre-Construction Meeting Agenda [SAMPLE] (EXHIBIT 3.2.2-A).................................................. 11
Kickoff Letter To Contractor [SAMPLE] (EXHIBIT 3.2.2-B).......................................................... 14
Notice of Site Mobilization (EXHIBIT 3.2.2-C) ............................................................................... 17
Pre-Construction Meeting Checklist (EXHIBIT 3.2.4.)..................................................................... 18
3.3 FILING SYSTEM ..................................................................................................................... 19
3.3.1 Purpose ................................................................................................................................ 19
3.3.2 Procedure ............................................................................................................................. 19
3.3.3 Filing Index .......................................................................................................................... 21
3.3.4 Exhibit ................................................................................................................................. 21
Contract Management File Index [SAMPLE] (EXHIBIT 3.3.3)........................................................ 22
3.4 CORRESPONDENCE AND CORRESPONDENCE CONTROL......................................... 25
3.4.1 Purpose ................................................................................................................................ 25
3.4.2 Effective Correspondence...................................................................................................... 25
3.4.3 Procedure ............................................................................................................................. 26
3.4.4 Exhibits................................................................................................................................ 26
Correspondence Log - Incoming (EXHIBIT 3.4.2-A)........................................................................ 27
Correspondence Log - Outgoing (EXHIBIT 3.4.2-B)........................................................................ 28
Correspondence Checklist (EXHIBIT 3.4.5)..................................................................................... 29
3.5 INSURANCE AND BONDS ..................................................................................................... 30
3.5.1 Scope ................................................................................................................................... 30
3.5.2 Insurance.............................................................................................................................. 30
3.5.3 Bonds................................................................................................................................... 30
3.5.4 Exhibits................................................................................................................................ 32
3.5.5 Checklist .............................................................................................................................. 32
Insurance Certificate Review Instructions (EXHIBIT 3.5.4-A) ......................................................... 33
TABLE OF CONTENTS
SECTION 3. INITIAL TASKS Page i
Certificate of Insurance (EXHIBIT 3.5.4-A - Attachment A) ............................................................ 36

Insurance Register (EXHIBIT 3.5.4-B) ............................................................................................ 37
Insurance and Bonds Checklist (EXHIBIT 3.5.6) ............................................................................. 38
3.6 SCHEDULE SUBMITTALS .................................................................................................... 39
3.6.1 Purpose ................................................................................................................................ 39
3.6.2 Procedure ............................................................................................................................. 39
TABLE OF CONTENTS
SECTION 3. INITIAL TASKS Page ii
3 INITIAL TASKS
3.1 PRE-AWARD ACTIVITIES
3.1.1 Purpose The purpose of this Section is to provide guidance to jobsite personnel with
respect to their participation in the pre-bid and pre-award process.
Pre-Bid Site Visits and Pre-Bid Meetings are held to provide prospective
bidders an opportunity to evaluate jobsite conditions and to obtain clarification
of bid or work scope requirements.
Bid Clarification Meetings are held with selected bidders prior to contract
award to review their proposals and to allow further clarifications, if
necessary.
Pre-Award Meetings are held with the selected contractor to assure that a
clear, mutual understanding of the work to be awarded has been reached.
3.1.2 Procedure The following general guidelines apply to all meetings held prior to award:
• Each meeting will have an agenda prepared in advance.

• Attendance, pertinent information, questions and answers will all be
recorded. Bidders should be advised that for fairness and consistency
they are only to rely on written answers to questions. Meeting
minutes will be issued, after internal review, to all meeting attendees.
However, meeting minutes will not be used to change any contract
requirement. If a change in the contract requirements is necessary,
the change will be implemented by addendum to the bid documents.
• All contacts with bidders prior to award of the contract are to be
coordinated through the designated representative.
The objective of the meetings held prior to award is to do the best job
possible to ensure there is a meeting of the minds regarding the contract
requirements.
• The Pre-Bid Meeting is an opportunity to elaborate on the

requirements as stated in the bid documents. In addition, it provides a
forum for an interactive exchange with potential bidders to discuss
questions and concerns they may have. (Refer to Exhibit 3.1.2-A for
a sample Pre-Bid Meeting Agenda.)

SECTION 3. INITIAL TASKS Page 1 of 40
• The Pre-Bid Site Visit provides bidders an opportunity to examine the

site and locale in order to reach their own conclusions regarding the
many site related factors, e.g., physical conditions/constraints, labor
market, laydown area, access/congestion. (Refer to Exhibit 3.1.2-B
for a Pre-Bid and Site Inspection Visit Contracts Agenda Checklist.)
This is also an opportunity to share any unique or "superior"
knowledge you may have regarding the project or site and how such
factors might affect the contract. If there are separate jobsite visits,
each bidder should receive the same information and any questions
answered must be recorded and shared with all bidders.
• Bid Clarification Meetings are held to resolve any questions that may
arise with respect to bids from bidders in the competitive range. Bid
Clarification Meetings may evolve into negotiation sessions. Terms,
scope or price issues may arise that require negotiation to resolve.
• The Pre-Award Meeting is held only after selection and approval of a

contractor, but prior to award (Refer to Exhibit 3.1.2-C for a sample
Pre-Award Meeting Agenda). The Pre-Award Meeting provides an
opportunity to reaffirm and confirm understandings that have been
reached during the pre-bid/bidding stages and an opportunity to resolve
detail level issues that affect the contractor’s mobilization. The
following should be addressed:
— Confirm that all addenda issued during the bidding process have
been incorporated in the contract scope, specifications and
drawings.
— Review the contract drawings to ensure that all changes discussed

have been incorporated in the "Issued for Construction" set.
Formally set aside (forever) the "Bid Drawings". Ideally this is
accomplished with a drawing by drawing review of the Issued for
Construction drawings to ensure no design evolution has crept in.
If the drawings are not ready for reissue at the time of award, the
award will state that the Bid Issue Drawings (with markups, if
applicable) constitute the Contract Drawings. If the Bid Issue
Drawings are to be used "For Construction" they shall be
designated "Issued For Construction".
— Confirm acceptability of all proposed substitutions.
— Confirm any agreements reached with respect to work plan,

access, changes in sequence or other schedule constraints
necessary for the contractor to be able to make its initial schedule
submittal.
— Discuss in detail owner provided materials, services and facilities in

— Reinforce the pre-mobilization administrative requirements (e.g.

insurance, bonds, pre-job labor conference) that can be
troublesome if not handled properly.
— Discuss specific activities that must be accomplished to receive

mobilization payment, if applicable. (Refer to Section 5.3 entitled
"Progress Measurement and Payment.")
• Combining Pre-Award and Pre-Construction Meetings

There are some situations where a Pre-Construction Meeting (reference
Section 3.3) and a Pre-Award Meeting can be held as a single meeting.
In these cases, the agenda should be adjusted for appropriate content
and the minutes should indicate a joint meeting.
3.1.3 Exhibits Pre-Bid Meeting Agenda [Sample] (Exhibit 3.1.2-A)

Pre-Bid and Site Inspection Visit - Contracts Agenda Checklist (Exhibit 3.1.2-B)
Pre-Award Meeting Agenda (Exhibit 3.1.2-C)
3.1.4 Checklists Pre-Award Action Checklist (Exhibit 3.1.4)

Pre-Bid Meeting Agenda [SAMPLE] (EXHIBIT 3.1.2-A)

Contract:
Contractor:
1. Introduction of company (and Customer) participants

A. Point of contact for questions
B. Role of participants
C. Brief description of evaluation and target award date
D. Discussions and meeting minutes cannot change requirements, only addendum
2. Review of technical requirements by Engineering representative

A. Overview of scope
B. Interfaces with others' work packages/crews
C. Explain drawing release plan
D. Explain use of RFI's
E. Quality
3. Review site considerations by Construction representative

A. Safety considerations
B. Access and work areas
C. Facilities and utilities provided
D. Permits required and permits furnished
E. Labor relations
This presentation may include a jobwalk of the work site.*
4. Review schedule requirements

A. Milestone dates
B. Reporting requirements
C. Work execution/ interface
5. Review bid package mechanics

A. Explain Exhibit C forms individually
B. Explain formation process and content of contract
C. Describe written question and answer process and stress that all questions must be in
writing
D. Describe bid package addendum process
E. Restate due dates and point of contact
6. Conclusions
A. Questions
B. Minutes will be provided by the company and sent to all attending Bidders, company
Departments and Owner

Pre-Bid And Site Inspection Visit

Contracts Agenda Checklist (EXHIBIT 3.1.2-B)
1. Site conditions under which the work will have to be performed. __________
2. Access to the project and the work area. __________
3. Contractor laydown area(s). __________
4. Location, capacity and details of Customer/Company -Furnished power, water, fuel,

and compressed air. __________
5. Material handling equipment and procedures. __________
6. Site investigation program (i.e. borings, samples, test pits, borrow pits, quarries). __________
7. Customer/Company -furnished permits, contractor-furnished permits and __________

generation of hazardous waste.
8. Customer/Company -furnished facilities and schedule for availability (e.g. camp,

warehousing, delivery or construction materials or equipment on site, contractor
responsibility for loading, unloading, storing of Customer/Company -Furnished
materials). __________
9. Contractor participation in the company's safety and first aid programs. __________
10. Other work which will or may be in progress during the term of the contract. __________
11. Scope of work for the contract and any unusual or difficult construction that may
be required. __________
12. Point out building sites, access roads, borrow pits, and other important site
features. __________
13. Work of a similar nature, if underway on the site, to show the required standard
of workmanship. __________
14. On foreign jobs, available communications set-up for on-job and external to job. __________
15. Location of disposal areas for cleanup purposes, and cleanup areas where more
than one contractor is working. __________
16. Full scope of the project and the facilities yet to be performed that will have an
influence on the work of the contract being bid. __________
17. Details of the work which might involve premium time. __________

Pre-Award Meeting Agenda [SAMPLE] (EXHIBIT 3.1.2-C)
Request for Proposal (RFP) NO._________________

Title:_________________________________________
1. General Introduction
1.1 Introduction; Individual greetings and Attendance Sheet signature
1.2 Purpose; Review and sign finalized contract
1.3 Distribution; Provide contractor copy of Contract Documents.
2. Contract Document Review
2.1 RFP Changes; Discuss agreed changes and indicate where incorporated in the
Contract Documents.
A. Specifications; Technical Department (Engineering and Construction) input as
required
B. Drawings; Technical Department input as required
C. Terms and Conditions
2.2 Contract Interpretation; Review Terms and Conditions utilizing the General and
Special Conditions definitions in Appendix I of the Contracts/Subcontracts
Formation Manual.
3. Securities (bonds or bank guarantees) and Insurance

3.1 Securities; Remind contractor when they are due or collect securities.
3.2 Insurance; Remind contractor when they are due or collect insurance certificates.
4. Jobsite Requirements
4.1 Jobsite Procedures; Construction to review Jobsite Procedures which bid
was based on (key procedures should have been issued at Pre-bid Meeting).
4.2 Jobsite Update
4.3 Labor Agreements and Trade Council Meetings
5. Contract Signing
5.1 Contractor Copy; Contractor takes home signed copy.
5.2 Company Copy; Copied to provide conformed copy distribution and then maintained
in Procurement contract formation file.
5.3 Customer Copy; Only when the company is agent a third signed original is provided,
otherwise conformed copy(ies) will suffice.
6. Turnover to Contract Administrator

6.1 Point of Contact; Exchange notification with contractor under the General
Condition titled NOTICES.
6.2 Meeting Minutes; Announce meeting minutes will be prepared and distributed to
all parties and Company/customer departments in attendance.
Pre-Award Action Checklist (EXHIBIT 3.1.4)
Contract Number:_____________________Contractor:______________________________
Contract
Scope:________________________________________________________________________
1. Pre-bid: Company/Customer provided materials, facilities and construction services YES NO
reviewed.
Comments:
2. Pre-bid: Contract Schedule conforms to project schedule. YES NO

Comments:
Pre-bid: Special construction support requirements, if any, reviewed. YES NO

Comments:
Bid Evaluation: Bidder understands total scope. YES NO

Comments:
5. Bid Evaluation: Manpower loading reviewed. YES NO

Comments:
6. Bid Evaluation: Bidder’s schedule and construction plan reviewed and resolved. YES NO
Comments:
7. Bid Evaluation: Substitutions, if any accepted/rejected (list accepted substitutions). YES NO

Comments:
8. Bid Evaluation: Bidder's Safety and Health Plan and experience reviewed and YES NO
determined to be satisfactory?
Comments:
. Pre-Award: Pre-Mobilization requirements reviewed and understood. YES NO

Comments:
10. Pre-Award: Issued for Construction drawings reviewed -- all bid period YES NO
comments/changes incorporated.
Comments:

Name:_______________________________ Date:______________________________

3 INITIAL TASKS
3.2 PRE-CONSTRUCTION MEETING
3.2.1 Purpose The goal of the Pre-Construction Meeting is to achieve a mutual

understanding with the contractor regarding the way in which the contract
requirements will be translated into action.
3.2.2 Procedure A meeting agenda will be developed. (Refer to Exhibit 3.2.2-A for a sample
Pre-Construction Meeting Agenda.)
There are some situations where a Pre-Construction Meeting and a Pre-

Award Meeting (reference Section 3.1.) can be held as a single meeting. In
these cases, the agenda should be adjusted for appropriate content and the
minutes should indicate a joint meeting.
The Pre-Construction Meeting will be conducted prior to the contractor's

mobilization.
The contractor will be provided an advance copy of the agenda.
Each participant will be instructed by the meeting leader on the scope of

their involvement.
Attendance at the meeting will be recorded.
A contract representative will prepare the meeting minutes and formally

distribute them to the contractor.
A contract representative will prepare an Action Items List and assume

responsibility for verifying closure of open items.
A confirming letter summarizing contract management expectations and

contract provisions of particular significance should be sent to the
contractor. (Refer to Exhibit 3.2.2-B for a sample Kickoff Letter.)

A Notice of Site Mobilization (reference Exhibit 3.2.2-C) should be issued if

there is a need to notify various departments of impending mobilization of a
contractor.
3.2.3 Exhibits Pre-Construction Meeting Agenda [Sample] (Exhibit 3.2.2-A)

Kickoff Letter to Contractor [Sample] (Exhibit 3.2.2-B)
Notice of Site Mobilization (Exhibit 3.2.2-C)
3.2.4 Checklist Pre-Construction Meeting Checklist (Exhibit 3.2.4)

Pre-Construction Meeting Agenda [SAMPLE] (EXHIBIT 3.2.2-A)
Contract:_______________________________________________________________________
______
Contractor:_____________________________________________________________________
____
I. Introduction and Background
A. Meeting purpose
B. Introductions
II. Organization
A. Yours
B. Contractor
C. Authorized representatives
1. Yours
2. Contractor
III. Safety and Health
A. Your policy
B. Contractor Safety Action Plan
C. First aid
D. Fire protection and prevention
E. Sanitation and housekeeping
F. Review contractor's proposed usage of hazardous materials
G. Hazardous Material handling and disposal
H. Citations
I. Drug Testing/Fitness for Duty (as applicable)
IV. Environmental
A. Your Policy
B. Contractor Environmental Control Plan
C. Environmental permit requirements
D. Hazardous waste generation and management
E. Asbestos inspection and notification
F. Compliance monitoring
V. Construction
A. Scope

B. Facilities and equipment furnished by you, owner and contractor

C. Permits and Environmental Impact Statement
D. Work coordination
E. Quality control and inspection
VI. Labor Relations
A. Pre-job conference
B. Craft access
C. Project Labor Agreement
D. Job Rules
E. Daily Force Report
F. Reporting disputes
G. Badging
H. Work assignments
I. Jurisdictional procedures (disputes/grievances)
VII. Construction Schedule and Progress Reporting
A. Project/construction schedule
• Initial submittal and requirements for approval
• Periodic updates
B. Manning curves
C. Contractor-furnished equipment and material (schedule and coordination)
D. Four-week rolling schedule
E. Progress review meetings
F. Coordinating work areas with others
G. Coordination meetings
VIII. Quality Assurance/Quality Control/Quality Surveillance

A. Contractor responsibilities
B. Your/Owner roles
C. Offsite QA/QC
D. Pre-fabrication submittal requirements
IX. Drawings
A. Design drawings and their distribution
B. Drawing control
C. Contractor drawing submittals, approvals and schedules
X. Other Submittals
A. Fabrication procedures, if required
B. Construction procedures
C. QA/QC procedures
D. Health and Safety Plan

XI. Contract Management
A. Correspondence
1. Addressee
2. Control and distribution
3. Requirement for sequential serialization
4. Formal notices
B. Contract Change Procedures
1. Directed Changes (Authorized)

2. Notice Requirements and Constructive Changes (risk of proceeding without authorization)
3. Discovery of potential errors, omissions and ambiguities and required notifications
4. Cost records - all changes
5. Proposal requirements
6. Duty to proceed
7. Dispute resolution
8. Claim submittal requirements
C. Insurance and Bonds -contractor submittals
D. Payments
1. Progress payment schedule
2. Progress measurement and approval
3. Invoice and Certificates of Payment
4. Submittals required prior to payment
(see Mobilization Payment Checklist in Section 5.3)
5. Force Account Work
E. Backcharges
1. Notices
2. Procedure
3. Performance
F. Ethics and Conduct
1. Conflicts of Interest
2. Gifts
G. Warranty Procedures
H. Project Schedule Reviews and Coordination Meetings
I. Contract Close-out Procedures

Kickoff Letter To Contractor [SAMPLE] (EXHIBIT 3.2.2-B)

To: Smith Construction Company B-SCC-001
Subject: COMPANY JOB NO.______________________ DATE
CONTRACT NO.________________________
KICKOFF LETTER
Gentlemen:
We are pleased to be working on this project with you and look forward to a mutually beneficial
relationship. To ensure that this relationship is a positive one and to avoid any future misunderstandings,
we have listed below some of the more important and sometimes overlooked contract articles. Although
every provision of the contract is significant, we want to call your particular attention to the following:
Section No. Title Action
[Use project article numbers and titles and include clauses which should be highlighted for this particular
contract.]
Authorized Representatives A letter designating the contractor's authorized

representative and scope of authority should be
submitted to the company prior to the start of
construction
Permits The contractor should review this article and confirm
that all required permits, licenses and certifications have
been obtained prior to the start of construction, and that
all permit conditions are satisfied, prior to, during or after
construction.
Labor, Personnel and Work This provision establishes the contractor’s obligation to
Rules comply with project labor agreements and provides the
basis for settling jurisdictional disputes. It also establishes
the company’s right to remove unacceptable personnel.
Publicity and Prior written permission is required from the company
for any Advertising announcements, photographs and videos or
release of any information regarding the contract or
Project.
Safety & Health The contractor must comply with the requirements of the
company’s Safety & Health Plan and shall have sole responsibility
to implement its own Safety and Health Program. Please appoint a
Safety & Health Representative for your work and inform the
company of your designation in writing.
Environmental Requirements This provision emphasizes the contractor’s obligation to
comply with environmental laws, regulations and
practices to minimize adverse impact to the site,
personnel on the site and adjacent environmentally

a copy of your Environmental Control Plan prior to

commencing work.
Section No. Title Action
Changes This provision establishes the mechanism for change. A
clear understanding and adherence to this provision from
the onset of the project is of great importance.
Assignments and Prior written approval from the company is required
Subcontracts before the contractor assigns the contract or enters into
any subcontracts for the performance of work related to
this contract.
Insurance All insurance requirements must be met before mobilization. A
review of the contractor's coverage with the company
representative is required.
Commencement, Progress The contractor will be required to furnish the resources
and Completion of the necessary to meet contract milestones. Progress meetings
Work and schedule submittals will be utilized to monitor this
progress. The company has the right to direct the
contractor to take corrective action to restore progress to
meet the schedule.
Contract Schedule A detailed CPM contract is to be submitted within thirty
(30) days of contract award and is therefore due on or
before . The progress reports specified in this article
will be required as stated.
Measurement for Payment The contractor should review this article carefully.
An early meeting with the company to ensure a thorough
understanding and complete compliance with this article is
suggested. The company will supply the correct forms
and review the proper invoicing procedures.
The provisions of the contract relating to changes will be strictly observed. Insofar as possible, changes
will be covered by Change Order prior to execution of the work, but if the demand of time or the nature of
the work makes that impossible, the company may issue written instructions (Change Notices) to proceed
with the change. Any such work undertaken without such written instructions will be at your own risk and
any resulting charges may not be allowed. Change Orders will be issued only for work authorized by the
company. This policy will be firmly enforced and all invoices for work not covered by the contract or by
Change Orders will be returned unpaid.
All correspondence you receive from the company will carry sequential serial numbers. Please ensure that
all letters which you send to the company are likewise numbered. All correspondence to and from the
company will be required to be identified with the contract number, be dated, and carry a unique sequential
serial number. Letter logs will be exchanged on a monthly basis to ensure no letters have been lost or
misplaced.

All correspondence you receive from the company will carry sequential serial numbers. Please ensure
that all letters which you send to the company are likewise numbered. All correspondence to and from the
company will be required to be identified with the contract number, be dated, and carry a unique sequential
serial number. Letter logs will be exchanged on a monthly basis to ensure no letters have been lost or
misplaced.
For example:
Letters To:
Smith Construction Company
Letters To:
Company (Contract No. )
_____________________[Contracts representative] has been assigned for your portion of this project.
[Contracts representative] will work with your field supervisory personnel and will be your primary contact
with respect to construction procedures and technical compliance. When you encounter field problems
that require our assistance, please bring them to the attention of [Contracts representative]. We expect
that with the help of [Contracts Representative] you will be able to resolve such problems, but if any
should persist, please feel free to contact me.
We will require [three] copies of all correspondence from your designated representative which shall be
addressed to the attention of the, .
If we can otherwise assist you in any way, do not hesitate to call on us. We feel that your success will be
our success and we will extend our cooperation and assistance to the fullest degree possible.
Very truly yours,

Pre-Construction Meeting Checklist (EXHIBIT 3.2.4.)
Contract Number:________________________________________Contractor:_____________________
Contract Scope:________________________________________________________________________
1. Need for Pre-Construction Meeting. YES NO

Comments:
2. The date is set PRIOR to contractor mobilization. YES NO

Comments:
3. Agenda issued to contractor and key company participants. YES NO

Comments:
4. Attendance list prepared. YES NO

Comments:
5. Open actions identified. YES NO

Comments:
6. Meeting minutes prepared and issued. YES NO

Comments:
7. Kickoff letter sent to contractor. YES NO

Comments:
8. Notification(s) of contractor mobilization given. YES NO

Comments:
9. Contractor's authorized representative designated. YES NO

Comments:
Name:______________________________________________ Date:___________________________

3 INITIAL TASKS
3.3 FILING SYSTEM
3.3.1 Purpose The Contract Management Files must contain all pertinent original contract
data and documents and be organized to allow for efficient storage,
identification and retrieval.
The files should be integrated into the project's document control program.
3.3.2 Procedure A complete contract file set will be maintained for each contract. The
following file subjects, as a minimum, will be included:
• Conformed Contract
• Change Notices/ Change Orders
• Amendments
• Internal Approval
• Chronological, sequentially numbered correspondence and relevant

phone notes of telephone and other conversations
− Outgoing correspondence
− Incoming correspondence
• Insurance and Bond Certificates
• Daily Reports
• Inspection Reports
• Construction Schedules
• Requests for Information
• Drawing File
• Backcharge File
• Progress Payment File
3.3 FILING SYSTEM

• Minutes of Meetings File
• Claims File
• Warranty File
• Closeout File
At the conclusion of the project all closed contract files will be dispositioned
in accordance with project procedures. All contract files that may have a
bearing on open claims or other unresolved matters are to be separately
dispositioned in accordance with project procedures.
GENERAL DISCUSSION OF DOCUMENTATION
A. WHY IS DOCUMENTATION NECESSARY
Documentation, including a monitoring program for receipt, closeout

and maintenance, is of crucial importance to proper contract
management. Its significance cannot be over-emphasized.
B. DISCUSSION
1. Concise and complete documentary records always will have a

substantial effect on the resolution of any problems. Frequently,
proper documentation will serve as sufficient and clear evidence to
resolve problems at the lowest possible level.
It is imperative in the administration of contracts that significant

events be documented in permanent records such as
correspondence, written notes and memoranda.
It is essential to summarize important discussions and meetings.

Notes covering conferences, telephone calls and discussions, should
give the date, location, parties involved and important issues
discussed. The contract number should also be included on all of
these items.
2. In order for any piece of documentation to be useful, it must stand

on its own. Each must contain information to satisfy the
fundamental six questions of what, where, when who, how and why.
Documentation should be dated and signed providing continuity
throughout the length of a project. In addition to being complete,
documentation must be objective.
3.3 FILING SYSTEM

If no problems materialize on a contract, it may seem the time and

efforts documenting a contract's performance was wasted. This is not
the case, as the documentation effort likely contributed significantly to
successful management of the contract.
3.3.3 Filing Index The Contract Management Files will conform to approved project document
control procedures and utilize the approved project document control
computer tracking program. A Sample Contract Management File Index is
provided in Exhibit 3.4.3.
3.3.4 Exhibit Contract Management File Index [Sample] (Exhibit 3.3.3)
3.3 FILING SYSTEM

SECTION 3. INITIAL TASKS
Page 21 of 40
Contract Management File Index [SAMPLE] (EXHIBIT 3.3.3)
GENERAL FILES
1.1 File Index

1.2 Prime Contract
1.3 Contract Plan
1.4 Project Master Schedule
1.5 Contract Register
1.6 Inter-Office Correspondence
1.7 Customer Correspondence
1.8 Standard Document Distribution
1.9 Directives and Special Procedures
1.10 Site Survey/Soil Reports
1.11 Site Procedures and Instructions
1.12 Site Labor Agreement
1.13 Project F & A Procedures and Audit Programs
CONTRACT FILES
As each contract is awarded and Construction assumes responsibility from Procurement Contract
Formation, individual files are established in the following typical major groups:
2.0 CONTRACT
2.1 Master Bid Package
2.2 Pre-Award Documentation (See Procurement Procedures)
2.3 Contract (Conformed Copy)
2.4 Change Notice Log
2.5 Change Notices
2.6 Change Order/Amendment Log
2.7 Contract Change Orders/Amendments (Conformed)
2.8 Commitment Authorizations
2.9 Insurance Correspondence
2.10 Payment/Performance Bond Correspondence
2.11 Contract Fact Sheet
3.0 ADMINISTRATION
3.1 Backcharge Register
3.2 Backcharge Notices
3.3 Contractor Schedules
3.3.1 Contract Schedule
3.3.2 Construction Schedules
3.3.3 Non-Manual Manpower Schedule
3.3 FILING SYSTEM

3.3.1 Contract Schedule

3.3.2 Construction Schedules
3.3.3 Non-Manual Manpower Schedule
3.4 Contractor Key Personnel, Addresses, Day/Night Phones
3.5 Drawing and Specification Control
4.0 COMMUNICATIONS
4.1 Correspondence Log
4.2 General Correspondence Files
4.2.1 Correspondence with Customer
4.2.2 Out-going Correspondence to Contractor
4.2.3 Incoming Correspondence from Contractor
4.2.4 Inter-Office Correspondence
4.3 Log/General Facsimile Files
4.4 Contacts File (Discussions/Telephone)
4.5 Minutes of Meetings
4.6 Memos for Record
4.7 Transmittal Memo Receipts
5.0 REPORTS
5.1 Daily Force Reports
5.2 Contractor Daily Report
5.3 Progress Reports
5.4 Work Interruption Reports
5.5 Inspection Reports
5.6 Accident Reports
5.7 Progress Photo/Video File
6.0 CONTRACTOR PROCEDURES AND PROGRAMS

6.1 Safety (Personnel, Equipment, Traffic)
6.2 Security
6.3 Environmental Compliance
6.4 Fire Protection
6.5 Inspection
6.6 Training
6.7 Housekeeping
7.0 CONTRACTOR EQUIPMENT

7.1 Equipment Schedule
7.2 Control Procedures
7.3 Customer/Company -Furnished Tools and Equipment
8.0 PAYMENTS
8.1 Contractor Invoices/Applications for Payment
3.3 FILING SYSTEM

8.2 Quantity Verifications (Field Engineering)

8.3 Cash Flow/Schedule "S" Curve
8.4 Contract Financial Status Sheet
8.5 Contractor Forecasts
8.6 Contract Trend Reports (if required)
8.7 Certified Payroll Reports (if required)
3.3 FILING SYSTEM

9.0 ACCEPTANCE AND CLOSEOUT

9.1 Final Inspection Reports
9.2 Punch List Reports
9.3 Taking Over Works
9.4 Completion Certificates
9.5 Maintenance Certificates
9.6 Final Acceptance
9.7 Closeout
10.0 WARRANTIES
10.1 Log
10.2 Vendor Backcharges
10.3 Site Backcharges or Rework Accounts
11.0 CLAIMS
11.1 Contractor Proposal/Claims Log
11.2 Contractor Proposals (Claims)
11.3 Claims Analysis
11.4 Statements/Depositions (Personnel Concerned)
11.5 Claims Correspondence
11.4.1 Customer Correspondence
11.4.2 Company/Contractor Correspondence
11.6 Claims Reports to Management
11.7 Claims Settlement Agreements
12.0 CONTRACTOR PERFORMANCE EVALUATION/HISTORICAL

12.1 Fact Sheet and Historical Record
12.2 Performance Evaluation
3.3 FILING SYSTEM

SECTION 3. INITIAL TASKS Page 25of 40
3 INITIAL TASKS
3.4 CORRESPONDENCE AND CORRESPONDENCE
CONTROL
3.4.1 Purpose Contract correspondence control is designed to ensure that all

correspondence to and from a contractor is accounted for, required replies
are sent and responses received, correspondence is cross-referenced,
correspondence can be quickly identified and retrieved, and action
requirements generated by correspondence are closed out on a timely basis.
3.4.2 Effective Make an exceptional effort to eliminate any chance of communications being
Correspondence misunderstood. Clear communication is essential to contract management
success. Everyone on the project team should understand that all contractual
communications may have legal ramifications, or at a minimum, be one of
the primary tools available to reconstruct facts if a dispute arises.
Correspondence should have a well defined purpose. Separate topics should
be addressed in separate letters. Clear, simple language should be used.
Ideas should be presented logically.
To maximize the value and effectiveness of correspondence:
• Serialize all contract correspondence
• Log all contract correspondence to ensure accountability for action

and timely responses.
• Coordinate all outgoing correspondence through one individual per

contract
• Periodically exchange logs with contractors to secure agreement on

open and closed items
• Write a separate letter for each subject
• Keep all correspondence objective and factual (avoid inflammatory

language or style)
• Clearly state the subject in all correspondence
• Identify all referenced items by title, date or revision
• Identify all enclosures
• Establish a minimum response time for all communication and

clearly state this in the correspondence
3.4 CORRESPONDENCE AND CORRESPONDENCE CONTROL

• Outgoing correspondence which requires no response should so

state
• Show "blind" distribution on the file copy
• Date stamp all incoming correspondence to establish chronology
• Acknowledge every letter by one of the following:
−Answer as required by incoming letter
−Interim reply if full response cannot be provided within the
established time period and then maintain an action item list to
ensure follow up.
3.4.3 Procedure Correspondence to and from each contractor will be sequentially numbered
for each contract.
All outgoing and incoming correspondence will be logged, action/reply
responsibility assigned, and replies recorded. Correspondence control logs
should be checked weekly to ensure that all open items are taken care of and
to provide follow-up. Larger projects are encouraged to electronically "sort"
the logs and distribute an open correspondence report weekly as a control
device. Ideally the project should exchange logs monthly with the contractor
to confirm agreement on open and closed items as well to confirm receipt of
correspondence requiring no response.
Original documents will be retained in the Contract Management Files and
only copies will be circulated.
Email, while an attractive convenience, is not to be used for contract
correspondence unless each transmittal is serially numbered, logged, signed and
controlled in the same manner as hard copy correspondence.
By establishing designated points of contact, you can control the flow of
correspondence. The authorized signatory should be identified to the contractor
in writing and no others should sign correspondence. However, various people on
the project team may originate correspondence. An appropriate counterpart in the
contractor's organization should be identified as contractor's addressee. (Multiple
originators and multiple addressees results in lack of coordination and
consistency.)
Contract management correspondence control will conform to approved
project document control procedures and utilize the approved project
document control computer tracking program. A Sample Contract
Management File Index is provided in Exhibit 3.3.3.
3.4.4 Exhibits Correspondence Log - Incoming (Exhibit 3.4.2-A)
Correspondence Log - Outgoing (Exhibit 3.4.2-B)
3.5.5 Checklist Correspondence Checklist (Exhibit 3.4.5)

Correspondence Log
(Outgoing)
COMPANY: JOB NO.:
CONTRACT NO.: CONTRACTOR:
NOTE: ENTER ONLY ONE LETTER PER LINE
REPLY
LETTER REQUEST DATE ACTION CONTRACTOR
SERIAL NO. DATED SUBJECT NO YES REPLY ASSIGNED ANSWERING LETTER
Expedition
Correspondence Checklist (EXHIBIT 3.4.5)
Contract Number:________________________ Contractor:___________________________
Contract Scope:________________________________________________________________________
1. Correspondence is objective/factual and has the appropriate tone. YES NO

Comments:
2. Correspondence is input to correspondence/document control system. YES NO

Comments:
3. All letters to contractor including email are being logged and tracked. YES NO
Comments:
4. All letters from contractor, including email are being logged and tracked. YES NO
Comments:
5. Open items are identified. YES NO

Comments:
6. Open items are statused and updated (at least bi-weekly). YES NO
Comments:
7. There are no past due action due dates. YES NO

Comments:
8. No letter numbers are missing. YES NO

Comments:
9. YES NO
Comments:
Name:___________________________________ Date:___________________________

3 INITIAL TASKS
3.5 INSURANCE AND BONDS
3.5.1 Scope This procedure outlines the requirements for obtaining, verifying and
monitoring contractor Certificates of Insurance and bonds.
3.5.2 Insurance Certificates of Insurance are submitted by a contractor to confirm that the
insurance policies required by the contract have been obtained. Because
insurance policies can expire by their terms, their expiration dates must be
monitored and policies extended as necessary.
The contractor should submit a Certificate of Insurance or other

documentation of insurance meeting contract requirements immediately
following contract award but no later than contractor's site mobilization.
Contractors without complete and satisfactory Insurance Certificates will
not be permitted to mobilize. Furthermore, if during the course of the work,
the contractor's insurance expires or is significantly modified, the contractor
must be denied access to the site until the required insurance is in place.
Verify that the certified insurance coverage conforms to the contract

requirements and is valid. (Refer to Exhibit 3.5.4-A for Insurance Certificate
Review Instructions.)
After the contractor starts work, Insurance Certificates will be monitored to

verify that the coverage is maintained in force and proper renewal is
obtained by the contractor.
An Insurance Register with expiration dates will be maintained (reference

Form 3.5.4-B).
An early notification system (tickler) which identifies 45 days in advance

those Certificates which require renewal will be maintained.
3.5.3 Bonds A performance bond is a surety company's guarantee that the obligations
that the contractor undertakes pursuant to the contract will be performed,
including those that extend past final acceptance (e.g., warranty). A
payment bond ensures that the contractor's suppliers and subcontractors are
paid for the work and/or material they supply. Performance and payment
bonds are typically issued together as a package for a single premium.
Bonding
requirements, if any, are contained in the contract. Performance and
payment bonds should be in a penalty amount equal to 100% of the contract.
There is no reduction in bond premium for a reduced bond penalty.

The contractor should submit performance and payment bonds which meet
contract requirements immediately following contract award. Typically, the
successful bidder's bid bond is not returned until receipt of satisfactory
performance and payment bonds. Note that bonds do not normally need to
be updated during the course of the work. If extra work is added that is
equivalent to another contract, it will be necessary to obtain another bond to
cover this work.
Verify that the bonds conform to the contract requirements and have been
issued.
Note that while Change Notices do not normally necessitate notification to

the bonding company, Contract Amendments for extra work outside of the
original scope of the contract may require specific notification to the bonding
company to ensure coverage of this extra work.
Verify that the bond(s) conform to the contract requirements. The surety
should be on the U.S. Department of Treasury's approved list of sureties.
When a contractor is required to obtain a performance/payment bond, the

premium is based on the final contract price. Therefore, an adjustment to the
premium will apply when pricing change orders. Performance and payment
bonds typically provide coverage for the contractually specified warranty
period without an additional premium.
Advance payments to a contractor in excess of what has been earned under

the contract should not be made. Such payments may be construed to be
"loans" to the contractor and therefore not credited toward the contract
balance owed by the bonding company.

An Advance Payment Bond is a special category of payment bond (unrelated

to the standard performance/payment bond) which is sometimes used on
international projects but rarely in the U.S. An Advance Payment Bond
assures that moneys advanced to the contractor will be used in connection
with the project. Such a bond may be required prior to making advance
payments to the contractor.
A Maintenance or Warranty Bond is usually written by the surety that

provided the Performance and Payment Bond and provides an extended
warranty for defects in materials and workmanship. Its cost is significantly
less than that of the Performance and Payment Bond. The normal penalty
amount is 10% of the contract price.
When a contractor's supplier or a lower-tier subcontractor has filed a lien

against the owner’s property, you may require the contractor to purchase a
release of mechanic's lien bond to release the lien. The
supplier/subcontractor's lien is then attached to the bond allowing the lien to
be removed from the customer's property. In effect, these bonds allow the
project to be turned over to a customer without any encumbrances and allow
the contractor to receive its retention pending resolution of the dispute with
its suppliers and subcontractors. Such bonds will typically have a penalty
amount of 125% to 150% of the lien obligation.
In some jurisdictions, to be able to file a lien the contractors must submit a

Preliminary Notice of Intent to file a lien at the start of work. The
Preliminary Notice looks very much like a lien and can be alarming, but has
no adverse consequences.
Reference Special Topics Section 7.2 "Basis for Claims" pages 27 and 28.
3.5.4 Exhibits Insurance Certificate Review Instructions (Exhibit 3.5.4-A)

Insurance Register (Exhibit 3.5.4-B)
3.5.5 Checklist Insurance and Bonds Checklist (Exhibit 3.5.6)

Insurance Certificate Review Instructions (EXHIBIT 3.5.4-A)
PURPOSE
To establish responsibility for acquiring initial contractor submitted Certificates of Insurance and to
provide guidelines for determination of the validity of such Certificates.
DEFINITIONS
A Certificate of Insurance establishes that the contractor has appropriate insurance to cover claims for
which the contractor is responsible.
REQUIREMENTS
Attachment A is a sample Insurance Certificate. The sections below provide explanations and
directions. The numbers also correspond to the sections on the Certificate.
1. This is the date the Certificate of Insurance was typed.
2. The name and address of the agent or broker who placed the insurance coverage for the contractor.
3. The name and address of the contractor who provided the evidence of insurance on the Certificate.
Verify that the name of the contractor is the same as the name in the contract.
4. The names of the insurance companies providing the insurance for the insured.
When there is any question about a contractor purportedly having valid insurance coverage,
contact the insurance company directly referencing the policy number.
5. Letter designation will indicate which insurance company is providing insurance coverage from the
list of insurance companies under Companies Affording Coverage.
6. Type of Insurance identifies the specific insurance being provided.
Commercial General Liability (formerly Comprehensive General Liability) is the insurance

generally available to contractors to cover third party liability arising from their operations. This
type of policy includes the following coverages:
• Premises and Operations
• Products and Completed Operations
• Contractual Liability
• Broad Form Property Damage
• Explosion, Collapse and Underground Hazards
• Personal Injury Liability
• Cross Liability or Severability of Interest Clause
The company requires that the Commercial General Liability policy be on an Occurrence
Form. This form provides coverage for a loss that happened during the policy term even if

• Cross Liability or Severability of Interest Clause
The company requires that the Commercial General Liability policy be on an

Occurrence Form. This form provides coverage for a loss that happened during the
policy term even if the claim is made after the policy has expired. A Claims Made
policy restricts the time that is allowed to make a claim to either the policy term or the
policy term plus a limited extended reporting period thereafter. Both Occurrence and
Claims Made policies will show per occurrence and annual aggregate limits. The
company requires that for contractors the minimum limits be $2,000,000 per
occurrence/$4 ,000,000 annual aggregate, with this aggregate being a policy aggregate
for all of the contractor's work. If the contractor has an aggregate less than $4
,000,000, it should obtain an endorsement from its insurer to establish a project
aggregate for the work it is doing for the company. (While we require contractors to
furnish Occurrence policies, it is likely that those contractors performing environmental
work will be able to obtain only Claims Made coverage.) The limits referred to herein
are for the company’s long form subcontract. Subcontracts with reduced scopes may
not need insurance limits this high. Refer to the Procurement Manual for the
acceptable limits.
Verify that the types of insurance and the limits of coverage being provided are
consistent with the contract requirements. If in doubt, have the Certificate reviewed by
the Risk Management Department.
7. The policy number of the insurance policy provided to the contractor.
8. The policy effective date must be effective on or before the contract inception date.
9. The policy expiration date must expire on or after the contract completion date.
If the expiration date is before the contract completion date, Procurement (or Contract
Administration if the contract has been transferred to the field) must monitor to insure
receipt of renewal certificates.
10. Generally the typed entries and special request items will appear in this space on the Certificate of
Insurance and may also include the "per project" limit mentioned above.
A sample of what might appear:
"XYZ Corporation (Owner) and the company are included as additional insureds except for
Worker's Compensation for the Fixed Project, #xxxxx, but only with respect to liability arising
out of the operation for the Owner and the Company by or for the contractor. Such
insurance shall be primary with any other insurance maintained by the additional insured
excess thereto."

The project name, contract number, and the specific company entity named as additional
insured as well as the Customer/Owner, if required, must appear. (While in practice the
additional insured provision is show in item 10; it is preferable to have this provision shown on a
separate endorsement attached to the Certificate.)
11. The certificate holder is the company entity which requested the Certificate of Insurance from the
contractor.
Verify that it is the correct company entity.
12. The company requires thirty (30) days notice of material alteration to the contractor's policies or
cancellation.
The standard cancellation provision does not include a provision for notice of termination or
material alteration and there is no industry standard for amending the Certificate. Look for
a typed entry or require the standard Certificate to be modified.
13. The Certificate of Insurance must be signed to be valid. It can be signed by the agent, the broker,
or the insurance company.
Verify that the Certificate of Insurance has been signed.

Insurance and Bonds Checklist (EXHIBIT 3.5.6)
Contract Number:_______________________Contractor:____________________________
Contract Scope:________________________________________________________________________
1. Insurance Certificates have been obtained from contractor PRIOR to mobilization. YES NO
Comments: ______________________________________________________
2. Contractor's insurance coverage meets contract requirements. YES NO

Comments: ______________________________________________________
3. Expiration dates have been entered into the tickler system. YES NO
Comments: ______________________________________________________
4. Special insurance coverage, if required has been obtained. YES NO

Comments: ______________________________________________________
5. Bond (or Letter of Credit), if required, has been obtained. YES NO

Comments: ______________________________________________________
6. Insurance and bonding companies have been checked through the Risk Management YES NO
Department.
Comments: ______________________________________________________
7. Validity of Insurance Certificates and bonds have been verified with the insurance YES NO
company as appropriate.
Comments: ______________________________________________________
8. Insurance Register is maintained to monitor expiration dates. YES NO

Comments: ______________________________________________________
9. YES NO
Comments: ______________________________________________________
Name:____________________________________ Date:____________________________

3 INITIAL TASKS
3.6 SCHEDULE SUBMITTALS
3.6.1 Purpose The contractor is usually obligated by the terms of the contract to submit a
resource loaded, precedence diagram schedule as an early deliverable for
approval. The contractor’s schedule must show the logical sequence,
construction methods, and estimated durations of activities necessary to
meet the milestones and completion dates established in the contract.
Approval of the contractor’s schedule indicates that it appears to be a
reasonable plan and commits us to cooperate in its implementation. The
contractor is committed to perform in accordance with the plan unless
revisions are subsequently submitted and approved. Changes to the
schedule may also be directed pursuant to the Changes clause.
Project Controls should participate in the review and approval of all
contractor schedules and revisions. They should also review periodic
updates which report progress against the current approved plan and
fragmentary networks submitted in support of contractor proposals for
adjustments to the contract milestones or completion dates based upon
critical path analysis.
3.6.2 Procedure • Verify that the contractor submits the initial schedule as required by
contract.
• Assure the schedule is in the form required by the contract. If the
contract requires a CPM schedule, and the contractor submits a
bar chart, approval in this form may act as a waiver of the CPM
requirement.
• Assure the schedule meets the milestones required by contract.
• Analyze the submitted schedule for reasonableness of network
logic, durations, the occurrence of float, completeness, appropriate
levels of detail, and the identification of critical paths.
• Assure that completion dates shown earlier than contemplated by
the milestones do not adversely affect the work of others (or cash
flow constraints).
• Review to see how the contractor's schedule supports the overall
project schedule.
• Review to see if the work of others supports the contractor's
schedule.
• Assure work as planned is consistent with parameters of the site,
e.g., no double shift if the site is working one shift.

• Formally approve the schedule.
Remember the contractor’s method of performance is its own. Requiring

any non-essential changes in the contractor’s planned methods of
performance, or a significant change in sequence, could, be considered a
change to the contract.
Finally, comments and exceptions, should be resolved before approval.

Although a contractor may seek permission to finish early, you and the
owner have the right to reasonably deny the request and insist upon
adherence to the contract completion dates. Reasonable denial may be
based on cash flow constraints, inability to support early access
requirements or the delivery of customer-furnished equipment, but if an early
finish is approved, you may be liable for extra costs if you fail to support or
actively interfere with its accomplishment. Refer to Section 4.3 of this
Manual for a discussion of schedule issues to be considered during
performance.

Performance
TABLE OF CONTENTS
4.1 CHANGES .............................................................................................................................1

4.2 INTERNAL APPROVALS..................................................................................................27
4.2.1 Purpose........................................................................................................................... 27
4.2.2 Procedure........................................................................................................................ 27
4.2.4 Checklist ......................................................................................................................... 28
4.3 SCHEDULE.........................................................................................................................37
4.3.1 Purpose........................................................................................................................... 37
4.3.2 Procedure........................................................................................................................ 37
4.4 REQUEST FOR INFORMATION (RFI) ...........................................................................38
4.4.1 Purpose........................................................................................................................... 38
4.4.2 Definitions ....................................................................................................................... 38
4.4.3 Discussion ....................................................................................................................... 38
4.4.4 Procedure........................................................................................................................ 38
4.4.5 Exhibits ........................................................................................................................... 40
Request For Information (RFI) Contractor Instructions (EXHIBIT 4.4.4-A) ................................... 41
Request for Information (RFI) (EXHIBIT 4.4.4-A - Attachment) .................................................. 42
Request for Information (RFI) Log (EXHIBIT 4.4.4-B) ................................................................ 43
4.5 TECHNICAL TRANSMITTALS .......................................................................................44
4.5.1 Purpose........................................................................................................................... 44
4.5.2 Discussion ....................................................................................................................... 44
4.5.3 Procedure........................................................................................................................ 44
4.5.4 Checklist ......................................................................................................................... 45
Technical Transmittals Checklist (EXHIBIT 4.5.4) ....................................................................... 46
4.6 CLAIMS ..............................................................................................................................47
4.6.1 Purpose........................................................................................................................... 47
4.6.2 Scope .............................................................................................................................. 47
4.6.3 Procedure........................................................................................................................ 48
4.6.4 Claims Defense .............................................................................................................. 51
4.6.5 Disputes .......................................................................................................................... 54
4.6.6 Exhibits ........................................................................................................................... 54
Directive To Maintain Schedule [SAMPLE] (EXHIBIT 4.6.3-A) .................................................. 55
Claim Flowchart (EXHIBIT 4.6.3-B) ........................................................................................... 56
4.7 BACKCHARGES................................................................................................................58
4.7.1 Purpose........................................................................................................................... 58
4.7.2 Discussion ....................................................................................................................... 58
4.7.3 Procedure........................................................................................................................ 58
4.7.4 Exhibits ........................................................................................................................... 59
Notice of Backcharge Work to be Performed (EXHIBIT 4.7.3-A) ................................................ 60
Backcharge Log (EXHIBIT 4.7.3-B)........................................................................................... 61
Daily Summary of Backcharge Work (EXHIBIT 4.7.3-C)............................................................. 62
Notice of Backcharge Completion (EXHIBIT 4.7.3-D) ................................................................. 63
TABLE OF CONTENTS
SECTION 4. PERFORMANCE Page i
4 PERFORMANCE
4.1 CHANGES
4.1.1 Purpose This section describes activities and documentation required to handle
Contract Changes effectively.
4.1.2 Background Change Orders, which can be issued unilaterally, allow you to compensate
the contractor based on your determination of an equitable adjustment (time
and money) when agreement cannot be reached. The contractor may elect to
continue to pursue additional compensation, but the incentive to do so is
diminished considerably because of the amount already paid. Amendments
should be used for contract modifications outside the general scope of work
of the contract, or to change the basic provisions of the contract (i.e., outside
the operation of the Changes clause) and require bilateral agreement.
4.1.3 Definitions Amendment -- a formal modification of a contract, signed by both parties,

which must be mutually agreed upon to effect a change to the rights and
obligations of one or both. An Amendment may be used to modify price and
time of performance in lieu of a Change Order but normally will be used only
for modifications outside of the scope of the Changes clause.
Change -- a modification to the work, time or method of performance

authorized by the Changes clause within the scope of the contract. A
directed change is one in which the contractor is directed to proceed with the
work independent of resolution of the commercial impact (if any) arising
from the change.
Change Notice -- a document issued notifying the contractor of a potential

or directed contract change made. Directed Change Notices which affect the
cost or time of performance obligate you to compensate the contractor, but
do not provide any funding for payment.
The Change Notice is to be used to:
• Transmit all new or revised drawings, data or any other instructions

to the contractor.
• Invite a proposal for new prices or schedule.
• Direct changes (revisions, additions and deletions) within the general
scope of the contract.
The Change Notice requires the contractor either to confirm adjustments to

time and/or compensation ( if any) or to submit its proposal for adjustments
to time and/or compensation.
Change Notice Request -- a contractor initiated request for a Change Notice

due to some differing site conditions, constructive change or similar event
justifying issuance of a Change Notice
4.1 CHANGES
SECTION 4. PERFORMANCE Page 1 of 63
CONTRACT/SUBCONTRACT MANAGEMENT
MANUAL
Change Order – a document which represents the commercial and technical

resolution of a Contract Change. A Change Order describes the scope,
price, schedule and method of payment for a change. It may be agreed to and
signed by both parties; or, if authorized by the terms of the contract, issued
unilaterally representing your determination of an equitable adjustment.
The original contract plus all of the Change Notices, Change Orders and
Amendments constitute the complete contract.
Change Proposal -- a proposed adjustment to contract price and/or time of

performance in response to a Change Notice or any other circumstance in
which the contractor believes an adjustment to the price or period of
performance is due. Proposals should conform to the contract requirements
for pricing of adjustments.
Directive to Proceed -- a document ordering the contractor to proceed with

the defined work despite a lack of agreement as to whether the work is within
the scope of the contract. The need for a directive arises when the contractor
asserts that such work should be compensated as a change (additional time
and/or money); however, your position is that the work is within the work
scope and thus not the subject of a Change Notice. The Directive will
instruct the contractor to segregate all costs associated with the work
described in the Directive. This work should be managed and monitored as
force account work pending resolution of whether or not the work is a
Contract Change. (Refer to the paragraph on Force Accounts in Section
4.1.5 and Special Topics Section 7.6 "Force Accounts.")
Extra Work -- work, which the contractor is requested to perform and

agrees to perform that, is outside of the general scope of the contract. You
cannot issue a directed Change Notice if the changed work was beyond the
parties' original contemplation of the scope of work. The agreement with the
contractor for Extra Work is formalized in an Amendment, which defines
scope, payment terms and schedule. The addition of Extra Work should be
treated as sole source procurement requiring appropriate approvals.
Not all additional work is Extra Work. This is a complicated area with
broad guidelines. See the section below under Discussion titled “Extra
Work”.
4.1.4 Discussion Changes

4.1.4.1 Contract Changes
You may make changes to a contract that are within the general scope of the
contract in accordance with the Changes provisions of the contract. Changes
in the drawings, designs or specifications, method, manner or sequence of the
4.1 CHANGES
MANUAL
contractor’s work; changes to Customer or your furnished facilities,

equipment, materials, services or site; directing acceleration or deceleration
of the work and modifying the contract schedule or contract milestones
qualify as Contract Changes.
The formal lines of communication for design changes must be consistent

with approved project procedures, and communicated to the contractor at the
Pre-Construction Meeting.
Engineering changes to drawings and specifications made in the office and

not formally controlled and communicated to the site may, if they affect the
contractor, constitute "constructive changes" and result in additional costs
and delays for which the contractor may have to be compensated.
The scope of each change should be clearly defined and coordinated with the
on-site team by the originator. The designated contract administrator should
assume responsibility for such coordination and clarification as may be
required as soon as the contract administrator becomes aware of the
proposed change.
The change approval process should include cost and schedule analysis in all
cases. The cost estimate is also required for the committed authorization if it
is intended to issue a directed change.
All approved Contract Changes must be communicated and confirmed in

writing by using a Change Notice and then incorporated into the contract by
use of either a Change Order or Amendment, depending upon the contract
terms and Project Procedures.
As a minimum, the following items must be included in the Change Notice:
• Descriptive scope of the change

• Method of payment (lump sum, unit prices, or force account)
• Time (schedule) adjustments (if known)
• Direction to proceed or to wait for notice
• Acknowledgment
The current status of all Change Notices must be formally monitored and
recorded in a Change Notice Log.
NOTE: Marked up contractor-submitted drawings that are not expected to

require an adjustment in time or money may be returned to the
contractor by controlled transmittals in accordance with Project
Engineering Procedures. The project transmittal form should have
language similar to the RFI form that indicates that the transmittal
is not a Change Notice and that the contractor is not to proceed on
4.1 CHANGES
MANUAL
work it considers to be a change without Change Notice or

Directive to Proceed.
Marked up contractor drawings being returned with comments that

constitute Contract Changes must be transmitted to the contractor
by Change Notice.
4.1.4.2. Contractor Initiated Changes
Contractors will frequently submit unsolicited proposals in response to what

they view as a change under the Changes clause. An unsolicited contractor
request may take the form of a proposal for work that you agree is a change
or it may take the form of a claim in which you have made an initial
determination of no entitlement.
A claim is a disputed demand by the contractor for time and/or money. It

may arise from a Contract Change where impact is at issue, or from
something the contractor believes to constitute a compensable change but
entitlement is at issue.
The term "claim" has often been applied to any unsolicited proposal, but
should only be applied to disputed requests. This is particularly important to
observe on Government projects, for which the acceptability of proposal
preparation/negotiation costs differ for changes vs. claims. For additional
information on claims see Sections 4.6 and 7.2.)
In contracts which include a disputes resolution clause, if the contractor

gives you notice of a dispute, the issue should be handled according to
company procedures for guidelines in establishing mediation, arbitration or
other procedures for resolution.
4.1.4.3 Change Order/ A Change Order or Amendment package (which should be reviewed for
Amendment completeness after execution of the Change Order or Amendment) consists of
File the following information:
• Change Order/Amendment
• Commitment authorization
• Change Summary -- a narrative describing why the change was made
• Technical Documents (e.g., drawings, sketches, DCNs)
• Change Notice(s)
• Contractor's proposal, if submitted
• Cost analysis (or price justification)
• Schedule analysis
• Correspondence
• Record of negotiation
• Time sheets, invoices or other supporting documentation, if
appropriate
4.1 CHANGES
MANUAL
4.1.4.4 Extra Work Generally speaking, increases in scope can almost always be directed. Extra
Work is work that is a significant departure from the contracted general
scope (e.g., directing a tank subcontractor to install a building). Determining
whether scope increases are "in scope" increases or “out of scope” Extra
Work, can be a gray area. Adding one more pump and 500 feet of pipe to a
mechanical subcontract scope that already includes pumps and pipe should
be a directed change. Adding a 250 MW turbine generator to the same
contract probably should not be directed as a change.
Depending on the nature and scope of the Extra Work, attention must be
given to whether modifications to the insurance, bonding [including
agreement by the bonding company], and warranty provisions of the contract
will be required.
It is rare for contractors to flatly refuse a directed change because if the work
is later determined to be within the general scope of the contract, they may be in
default and liable for significant reprocurement costs. Changes "within the
general scope of the contract" should be very broadly interpreted.
All negotiations with a contractor must be documented. All proposed
settlements should be approved internally prior to negotiation with the
contractor. (Refer to Section 7.3, Negotiation, for a discussion on
negotiation preparation and strategy).
4.1.5 Procedure A Change Notice is prepared and will include all related data, drawings and
documentation that are available at the time of its issuance. (Reference
Exhibit 4.1.4-A for the Change Notice form.) Change Notices authorizing
work to proceed require internal approval. (Reference Section 4.2.)
Each Change Notice will be sequentially numbered and entered in the Change
Notice Log. (Reference Exhibit 4.1.4-B for the Change Notice Log form.)
The approved Change Notice will be transmitted to the contractor. All
transmittals to contractors will contain a serialized letter number.
The contractor should be required to respond to each Change Notice. All

contractor responses, whether acknowledgments without comment, disagreement
with the Change Notice, or contractor counter-proposals, must be entered in
the Change Notice Log. The Log should be updated on a regular basis to
status open Change Notices and follow up should occur where there has been
no responses.
All proposals submitted by the contractor (in response to Change Notices,

unsolicited proposals and claims) must be provided a unique tracking
identifier. Each proposal must be entered into a Contractor Proposals/Claims
Log kept for each contract. (Reference Exhibit 4.1.4-C for the Contractor
Proposals/Claims Log.)
4.1 CHANGES
MANUAL
Once contractor proposals are negotiated and adjustments are agreed upon,
they will be incorporated into the contract by either a Change Order or
Amendment. (Reference 4.1.4-D and 4.1.4-E for the Change Order and
Amendment Forms.) Each Change Order and Amendment should be given
a unique sequential number, which is entered into a Change Order/ Amendment Log
for each contract. (Reference Exhibit 4.1.4-F for the Change
Order/Amendment Log form.) It is important that the cross-references in the
logs are completed to ensure a change can be tracked from
Its inception (Change Notice or Proposal) to its incorporation in a Change
Order or Amendment.
Situations may arise where the contractor will be directed to perform

changed/disputed work in the absence of mutual agreement. In such cases,
the Company will issue a Directive to Proceed to the contractor requiring the
contractor to perform the work pending final agreement. (Reference Exhibit
4.1.4-G for a sample Directive to Proceed letter.) In such cases, the work
being performed must be clearly defined. Also, complete documentation
must be maintained to record costs and schedule impact. If there is a
subsequent final agreement for additional costs for this work, it should be
incorporated into the contract by Change Order. If necessary, a unilateral
Change Order may be issued to modify the price or time of performance as
determined per the Disputes clause.
4.1.6 Equitable The Changes article of the contract will generally provide words to the effect
Adjustments that:
"If any change under this clause directly or indirectly causes an
increase or decrease in the contractor's cost of, or the time required
for, the performance of any part of the work under this contract,
whether or not changed by any order, an equitable adjustment shall
be made and the contract modified accordingly."
Prompt and fair resolution of changes is contractually required and will also
best serve your long-term interests. The following material is intended to
provide general guidance, not procedural direction. The terms of the contract
and Project Procedures will dictate the basis for negotiating equitable
adjustments.
Schedule Adjustments
Adjustments to the contract period of performance generally will be based on
the effect the change has on the time required to perform the contract work.
However, there are many factors to consider in evaluating the actual impact
of a change on a contractor's schedule. For example, even though changed
work may require some time to perform, the change may not affect any work
on the critical path of the current approved schedule. Consequently, it
would be inappropriate to modify the contract milestones or completion date.
4.1 CHANGES
MANUAL
Similarly, the effect of a change may be exaggerated because of a

performance problem for which the contractor is responsible. The period of
performance should only be adjusted for the effect for which the you are
responsible. When delays are caused by concurrent events for which both
parties are responsible, the period of extended performance is excusable but
not subject to compensation.
Price Adjustments
Price adjustments will fall into one or a combination of three categories:
lump sum, unit price or cost reimbursable. The preferred method of pricing
a change generally follows the base contract pricing. The contract Changes
article normally provides you the right to prescribe the pricing method,
regardless of the base contract pricing method, e.g., unit rates in lieu of lump
sum.
Fixed Price (Lump Sum or Unit Price) Contracts

For a lump sum contract, the preferred method of pricing a change is to
estimate the cost for the effect of the change and negotiate a fixed price. If
the change is priced before the work is performed, the fixed price will be
based on the estimated cost effect of the change plus a reasonable profit
based on traditional profit factors, such as risk, resources required and
investment.
If the change is negotiated after the work is performed, you may both take
advantage of the actual costs incurred to assist in establishing an appropriate
price for the change. Do not, however, rely solely on cost records if a "lump
sum" settlement is being negotiated after the work is partially performed or
completed. Cost records are a tool to evaluate proposed settlement values and
are not necessarily an indicator of the reasonable amount the company is
obligated to pay. The contractor is entitled to an equitable adjustment for the
change. That may or may not be reflected in the amount that the contractor
has spent depending upon its productivity, skill and efficiency.
The estimated cost is based on the expected direct costs for material, labor
and equipment, to which negotiated factors are applied for the indirect costs
(scaffolding, cleanup, etc.), for overhead (site facilities, site management,
etc.) and for general and administrative expenses (home office support, etc.).
Note that it may be expedient to establish the factors for indirects, overhead
and G&A early in the project to be used for changes, avoiding renegotiation
of the rates for each change.
Where available and appropriate for the nature of the change, the contract
4.1 CHANGES
MANUAL
unit prices should be used to price quantity changes. Changes that add work
for which no applicable unit rates exist will necessitate the establishment of
new unit prices, as will changes for which established unit prices are
inappropriate. Unit prices are actually a form of fixed price and negotiated
new unit prices will be based on the estimated cost for the changed work,
plus a reasonable profit, similar to the method described above for lump sum
work.
Cost Reimbursable Contracts

Changes on cost reimbursable contracts are generally less complicated and
controversial to administer (although more labor intensive) than fixed price
contracts. The contractor will always recover its reimbursable costs, and will
generally recover at least the site overhead as a factor applied to direct costs.
Cost plus fixed fee contracts typically include language that requires
adjustment in the "fixed" fee for changes. The "negotiated" fee adjustment
is not necessarily based on the ratio of the original fee to the original
estimated cost. The fee for each change should be evaluated for its own
impact based on the traditional consideration of risk, investment and
resources.
Cost plus percentage of cost contracts normally require no negotiations for

any changes. All elements of cost and profit are adequately recovered
directly or in the percentage fee. It is seldom appropriate to contract on a
cost plus percentage basis, and it is illegal in U.S. federal government work.
Time and Materials Work

Time and materials (T&M) work is usually a combination of unit rates for
labor and cost plus a percentage (typically 10%) for materials. Equipment is
priced based on negotiated rates or a percentage (typically 80%) using
industry publications such as the Blue Book for U.S. projects. U.S. federal
government contracts do not allow a markup for material on T & M work.
The unit rate for labor normally includes a markup for supervision, tools,
overhead and profit. The percentage markups for materials may cover the
labor effort to purchase, inspect, expedite, warehouse and handle the
materials plus a profit.
T&M work, while convenient, is often expensive. T&M work should be

limited to those occasions when the scope of the change work to be
performed is not very large, is not well understood and must proceed on an
expedited basis, rather than waiting until the scope is better defined. T&M
work should be monitored by requiring the contractor to submit, for
approval, a Daily Summary of Time and Materials Work (reference Exhibit
4.1.5).
4.1 CHANGES
MANUAL
Force Accounts
Force Accounts are actually an accounting mechanism (holding accounts) for
work being performed prior to agreement on a price. (Refer to the Special
Topics Section entitled “Force Accounts” for a discussion of the application
of Force Accounts.) The terms Force Account and T&M are often used
(incorrectly) interchangeably. This can lead to misunderstandings if the
contractor has a different view of the terminology. (Reference Special Topics
Section 7.6 "Force Accounts".)
Settlement Finality
Use this language when preparing a Change Order or Amendment:
"The price adjustment and time extension (if any) granted
under this Change Order (Amendment) constitute payment in
full for the work covered by this Change Order (Amendment),
including without limitation, all direct costs; indirect costs;
overhead costs; general and administrative expenses; profit;
and all effects (direct, indirect, and consequential, including
impacts, and "ripple effects") on the work, covered by this
Change Order (Amendment) on all contract work, whether or
not changed by this Change Order (Amendment)."
All of the indicated cost elements mentioned, “indirects, consequential,

impacts, etc.” should be discussed in negotiation. Then an affirmative
statement should be made in each Change Order or Amendment either
granting an extension to milestone completion dates or stating there are no
schedule adjustments caused by this Change Order or Amendment.
4.1.7 Cost Records For fixed price contracts (lump sum or unit price) changes should be issued
for Changes and negotiated on a fixed price basis. This objective assumes the scope of
the changed work is well enough defined and understood to support
preparation of a fixed price estimate. On all changes you should implement
cost tracking upon initiation of the change to develop sufficient information
on which to base pricing (i.e. time sheet review, material and equipment
usage reports review).
4.1.8 Exhibits Contract Change Notice (Exhibit 4.1.4-A)

Subcontract Change Notice (Exhibit 4.1.4-AA)
Change Notice Log (Exhibit 4.1.4-B)
Contractor Proposals/Claims Log (Exhibit 4.1.4-C)
Contract Change Order (Exhibit 4.1.4-D)
Subcontract Change Order (Exhibit 4.1.4-DD)
Contract Amendment (Exhibit 4.1.4-E)
Subcontract Amendment (Exhibit 4.1.4-EE)
Change Order/Amendment Log (Exhibit 4.1.4-F)
Directive to Proceed (Notice to Proceed Letter) (Exhibit 4.1.4-G)
4.1 CHANGES
MANUAL
Daily Summary of Time and Material Work (Exhibit 4.1.5)

Contract Proposals Summary (Reference Form)
Flowchart of Changes/Claims (Equitable Adjustment Procedure) [Sample]
(Exhibit 4.1.9)
4.1.9 Checklists Change Notice Checklist (Exhibit 4.1.8-A)

Change Order/Amendment Checklist (Exhibit 4.1.8-B)
Contractor Proposal Checklist (Exhibit 4.1.8-C)
4.1 CHANGES
Subcontract Change Notice
COMPANY:
OWNER:
JOB NO.:
SUBCONTRACTOR: LETTER NUMBER:

ADDRESS: EFFECTIVE DATE:
REPLY REQUIRED:
SUBCONTRACT NUMBER:
CHANGE NOTICE NO.:
D-U-N-S NO.: COMMODITY CODE:
This change notice is forwarded for your signature. Please complete this form as required and return the original to this
office. A copy has been included for your files.
DESCRIPTION OF CHANGE:
PRICING METHOD:
LS UP NEW UP T&M COST RE N/A
PROCEED with work Notice to proceed REQUIRED

NO change in price authorized NO extension of time authorized
Drawings/data ATTACHED SUBMIT proposal within _____ days
DATE COMMITMENT AUTHORIZATION APPROVED SIGNATURE AUTHORITY DATE
TO : SUBCONTRACTOR LETTER SERIAL NO.:

ACKNOWLEDGE AND ACCEPT ACKNOWLEDGE WITH EXCEPTIONS:
ARE ARE NOT PROCEEDING WITH THIS CHANGE

A PROPOSAL HAS BEEN SUBMITTED WILL BE SUBMITTED WILL NOT BE SUBMITTED
SIGNATURE TITLE DATE
Expedition
Directive To Proceed (Notice To Proceed) [SAMPLE] (EXHIBIT 4.1.4-G)
[Date]
XYZ Corp.
123 Adams St.
Richland, WA 99352
Attention: [Contractor's Authorized Representative]
Subject: Company Job 29999

Hanford Waste Treatment Facility
Tank Post Weld Heat Treatment
Reference: Letter 29999-KLB-1234
Dear [Contractor's Authorized Representative]:
The reference letter indicates that XYZ Corp. considers the Post Weld Heat Treatment of the Liquid
Effluent Tank to be out of scope and requests a Change Notice to proceed with the work. The company
considers this work to be in scope work [OPTION: "but will research this matter and advise
separately as to a final decision"].
In accordance with Article ___, entitled Contract Interpretation, XYZ Corp. is hereby directed to proceed
with the Post Weld Heat Treatment and, if XYZ Corp. still considers this work to be out of scope, treat
such work as if it were a change and segregate costs and maintain separate cost records. This direction is
not to be construed by XYZ Corp. as the company's acceptance that this work is a change, but does
protect both the interests of the company with respect to continuation of the work and the interests of
XYZ Corp. should this work be determined later to be a bona fide change.
Please signify your intent with respect to this matter in the space provided below. If you have any
questions, please contact [contract administrator] at (509) 377-1234.
Very truly yours,
[Company's Authorized Representative]
Work proceeding, accepted as in scope.
Work proceeding, will prepare change proposal.
Authorized Representative: _____________________
Name typed or printed: _____________________
4.1 CHANGES
Daily Summary of Time
and Material Work
CONTRACT NO.: COMPANY:
CONTRACTOR: JOB NO.:
CHANGE NOTICE/CHANGE ORDER/AMENDMENT/

WORK DESCRIPTION: WORK ORDER NO.:
CURRENCY:
BC NO.:
LOCATION: DATE:
LABOR EQUIPMENT
NO. HOURS TOTAL TOTAL EQUIP.
MEN CLASS. ST OT RATE WAGES SUBSISTENCE NO. DESCRIPTION HOURS RATE AMOUNT
TOTAL LABOR TOTAL EQUIPMENT

OTHER
QUANTITY DESCRIPTION UNIT PRICE AMOUNT
TOTAL OTHER
REMARKS
SUBMITTED BY: APPROVED BY:
TITLE TITLE
Expedition
Contract Change Notice Checklist (EXHIBIT 4.1.8-A)
Contract Number:______________________ Contractor:______________________________
Contract Scope:________________________________________________________________________
1. Verify that changed work is not actually part of original contract scope. YES NO
Comments:
2. Change Notices are accurately entered in Change Notice Log. YES NO

Comments:
3. Change Notice documentation is sufficiently clear to minimize contractor questions YES NO

and uncertainty.
Comments:
4. Change Notices have initiated cost commitment changes, if necessary, and proper YES NO
approvals have been obtained.
Comments:
5. Cost and schedule impacts of Change Notices have been identified. If no cost YES NO
changes, this, too, has been noted.
Comments:
6. Verify contractor's cost records for changes. YES NO

Comments:
7. YES NO
Comments:
8. YES NO
Comments:
Name:________________________________________ Date:____________________________________
4.1 CHANGES
Contract Change Order/Amendment Checklist (EXHIBIT 4.1.8-B)
Contract Scope:________________________________________________________________________
Scope of Change Order/Amendments is clearly defined. YES NO

Comments:
2. Schedule impact or change, if any, is noted on the Amendments. Changes with no YES NO
impact will be noted as such.
Comments:
3. All Change Notices or unsolicited contractor requests (proposals) are available and on YES NO
file as back up.
Comments:
4. The file contains estimates, schedules, notes, meeting minutes or other documents YES NO
which substantiate the agreed upon price.
Comments:
5. There are statements in the file regarding what caused the changes. YES NO
Comments:
6. Verify that the Commitment Authorization has been approved and signed by someone YES NO
with appropriate delegated authority.
Comments:
7. Both parties have signed the Amendments. YES NO

Comments:
8. Verify that the Change Orders/Amendments have been approved and signed by YES NO
someone with appropriate delegated authority.
Comments:
Name:________________________________________ Date:____________________________________
4.1 CHANGES
Contractor Proposals Checklist (EXHIBIT 4.1.8-C)
Contract Scope:________________________________________________________________________
1. Contractor proposals are immediately identified, separately logged and acknowledged. YES NO
Comments:
2. Contractor proposals are evaluated to verify if they are clearly changed work or are YES NO
claims.
Comments:
3. Contractor proposals are evaluated for additional costs. YES NO

Comments:
4. The company is aware of all Contractor proposals and is focusing additional efforts on YES NO
documenting contractor performance.
Comments:
5. Contractor proposals are closed by Change Order or formally rejected in writing. YES NO
Comments:
6. At time of closure, alternative positions and possible negotiation positions are YES NO
prepared.
Comments:
7. Records of negotiations and settlements, if any are included in the contract file. YES NO
Comments:
8. Change Orders and Amendments have been prepared and approved to reflect YES NO
settlements, if any.
Comments:
Name:________________________________________ Date:____________________________________
4.1 CHANGES
4 PERFORMANCE
4.2 INTERNAL APPROVALS
4.2.1 Purpose This section defines the procedure for preparing and executing Commitment
Authorizations and will be used in conjunction with Section 4.1 "Changes."
Commitment Authorizations will be obtained in advance of any activity

which may cause a change to the currently authorized expenditure limits or
to the Contract Schedule. This includes field issued contracts, changes or
directives to contractors. The mechanics of the Change Notice/Change
Order/Amendment cycle described below, preclude payment for work on
Change Notices until a Contract Change Order Request is processed
funding the change. This is an intended control point. It is not appropriate
or acceptable to fund changes from the base contract commitment unless a
funding pool is specifically established, e.g., for Work Orders. The funding
commitments for changes are to be separately processed and approved prior
to issuing changes.
No one is to execute Change Notices, Change Orders or Amendments

without the appropriate authority.
4.2.2 Procedure Assemble all documentation which is relevant to the proposed commitment
change.
Prepare a concise change narrative if it will help convey the intent and
purpose of the proposed change.
Prepare an internal approval document. Verify the proper approval
authorities have been identified.
Submit the Commitment Authorization and all relevant support documents

to the approval authorities. Relevant documents may include:
• Draft change document
• Records of negotiation
• Correspondence
Retain the original change document for the Contract Management Files.
The supporting documentation will include:
• Commitment Authorization
• Change Notice/Change Order/Amendment
• Company's cost study or estimate
• Records of negotiations
• Pertinent correspondence or a summary of correspondence
references
1
For unit price contracts for which adequate funding exists, quantity releases are not considered commitments.
4.2 COMMITMENT APPROVALS

Cost Commitment Checklist (EXHIBIT 4.2.4)
Contract Scope:________________________________________________________________________
1. Commitment Authorization obtained in advance of authorizing work to proceed. YES NO
Comments:
2. Commitment Authorizations approved by both Regional and Contracts YES NO

representatives.
Comments:
3. All relevant documents assembled. YES NO

Comments:
4. Delegation of Commitment Approval Authority on file.. YES NO

Comments:
5. Delegation of Execution/Signature Authority on file. YES NO

Comments:
6. All Commitments reported to Central Procurement. YES NO

Comments:
7. Sole source approval on file for out of scope changes. YES NO

Comments:
Name:________________________________________ Date:____________________________________
4.2 COMMITMENT APPROVALS

4 PERFORMANCE
4.3 SCHEDULE
4.3.1 Purpose Keeping a contract schedule current is a key element of contract

management. Most contracts require regular updates to show progress on
approved baseline schedules and submittal for approval of any proposed
revised schedules. Further, contract changes and excusable delays may
require adjustments to contract milestones, and/or the contractor's schedule.
Another important aspect of schedule management is keeping as-built
schedules reflecting progress as it occurs. This not only provides a tool for
statusing performance, but is also essential to critical path analysis if a claim
is filed at a later date.
4.3.2 Procedure It is important to identify exactly the schedule submittal requirements of the
contract. It is essential these requirements be rigorously enforced. Allowing
a contractor not to submit scheduling information may result in a waiver of
those requirements.
Once a revised schedule is approved, it becomes the basis for future progress
measurement.
Retain copies (hard copy and, as appropriate, electronic) of all approved
schedules and updates. Formal written approval of schedules is required.
In reviewing a revised schedule:
• Assure that the schedule reflects changed work.
• Assure the schedule incorporates any approved time extensions.
• Assure that the contract milestone dates are not changed except as
modified by Change Order or Amendment . If the contractor has
changed milestone dates, this may constitute a request for an
extension of time and should therefore be addressed/resolved with
the contractor. (Refer to Section 4.6 "Claims", subsection 4.6.3.)
The contractor's schedule should be marked up (maintained) in accordance
with the contract requirements. This mark-up should be retained as it
reflects actual progress. All legitimate delays should be incorporated in the
schedule as they occur. When all tasks are complete the final mark-up
constitutes the as-built schedule.
NOTE: See Section 5.2 for a discussion of Progress Review and
Coordination Meetings and Special Topics Section 7.4 "Interface
Coordination".
Refer to Special Topics Section 7.8 "Delays and Extension of
Time" and Section 7.9 "Acceleration".
4.3 SCHEDULE
4 PERFORMANCE
4.4 REQUEST FOR INFORMATION (RFI)
4.4.1 Purpose This procedure provides for controlled identification, notification and
resolution of contractor initiated technical questions.
4.4.2 Definitions Request for Information (RFI) -- a contractor initiated technical question.
An RFI is initiated if the contractor:
• Is unable to understand the technical documents (i.e., scope,
specifications, drawings or data).
• Discovers or perceives a conflict, ambiguity, error or omission in or
among the technical documents.
• Has an alternate/substitute material or method to propose that will
not adversely affect cost or schedule.
4.4.3 Discussion RFI's often represent, in shear numbers, the single largest form of
documentation on the project. Further, some RFI's may affect the
contractor's ability to continue a portion of work until its question is
answered. Consequently it is critical that an efficient, effective and timely
mechanism for dealing with such technical questions be implemented
immediately upon contract inception (prior to mobilization, if the contractor
is performing initial design or other preparatory work offsite).
RFI's are not change documents and cannot be used to direct a change in
contract requirements. If a technical response represents a compensable
change, it must be issued by Change Notice.
4.4.4 Procedure Each project should develop a project instruction for RFI's to be given to
each contractor. (Refer to Exhibit 4.4.4-A for a sample instruction.)
Immediately after a contract is awarded the contractor should be provided the
instruction sheet and a supply of RFI forms. Even if the pre-construction
meeting is delayed, the contractor should be informed immediately of the
intended RFI procedure. Performing this bit of housekeeping will help to
ensure that the contractor utilizes the standard format for dealing with
technical questions, rather than a format of its own.
To administer the RFI process, the project will identify for each contract an
individual to be designated recipient for the RFI's on that contract. This
individual is responsible for ensuring that RFI's that may affect ongoing
work receive appropriate expedited responses.
4.4 REQUESTS FOR INFORMATION (RFI’S)

Upon receipt of an RFI, the designated recipient will ensure that the RFI is
logged and that an individual is assigned to take the necessary action. (Refer
to Exhibit 4.4.4-B for a sample RFI Log form.) RFI's that indicate a specific
date for a required response should be monitored for a response and, if no
response has been issued three (3) days before the response is due, the
individual responsible for follow up should contact the assigned person to
ensure that the response will be issued on time. RFI's that indicate an
immediate response is required should be responded to as quickly as possible,
within reason and with due care. The target for responding to most RFI's
should be within three (3) working days and for all RFI's within two (2)
weeks.
Outgoing RFI's will be reviewed by the designated technical representative

(reviewer) to verify that the response is technically adequate and correct.
The response has the same technical weight as the base technical documents:
scope, specifications, drawings and data, and accordingly requires the same
level of technical attention, review and control as the base technical
documents. The reviewer will also provide a "commercial check" to ensure
that you are not giving commercial direction in response to an RFI and
provide a "tone check" to ensure that the response is limited to a factual and
objective answer to the question.
A special note with respect to tone. It is "contractually" advantageous if the

responses to RFI's are written in the same professional, impersonal style that
standard specifications adopt. It is counter-productive to use such phrases as
"as the contract clearly indicates" or "this question is unnecessary" or other
such terms or phrases that might be perceived as contentious or
inflammatory. Reply in the simplest, most direct and technically correct and
complete manner, even if an RFI appears to be unnecessary or purposefully
obtuse.
It also serves no purpose to reply to an RFI with: "Perform the work in

accordance with the technical documents." Trying to avoid a commercial
liability by providing an incomplete response will actually disadvantage you
if the contract issue turns into a dispute.
Commercial language should be avoided in the responses to RFI's, even if the

RFI question from the contractor suggests a commercial issue. For example,
avoid including a commercial phrase such as "the painting specification,
which has precedence over the drawing notes, indicates that inorganic zinc
paint is required in all outdoor environments." Say instead:
"Please refer to the painting specification, A-102, article 13.1.2,

which states, in part, that "inorganic zinc paint is required in all
outdoor environments. Work should proceed on this basis."

or simply
"The contractor is directed to proceed in accordance with painting

specification A-102, article 13.1.2."
Order of precedence, the presence or absence of ambiguity or conflict, and all

other such commercial issues should be dealt with in letter form.
Although commercial language is not included in RFI's, your responses will

often result in commercial impacts. Consequently, your representative
responsible for commercial administration of the contract should receive a
distribution copy of all RFI's as they are issued. This provides an early
warning if a contractor is likely to consider that the response will require a
Contract Change Notice for implementation.
If it is clear that an RFI response requires a Change Notice for

implementation, a Change Notice should be prepared and transmitted as the
response to the RFI. In response, simply state: "Refer to (attached) Change
Notice No. XX."
4.4.5 Exhibits Request for Information (RFI) Contractor Instructions (Exhibit 4.4.4-A)
Request for Information (RFI) Log (Exhibit 4.4.4-B)

Request For Information (RFI) Contractor Instructions (EXHIBIT 4.4.4-A)
This procedure provides for controlled identification, notification and resolution of contractor initiated
technical questions. A Request for Information (RFI) is a contractor initiated technical question. An RFI
is initiated if the contractor:
• Is unable to understand the technical documents: scope, specifications, drawings or data.
• Discovers or perceives a conflict, ambiguity, error or omission in or among the technical

documents.
• Has an alternate/substitute material or method to propose that will not adversely affect
cost or schedule.
Upon determination that an RFI is required, the contractor should prepare its question on the attached form,
log the RFI using a sequential numbering system (e.g., the first RFI is [Job #]-RFI-0001, and deliver the
RFI to _________________________).
RFI's that indicate a specific date for a required response should be monitored for a response and, if no
response has been issued three (3) days before the response is due, the originator should contact the
company to ascertain the status of the response. The company will target to respond to most RFI's with
three (3) working days and all RFI's within two (2) weeks.
RFI's are not authorized change documents and cannot be used to direct a change in contract requirements.
If the company's response on the RFI has a cost and/or schedule effect, it is the contractor's responsibility
to immediately advise the company with a contractor change proposal. Work undertaken without company
authorization is at the contractor's risk and expense.

Request for Information
(RFI)
PROJECT NAME: SUBCONTRACT NO.:

JOB NO.: RFI NO.:
LOCATION: PAGE 1 of 1
TO:
OF:
REFERENCE DRAWING SPECIFICATION
LOCATION
INFORMATION AND REASON REQUESTED
REQUESTED BY SUBCONTRACTOR
REPLY REQUIRED BY
Information to Subcontractor
TO: FROM:
OF: OF:
REQUESTED INFORMATION
DATE COMPANY NAME
Expedition
4 PERFORMANCE
4.5 TECHNICAL TRANSMITTALS
4.5.1 Purpose This procedure outlines responsibilities for transmitting company design
documents to contractors and for processing technical submittals received
from contractors.
4.5.2 Discussion Poor control of technical documents can lead to uncontrolled changes to the
contract and can raise questions about design configuration control and,
ultimately, the quality of installed work. It is important that all team
members understand and follow the project's technical document change and
transmittal procedures.
Transmitting Your Drawings to a Contractor
Drawings included in the contract at the time of contract award are considered
the base set of drawings.
The base set of drawings is issued by Engineering and incorporated into the
original contract.
Processing Drawings Received from Contractors
The procedure for processing contractor submittals will parallel approved

Engineering procedures.
Marked up contractor submitted drawings that are not expected to require an

adjustment in time or money are returned to the contractor by controlled
transmittals in accordance with Project Engineering Procedures. The project
transmittal form should have language similar to the RFI form that indicates
that the transmittal is not a Change Notice and that the contractor is not to
proceed on work it considers to be a change without a Change Notice.
Marked up contractor drawings being returned with comments that are

known to impact cost or time of performance must be transmitted to the
contractor by Change Notice.
4.5.3 Procedure Revised Drawings
Prior to the Pre-Award Meeting, the bid set of drawings will be updated to
reflect changes during the pre-award phase and reissued in the status of
"Issued for Construction." All changes from the bid set to the Issued for

Construction set of drawings are to be noted on the drawings.
The list of contract specifications, drawings and data will be kept current and
updated every time drawings are changed or new drawings issued.
A summary of significant changes associated with a revised technical

document should accompany each drawing transmittal.
A Change Notice which identifies the drawings and engineering data

transmitted will be issued to the contractor. Change Notices may address
more than one drawing transmittal. They will be issued in a timely manner in
order to avoid adverse impact to the contractor's performance of the work.
The contractor may initiate unsolicited proposals in response to the Change

Notice transmitting the drawings. Change Notices and unsolicited proposals
will be handled in accordance with the Section 4.1 "Changes" of this Manual.
Contractor Technical Submittals
Contractor drawings/data submittals required by the specifications will be

received and processed pursuant to the appropriate project procedures.
Contractor submittals and your review of comments for compliance with

contractual commitments and commercial effect will be monitored via copies
of the transmittal documents concurrently with the technical review to:
• Ensure that each contractor submittal is reviewed and returned to

the contractor.
• Establish a logging and control system to monitor the submittal
against contract requirements.
• Monitor approved technical submittals for changes in scope.
• Monitor timely (per contract requirement) return of submittals.
4.5.4 Checklist Technical Transmittals Checklist (Exhibit 4.5.4)

.
Technical Transmittals Checklist (EXHIBIT 4.5.4)
Contract Number:__________________________
Contractor:____________________________________
Contract Scope:
1. Cost/Schedule reviews have been performed for all revised or added drawings. YES NO
Comments:
2. Change Notices, Change Orders and Amendments are being processed for all YES NO
contracts and include an accurate accounting of drawing revisions.
Comments:
3. Change Notice for added and revised drawings are processed within the time YES NO
periods required by this procedure.
Comments:
4. YES NO
Comments:
5. YES NO
Comments:
6. YES NO
Comments:
7. YES NO
Comments:
8. YES NO
Comments:
Name:________________________________________ Date:____________________________________

4 PERFORMANCE
4.6 CLAIMS
4.6.1 Purpose This procedure describes the process for analysis, evaluation, and resolution
of contractor claims for price or schedule adjustments.
Definition:
"A claim is a disputed demand by the contractor for time and/or

money which arises from a contract change or a contractor's
perception of entitlement for something the contractor believes to
constitute a compensable change."
4.6.2 Scope A wide variety of causes may give rise to claims from contractors. Some
typical causes are:
• Impact from directed changes (pricing and effect on unchanged

work)
• Constructive changes (not formally directed by Change Notice but
required by the work or your direction)
• Untimely direction and administration of changes
• Deficient or tardy customer supplied materials or equipment,
specifications and drawings, design releases, facilities and utilities,
or payments
• Delays, disruptions and interferences by others
• Unduly strict inspection
• Force majeure conditions
• Interference by you of the contractor's method or manner of
performance of the work
• Failure to disclose relevant information to the contractor
• Taking over/managing a contractor's subcontractor
• Untimely clarification and approvals
• Unanticipated subsurface conditions
• Failure to act fairly and in good faith
• Almost anything else you can think of
4.6 CLAIMS
SECTION 4. PERFORMANCE Page 47
of 63
Refer to Special Topics Section 7.2 "Basis for Claims".
Contractors are obligated to provide adequate explanation and documents of

claims, preferably at the time the claim arises, but sometimes ultimately in
court. They are entitled to fair and timely consideration of their claims and
clear, equitable replies. The basis for the settlement of claims or for your
recommendations to your customers for settlements should be the contract,
applicable law, the facts and fundamental fairness.
For the orderly administration of contracts, all members of the project team
should endeavor to avoid claims by:
• Identifying potential claims and taking steps to mitigate
• Frank discussions with contractors to discourage spurious claims
• Application of contract provisions for relief where justified
• Prompt resolution of acknowledged changes
When claims cannot be avoided or resolved by management, the following

procedure should be followed and documented.
4.6.3 Procedure Submittals — Encourage the full and complete submittal of the factual
causes, contractual basis, quantified impact, documentary evidence, and
proposed resolution from the contractor. Submittals should address:
• Description of the work performed, delayed or impacted

• Cost and schedule quantification
• Contractual basis for entitlement
• Requested relief
Requested Schedule Extensions — Note that any claim for time extension,
with or without money, should be expeditiously resolved i.e., rejected or
negotiated to conclusion. Unanswered requests for time extensions, where
the contractor has been compelled to accelerate its work to meet schedule in
the absence of a response, may be treated by the contractor (and by the
courts) as "Constructive Acceleration". Even if it is impractical to make an
immediate determination whether the contractor is entitled to a schedule
extension, it is generally quickly determinable if a time extension is
acceptable (whether or not justifiable) to the project. If an extension is not
acceptable, you should direct the contractor to complete on time and
simultaneously advise the contractor that you are evaluating the merits of its
requested schedule extension. (Refer to Exhibit 4.6.3-A for a sample
"Directive To Maintain Schedule" letter.) If the extension is justified, the
contractor will be entitled to compensation for acceleration. If the extension
is not justified, the contractor has maintained the schedule at its own cost.
4.6 CLAIMS
By deferring the evaluation but not deferring direction to the contractor

regarding the schedule, you have protected the schedule while providing time
to evaluate properly who has responsibility for the cost to maintain the
schedule. (Refer to Special Topics Section 7.8 on "Delays and Extensions of
Time" in this Manual.)
Logging and Tracking — Claims will be logged and tracked In accordance

with Section 4.1.4 of the "Changes" Section of this Manual. (Refer to
Exhibit 4.6.3-B "Claim Flowchart".)
Fact Findings — Before a reliable analysis or evaluation can be performed,

it is important to be thoroughly familiar with all of the facts. It can be
wasteful and even counterproductive to develop a negotiating position and
attempt resolution with an inadequate grasp of the fact situation.
Accordingly, fact-finding discussions or correspondence should be undertaken
whenever necessary to identify all of the circumstances applicable to the
issues.
Analysis — There are three separate and distinct steps to be taken in

evaluating claims. The first and second must be completed and done
independently from the third.
• Technical Validity — The scope of work, resources required and

technical engineering or construction methods involved should be
evaluated by the appropriately skilled staff to ensure that the claim has a
sound technical basis.
• Entitlement — Unlike recognized changes where the contractor's right to

seek price or schedule relief is not in question, a go/no-go, accept or
reject determination should be made based upon the terms and conditions
of the contract and applicable law. The time and money involved should
not be a factor in determining entitlement. While sympathy claims or
nuisance settlements may, as a matter of management judgement, be
considered, the contractual rights and obligations related to any claim
should be analyzed and understood.
• Confidentiality — In a claim situation the confidentiality of your

documents should be protected. Documents relating to your evaluation
of the claim should have limited distributed and be maintained in a secure
location.
4.6 CLAIMS
• Quantification — If and when it is determined that the contractor is

contractually entitled to an adjustment to price and schedule, each
claim should be evaluated for price and schedule impact. To avoid
fragmented, conflicting or overlapping claims, each analysis should
address to the extent applicable:
− Labor, including fringe benefits, direct and indirect categories

− Material, including taxes and transportation
− Equipment, tools and supplies
− Overhead and G & A expense
− Bond and insurance costs
− Profit
− Actual time durations (planned and actual)
− Critical path significance
− Impact on efficiency
Rejection — Claims that are determined to be without merit will be rejected

in writing.
Counterclaims — After analysis of the contractor's claim and before an

amendment or negotiation plan is prepared, all counterclaims, back-charges,
credits or off-sets arising out the same issues or circumstances should be
identified, developed, priced, and included in the resolution.
Negotiations — If the analysis validates all aspects of a claim, a Contract

Amendment incorporating the requested adjustments should be prepared and
processed in accordance with project procedures. If not, and some
significant difference of opinion regarding validity, entitlement or
quantification exist, a negotiation plan should be developed, documented and
approved as a prerequisite to negotiations with the contractor. Negotiations
should be conducted with the objective of reaching a fair and equitable
resolution of the claim, not to coerce settlements which deny either party their
full rights under the contract.
Unsuccessful negotiations should be governed by the disputes process of the

contract or by escalation to senior management levels where appropriate.
Contract Change Order and Amendments — Upon reaching a negotiated

settlement at any level, a Contract Change Order or Amendment and
Commitment Authorization should be prepared and, with appropriate
approvals, executed by both parties. All Contract Change Orders and
Amendments for claims settlements must:
• Accurately define the technical scope.
• Provide price and schedule resolution. An affirmative statement of
4.6 CLAIMS
• Provide price and schedule resolution. An affirmative statement of

no schedule impact must be made if applicable.
• State that the terms of the Contract Change Order or Amendment

represent a "complete accord and satisfaction of all issues raised by
and consequences arising out or related to the claims described."
• Provide payment terms for the price adjustment.
4.6.4 Claims Because claims may arise and not be resolved, contracts will generally
Defense provide for a method of handling disputes. These may range from resolution
of protests in accordance with a specified procedure, settlement through
arbitration, or recourse to litigation. The specific contract clauses must be
clearly understood before undertaking resolution of a claim.
Evaluation of the Claim or Change Proposal
1. Evaluate each claim element, change proposal or expected Change

Order or Amendment on its own merits. Consider:
a. The degree of responsibility and degree of fault caused by each

side
b. Whether the work was done in accordance with the contract

specifications or in keeping with standard industry practice
c. The contractors past practice with regard to settlement or litigation

of claims
d. The comparative cost of alternatives
2. Require the contractor to accompany its claim or proposal with a fully

documented report. Require all relevant information (including CPM
schedules, correspondence, and graphic material).
3. If applicable, obtain the opinion of the Architect/Engineer of the validity

of the claim.
Determining Entitlement or Initial Liability
In reaching a determination of the validity of the claim and the entitlement, if

any, of the contractor, the following elements are essential in reaching a
thorough, balanced conclusion.
4.6 CLAIMS
made part of the contract.
2. Identify the proper parties.
3. Determine the facts, using information from all relevant sources. Most
claims are based upon factual disputes and a full knowledge of the true
facts is essential in reaching a correct conclusion.
4. Carefully examine the material presented by the contractor as proof of

causation to spot any inaccuracies or ambiguities which may discredit
or negate all or part of the contractor's claim. Require that the
contractor prove a cause and effect relationship.
5. When analyzing damages, remember that claims are often calculated on

the basis that the customer has ample resources to compensate the
contractor. Analysis of claimed damages should:
a. Require the contractor to provide proof of expenditures and

detailed calculation of damages.
b. Include an audit, if feasible.
c. If possible, require the contractor to provide actual cost information

from its records as proof of damages.
d. Include as a deduct/offset any additional cost the customer has

incurred in repairing or completing deficient work.
Defense Preparation
Review all records of contract actions and overall administration

correspondence. The outcome will ultimately depend upon the
documentation and presentation of the facts.
Factual defense includes:
1. Disputing Facts: Use every opportunity to find inconsistencies in the

contractor's approach. Identify and utilize contradictions in the records.
2. Disputing Damages: Carefully analyze and dispute the damages which

contractor alleges to have suffered, so as to reduce potential liability to
only those damages directly and specifically caused by the customer's
actions.
3. Concurrency: If both the customer and the contractor are at fault, the
law may not provide for recovery or for the apportionment of damages
4.6 CLAIMS
to either side. Seek a legal opinion based on the actual circumstances and
be guided by that opinion.
4. Mitigation: Utilize evidence to show steps/action that the contractor

could have taken to avoid or reduce the effect of the claimed cause on its
operation and did not do so.
Contractual or legal defenses include:
1. Notice Requirements: Compliance by the contractor to provide the

notices required by the contract. However, consider other factors which
may be pertinent, such as:
a. Constructive notice
b. Waiver of notice requirements by actions of the customer
c. Lack of prejudice to the customer by the contractor's failure to

provide notice
Exhibit 4.6.4 provides a sample response for a claim which has been
submitted without proper notice.
2. Exculpatory Clauses: Contract clauses which clearly relieve the customer

of responsibility or which limit its exposure to potential liability for its
actions. Note that these clauses are strictly construed by the Court, but
their validity is generally upheld.
3. Prior Settlement: Be aware of all possible circumstances in the

administration of the contract, or in the settlement of changes where the
contractor may have waived any of its rights or provided a release in
connection with a particular issue.
4. Excusable Delays: The contractor will not be able to assert a right to

recover from the customer if the cause or the delay is excusable, but not
compensable. Unless by contract the customer assumes the risk for a
delay, it cannot be held responsible for any excess costs which the
contractor may incur for a delay which was outside the control of the
customer.
Counterclaims
Defense against a claim should include the possibility of asserting a claim

against the contractor for breaches of contract (technical as well as
substantive) and its actions or inactions which resulted in excess costs to the
4.6 CLAIMS
customer.
4.6.5 Disputes Occasionally it is not possible to resolve a claim. The contract may contain a
disputed article that provides a procedure for resolution of disputes. Such a
procedure may indicate the steps and sequence of events to resolve the
dispute, or may only provide that "the parties agree to attempt in good faith
to resolve disputes". Detailed procedures, if provided, should be followed
carefully.
It should be a goal to resolve all contractor claims at the project level through
negotiations between parties who have the best knowledge of the facts and
circumstances. Where this is not possible, it may be necessary for the
dispute to be resolved through a third party. The most costly and time-
consuming process is litigation which should therefore be avoided if at all
possible. Alternative Dispute Resolution (ADR) processes (such as
mediation, expert panels, and dispute review boards) can be considered.
Many contractor claims may ultimately be passed through to your customer.

If your prime contract has a disputes provision with express procedural
requirements, it may be necessary to instruct the contractor how to proceed
in a dispute in order for you to comply with these requirements.
4.6.6 Exhibits Directive to Maintain Schedule [Sample] (Exhibit 4.6.3-A)

Claim Flowchart (Exhibit 4.6.3-B)
Claim Rejection [Sample] (Exhibit 4.6.4)
4.6 CLAIMS
EXHIBIT 4.6.3-A
DIRECTIVE TO MAINTAIN SCHEDULE
[SAMPLE]
DATE_________________
ADDRESSEE
__________________________________
__________________________________
__________________________________
__________________________________
Subject: Schedule Extension
On ____________ [Contractor] made a request for an extension of time. That

request is being evaluated for merit; however, the extension you have requested
cannot be accommodated. You are directed to take such action as is necessary to
recover schedule and meet the contract milestone dates and segregate the costs
associated with this effort pending a final determination.
Please provide an estimate of this cost as soon as possible and, in any event, within
[ ] days.
Very truly yours,
Contract/Subcontract Mangement Manual Page 55 of 63

Section 4
Claim Rejection [SAMPLE] (EXHIBIT 4.6.4)
May 9, 1993
Dear Sir:
Re: General Civil Contract

Change Order Request for Imbedded Anchors
in Primary Concrete for Gate Parts
Your Ref. No. _________, dated April 15, 1993
________________________________________
We have reviewed your request and find that the construction

drawings showing the revision were issued February 13,
1991 and that the first pour with these anchors was
completed September 29, 1991.
Raising this issue more than two years after the construction
drawings were issued, more than 16 months after the work
was commenced, and after the work is essentially complete
has denied us the opportunity to either return to the tender
scheme, consider alternatives, or implement special
monitoring of the operation. We consider your request at
this time to be unreasonable and, in accordance with Section
36 of the General Specifications, will not be given further
consideration.
Yours truly,
4.6 CLAIMS
4 PERFORMANCE
4.7 BACKCHARGES
4.7.1 Purpose This procedure describes the process for generating and collecting costs
against a contractor who has provided goods or services that are not in
compliance with the contractor's obligations under the contract.
4.7.2 Discussion Contracts often have express provisions for backcharges describing the
administrative requirements for notice and pricing terms. If so, they must be
followed. However, legitimate backcharges may be generated and collected
pursuant to other contract provisions or basic legal rights as well.
The necessary elements are:
• Notice
• Cost determination
• Pricing
• Collection
It is always preferable, for warranty, resource and pricing purposes, to have

rework or other corrective action performed by the responsible party.
4.7.3 Procedure When rework or other corrective action for defects is determined to be
necessary or when you intend, out of necessity to perform work on behalf of
the contractor (e.g., cleanup, material offloading or providing construction
equipment), you should prepare a written notice to the responsible contractor
identifying the nature of the problem and asking the contractor to perform the
necessary work. If safety or other urgent considerations dictate, the notice
may explain and provide that correction is being undertaken by you or others.
(Note that if you have another contractor perform the backcharge work, you
should require adequate cost records to support the backcharge.)
If the contractor is unable or unwilling to perform the work, a Notice of

Backcharge Work to be Performed (reference Exhibit 4.7.3-A) should be
logged (reference Exhibit 4.7.3-B) and issued seeking acceptance by the
contractor and advising of the pricing mark-ups, if not provided by contract.
If agreement or acceptance cannot be obtained, proceed to authorize the work

and establish a Force Account by cost code to accumulate labor, material and
equipment charges in accordance with project procedures and authorization.
(Reference Special Topics, Section 7.6 "Force Accounts.")
4.7 BACKCHARGES
Prepare Daily Summaries of Backcharge Work (reference Exhibit 4.7.3-C)

and seek contractor acceptance on a daily basis. If refused, make a notation
on the form and continue the process.
Upon completion of the work, prepare a Notice of Backcharge Completion

(reference Exhibit 4.7.3-D) apply agreed or appropriate rates and supply a
consolidated request for billing (including any indirect or other costs for
which the contractor is liable) to the Controller for collection or off-set
against amounts otherwise due.
When resolved through collection or negotiation, close out the backcharge

force account in accordance with project procedures.
4.7.4 Exhibits Notice of Backcharge Work to be Performed (Exhibit 4.7.3-A)

Backcharge Log (Exhibit 4.7.3-B)
Daily Summaries of Backcharge Work (Exhibit 4.7.3-C)
Notice of Backcharge Completion (Exhibit 4.7.3-D)
4.7 BACKCHARGES
Daily Summary of Backcharge Work

CURRENCY:
BC NO.:
LOCATION: DATE:
LABOR EQUIPMENT

OTHER
TOTAL OTHER
REMARKS
TITLE TITLE
APPROVED BY CONTRACTOR:
(FOR WHOM BACKCHARGE WORK IS BEING PERFORMED):
TITLE
COMPANY
Expedition
Monitoring/Reporting
TABLE OF CONTENTS
5.1 DAILY REPORT ........................................................................................................................1

5.1.1 Purpose ..................................................................................................................................1
5.1.2 Procedure ...............................................................................................................................1
5.1.3 Exhibit ...................................................................................................................................4
5.1.4 Checklist ................................................................................................................................4
Daily Report (EXHIBIT 5.1.2) ..........................................................................................................5
Daily Report Checklist (EXHIBIT 5.1.4) ...........................................................................................6
5.2 PROGRESS REVIEW AND COORDINATION MEETINGS.................................................7
5.2.1 Purpose ..................................................................................................................................7
5.2.2 Procedure ...............................................................................................................................7
5.2.3 Exhibit..................................................................................................................................8
5.2.4 Checklists...............................................................................................................................8
5.2.5 Reference ...............................................................................................................................8
Progress Review Meeting Checklist (EXHIBIT 5.2.3-A) ....................................................................9
Coordination Meeting Checklist (EXHIBIT 5.2.3-B) ........................................................................ 10
Schedule Checklist (EXHIBIT 5.2.3-C)............................................................................................ 11
5.3 PROGRESS MEASUREMENT AND PAYMENT.................................................................. 12
5.3.1 Purpose ................................................................................................................................ 12
5.3.2 Procedure ............................................................................................................................. 12
5.3.3 Exhibits................................................................................................................................ 13
5.3.4 Checklists............................................................................................................................. 13
Invoice For Progress Payment (EXHIBIT 5.3.2-A.1)........................................................................ 14
Invoice For Progress Payment - Alternate (EXHIBIT 5.3.2-A.2)....................................................... 15
Certificate of Payment (EXHIBIT 5.3.2-B) ...................................................................................... 16
Invoice Concurrence Sheet (EXHIBIT 5.3.2-C)................................................................................ 17
Progress Measurement Procedure [SAMPLE] (EXHIBIT 5.3.2-D)................................................... 18
Mobilization Payment Checklist (EXHIBIT 5.3.4-A)........................................................................ 19
Invoice Processing Checklist (EXHIBIT 5.3.4-B)............................................................................. 20
5.4 QUALITY SURVEILLANCE .................................................................................................. 21
5.4.1 Purpose ................................................................................................................................ 21
5.4.2 Procedure ............................................................................................................................. 21
5.5 SAFETY AND HEALTH.......................................................................................................... 22
5.5.1 Purpose ................................................................................................................................ 22
5.5.2 Definitions............................................................................................................................ 22
5.5.3 Procedure ............................................................................................................................. 23
5.5.4 Contract Compliance ............................................................................................................ 24
5.5.5 Exhibits................................................................................................................................ 24
5.5.6 Checklist .............................................................................................................................. 24
TABLE OF CONTENTS
SECTION 5. MONITORING/REPORTING Page i
Confirmation of Noncompliance with Contract Safety and Health Requirements (EXHIBIT 5.5.3-B)29
Safety and Health Checklist (EXHIBIT 5.5.6).................................................................................. 30
5.6 ENVIRONMENTAL ................................................................................................................ 31
5.6.1 Purpose.............................................................................................................................. 31
5.6.2 Discussion ......................................................................................................................... 31
5.6.3 Procedure ............................................................................................................................. 32
5.6.4 Checklist .............................................................................................................................. 33
Environmental Checklist (EXHIBIT 5.6.4)....................................................................................... 32
TABLE OF CONTENTS
SECTION 5. MONITORING/REPORTING Page ii
5.1 DAILY REPORT
5.1.1 Purpose This section identifies the information required on the Daily Report of a
contractor's activities.
The Daily Report is your internal document. It is an historical record that

describes your observations of the contractor's day-to-day operations. It can
be used later as a reference to determine the exact progress and status of a
contractor's work at any given time. In the event of a claim or dispute, the
details of events recorded in the Daily Reports become critically important.
Daily Reports must be complete and factual. Utmost care must be exercised
in preparing Daily Reports.
5.1.2 Procedure General
A Daily Report will be completed for each day a contract is active. The
reports will be sequentially numbered, beginning with 001 for the first day of
work. (Refer to Exhibit 5.1.2 for a Daily Report form.) Preparation of the
Daily Report is primarily the responsibility of your representative who is
monitoring the physical work (e.g., field engineer, contract coordinator,
contract supervisor). (Although on short-staffed projects there may be a
temptation to have the contractors prepare and submit Daily Reports for your
concurrence, it is to be avoided because of a contractor's natural tendency to
"shade" facts or include/exclude items based on its own best interests.) Each
Daily Report will be signed by the preparer and submitted for management
review no later than the morning of the following day. The original report will
be retained in the contract master file.
NOTE: If individuals feel compelled to enter contract related events,

discussions or observations into personal diaries or logs, these
diaries or logs should be submitted periodically to site management for
review just as the Daily Reports are.
Each day of an active contract will be covered by a Daily Report; however, if

no work is performed on the weekend or holidays, a separate Daily Report is
not required for each day of the weekend, providing the Monday Daily
Report contains a statement such as:
"No work was performed on Saturday and Sunday, ___________(month)

____________(day) and ________________ (day), _________(year). "
Also, if work is not performed for a number of days, one Daily Report may
be prepared stating the specific dates covered by the report.
5.1 DAILY REPORT

SECTION 5. MONITORING/REPORTING Page 1 of 33
The Daily Report should include the following information:
Shift -- The shift and the starting and ending times will be indicated.
Forces and Equipment -- Records will be kept of the number of craftsmen

(by trade) and the major pieces of contractor equipment on site.
Equipment moved on or off site since the last report will be indicated.
Any down equipment and the downtime, if it can be established, will be
indicated. (Note: this section will normally reference the contractor's prior
daily force and equipment reports if adequate details are covered in those
reports.)
Description of Work Performed Today - Progress
A brief description of the work being performed will be entered, indicating

the area, location, elevations, column lines, etc.
• The progress made relative to the contractor's plan will be

indicated, noting the initiation and completion of any major item of
work. (Note: This and the preceding item may reference the
contractor's rolling 4-week schedule if the data is included in that
document.)
• Major items of material received and/or removed or installed will

be recorded.
• When a contractor ceases work or returns to work after a period of

time away from the job, this will be noted with appropriately
detailed comments.
Special Comments -- While the level of detail indicated below is not

expected for every Daily Report, each of the issues raised should be
considered and chronicled, as appropriate, if potentially significant. It is
important, though, for the report to include only factual statements. If the
preparer has no factual basis for an assessment (e.g., regarding avoidable
delays), the writer should not hazard a guess or opinion. This comment
applies to all notations and reports prepared by those involved in contract
management.
• Work Stoppages, Interruptions, Delays, or Potential Causes of

Delays
5.1 DAILY REPORT

In recording information on such delays, stoppages, and

interruptions, the following items will be considered:
— Was the activity on the critical path?

— Was it unavoidable?
— What was the cause?
— What was the impact?
— What was the productivity result?
— How much time was lost - craft and man-hours?
— What equipment was affected or idled?
— Were there concurrent delays due to other causes (i.e.,
contractor caused)?
• Weather
— Weather conditions will be described, indicating if weather

affected the contractor's operation.
— Weather that may result in a force majeure request for

extension from the contractor will be noted separately.
• Surveillance
— A record will be kept of such items as:
- Unusual field conditions
- Unsatisfactory work notifications and actions taken by

contractor to remedy the situation.
NOTE: When comments are made concerning any

unsatisfactory conditions, each succeeding report will
indicate action taken by the contractor to remedy the
situation until all unsatisfactory conditions have been
corrected.
- Tests performed and results
- Inspections performed (record satisfactory/unsatisfactory

items)
• Accidents, Injury, and Safety
5.1 DAILY REPORT

— Any accidents, injuries, or safety violations will be recorded.
• Requests from the contractor for field related assistance
• Requests from other departments and action taken
• Direction/Instructions
— Direction/Instructions given to the contractor will be recorded,

listing the name of the person and the time given. Any action
taken will also be indicated.
• Conflicts
— When conflicts occur, the following will be recorded:
-- What was the conflict?

-- Who discovered and reported it?
-- Who was informed?
-- What steps were taken to resolve the conflict?
-- What was the resolution?
• General
— Action taken on any previous outstanding items will be

recorded
SPECIAL NOTE: Items of significance (e.g., work stoppages, conflicts)

should be carried forward to the agenda for the
Progress Review Meeting or Coordination Meeting
(as appropriate).
5.1.3 Exhibit Daily Report (Exhibit 5.1.2)

Daily Report [Sample] (Exhibit 5.1.2.A)
5.1.4 Checklist Daily Report Checklist (Exhibit 5.1.4)
5.1 DAILY REPORT

Daily Report
SUBCONTRACT NO: COMPANY:
SUBCONTRACTOR: PROJECT:
CONTRACTOR REP: REPORT NO:

PAGE: 1 of 1
WEATHER
SHIFT DATE Temp. Sky Precipitation Wind
Daily 03/30/1999 82 Clear None Light

DESCRIPTION OF WORK PERFORMED TODAY:
Building demolition completed.

------------------------------------------------------------------------------
Acme setting up paint mixing room.
SPECIAL COMMENTS:
EQUIPMENT
DESCRIPTION SOURCE UNITS TYPE WORK AREA REMARKS
PC200 Hoe STDPAV 1 3/4 CY Hoe
Pickup Truck ACMEGC 1 Ford - NJ 08996 A
Dumpster ACMEGC 2 30 ton dumpsters ALL
D6 Bulldozer STDPAV 1 Caterpillar
REVIEWED BY: DATE REPORTED BY: DATE
09/02/1999 09/02/1999
X X
Expedition
Daily Report Checklist (EXHIBIT 5.1.4)
Contract Number:____________________________
Contractor:_______________________________
Contract Scope:
1. Daily Reports include contractor's first day on site, days not worked and cover all YES NO
shifts
Comments:
2. Daily Reports cover all calendar days and are sequentially numbered YES NO
Comments:
3. Information on Daily Report is factual and cannot be considered as an opinion. YES NO

Comments:
4. Sufficient information is included to reconstruct contractor's progress at a later date YES NO

Comments:
5. Action items or potential problems identified and actions taken YES NO

Comments:
6. Daily Reports are current within one day YES NO

Comments:
7. YES NO
Comments:
8. YES NO
Comments:
Name: ____________________________________ Date: __________________________
5.1 DAILY REPORT

5.2 PROGRESS REVIEW AND COORDINATION MEETINGS
5.2.1 Purpose Progress Review and Coordination Meetings are held to evaluate the progress
of a contractor; review schedules; discuss past, current, and potential
problems; and resolve interfaces and restraints. Generally there are two
types of meetings:
• Progress Review Meetings (you and an individual contractor)
• Coordination Meetings (you and two or more contractors
5.2.2 Procedure Progress Review Meetings – Progress Review Meetings are generally
conducted once a week or as project or contract conditions warrant.
Coordination Meetings are held periodically (e.g., weekly, or on an as-needed
basis). An agenda will be prepared by the company and sent to all
participants in advance of each meeting. (Refer to Exhibit 5.2.2. for a
sample Progress Review Meeting Agenda).
The meeting participants will:
• Discuss outstanding action items from previous meetings, their status

and resolution.
• Evaluate the contractor's progress since the last meeting and compare
it to the scheduled progress.
• Agree on status of work and mark up a schedule for progress to date.
• Discuss the schedule and the proposed plans and progress for the next
schedule period.
• Discuss interfaces, critical items, and current and potential problems,

including a review of the Change Notices and Proposals/Claims Log,
and potential and pending claims.
• Determine action items and assign responsibility.
• One of your participants will summarize the results of the meeting,

distribute minutes to the participants, and provide the contractor with
a list of action items and any agreements or understandings reached.
The use of a 4-week rolling schedule in lieu of a 3-week look ahead schedule
is recommended as a tool to record as-built schedules and for planning new
work. For each new revision of the 4-week rolling schedule, the most recent
past week (as-built) and the next three weeks should be shown.

The importance of adequate and proper monitoring of the contractor's

progress cannot be over emphasized. Inevitably, this becomes the most
significant factor in processing claims after the Project is completed.
Therefore, documentation of progress and reasons for delays is a must.
In addition to schedule performance there are numerous other ways to

monitor progress in the field including comparison of actual to forecast:
• Cash Flow
• Manpower Projections
• Quantity Installation
• Design and vendor drawing submittals
• Equipment Deliveries
Coordination Meetings -- Coordination Meetings are conducted to schedule
work area accessibility, equipment and schedule coordination among the
contractors and you. An agenda for the meeting will be prepared by you and
distributed to the participants in advance of the meeting. Coordination
Meetings are generally held weekly or as work schedules require.
The meeting participants will:
• Discuss outstanding action items from previous meetings, their status
and resolution.
• Discuss foreseeable interfaces and potential conflicts between
contractors. Address foreseeable constraints to the flow of work,
including constraints caused by other parties (e.g., you, other
contractors, customer, government authorities).
• Determine action items and assign responsibility.
• A company participant will summarize the results of the meeting,

distribute minutes to the participants, and provide the contractor with
a list of action items and any agreements or understandings reached.
SPECIAL NOTE: When "accepting" or "approving" the contractor's
working schedule(s), be sure it is understood by all that
such "acceptance" or "approval" is for work
coordination purposes only and does not alter the
contract schedule milestone dates. The contract
schedule milestone dates can only be modified by
Contract Amendment.
5.2.3 Exhibit Progress Review Meeting Agenda (Exhibit 5.2.2)
5.2.4 Checklists Progress Review Meeting Checklist (Exhibit 5.2.3-A)

Coordination Meeting Checklist (Exhibit 5.2.3-B)
Schedule Checklist (Exhibit 5.2.3-C)
5.2.5 Reference Contract/Subcontract Coordination Handbook

5.2.5 Reference Contract/Subcontract Coordination Handbook
Progress Review Meeting Checklist (EXHIBIT 5.2.3-A)
Contract Number:____________________________
Contractor:_______________________________
Contract Scope:
1. Meeting frequency is appropriate for this contract and are being held as scheduled. YES NO
Comments:
2. Agendas and meeting minutes are being prepared. YES NO

Comments:
3. Action items, due dates and responsibilities are being identified. YES NO
Comments:
4. Action items are being followed up. YES NO

Comments:
5. The appropriate attendees are invited. YES NO

Comments:
6. Is the 3/4-week working schedule being used to plan work?. YES NO

Comments:
7. Schedule changes are being approved per the contract. YES NO

Comments:
8. YES NO
Comments:
9. YES NO
Comments:

SECTION 5. MONITORING/REPORTING Page of 35
Coordination Meeting Checklist (EXHIBIT 5.2.3-B)
Contract Number:____________________________
Contractor:_______________________________
Contract Scope:
1. Meeting frequency is appropriate for this contract and are being held as scheduled. YES NO
Comments:
2. Agendas and meeting minutes are being prepared. YES NO

Comments:
3. Action items, due dates and responsibilities are being identified. YES NO
Comments:
4. Action items are being followed up. YES NO

Comments:
5. The appropriate attendees are invited. YES NO

Comments:
6. Schedule changes are being approved per the contract. YES NO

Comments:
7. YES NO
Comments:
8. YES NO
Comments:
9. YES NO
Comments:
Name: ____________________________________________________ Date:

__________________________

Schedule Checklist (EXHIBIT 5.2.3-C)
Contract Number:____________________________
Contractor:_______________________________
Contract Scope:
1. Contractor's initial schedule has been obtained. YES NO

Comments:
2. Initial schedule has been approved and contractor has been formally notified. YES NO
Comments:
3. Periodic schedule submittal received from contractor. YES NO

Comments:
4. Change notices written to reflect contract schedule changes. YES NO

Comments:
5. Schedule submittals meet contract requirements for form and substance. YES NO
Comments:
6. Continuous as-built schedule is maintained. YES NO

Comments:
7. As-built schedule contains sufficient data to reconstruct events at a later date. YES NO
Comments:
8. Contractor submits a revised schedule for each claim of additional time indicating the YES NO
cause and effect.
Comments:
9. YES NO
Comments:
Name: __________________________________________________ Date: __________________________

Progress Review Meeting Agenda [Sample] (Exhibit 5.2.2)

VIII. Quality
I. Action Items from Last Meeting − Rejections, defects
II. Updated Rolling 3/4 Lookahead Schedule − Proposed/Approved Corrections
III. Quantity Progress by Area or Activity

− Trends and counter measures (if any)
− Progress since last meeting IX. Safety
− Total progress to date − Incidents/status since last meeting
− Planned progress to date − Project to date experience/trends (if any)
− Variations to baseline quantities − Safety initiatives

• from changes X. Requests for Information
• from design growth − Initiated since last meeting
• from revised estimates
− Cumulative/resolved/open status
− Schedule trend (early/late) (if any)
− Critical items
IV. Manpower by Craft
XI. Technical Data Submittals
− Headcounts since last meeting
− Submitted since last meeting
− Updated manpower curves
• by headcount − Status of items for approval
• by man-hours expended − Delinquent data (if any)
− Overtime issues XII. Change Notices
− Productivity − Issued to date
• man-hours against quantities
• man-hours against budgets
− Priced by Contractor
− Cost trends (if any)

− Negotiated
− Documentation Complete
V. Equipment by Task/Crew
− Operated hours
XIII. Change Orders/Amendments
− Standby hours
− Executed to date
− Downtime hours
− Pending
− Availability against plan

XIV. Correspondence Pending (reply required)
− Revised equipment plan (if any)

− Company to Contractor
VI. Manpower Availability

− Contractor to Company
− Manpower curves against plan

XV. Invoice and Payment Status
• Manual Crafts − Submitted but not paid
• Non-manual supervision − Paid to date
− Recruiting/approval issues − Retained amounts, ( if any)
VII. Material − Exceptions, rejections, or revisions
− Critical items lists XVI. New Action Items with Target Closure Dates
− Over/Short/Damaged information
− Purchase Order and Subcontract status
• Contractor furnished
• Owner/Company Furnished
− Equipment data issues
− Rejections, rework, warranty items

SECTION 5. MONITORING/REPORTING Page 8a of 33
5.3 PROGRESS MEASUREMENT AND PAYMENT
5.3.1 Purpose This procedure outlines actions required before progress payment requests
are transmitted for payment.
Most contracts contain provisions to pay a contractor upon completion of a

measurable segment of the work. Effective contract management involves
ensuring that what is paid for is actually received and acceptable.
5.3.2 Procedure The contractor's progress payment schedule will be approved prior to
commencement of contract work.
The contractor's mobilization payment will not be made until certain

submittals have been made. These submittals, which must be listed in the
contract as prerequisites for mobilization payment if the payment is intended
to be withheld until submittal, will include:
• Contract schedule
• Insurance Certificates and bonds
and may include:
• Safety and Health Program

• Quality Plan
• Environmental Compliance Program,
• Technical procedures (e.g., welding procedures)
• Pre-job (labor) conference results
• Progress payment schedule, when applicable
In order to avoid progress payment disputes, reconcile percentage of

completion and/or quantities with the contractor prior to the contractor's
submitting an invoice. (Reference Exhibits 5.3.2-A.1 and 5.3.2-A.2 for
typical invoice formats.) The reconciled payment schedule is returned to the
contractor who submits an invoice with the updated and approved payment
schedule as backup. For cost reimbursable contracts, the contractor will, in
addition, submit verified time sheets, material invoices and approved
equipment lists with the invoice.
An updated progress payment schedule is prepared for each payment request

received from the contractor.

The contractor will be required to submit with each invoice a Certificate of

Payment form (reference Exhibit 5.3.2-B). This document, which should be
signed by an officer of the contractor's firm, certifies that the contractor has
paid all of its subcontractors and suppliers for services and/or materials
furnished for the period of time or scope of work covered by the invoice.
The contractor's invoice should be verified for contract compliance and

previously reconciled payment schedule, and submitted for approval.
(Reference Exhibit 5.3.2-C for a Invoice Concurrence Sheet form.)
Reconcile all invoice offsets such as retention or backcharges.
Verify arithmetic and issue payment to contractor on approved invoices.
It is often advantageous to develop detailed, contract-specific procedures for

progress measurement. These procedures will reflect the contract terms for
progress measurement and provide additional details typically not included in
the contract language (reference Exhibit 5.3.2-D for a sample "Procedure for
Progress Measurement").
5.3.3 Exhibits Invoice For Progress Payment (Exhibit 5.3.2-A.1)

Invoice For Progress Payment - Alternate (Exhibit 5.3.2-A.2)
Certificate of Payment (Exhibit 5.3.2-B)
Invoice Concurrence Sheet (Exhibit 5.3.2-C)
Progress Measurement Procedure [Sample] (Exhibit 5.3.2-D)
5.3.4 Checklists Mobilization Payment Checklist (Exhibit 5.3.4-A)

Invoice Processing Checklist (Exhibit 5.3.4-B)

Invoice Concurrence Sheet
CONTRACTOR:
COMPANY
JOB NO.:
SUBCONTRACTOR'S NAME SUBCONTRACT NUMBER NOTES:
SUBCONTRACT
INVOICE NO.
D-U-N-S NO. COMMODITY CODE
FUNCTION NAME CONC REJECT
TECHNICAL REVIEW
PROJECT CONTROLS
CONTRACT SUPERVISOR
COORDINATOR
CONTROLLER
APPROVAL FOR PAYMENT
SUBCONTRACT MANAGER SITE MANAGER
CONCUR WITH INVOICE PROCEED WITH CONCUR WITH INVOICE PROCEED WITH
PAYMENT IN FULL PAYMENT IN FULL
REJECT INVOICE-RETURN TO REJECT INVOICE-RETURN TO
SUBCONTRACTOR SUBCONTRACTOR
CONCUR WITH INVOICE IN PART. PROCEED WITH CONCUR WITH INVOICE IN PART. PROCEED WITH
PARTIAL PAYMENT IN THE AMOUNT OF PARTIAL PAYMENT IN THE AMOUNT OF
QUALIFICATION FOR REDUCTION OF PAYMENT
ACCOUNT CODE DISTRIBUTION
ACCOUNT AMOUNT
Expedition
Progress Measurement Procedure [SAMPLE] (EXHIBIT 5.3.2-D)
CONTRACT NO. 20001 CONTRACT SCOPE - Furnish and Erect Siding
Terms of Payment:
1. Payment made for siding material as it arrives at the Site.

2. Pricing for siding to be paid on a square foot basis as installed.
3. Pricing established for penetrations on a per each basis, based on size.
Time of Payment: Invoices submitted monthly. Agreed to measure for payment prior to the 15th of each
month.
Measurement for Payment:
1. As siding arrives on site, contractor must furnish bills of material. The company representative
reviews contractor material receiving reports. Receiving reports will show square footage and number
of pounds shipped.
Contractor provided a unit price breakdown with bid showing material cost represented 50% of price.
Procedure - Agreed with contractor on what material receiving reports represent, such as all material
for Face "A" of building XYZ. Then allow progress payment based on 50% of that square footage.
2. As siding is installed, it will be shown in marked up drawings.
Procedure - Based on a joint walkdown, drawings will be marked up showing what has been installed.
For example, the Face "A" drawings may show that it is agreed that 1/3 of the square footage is
installed. This can be figured roughly using dimensions on the drawings.
3. Penetrations
Procedure - As penetrations are installed, they will be colored green on the marked up drawings. For
example for Face "A" the green circles represent penetrations. Alongside each green circle is marked
the size of the penetration, such as 48" - perimeter.
Note only one set of drawings will be kept, and progress will be added as work is complete. The
drawings will show break marks for what is on Progress Payment #1, #2, etc.
4. The marked up drawings will be kept at Bill Smith's desk. Bill Smith is assigned responsibility for
this work. As each face is completed, the marked up drawing will be transferred to the Progress
Payment drawer for contract XYZ.

Mobilization Payment Checklist (EXHIBIT 5.3.4-A)
Contract Number:____________________________
Contractor:_______________________________
Contract Scope:
1. Contractor has submitted and the company has approved a contract schedule. YES NO
Comments:
2. Contractor has submitted acceptable Certificates of Insurance. YES NO

Comments:
3. Contractor has submitted evidence of adequate bonds, if required. YES NO

Comments:
4. Contractor has submitted an acceptable Safety and Health Action Program. YES NO
Comments:
5. Contractor has acceptable document controls in place. YES NO

Comments:
6. Technical procedures have been received. YES NO

Comments:
7. Labor relations plan is in place. YES NO

Comments:
8. Progress payment schedule and payment procedures are approved and in place. YES NO
Comments:
9. YES NO
Comments:
Name: __________________________________________________ Date: __________________________

Invoice Processing Checklist (EXHIBIT 5.3.4-B)
Contract Number:____________________________
Contractor:_______________________________
Contract Scope:
1. The person(s) who will approve invoices is identified. YES NO

Comments:
2. The invoice has been reviewed for contract and/or commercial compliance. YES NO
Comments:
3. Billings have been reconciled with approved progress requests. YES NO

Comments:
4. Certification of Payment form is submitted with each invoice. YES NO

Comments:
5. Controller concerns or comments have been acted upon and closed out. YES NO
Comments:
6. All offsets such as retention and backcharges have been reconciled. YES NO
Comments:
7. YES NO
Comments:
8. YES NO
Comments:
9. YES NO
Comments:
Name: __________________________________________________ Date: __________________________

5 MONITORING/ REPORTING
5.4 QUALITY SURVEILLANCE
5.4.1 Purpose This section addresses issues that may arise with respect to your quality
surveillance of the contractor's work in progress. Refer to Section 6.1 of this
Manual for a discussion of acceptance of the work.
Your surveillance is a monitoring function to provide an independent

assessment of both quality and physical progress. First line inspection is the
contractor's responsibility. Your role is quality assurance, not quality control.
The contractor is responsible for completing the work in accordance with the
contract and, where your inspections are required for work in progress, for
notifying you in a timely manner to permit inspections.
Over-inspection is to be avoided because it can potentially cause a

constructive change in favor of the contractor, or it may lead a contractor to
the conclusion that it does not need to inspect its own work.
A contractor's repeated inability to meet the technical requirements of the

contract warrants consultation with management.
5.4.2 Procedure The contractor will give notice of:
• Work in progress that is ready for inspection.
• Portions of the work that are ready for testing and acceptance when
partial acceptance is permitted in the contract. (Refer to Section 6.1
of this Manual.)
Inspect the work. Avoid giving direction to the contractor regarding potential
corrective actions. The results of your inspections will be formally
documented.
The contractor will be notified of non-conforming items and requested to

provide a corrective action plan.
Comment on and approve all corrective action prior to implementation.

Rework will be re-inspected.
5.4 QUALITY SURVEILLANCE

5.5 SAFETY AND HEALTH
5.5.1 Purpose This section provides an outline for monitoring a contractor's Safety and
Health Program and for handling contractor safety and health violations.
The Project Safety and Health Program is intended to implement safe work
practices which must be observed by all jobsite employees. Contractors must
adhere to the Project Safety and Health Program and its requirements. The
fundamental principle is that contractors are responsible for developing the
safety and health program for their employees and for ensuring the safety and
health of their own employees.
The contractor is responsible for performing work in a safe manner and for
conforming to established Federal, state, local and contractual safety and
health requirements. The contractor is also responsible for providing a safe
and healthy working environment for its employees, including correcting
unsafe working conditions.
Monitor contractor compliance with the contractual requirements of the

contractor's safety and health program. Your Safety Group reviews the
contractor's safety and health program submittal to verify contractor
compliance with it’s Safety and Health Program and applicable Federal and
state regulations.
5.5.2 Definitions Imminent Danger Violations -- Any conditions or practices in any place of
employment where an immediate danger exists which could reasonably and
immediately be expected to cause death or serious physical harm.
Serious Violations -- If there is a potential probability that death or serious

physical harm could result from an existing condition.
Non-serious Violation -- Where an incident or occupational illness resulting

from violation of a standard would probably not cause death or serious
physical harm, but would have a direct or immediate effect on the safety or
health of employees.

5.5.3 Procedure Obtain the contractor's Safety and Health Program and forward it within 30
calendar days after contract award and prior to commencing work at the
jobsite, unless otherwise specified in the contract.
Although "stop work" action in response to a safety or health problem is

normally the responsibility of the contractor, potential safety and health
violations may be reported by workers or observed in the course of day to
day operations. Management will be notified of all such potential and actual
safety and health violations that come to attention.
Violations will be classified by Safety as imminent danger, serious or non-

serious violations.
Imminent Danger Violation
• Work shall be immediately halted, and the contractor instructed to

remove all personnel from the area if required to preclude death or
serious injury.
• Immediately notify management.
• Resumption of work shall not be permitted until corrective action has

been taken by the contractor and verified to eliminate the unsafe
situation.
• A Confirmation of Noncompliance with the Contract Safety and

Health Requirements form (reference Exhibit 5.5.3-B) will be issued
to the contractor and monitored to ensure a timely response.
Serious Violation
• This condition will be brought to the immediate attention of

management, who shall cause the contractor to cease work and
remove all personnel from the area if required to preclude possible
physical harm.
• Correction of the cause of the violation by the contractor and

verification of the correction shall be a prerequisite to resumption of
work in that area.
• A Confirmation of Noncompliance will be issued to the contractor and

monitored for a timely response.
Non-Serious Violation
• The contractor and your representative will be informed of the

violation as soon as practicable.
• A Confirmation of the Noncompliance will be issued to the contractor

and monitored for a timely response.
• The contractor will confirm resolution of the violation.
• If the condition is not corrected within the time stipulated in the notice,
the contractor's site representative will be contacted to resolve the
matter.
• If the safety and health violation is not corrected after a second notice,
or if the contractor has continued to repeat violations, the situation
will be referred to management to pursue remedies under the contract.
5.5.4 Contract When work is stopped or suspended, a confirming letter citing the contract
Compliance provision under which the action was taken will be issued to the contractor.
5.5.5 Exhibits Confirmation of Noncompliance with Contract Safety and Health

Requirements (Exhibit 5.5.3-B)
5.5.6 Checklist Safety and Health Checklist (Exhibit 5.5.6)

Safety and Health Checklist (EXHIBIT 5.5.6)
Contract Number:____________________________
Contractor:_______________________________
Contract Scope:
1. The contractor is required to submit a Safety and Health Action Program and/or a Fire YES NO
prevention Plan.
Comments:
2. The contractor has submitted the name of its person responsible for safety and health YES NO
compliance.
Comments:
3. Safety and health submittals required by the contract have been obtained from the YES NO
contractor.
Comments:
4. Safety and health submittals have been reviewed and acknowledged by the company YES NO
Safety and Health Services.
Comments:
5. Company comments have been resolved with the contractor. YES NO

Comments:
6. Company Safety and Health Services confirms contractor's safety and health and fire YES NO
prevention plans comply with the company's requirements.
Comments:
7. The contractor's workers compensation insurance coverage has been confirmed by the YES NO
company (if required).
Comments:
8. A copy of the contractor's Hazard Communication Program has been submitted to the YES NO
company.
Comments:
Name: __________________________________________________ Date: __________________________

EXHIBIT 5.5.3-A
Safety and Health History
(Page 1 of 5)
CONTRACT NO.________________________ COMPANY__________________________
CONTRACTOR ________________________ COMPANY
JOB NO. ________________________
1. EMR
1A. List your firm's Interstate Experience Modification Rate (EMR) for the three most recent years and
total hours worked.
19_____ 19_____ 19_____
a. EMR __________ _________ __________
b. Hours Worked __________ _________ __________
1B. If the state where the jobsite is located has an EMR rating system, provide the state EMR for the
three most recent years and total hours worked.
19_____ 19_____ 19_____
a. EMR __________ _________ __________
b. Hours Worked __________ _________ __________
2. SAFETY PERFORMANCE
2A. List safety performance incident rates for the three most recent years:
19_____ 19_____ 19_____
a. OSHA Recordable Incident Rate __________ _________ __________

b. Lost Workday Case Incident Rate __________ _________ __________
2B. Use your OSHA No. 200 Log to fill in the three most recent years:
19_____ 19_____ 19_____
a. Number of lost workday cases. __________ _________ __________
b. Number of restricted workday cases. __________ _________ __________
c. Number of cases with medical attention only. __________ _________ __________
d. Number of fatalities. __________ _________ __________
3. Check your type of work:

❏ Non-Residential Building
❏ Heavy (Non-Highway) Construction
❏ Mechanical
❏ Electrical
❏ Other (State Type): ______________________________________________________

EXHIBIT 5.5.3-A
(Page 2 of 5)
JOB NO. ________________________
4. Are accident reports (OSHA 200) and report summaries sent to the following and how often?
No Yes Monthly Quarterly

Annually
a. Project Superintendent/Site Mgr.
b. Vice President/Mgr. of Construction
c. Safety Director
d. President of Firm
5. Do you hold site safety meetings for field employees both Manual and Non-Manual?
Yes No
How Often?
Weekly Bi-Weekly Monthly Less Often, As Needed
6. Do you conduct project safety inspections?

Yes No
If yes, who conducts this inspection?

TITLE HOW OFTEN?
7. How are accident records and accident summaries kept? How often are they reported?
No Yes Monthly Annually
a. Accidents totaled for the entire company
b. Accidents totaled by project
(1) Subtotaled by superintendent
(2) Subtotaled by foreman
8. How are the costs of individual accidents kept? How often are they reported?
No Yes Monthly Annually
a. Costs totaled for the entire company
b. Costs totaled by project
(1) Subtotaled by superintendent
(2) Subtotaled by foreman

EXHIBIT 5.5.3-A
(Page 3 of 5)
JOB NO. ________________________
9. List key Safety and Health personnel planned for this project. Please list name, expected position and
safety performance on last three projects (OSHA Recordable and Lost Workday Case Incident (LWCI)
rates). When a project has not been specified, list key company personnel.
NAME POSITION PROJECT OSHA LWCI

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
10.Do you have a written safety program?

Yes No
If yes, submit a copy for evaluation.
11.Do you have an orientation program for new hires?

Yes No
If yes submit a copy for evaluation. Does it include instruction on the following?
Yes No Yes No
a. Head protection i. Fire protection
b. Eye protection j. First aid facilities
c. Hearing Protection k. Emergency procedures
d. Respiratory protection l. Toxic substances
e. Safety belts and lifeline m. Trenching and excavation
f. Scaffolding n. Signs, barricades, flagging
g. Perimeter guarding o. Electrical safety
h. Housekeeping p. Rigging and crane safety
q. Road Safety (Driving)

EXHIBIT 5.5.3-A
(Page 4 of 5)
JOB NO. ________________________
12.Do you have a program for newly hired or promoted foremen?

Yes No
If yes submit a copy for evaluation. Does it include the following?
Yes No Yes No
a. Safe work practices e. First aid procedures
b. Safety supervision f. Accident investigation
c. Toolbox meetings g. Fire protection and prevention
d. Emergency procedures h. New worker orientation
13.Do you hold craft "toolbox" safety meetings?

Yes No
How Often?
Weekly Bi-Weekly Monthly Less Often, As Needed
14.Do you have a written Hazard Communication program?

Yes No
If yes, how is it implemented on each project?
15.Do you have/require Material Safety Data Sheets (M.S.D.'s) for material/chemicals/equipment?
Yes No
If yes, explain field procedure for informing craft workers about potential hazards:

EXHIBIT 5.5.3-A
(Page 5 of 5)
JOB NO. ________________________
16. List three (3) client references that could verify the quality and management commitment of
your safety program.
Name Address Phone No.
a. ____________________________ ________________________ _______________
________________________
b. ____________________________ ________________________ _______________
________________________
c. ____________________________ ________________________ _______________
________________________

5.6 ENVIRONMENTAL
5.6.1 Purpose This procedure describes methods for monitoring a contractor’s Project
Environmental Control Program and other relevant environmental issues.
(This section references contractor’s activities; it should be noted, however,
that your responsibility for environmental activities and oversight of our
contractors or a customer’s contractors varies depending on the contract
and scope of work, and should be identified on a project specific basis).
Management has the responsibility for overseeing that activities at the

5.6.2 Discussion construction site adhere to environmental requirements, including requiring
compliance by contractors. Generally, contractors will be formally notified
in their contract that they are required to comply with all federal, state, and
local environmental regulations applicable to their project site activities, and
of course, have this responsibility by law regardless of contract terms.
Each contractor should be provided a copy of your Construction

Environmental Control Plan (CECP), and advised that they must comply, at
a minimum, with all requirements in it applicable to their work, as well as
with all other laws and regulations applicable to their work, which they are
solely responsible for determining. As appropriate, contractors should also
be required to develop their own written Environmental Compliance Plan.
Any plans that are prepared by a contractor shall be submitted prior to the
start of plan implementation.
Contractors should be required to cooperate fully in implementing any

project specific procedures and guidelines developed regarding compliance
and should be held responsible for failure to comply. Reasonable steps will
be taken to communicate pertinent project environmental compliance
requirements to contractors and to require such contractors to communicate
these requirements to their own personnel and subcontractors.
Noncompliance with environmental requirements, no matter whose fault,
may result in agency actions that can include fines, suspension of permits or
authorizations, or stop work orders potentially affecting everyone.
Routine inspections of the jobsite should be conducted, as appropriate,

regarding compliance with environmental requirements, including proper
handling and storage of hazardous materials and wastes. Contractors should
immediately be notified of any activity observed which is perceived as being
out of compliance with applicable procedures or requirements. Follow-up
monitoring should be conducted, as appropriate, to verify that any such
activities have been brought into compliance.
Where required (in the contract), obtain the contractor's Environmental

Control Plan submittal and forward it to environmental specialists for
review prior to allowing the contractor to start work. This will include
5.6 ENVIRONMENTAL
storage, waste management, spill controls, compliance with permit

conditions, and related issues.
5.6.3 Procedure Monitor the contractor’s program for obtaining, reviewing and making
available the Material Safety Data Sheets to all affected parties.
Monitor contract requirements where contractors are required to have a spill

control plan and equipment available and on site at all times.
Monitor contractor activities with respect to storage, handling and removal

of hazardous materials and hazardous waste.
Monitor the project to identify any unexpected activities or scope changes

that involve the potential for a contractor to perform hazardous waste
services. Hazardous waste services include the following:
− Site Remediation. Services related to the potential remediation of

contaminated property or facilities, including excavation, transport or
disposal of contaminated soil and groundwater encompassing:
• Site investigations, assessments, sampling, and analysis to

determine the nature and extent of the contamination
• Remedial or corrective action designs for site contamination
• Construction and/or implementation of site cleanup (including

storage, treatment, transport, or disposal of hazardous)
− Environmental Property Audits. Environmental assessments to

determine the extent of hazardous substance contamination at a site,
including those intended for use in connection with the sale of
property or other financial transactions.
− Waste Treatment/Disposal Facilities. Services related to the

design construction, or operation of hazardous waste treatment
facilities (e.g., waste impoundments, landfills, chemical waste
treatment facilities, incinerators, deep well injection units).
− Mixed waste. Work involving investigation, design, construction, or

management of mixed chemical and radioactive wastes.
Contractor is to notify you in writing of all site inspections by environmental

regulatory agencies and provide specifics of any notifications of non-
compliance (e.g., notices of violation, fines or penalties).
Advise appropriate contractor personnel that excavation, demolition
5.6 ENVIRONMENTAL
/disassembly or other actions resulting in the discovery of underground

storage tanks, buried drums, pooled liquids, stained soils, or strong odors
should immediately be discontinued, until it can be determined what
regulatory requirements apply (e.g., reporting of releases of reportable
quantities of hazardous substances in the United States). Upon such a
discovery, the customer should be notified immediately, and your contractual
responsibilities should be identified. In many cases, reporting to the
responsible agency is required within 24 hours. This potential requirement
should be addressed immediately on a project-specific basis. If reporting is
required and the customer does not report the event, you should report it.
Notify the contractor in writing of any delay or stop work actions taken due
to environmental issues (e.g., discovery of contaminated soil, tanks) citing
why it was taken, the contract provision and a response date. Log and track
open environmental items.
Notify, in writing the contractor or the customer of any activity of which you
become aware that appears to be out of compliance with the project’s
procedures or regulatory requirements.
5.6.4 Checklist Environmental Checklist (Exhibit 5.6.4)
5.6 ENVIRONMENTAL
Environmental Checklist (EXHIBIT 5.6.4)
Contract Number:____________________________
Contractor:_______________________________
Contract Scope:
1. Does the contract require a Project Environmental Control Plan ?. YES NO

1a. If so, has it been submitted to the company? YES NO
2. Contractor has provided lists of hazardous materials it will use and the list has YES NO
been approved by the company Safety and Health Services before the
contractor starts work.
Comments:
3. Contractor has submitted the name of the person responsible for environmental YES NO
compliance.
Comments:
4. Required documents such as MSDS and proof of spill control procedures have YES NO
been obtained from contractor.
Comments:
5. Contractor has agreed to remove all hazardous materials/waste that it has YES NO
brought onsite.
Comments:
6. Determination has been made as to whether contractor needs to perform YES NO

asbestos inspection and notification.
Comments:
7. YES NO
Comments:
8. YES NO
Comments:
5.6 ENVIRONMENTAL
Name: __________________________________________________ Date: __________________________
5.6 ENVIRONMENTAL
Closeout
TABLE OF CONTENTS
6.1 CONTRACT CLOSEOUT .........................................................................................................1

6.1.1 Purpose ..................................................................................................................................1
6.1.2 Procedure ...............................................................................................................................1
6.1.3 Exhibits..................................................................................................................................2
Contractor Request for Inspection of Completed Work (EXHIBIT 6.1.2-A)........................................3
Contractor Demobilization Checklist (EXHIBIT 6.1.2-B)...................................................................4
Contract Closeout Checklist (EXHIBIT 6.1.2-C)................................................................................5
Certificate of Acceptance (Partial Acceptance) (EXHIBIT 6.1.2-D)....................................................6
Certificate of Final Acceptance (EXHIBIT 6.1.2-E) ...........................................................................7
Release and Certificate of Final Payment (EXHIBIT 6.1.2-F).............................................................8
Contractor Fact Sheet and Historical Record (EXHIBIT 6.1.2-H).......................................................9
Contractor Performance Evaluation (EXHIBIT 6.1.2-I).................................................................... 10
6.2 BENEFICIAL OCCUPANCY .................................................................................................. 10
6.2.1 Purpose ................................................................................................................................ 10
6.2.2 Procedure ............................................................................................................................. 10
6.2.3 Exhibits................................................................................................................................ 11
Notice of Beneficial Occupancy [SAMPLE] (EXHIBIT 6.2.2-A) ..................................................... 12
Beneficial Occupancy Flowchart (EXHIBIT 6.2.2-B)...................................................................... 13
6.3 SUBSTANTIAL COMPLETION............................................................................................. 14
6.3.1 Purpose ................................................................................................................................ 14
6.3.2 Procedure ............................................................................................................................. 14
6.3.3 Exhibits................................................................................................................................ 15
Notice of Substantial Completion [SAMPLE] (EXHIBIT 6.3.2-A) ................................................... 16
Notice of Substantial Completion [SAMPLE] (EXHIBIT 6.3.2-B) ................................................... 17
Certificate of Substantial Completion — Contractor [SAMPLE] (EXHIBIT 6.3.2-C) ....................... 18
6.5 WARRANTY ............................................................................................................................ 23
6.5.1 Purpose ................................................................................................................................ 23
6.5.2 Procedure ............................................................................................................................. 23
6.5.3 Exhibits................................................................................................................................ 24
Warranty Defect Notice [SAMPLE] (EXHIBIT 6.5.2-A) ................................................................. 25
Warranty Log [SAMPLE] (EXHIBIT 6.5.2-B) ................................................................................ 26
Correction of Warranty Defect [SAMPLE] (EXHIBIT 6.5.2-C) ....................................................... 27
.
TABLE OF CONTENTS
SECTION 6. CLOSEOUT Page i
6 CLOSEOUT
6.1 CONTRACT CLOSEOUT
6.1.1 Purpose This section covers the final inspection and actions required to close out a
contract. Contract close-out means that all contractual obligations have
been discharged by both parties. This includes all commercial, technical and
administrative obligations contained in the contract and requires formal
resolution of all changes, requests for time extension, claims and
backcharges.
Although the contractor has the primary responsibility for in-process

inspection, the contractor will be notified of non-complying items identified
as they are discovered. The final inspection and walk down should simply
be a confirmation of the closure of all open non-conformance reports issued
during the progress of the work. Final acceptance and closeout procedures
will have to be modified for those contracts that have turnover, start-up, or
performance test requirements.
6.1.2 Procedure The contractor will provide notice of work that is complete and ready for
final inspection. (Refer to Exhibit 6.1.2-A.)
Initiate a Contract Closeout Checklist. (Refer to Exhibit 6.1.2-C.)
A joint inspection of the work will be conducted by you, the customer (if
appropriate) and the contractor.
Deficiencies will be recorded on a punch list and prepared for formal

transmittal to the contractor. (Refer to Section 6.4 "Punch List.")
Occasionally it may be necessary or appropriate to incrementally accept the

work or "accept" just a portion of the work. If so, utilize the form provided
as Exhibit 6.1.2-D.
Prior to demobilization, initiate Contractor Demobilization Checklist. (Refer

to Exhibit 6.1.2-B.)
When all check items on the Contract Closeout Checklist are complete,
issue a Certificate of Final Acceptance (reference Exhibit 6.1.2-E) and
provide the contractor with a form for a Release and Certificate of Final
Payment (reference Exhibit 6.1.2-F). In certain instances, and as approved
by Management, a Partial Release and Certificate of Payment may be used
(Exhibit 6.1.2-G.) (Note: Some states, such as California and Arizona
prescribe the type of form that must be used in order for the waiver and
releases to be valid.)

SECTION 6. CLOSEOUT Page 1 of 27
After receiving a signed Release and Certificate of Final Payment from the
contractor, the contractor's final invoice may be processed, including release
of retention in accordance with the provisions of the contract. (Note: A
reasonable retention may continue to be withheld if necessary to ensure
timely resolution of claims against a contractor, but should not be withheld
simply to induce a contractor to settle on a claim against you or the
customer. In some instances, the contractor in lieu of continuing to withhold
retention if both parties agree could provide an irrevocable Letter of Credit.)
6.1.3 Exhibits Contractor Request for Inspection of Completed Work (Exhibit 6.1.2-A)
Contractor Demobilization Checklist (Exhibit 6.1.2-B)
Contract Closeout Checklist (Exhibit 6.1.2-C)
Certificate of Acceptance (Partial Acceptance) (Exhibit 6.1.2-D)
Certificate of Final Acceptance (Exhibit 6.1.2-E)
Release and Certificate of Final Payment (Exhibit 6.1.2-F)
Partial Release and Certificate of Payment (Exhibit 6.1.2-G)

Release and Certificate
of Final Payment
COMPANY: JOB NO.:
With reference to Subcontract No. dated

as amended, between the undersigned Subcontractor,
[NAME OF SUBCONTRACTOR]
and
[CONTRACTOR]
for
[TYPE OF WORK]
at
[LOCATION OF OWNER'S PREMISES]
the Undersigned hereby certifies and represents that it has made full payments of all costs, charges and expenses
incurred by it or on its behalf for work labor, services, materials and equipment supplied to the foregoing premises
and/or used in connection with the Work under said Subcontract.
The Undersigned further certifies that to its best knowledge and belief, each of its subcontractors and materialmen
has made full payments of all costs, charges and expenses incurred by them or on their behalf for work, labor,
services, materials and equipment supplied to the foregoing premises and/or used by them in connection with the
Undersigned's work under said Subcontract and has obtained releases to that effect.
In consideration of as final payment under the Subontract, the Undersigned

hereby unconditionally releases and forever discharges
the Owner
and Contractor
and the Owner's premises and property from all claims, liens and obligations of every nature arising out of or in
connection with the performance of the said Subcontract and all amendments thereto except as set forth below:
As additional consideration for this payment, the Subcontractor agrees to the fullest extent of the law to, indemnify and
hold harmless the said Owner and Contractor from and against all costs, losses, damages, claims, causes of action,
judgments and expenses, including attorney's fees, arising out of or in connection with claims against the said
Owner or Contractor which claims arise out of the performance of the work under the Contract and which may be
asserted by the Subcontractor or any of its suppliers, contractors of any tier or any of their representatives, officers,
agents or employees except for those claims listed above, and except for claims arising out of the sole negligence
or willful misconduct of the party indemnified or held harmless.
The foregoing shall not relieve the Undersigned of its obligations under the provisions of said Subcontract, as
amended, which by their nature survive completion of the Work including, without limitation, warranties,
guarantees and indemnities.
Executed this day of
SIGNED TITLE
Expedition
Partial Release and Certificate of Payment
COMPANY: JOB NO.:
With reference to Subcontract No. dated

as amended, between the undersigned Subcontractor,
and
[CONTRACTOR]
for
[TYPE OF WORK]
at
[LOCATION OF OWNER'S PREMISES]
the Undersigned hereby certifies and represents that it has made full payments of all costs, charges and expenses
incurred by it or on its behalf for work labor, services, materials and equipment supplied to the foregoing premises
and/or used in connection with the Work under said Subcontract through .
[DATE]
The Undersigned further certifies that to its best knowledge and belief, each of its subcontractors and materialmen
has made full payments of all costs, charges, and expenses incurred by them or on their behalf for work, labor,
services, materials and equipment supplied to the foregoing premises and/or used by them in connection with
the Undersigned's work under said Subcontract through .
[DATE]
In consideration of as payment under the Subcontract for all work performed

through , the Undersigned hereby unconditionally releases and forever discharges
[DATE]
the Owner
and Contractor
and the Owner's premises and property from all claims, liens and obligations of every nature arising out of or in
connection with the performance of the said Subcontract and all change orders and amendments hereto, through
except as set forth below:
[DATE]
As additional consideration for this payment, the Subcontractor agrees to the fullest extent of the law to, indemnify
and hold harmless the said Owner and Contractor from and against all costs, losses, damages, claims, causes of
actions, judgments and expenses, including attorney's fees, arising out of or in connection with claims against the
said Owner or Contractor which claims arise out of the performance of the work under the Subcontract through
and which may be asserted by the Subcontractor or any of its suppliers, contractors of
[DATE]
any tier or any of their representatives, officers, agents or employees except for those claims listed above, and
except for claims arising out of the sole negligence or willful misconduct of the party indemnified or held harmless.
The foregoing shall not relieve the Undersigned of its obligations under the provisions of said Subcontract, as
amended, which by their nature survive completion of the Work including, without limitation, warranties,
guarantees and indemnities.
Executed this day of
By:
Title
Expedition
6 CLOSEOUT
6.2 BENEFICIAL OCCUPANCY
6.2.1 Purpose The contract may expressly provide for the customer to take possession and
use all, or any part, of the contractor's completed or partially completed work
at any time during the life of the contract. The customer may use the area for
any purpose it chooses, ranging from occupying a portion of a structure to
turning a system over to a third party for testing or use. "Beneficial
Occupancy" is the term used to describe the situation where the customer
takes possession of a discrete part of the contractor's work such as:
• A room, structure or area of land
• A site-wide system such as drainage, water or sewer system
• A street, road or parking area which may be utilized by the

customers or others
Beneficial Occupancy is not used to take possession of an element of work

such as concrete, structural steel, conduit or piping or other construction
element.
Beneficial Occupancy is a contractually important step because it transfers

responsibility from the contractor to the customer for maintenance of the area
or for damage which may occur as the result of occupancy. The contractor
remains responsible for completing the remaining work and for correcting
any deficiencies noted during the period of occupancy.
Beneficial Occupancy does not:
• Accept any work
• Impact the warranty duration
• Relieve the contractor from responsibility to complete its contract
• Release retention or form the basis for any additional costs
6.2.2 Procedure Immediately prior to taking Beneficial Occupancy, the area should be
carefully inspected with the contractor to establish the status of work
remaining to be completed or corrected.
Beneficial Occupancy is initiated by giving the contractor written notice a

number of days (usually specified by contract) before the date on which
Beneficial Occupancy will occur. The notice should include:

1. The area, by column or line, stationing, or building designation which

clearly defines the limits to be occupied.
2. A Punch List (Reference Section 6.4) of all incomplete work or

deficiencies which remain to be completed or corrected.
3. A clear statement regarding the responsibility for maintenance of the area

or structure after Beneficial Occupancy occurs.
4. The date on which the customer takes Beneficial Occupancy.
Refer to Exhibit 6.2.2-A for a sample Notice of Beneficial Occupancy and to

Exhibit 6.2.2-B for a flowchart of a typical procedure for the turnover
necessary to achieve "Beneficial Occupancy".
6.2.3 Exhibits Notice of Beneficial Occupancy [Sample] (Exhibit 6.2.2-A)

Beneficial Occupancy Flowchart (Exhibit 6.2.2-B)

Notice of Beneficial Occupancy [SAMPLE] (EXHIBIT 6.2.2-A)
[ADDRESSED TO CONTRACTOR]
Attention: ________________________ Project Manager
Subject: XYZ Project

Contract No. 12345-M-XXX
NOTICE OF BENEFICIAL OCCUPANCY
Dear ________________________,
In accordance with the General Condition, entitled "Use of Completed Portions of the Work," the customer
intends to take possession of a portion of the contract work on _______________, 199__). The work
which the customer will occupy is described as
Based upon the joint inspection of that area made with you on ____________________, the work shown
on the attached list remains to be completed or corrected. Please contact the undersigned to arrange a
schedule for completion of these work items which will be acceptable to the customer.
Effective upon the customer taking Beneficial Occupancy, you are relieved of responsibility for any
damage which may occur as the result of the occupancy or use of the work, and of maintenance of work or
systems within the area.
Beneficial Occupancy of this area does not constitute acceptance of the work or of the contract. You are
reminded that the warranty duration extends ___________ months from the Final Acceptance of the
Project as a whole by the customer. That date is currently forecast to be ___________. We recommend
you periodically contact ______________ if you wish to be kept apprised of the actual acceptance date.
Very truly yours,
COMPANY
_____________________________________________
CONCUR
_____________________________________________
[CONTRACTOR'S NAME]

6 CLOSEOUT
6.3 SUBSTANTIAL COMPLETION
6.3.1 Purpose Work under a contract may be considered to be "substantially complete" at

some point before the entire contract is completed. Substantial Completion
of work is advantageous to both the contractor and to the customer under
some circumstances. It also involves the transfer or activation of
responsibilities among the parties.
The point at which work is substantially completed may not be defined in the
contract and, if it is not, is a matter of judgement on the part of you, the
customer and the contractor. Normally, it occurs when:
• All major work under a contract is completed and only cleanup and
punch list correction remains
• A discrete building, sitewide utility system, or area is complete while

work continues on other work under the contract
• It is of benefit to the customer to take over and use a system or

work area
• The work under the original scope is complete and the contractor is
working only on changed or added/extra work which may extend
beyond the original contract completion date
6.3.2 Procedure There is generally no specific contractual provision governing Substantial

Completion, but it may be mutually advantageous to transfer work that is
essentially complete from the contractor to the customer. (The customer, as
part of taking possession of work under the Beneficial Occupancy contract
provisions may determine the work to also be substantially complete but is
not required to do so.)
In either case, representatives of all parties will make an inspection of the

work. A Punch List (refer to Section 6.4 "Punch List") of incomplete and
defective work will be developed. The Punch List will include not only
physical work items to be completed, but also all administrative or
contractual items related to that physical work, such as completion of "as-
built" drawings, obtaining code #1 approvals of all engineering submittals, or
resolution of all outstanding proposals for changes to the work which is
substantially completed. Firm completion dates for each item will be
developed.

Substantial Completion is formalized by issuance of a Certificate signed by

all parties, and accompanied by the Punch List of work to be completed.
Prior to issuance to the contractor, the Certificate should be reviewed with
the customer and responsibility for maintenance of the work clearly
established.
Issuance of the Certificate of Substantial Completion activates several

actions by both parties, principally:
• Submittal by the contractor (within a specified period — typically

30 days from the date of the Certificate) of a final billing for work
under the contract, including a projection of all incomplete costs or
fees.
• Start of maintenance by the customer, if the customer has elected to

take over that responsibility. If not, the responsibility remains with
the contractor until Final Acceptance.
Completion of all items on the Punch List will be tracked against the firm
dates established by the Certificate of Substantial Completion. Reinspection
to record satisfactory completion of each item will be carried out by
representatives of the contractor, the customer, and company.
In the event that the contractor fails to satisfactorily complete any or all of
the items on the Punch List by the required dates, the customer retains the
right to have the work performed by others and the cost deducted from any
funds due the contractor.
6.3.3 Exhibits Letter from you to the owner advising that a contractor has achieved
Substantial Completion [Sample] (Exhibit 6.3.2-A)
Letter from you to a contractor transmitting the "Certificate of Substantial

Completion" [Sample] (Exhibit 6.3.2-B)
Certificate of Substantial Completion [Sample] (Exhibit 6.3.2-C)

Notice of Substantial Completion [SAMPLE] (EXHIBIT 6.3.2-A)
[ADDRESSED TO CUSTOMER]

Substantial Completion
Dear ,
It has been determined that [all work under the contract] [a portion of the work under the contract] is
substantially complete. The work has been inspected by representatives of [customer], the contractor, and
company to determine the status and a Punch List of all incomplete or deficient work has been developed.
A date for completion of all items on the Punch List has been established and a re-inspection will be held on
that date to assure that all remaining items have been completed.
Attached herewith for your review and concurrence is the Certificate of Substantial Completion for the
work, together with the listing of remaining work to be completed by the contractor. You will note that it
specifies the responsibility for future maintenance of the work described.
After your review, please sign and return the Certificate to the undersigned for issuance to the contractor.
Very truly yours,
COMPANY
_____________________________________________
____/__
Attachment

Notice of Substantial Completion [SAMPLE] (EXHIBIT 6.3.2-B)
[ADDRESSED TO CONTRACTOR]
Attention:
Project Manager

Certificate of Substantial Completion
(Reference: If Contractor has requested Substantial Completion, reference its letter)
Dear ,
It has been mutually agreed that [all work under the contract] [a portion of the work under the contract] is
substantially complete. In accordance with the General Conditions, attached herewith is a fully executed
Certificate of Substantial Completion covering [all work under the contract] [that part of contract work
described in the Certificate] and the Punch List of remaining items has been resolved. As reflected in the
Certificate, the work is determined to be substantially complete as of .
The provisions of warranty as described in General Conditions continues to be in full force and effect, and
are supplemented by other requirements of the technical specifications. Maintenance of the work
subsequent to [will be performed by others] [will remain your responsibility until Final
Completion and Acceptance of the contract by the customer].
Please note that a formal billing for all costs or fees which you believe to be due under the contract must be
submitted within thirty (30) days of the date of the Substantial Completion, or .
Very truly yours,
COMPANY
_____________________________________________
____/__
Attachment
Response Required:

Certificate of Substantial Completion — Contractor [SAMPLE] (EXHIBIT 6.3.2-C)
Date:
____________________________________
FACILITY/AREA :
_________________________________________
DESCRIPTION OF FACILITY/AREA :
_________________________________________
CONTRACTOR :
_________________________________________
CONTRACT NO. :
_________________________________________
PUNCH LIST COMPLETION DATE ______ :

_________________________________________
This is to certify the work described above has been substantially completed in accordance with the
contract and associated documents. The facility/area designated above has been inspected by
representatives of all parties, and is complete with the exception of the attached Punch List which
contractor agrees to complete by the date designated.
The extended warranty period commences on the date the remedial work is completed as described in the
punch list or from the date of Final Acceptance of the Project as a whole, whichever is later.
INSPECTION CERTIFICATE
CONTRACTOR:_____________________________ DATE:_____________________________
ACCEPTED BY
COMPANY:__________________________________DATE:_____________________________
CUSTOMER

6 CLOSEOUT
6.4 PUNCH LIST
An essential aspect of contract closeout is the management of the Punch List.

A Punch List Procedure should be developed to efficiently identify work which
requires correction or completion and to monitor the closeout of this work.
Depending upon the nature and scope of the contractor's work, the following
types of events will require a walkthrough and inspection to develop a Punch
List:
1) Substantial Completion/Completion of any contract package
2) Beneficial Occupancy of any portion of a facility by the customer
Punchlists will typically be itemized into major categories such as Mechanical,

Electrical, and Civil/Architectural.
6.4.1 Exhibits Procedure for use on CM projects (Exhibit 6.4-A)
Contract Punch List [Samples] (Exhibit 6.4-B.1 and Exhibit 6.4-B.2)
6.4 PUNCH LIST

Punch List Procedure (EXHIBIT 6.4-A)
1. To initiate a Punch List effort, the following action items will occur:
• The company will notify the customer of a Punch List walkthrough. This walkthrough
is communicated via a formal letter issued a minimum of one week prior to the schedule
walkthrough.
• The notification letter will include the following:
a) Description of Punch List activity by category and area of facility
b) Date and time of scheduled walkthrough
c) Date required for final input from all parties on Punch List effort
d) Date Punch List is to be issued to contractor
2. Consolidation of Punch List input and issuance to contractor will be completed as follows:
a. Compile all Punch List input from various disciplines and other sources, and check for
duplication
b. Prepare the formal Punch List and issue to distribution
3. Reinspection and sign off of completed items will be the responsibility of [designated
company representative] to coordinate with [the customer's representative(s)].
6.4 PUNCH LIST

Contract Punch List [SAMPLE] (EXHIBIT 6.4-B.1)
FACILITY/AREA: ___________________ DATE_____________

CONTRACTOR _____________________ DISCIPLINE ________
CONTRACT NO.:___________________ PAGE ____ OF ____
Item Completion Completion

No. Location Description Date Verification
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
6.4 PUNCH LIST

____ Elev_____ __________________________________ ACT________ _

Grid#____ __________________________________ [Cust.]________
Date__________
RM#____ __________________________________ SCHD_______ [Company]_____
____ Elev_____ __________________________________ ACT________ _
Grid#____ __________________________________ [Cust.]________
Date__________
6.4 PUNCH LIST

6 CLOSEOUT
6.5 WARRANTY
6.5.1 Purpose Your contract with the Owner generally provides that you are directly
responsible for warranting work performed and/or you are to obtain
warranties from its suppliers and contractors. In either circumstance, you
will endeavor to obtain warranties from contractors that match the extent of
your liability with respect to duration and with respect to coverage (e.g.,
including incidental cost of removal, replacement, re-testing, etc.). Recovery
under the warranty requires that you follow the procedural requirements in
the warranty clause(s).
6.5.2 Procedure Construction contracts should contain a warranty provision in the General
Conditions for material and workmanship. Be advised that the technical
specifications may require a longer warranty on specific materials or
equipment (roof, mech/elect. equipment, etc). These modified warranty
requirements should be shown in the Special Conditions.
After Final Acceptance of the contractor’s work, a letter should be issued

confirming the anticipated date of Final Acceptance of the project as a
whole and, for post-construction issues, the points of contact for you and the
contractor. Note that post-acceptance rework will most often have a
different (extended) warranty period and this, too, should be documented
when accepted. Deficiencies discovered in the work subsequent to Final
Acceptance and not included in the Punch List issued to the contractor
should be treated as warranty items and not as additions to the Punch List.
(Note that resolution of all discrepancies/deficiencies must be documented,
whether discovered during the work or after acceptance. "Informal"
acceptance of deviations can lead to an extensive misunderstanding or result
in your liability for contractor warranty items.
Any potential warranty items noted by the customer or your personnel

should be reported to the designated representative who was responsible for
the construction contract. After verifying that the deficiency is the
contractor's responsibility, you will notify the contractor of the problem and
direct that corrective action be taken. A letter will be sent to the contractor
confirming the direction and accepted method of rework and establishing a
required completion date. (Reference Exhibit 6.5.2-A for a sample letter.)
Contractors and their subcontractors returning to the site for warranty work
must comply with all site safety and security rules in effect at that time.
Maintain a log of warranty work items for each contract. (Reference

Exhibit 6.5.2-B for a sample log.)
6.5 WARRANTY
Upon completion of the corrective work and any required re-testing, the
work will be inspected and accepted by all parties. The contractor will be
notified by letter of the customer's acceptance. (Reference Exhibit 6.5.2-C
for a sample letter confirming correction work has been performed.)
Backcharges for Warranty Work
In the event the contractor does not correct a deficiency within a reasonable
time after written notification, or if time does not permit correction by the
contractor, you or the customer may have the deficiency corrected by others
and charge the contractor for the cost of the work. The contractor will be
notified in accordance with the Project Backcharge Procedure that the
corrective work is proceeding. Alternatively, for practical reasons, you may
decide not to have the rework performed and adjust the contract value
accordingly. Refer to Section 4.7 "Backcharges" of this Manual.
Subtier Work
Warranty claims for work that was originally supplied, fabricated, or installed
by a subtier should be directed to the contractor, not to the subtier. You
have no contractual relationship with the subtier, and it is the contractor's
responsibility (and option unless the contractor refuses to act) to determine
who will perform the warranty work, and how it will be performed.
"Full Wrap" Warranties
Contracts need to be reviewed to determine exact warranty requirements.

The warranty requirements of the prime contract for a Project need to be
understood as they relate to the contracted work. Many prime contracts
require "full-wrap" warranties. Under a "full-wrap" you typically warrant all
of the work performed by your forces and contractors through the entire
duration of the Project's overall warranty period.
"Evergreen" Warranties
Some contracts contain "evergreen" or partial "evergreen" warranties. In a

true "evergreen" warranty, if a warranty defect is encountered during the
original warranty period, the defect is corrected, and the warranty for the
corrected portion of work is extended for the original duration, but starting
from the point of acceptance of the corrective work. If the same defect
occurs again, the defect is again corrected and the warranty again is
extended a like amount of time. Therefore, the warranty is "evergreen."
Theoretically, if the same problem kept occurring within a year of being
corrected, the warranty would be endless.
6.5.3 Exhibits Warranty Defect Notice [Sample] (Exhibit 6.5.2-A)

Warranty Log [Sample] (Exhibit 6.5.2-B)
Correction of Warranty Defect [Sample] (Exhibit 6.5.2-C)
6.5 WARRANTY
Warranty Defect Notice [SAMPLE] (EXHIBIT 6.5.2-A)
____________________________
____________________________
____________________________
Attention:

__________________________________
Warranty Item No. 1 Sagging of Insulation
Gentlemen:
Confirming our verbal notice, you are hereby notified in accordance with the Warranty Provision of
Contract General Conditions Article [ ] of the following defect in the work:
At intersection with the PF-027 tour bridge column lines A and 6-7, the
bottom insulation installed between metal studs in the west cavity wall is
sagging.
You are [directed to take immediate action] [directed to advise your proposed measures] to correct this
problem by no later than September 8, 1992. Please contact the undersigned to establish a schedule for
your corrective work.
Very truly yours,
COMPANY
_____________________________________________
6.5 WARRANTY
Correction of Warranty Defect [SAMPLE] (EXHIBIT 6.5.2-C)
(Contractor)
Attention:

_________________________
Correction of Warranty Defect
Gentlemen:
The deficiency described in reference letter has been corrected. The corrective work has been re-inspected
and appears to meet all of the requirements of the contract technical specifications.
Your responsiveness in correcting this problem is appreciated.
Please note that the extended warranty period for this corrective work begins as of the date of this letter.
Very truly yours,
COMPANY
_____________________________________________
6.5 WARRANTY
Special Topics
TABLE OF CONTENTS
7.1 CONTRACT LAW...............................................................................................................1

7.2 BASIS FOR CLAIMS .........................................................................................................12
7.3 NEGOTIATION ..................................................................................................................29
7.4 INTERFACE COORDINATION .......................................................................................35
7.4.1 Purpose........................................................................................................................... 35
7.4.2 Initial Steps ...................................................................................................................... 35
7.4.3 Construction Coordination................................................................................................. 39
7.4.4 Interfaces........................................................................................................................ 40
7.4.5 Schedule Coordination ...................................................................................................... 41
7.4.6 Coordination with Procurement ......................................................................................... 42
7.4.7 Coordinating Clean-Up and Housekeeping ......................................................................... 42
7.4.8 Other Coordination Interfaces........................................................................................... 43
7.4.9 Sub-Tier Subcontractors ................................................................................................... 44
7.4.10 Conclusion....................................................................................................................... 44
7.5 LABOR AND INDUSTRIAL RELATIONS.......................................................................44
7.5.1 Purpose........................................................................................................................... 44
7.5.2 Procedure........................................................................................................................ 44
7.5.3 Checklist ......................................................................................................................... 44
Labor Relations Checklist (EXHIBIT 7.5.3) ................................................................................. 45
7.6 FORCE ACCOUNTS ..........................................................................................................46
7.6.1 Purpose........................................................................................................................... 46
7.6.2 Discussion ....................................................................................................................... 46
7.6.3 Procedure........................................................................................................................ 46
7.6.4 Exhibit............................................................................................................................. 47
Daily Report of Force Account Work (EXHIBIT 7.6.3) ................................................................ 48
7.7 LIQUIDATED DAMAGES.................................................................................................49
7.8 DELAYS AND EXTENSIONS OF TIME...........................................................................50
7.10 SUSPENSION OF WORK...................................................................................................54
7.11 DIFFERING SITE CONDITIONS......................................................................................55
7.12 TERMINATIONS ...............................................................................................................56
7.12.1 Purpose........................................................................................................................... 56
7.12.2 Discussion ....................................................................................................................... 56
7.12.3 Procedure........................................................................................................................ 56
7.12.4 Exhibits ........................................................................................................................... 59
7.12.5 Checklists........................................................................................................................ 59
Notice Letter — Schedule Submittal Unacceptable [SAMPLE] (EXHIBIT 7.12.1)......................... 60
TABLE OF CONTENTS
SECTION 7. SPECIAL TOPICS December 1995, Revision 2 Page i
Termination for Convenience Letter [SAMPLE] (EXHIBIT 7.12.3-A) .......................................... 61

Cure Notice — Refusal to Proceed [SAMPLE] (EXHIBIT 7.12.3-B.1)......................................... 62
Cure Notice — Schedule Performance Endangering Contract Milestones [SAMPLE] (EXHIBIT
7.12.3-B.2) ................................................................................................................................. 63
Cure Notice — Schedule Submittal with Unacceptable Milestones [SAMPLE] (EXHIBIT 7.12.3-
B.3) ........................................................................................................................................... 64
Termination for Default Letter [SAMPLE] (EXHIBIT 7.12.3-C)................................................... 65
Contract Termination Checklist/Termination for Convenience (EXHIBIT 7.12.5-A)........................ 66
Contract Termination Checklist/Termination for Default (Cause) (EXHIBIT 7.12.5-B) ................... 67
7.13 PROJECT ENVIRONMENTAL CONTROLS ....................................................................1
7.13.1 Purpose.............................................................................................................................1
7.13.2 Overview - Strategic Planning.............................................................................................1
7.13.3 Phase I - Planning..............................................................................................................1
7.13.4 Phase II - Design................................................................................................................2
7.13.5 Phase III - Pre-Construction...............................................................................................4
7.13.6 Phase IV - Construction......................................................................................................6
7.13.7 Phase V - Project Completion..............................................................................................6
7.13.8 Exhibits..............................................................................................................................7
TABLE OF CONTENTS
SECTION 7. SPECIAL TOPICS December 1995, Revision 2 Page ii
7 SPECIAL TOPICS
7.1 CONTRACT LAW
To manage a contract effectively and respond to claims by contractors, it is

necessary to understand some fundamental legal principles, particularly those
relating to contract interpretation. By understanding the basic principles of
contracts you will be better equipped to analyze a contract problem and
respond appropriately.
Duty to Seek Clarification
It is generally accepted that bidders are obligated to bring to the owner's

attention major discrepancies or errors that they detect in the specifications or
drawings. If they fail to do so, they may be required to bear the consequences
that may ensue. Address this point in the Instruction to Bidders when soliciting
bids for a contract. The legal rule that applies is:
"Where a contractor knows that there is an ambiguity, or obvious

omission or a significant conflict in provisions, it is under a duty to
seek clarification prior to bidding."
However, contractors are business people. They are usually pressed for time
and are aggressively seeking to underbid a number of competitors. In order to
be the low bidder, they estimate only those costs that they feel the contract
terms will permit the owner to insist upon in the way of performance. They
are not expected to exercise clairvoyance or spend time and money looking for
hidden ambiguities in the bid documents. They are protected if they
innocently construe in their own favor an ambiguity that is equally subject to
different construction. In the case of patent ambiguities or discrepancies, the
contractor's duty to seek clarification before bidding should be brought to the
attention of contractors when questions of intent or interpretation arise.
Contract Interpreted Against Drafter
If during the performance of a contract, its language is found to be ambiguous

or susceptible to two or more reasonable interpretations, it will be interpreted
against the party who drafted it. However, before it is considered ambiguous,
all specifications and drawings which form a part of the contract must be read
together, and no portion is to be rejected or treated as meaningless if any
meaning which is reasonable and consistent with the rest of the contract can be
given to it. In the case of two or more reasonable interpretations, the
ambiguity is construed against the drafter of the document. It was the
7.1 CONTRACT LAW

SECTION 7. SPECIAL TOPICS Page 1 of 67
drafter's responsibility to draft the documents with clarity and completeness in

the first place.
Rules of Precedence
Unfortunately, discrepancies or ambiguities can occur in the best contracts.

When agreement on interpretation cannot be reached, there is a legal question
as to which of the conflicting interpretations prevails; that is, which provisions
take precedence over others.
The following are some basic rules to help address the resolution of
ambiguities:
1. General vs. Specific
The parties are largely free to establish any order of precedence they
wish by specifically incorporating language in the contract which
establishes the precedence of one part of the contract over another.
In the absence of such express instructions, the following rules
generally apply:
a. Where, in an agreement, there are both general and special

provisions relating to the same thing, the special provisions
will prevail.
b. Where the technical specifications or special conditions refer

to a standard code or standard specification, the technical
specifications or special conditions take precedence over the
standard referred to when there is a variation.
c. The specifications normally take precedence over the

contract drawings.
d. Large-scale details on the contract drawings take precedence

over the small-scale portion of the drawings from whence the
detail originates.
e. Every note on a contract drawing is considered to be a

portion of the specification commenting specifically on that
particular portion of the drawing and must take precedence if
a conflict exists.
2. Writing vs. Printing
"When a contract is partly typed and partly written and
7.1 CONTRACT LAW

the written portion cannot be reconciled with the typed

portion, the written portion will prevail."
The reason behind this is that the written words are the immediate
language in terms chosen by the parties themselves for the
expression of their meaning. Accordingly, such written words are
deemed worthy of greater weight than typed words intended for
general use.
3. Written Words vs. Written Figures
"In the event of any inconsistency between words and

figures appearing in a contract, the words will govern."
4. Parol Evidence
"The law will not allow parol (oral or verbal) evidence

to be introduced to contradict what the parties have
agreed to in writing if the contract is clear and
unambiguous."
This is known as the "Parol Evidence Rule" which is intended to

limit the opportunity for fraud and mistake.
When parties put their agreement in writing, all previous oral

agreements merge in the writing and a contract as written cannot be
modified or changed by parol evidence, in the absence of a plea of
mutual mistake or fraud in the preparation of the writing.
5. Course of Conduct
When the agreement is not clear on its face, you may refer to the
"course of conduct of the parties" up to the time of the dispute as to
how they interpreted the provision; or you may bring in the
"standard practice of the industry," or what may have been the
"interpretation of other parties to the identical contract
provision," or the "record of negotiations" between the parties
prior to execution of the contract.
6. Entire Agreement
7.1 CONTRACT LAW

Contracts typically include a provision that states "This Contract

embodies the entire agreement... and supersedes all other writings.
The parties shall not be bound by, or be liable for any statement,
representation, promise, inducement and or understanding not set
forth herein."
The purpose of the "Entire Agreement" provision is to ensure that at

the time the parties enter into their agreement they clearly identify in
one place everything that comprises the "deal." Furthermore, this
has the effect of rendering ineffective anything not in the agreement
(e.g., the contractor's bid, negotiation meeting minutes, bid
drawings).
Errors in the Contract
1. Clerical Errors
"Where there is a definite and proper agreement between the

parties and the sole difficulty is that a simple error of a clerical
nature has been made in committing the understanding to writing,
such a mistake will not invalidate the contract." In the occasional
instance where the contracting parties cannot correct such an error
by mutual agreement and one party seeks unfairly to take advantage
of the situation, the other party may have the contract judicially
enforced in accordance with the actual intent and original
understanding of the parties. Courts frequently exercise the power
to correct a clerical mistake when the available proof leaves no
doubt that the real contract was meant to be something quite at
variance with what appears in the writing.
2. Unilateral Mistake
"One party to a contract can not void the contract simply by

showing it erred or by claiming ignorance of what it promised or
did." This rule applies and the contract will be enforced as written
if there has been no misrepresentation; if there is no ambiguity in the
terms of a contract; and if the other party had no timely notice of the
mistake and itself acted in good faith. Subject to certain exceptions,
a party must exercise ordinary diligence. The court will not relieve
a party of the consequences of its own carelessness or poor
judgement, no matter how unfortunate.
3. Errors Discovered by the Contractor
7.1 CONTRACT LAW

Contracts typically require a contractor to report immediately any

error discovered in the contract document or in any data furnished.
Any further work done on the affected part before you can issue
instructions regarding what is to be done in the matter will be
subject to correction at the contractor's expense.
Disclosure Requirements
1. Intentional Misrepresentation
A contract may be invalid if it has been prepared and signed under

circumstances that are considered to be fraudulent.
An intentionally false statement of a past or existing fact may be a

basis for a claim of fraud. However, such a representation of
purported fact must be distinguished from a simple expression of
opinion about the future.
Where fraud or material misrepresentation exists in the formation of

a contract, the party to the contract that is the victim of this fraud
may void the contract if:
• A reckless or intentional misstatement of a material

fact exists
• The contract was prepared with intent to deceive
• The contract was prepared in such a fashion as to

mislead the innocent party to enter into the contract to
its detriment
2. Unintentional Misrepresentation
A misrepresentation that is made in innocence falls short of fraud.

However, if the misrepresentation constituted a material
inducement, it may still render a contract subject to void.
7.1 CONTRACT LAW

3. Full Disclosure
It must be kept in mind that a misrepresentation may be created just

as effectively by concealment or suppression of material facts as by
affirmative misstatement. This means that in preparing a contract
(or amendment), you are bound to disclose any and all information
available to it which is of a pertinent or significant contractual
nature. Any bidder who is requested to submit proposals should
have access to and full awareness of the same information available
to the other party.
Performance Requirements
Inherent in every valid contract is the obligation to perform. Except for

unreasonably extended nonpayment and true "impossibility," there is seldom
any valid excuse for a contractor to refuse to perform. In the real world,
however, "contract performance" is not an absolute term and even
"impossibility" may have shades of meaning. The following will provide some
insights into how "performance" is construed in practical application:
1. Substantial Performance
Substantial performance may be defined as the accomplishment of

all things essential to the fulfillment of the purpose of the contract.
In the case of a construction contract for example, the facility would
be capable of being fully occupied and utilized in the manner
intended by the contract.
While the performance of a contract must be strictly in accordance

with its terms and a party cannot be required to accept performance
that is less than that for which it bargained, nevertheless there is a
definite trend apparent from recent judicial decisions requiring
merely "substantial performance" in lieu of absolute literal and total
compliance with precise contract requirements. The equitable
doctrine of substantial performance stems from a desire of the
courts to protect those who have faithfully and honestly endeavored
to perform their contractual duties and to preserve the right of such
persons to compensation despite minor variations or omissions in
the performance involved.
It is often difficult, of course, to determine what constitutes

substantial performance in a given situation. It should be
emphasized that the concept is not intended to confer on one party
the right to deviate freely from its contract or to substitute some
material or type of operation that it may regard as just as good as
what is actually called for in the agreement. Moreover, for any
7.1 CONTRACT LAW

deviation from contract requirements which is willful or made in

bad faith, the offending party is not entitled to recover at all. Only
when defects are purely unintentional and not so extensive as to
prevent the other party from receiving substantially all that it
bargained for does the principle of substantial performance come
into play.
In the event of deviations which permit the intended use of the

facility, but which do not comply in all respects with the
requirements of the contract, a reduction in the contract price as
compensation for the work not in complete compliance may be
appropriate.
2. Impossibility of Performance
Contractors will sometimes use "impossibility" as an excuse for

nonperformance. They also may try to use it as a basis for
additional compensation, or a time extension, or both.
The expression "impossibility" when used in connection with

excuses for nonperformance of contractual obligations refers not
only to the literal impossibility of doing the work, but also to the
impracticability owing to extreme difficulties encountered.
However, it is necessary to distinguish carefully between
"commercial impracticability" (which may operate as an excuse for
nonperformance) and mere hardship or severe inconvenience which
is never really a valid excuse. This is not always an easy
distinction.
"Commercial impracticability" exists when performance would

cause such extreme and unreasonable difficulty and expense that
performance is not practical within the existing commercial
circumstances and basic terms of the contract. However, hardship
or greater costs than anticipated do not necessarily constitute
"commercial impracticability."
By contrast, a test usually applied for literal impossibility is an

objective one. That is, to be considered an excuse for
nonperformance, the impossibility must be such that no contractor
could perform, not just the one under the contract.
Although the courts have delivered some comparatively liberal

decisions, these decisions all have in common the recognition that a
release from a contractual obligation by reason of impossibility is
necessarily subject to qualifications.
7.1 CONTRACT LAW

First, the impossibility involved must be bona fide and not simply a
question of hardship or inconvenience. Second, the contractor
seeking to be excused must not have assumed the risk of
impossibility. Third, the performance will not be excused if the
impossibility stems even to a limited extent from negligence or lack
of diligence on the part of the contractor.
Generally, relief will not be allowed if:
a. The contractor initiated or was responsible for the design
b. At the time of contracting the risk of impossibility was

obvious to the contractor
c. Performance specifications were involved
d. The contractor had, or represented that it had, superior

knowledge regarding the feasibility of performance
Courts have held that a contractor who unconditionally obligates

itself to a certain performance will not be excused by a subsequent
impossibility brought on by an act of God or other unforeseeable
emergency. In other words, by failing to perform the "impossible"
which it contracted to do, the contractor has breached its obligation
and is therefore liable for the damages incurred by the company or
the customer as a result of the failure. Generally speaking,
therefore, where one of two innocent parties must sustain a loss, the
law will leave the burden where the contract placed it.
While the doctrine of "impossibility of performance" is clear and

well established, the difficulty arises in determining whether the
circumstances involved constitute such impossibility as to provide
an excuse at law for nonperformance or the basis of a claim.
3. Hardship or Inconvenience
Hardship or severe inconvenience is not an excuse on the basis of

"impossibility of performance." It is entirely plausible for a
contractor to unequivocally contract to do a difficult piece of work
in a certain fashion. The fact that the undertaking proves more
burdensome than anticipated will not make the contract invalid or
relieve the contractor of its obligation. Almost every contract
7.1 CONTRACT LAW

involves at least some measure of risk and in many instances,

unforeseen difficulties or expense can result in a considerable loss
for one party and perhaps for both.
Breach of Contract
It may be stated as a general proposition that where contractual promises have

been exchanged one for the other, the material breach on the part of one party
will (unless occasioned by misconduct of the other party) clearly justify the
other's refusal to perform and will entitle the injured party to any provable
damages resulting from the breach. However, the breach must be
material/substantial if it is to result in excusing subsequent nonperformance
by the injured party. For example, when "time is of the essence" is a term in
the contract, failure to complete the undertaking within the period specified is
a material breach. Also, unjustified refusal to pay can be a material breach.
Undoubtedly, the most common remedy for breach of a contract is the

recovery of a sum of money awarded (often in court) as compensatory
damages. In ascertaining the proper measure of such damages, a fundamental
consideration is to place the innocent party in the position it would have
occupied had the contract been performed according to its terms. In the
determination of compensatory damages, the party in breach of contract has
the right to expect that the adverse party will do everything reasonably
possible to mitigate (minimize) damages, and the latter party cannot recover
with respect to the portion of the loss which it could readily have avoided once
the breach became known to that party.
Probably the most important thing to remember about breaches of contract is

that such claims must be avoided if at all possible. Construction contract
litigation is one of the most expensive types of litigation there is. Not only
must lawyers, consultants, and experts be paid for the vast amount of time
required in preparing the mass of law and detail involved in such litigation,
but the time of the contractor's and company's personnel must be consumed in
digging out facts from records, correspondence, interviews with
knowledgeable personnel, etc. Needless to say, every attempt should first be
made to bring the claim within one of the provisions of the contract permitting
an equitable settlement.
Termination
A contract may be brought to an end in a variety of ways. Full and

satisfactory performance by both sides is the usual mode. On occasion, a
contract may also be terminated by any of the following:
1. Your Breach of Contract
7.1 CONTRACT LAW

Failure to make prescribed payments to the contractor or causing

unreasonable suspension of the project are probably the most
common breaches. In such circumstances, the contractor is entitled
to damages caused by your failure to carry out your responsibilities
under the contract.
2. Breach of Contract by Contractor
Default or failure to perform under the contract are the usual

breaches committed by contractors. Examples of material default
by the contractor that convey to you a right of action against the
contractor are nonperformance, continued uncorrected faulty
performance, failure to show reasonable progress, failure to meet
financial obligations, or persistent disregard of applicable laws.
(Reference Special Topics, Section 7.12 "Terminations".)
3. Mutual Agreement
A third way in which a contract can be terminated is by mutual

agreement of both parties. This is not common in the construction
industry, although this has occurred in some cases. For example, it
sometimes happens that the contractor experiences unanticipated
circumstances such as financial reverses, labor troubles, or loss of
key personnel that make its proper performance under the contract a
matter of considerable doubt. Under such circumstances both
parties may agree to terminate the contract and to engage another
contractor. When little or no work has yet been done, termination of
the contract by mutual consent can sometimes be a viable option.
4. Termination for Convenience
This is the type of termination with which we are most likely to be

involved. Termination for convenience is accomplished through an
"Optional Termination" clause in the contract. It must be
understood that this is an option that is open for the convenience of
you but not for the contractor. Under this clause the contractor
agrees to waive any claims for damages, including loss of
anticipated profits, and agrees that its sole remedy is to receive the
payment specified.
7.1 CONTRACT LAW

The payment specified is the contract price corresponding to work

performed, and includes reimbursement for all in-process work and
materials, plus such expenses as may be incurred by it in canceling
its orders and demobilizing the work and also a reasonable profit for
the effort associated with terminating the work.
A typical clause provides that:
"You may, at your option, terminate for convenience any work

under the contract in whole, or from time to time, in part, at any
time by written notice...."
Careful consideration should be given to utilizing this clause as an

option to prolonged or indefinite suspension, especially when the
contractor's performance and/or cooperation has left something to
be desired. (Reference Special Topics, Section 7.12
"Terminations".)
5. Impossibility of Performance
A contract may be rescinded because of Impossibility of

performance under circumstances beyond the control of either party.
For instance, unexpected site conditions may be found that make it
impossible to carry out the construction described by the contract.
However, the doctrine of legal impossibility does not demand a
showing of actual or literal impossibility. Impossibility of
performance has been applied to cases in which, even if
performance were technically possible, the cost of performance
would have been so disproportionate to that reasonably
contemplated by the contracting parties as to make the contract
totally impractical in a commercial sense. The deciding factor was
that an unanticipated circumstance made performance of the
contract vitally different from what was reasonably to be expected.
6. Operation of Law
A contract may be terminated through operation of law as for

example, when one party becomes bankrupt.
7.1 CONTRACT LAW

7 SPECIAL TOPICS
7.2 BASIS FOR CLAIMS
The following is a discussion of various contract clauses which contractors

often rely upon as the basis for claims. [Note: Refer to Section 4.6
"Claims".]
1. Differing Site Conditions

To discourage bidders from adding high contingency factors to their prices
to protect themselves against unusual conditions, most construction
contracts contain a "Changed Conditions" or "Differing Site Conditions"
clause. A typical clause reads as follows:
"Contractor shall promptly notify you in writing before proceeding with
any work which Contractor believes constitutes a differing site condition
with respect to: (1) subsurface or latent physical conditions at the
Jobsite differing materially from those indicated in this Contract, or (2)
previously unknown physical conditions at the Jobsite, of an unusual
nature, differing materially from those ordinarily encountered and
generally recognized as inherent in work of the character provided for in
this Contract. You will, then investigate such conditions and make a
determination. If you determine that such conditions do materially so
differ and cause an increase or decrease in Contractor's cost of or the
time required for performance of the Work under this Contract, an
equitable adjustment will be made pursuant to the General Conditions
tilted “Changes”. No claim of Contractor under this clause will be
allowed unless Contractor has given the required notice."
This clause covers two types of special situations. It deals first with the
subsurface and latent physical conditions at the site of the work which
differ materially from those stated in the contract. Essentially, what this
means is that if the data shown in the test borings or specifications are in
error, and if the contractor has thereby been misled, there will be an
equitable adjustment made for any change in the contractor's costs and/or
time for performance.
The second part of the clause deals with a physical condition at the work
site, of an unusual nature, differing materially from that which a
contractor would ordinarily expect to encounter. No misrepresentation on
your part is required.
Should the contractor believe it has encountered either of these situations,

it must give notice to enable you to investigate the conditions. If the
contractor fails to give the notice, its claim can be jeopardized because
you have a right to investigate the condition before it is changed or is
covered up. Of course, if you are already on notice of such condition, or
if there is an emergency or urgent necessity (as in a case where steel ribs
have to be installed to protect a tunnel from collapsing), failure by the
contractor to give immediate notice will not bar its claim.

MANUAL
The conditions contemplated by the first part of the clause are physical in
nature. Also, they are either below the surface or latent, meaning hidden,
dormant, or not manifest; they must be at the site and they must differ
from what is described in the contract documents. The entitlement can
result from errors in surveying or exploratory drilling of the site, from
incomplete presentation of drilling logs, from omission of subsurface
water information or omissions from the drawings. It can even arise from
conditions inferred from equipment or methods indicated in the plans or
specifications.
However, it is incumbent upon the contractor to examine the site of the
work carefully, and if there are cores available for inspection, it should
examine them. In fact, every representation made to the contractor must
be carefully documented so that a determination can be made whether the
actual conditions encountered are materially different from those
represented. Most of the problem areas involve grossly inaccurate
estimated quantities, inaccurate portrayal of subsurface water or rock
conditions, misrepresentation of soil conditions, borrow pits, contour
lines, or failure to show accurately existing utility lines.
To come under the second part of the clause, the condition must have been
unknown when the parties entered into the contract. Furthermore, if a
reasonable investigation would have disclosed the condition, this could be
fatal to the contractor's claim. For example, if a contractor is working
near the Rocky Mountains, its general experience should give it the
knowledge that there will likely be subsurface rocks or boulders.
Likewise, if the contractor is working in some parts of Florida, it is
certainly aware of the nearness of the water table to the surface. Thus,
the contractor cannot successfully claim that it has encountered an
"unknown" condition of unusual and not to be expected character.
Refer to Special Topics Section 7.2 "Basis for Claims" p. 21 and Section
7.11 "Differing Site Conditions."
2. Added Work
Additional quantities ordered during the progress of the work generally
entitle a contractor to claim extra compensation on a lump sum job.
While additional quantities of work added during the course of
construction may not entitle a contractor to claim for additional
compensation on a unit price contract, this would be subject to
interpretation as to whether the work added is of the same "nature and
character" as the work contemplated in the original unit item of the
contract. The work added under unit prices need not be exactly the same
as under the original contract; however, there should be a reasonable
compatibility. Furthermore, the contractor may in fact agree to accept

SECTION 7. SPECIAL TOPICS December 1995 , Revision 2 Page 14 of 67
unit prices even if the work is not compatible as long as the contractor
feels the unit price compensation is adequate.
3. Reduction of Work
A reduction in the quantity of work may be a proper basis for a price
adjustment (increase) for the units of work actually performed under a
unit price contract. The rationale is that the contractor has spread the
fixed components of cost over the estimated quantities. A significant
quantity underrun results in under-recovery of the fixed costs. It is
generally considered that an increase or decrease in the volume of work to
be performed not exceeding plus or minus 20% of an item of work whose
total value is less than 5% of the contract amount will have no substantial
impact on the contractor. Conversely, if the quantity of an item which
exceeds 5% of the contract is varied by more than plus or minus 20%,
there may be significant impact on the contractor's financial position due
to its inability to recover its fixed costs. Therefore, it is desirable that the
contract should state the permissible variation in quantities. Such a
statement will go a long way to avoid disputes.
A typical clause dealing with variation in quantities would read as

follows:
“The Contractor's proposal is to be based upon the estimated quantities
shown in the “Schedule of Prices.” Inasmuch as the quantities may be
affected by conditions encountered in the performance of the work or by
written instructions to be issued as the work progresses, the quantity of
work done under this Schedule of Prices may vary considerably from the
estimated quantities. Payment for the actual quantity of work performed
shall be made to the Contractor at the contract unit prices. However, if
the quantity of any particular pay item which amounts to more than 5%
of the total contract varies in its final quantity by more than plus or
minus 20% from the estimated quantities shown in the contract
documents, there may be (a) an equitable adjustment of the unit prices
for the units in excess of 120% of the estimated quantities or, (b) an
equitable adjustment to the price (based solely on the effect of the
quantity reduction) for all units if the actual quantity is less than 80% of
the estimated quantity."
Note that this language provides relief for the contractor solely as a result
of a quantity variation; it does not provide relief in the event the contractor
simply failed to meet its estimated levels of productivity.
4. Increased Difficulty of Performance
Whether the work is increased in quantity or not, unanticipated difficulties
which interfere with performance (the risk of which was not assigned to
the contractor under the terms of the contract), may be a proper cause for
the contractor to claim extra compensation. This may be true when the

MANUAL
work to be performed is found to be more difficult than that called for by

or identified in the contract. For example, the contractor may be entitled
to additional compensation if the contract documents are misleading as to
the schedule, scope, or conditions of the work. (Reference Special Topics
Section 7.1 "Contract Law" pg. 11.)
5. Delays
Time is money. This is probably an overworked phrase but it never is
truer than in the context of this subject. Delay is generally acknowledged
to be the most common, costly and complex problem encountered on
construction projects. Because of the overriding importance of time both
to you, in terms of performance and to the contractor in terms of money, it
is the source of frequent disputes, claims, and law suits. To control this
situation insofar as possible, the contract is formulated to identify known,
potential delay situations in advance and to define and fix obligations in
order to preclude controversies. A substantial number of the contract
clauses address this subject in one way or another.
It is not required that a delay extends contract performance beyond the
contract completion date to establish entitlement. A contractor may
complete the work ahead of schedule but still receive additional
compensation if it could have finished earlier had it not been for your
delay. The law does, however, require that the contractor establish a
direct cause-and-effect relationship between your breach of a contractual
obligation and the delay. In addition, the contractor has the burden of
establishing that its costs increased as a result of the delay.
You will find in practice that not everything in the contract can be taken at
face value and applied in cookbook fashion. Circumstances play a large
part in determining which clause or clauses will be applied to a particular
delay claim. Also, contract law encompasses concepts of reasonableness
and fair dealing, implied obligations and warranties, etc. A good general
understanding of the principles involved and the operation of the
applicable clauses is essential to make appropriate decisions and to take
the proper action in delay situations. (Reference Special Topics Section
7.8 "Delays and Extensions of Time.")
Types of delays are many and varied but they can be grouped in four
broad classifications according to how they operate contractually. They
are:
A. NON-EXCUSABLE DELAYS
B. EXCUSABLE DELAYS
C. COMPENSABLE DELAYS
D. CONCURRENT DELAYS

Generally, whether a delay is excusable or non-excusable is determined by

the provisions of the contract. Do not assume you know the difference
without reading the full contract.
A. Non-excusable Delays
Non-excusable delays are delays the contractor causes or delays for
which the contractor assumes the risk. They are within the control
of the contractor or are foreseeable; it is not necessary, however,
that they be both.
These non-excusable delays can be the results of underestimates of
productivity, inadequate scheduling or management, construction
mistakes, (normal) weather , equipment breakdowns, or just plain
bad luck. Such delays which could have been foreseen or
avoided by due care of the contractor are inherently the
contractor's responsibility and no time extensions are allowed.
There is no question that in a large and complex undertaking, there
will necessarily have to be a certain amount of give and take among
the diverse elements battling for the same time and space. We must
avoid diverting time, energy, and money from building the job to
pursuing claims and disputes over minor delays,
disruptions, and interferences. Accordingly, the General Conditions
typically contain clauses that put the contractor on notice to plan for
certain events and that reasonable delays that occur as a result of
these events are non-excusable delays. One example is the
following:
Cooperation With Others
“Owner, other Contractors and other Subcontractors may be
working at the Jobsite during performance of this Contract and
Contractor's work, or use of certain facilities, may be interfered
with as a result of such concurrent activities. You reserve the right
to require Contractor to schedule the order of performance of its
work in such a manner as will minimize interference with the work
of any of the parties involved."
This is a gray area because the amount of give and take cannot be
precisely defined and the element of reasonableness which is stated
or implied in the controlling contract clauses must be interpreted in
the light of the facts in every case. An unreasonable delay, even in
the case of an event the contractor was advised to anticipate, can
change a non-excusable delay to a compensable delay. Examples
are:
• Failure to provide timely inspection of completed work
• Failure to competently coordinate the work of separate
contractors

MANUAL
B. Excusable Delays
When a delay is caused by factors that are not foreseeable and are
beyond the contractor's reasonable control, it may be "excusable".
This term has the implied meaning that neither party is at fault
under the terms of the contract and have agreed to share the risk and
consequences when "excusable" events occur. The contractor will
not receive compensation for the cost of the delay, but it will be
entitled to additional time to complete its work (and relief from any
contractually imposed liquidated damages for the period of delay).
You are not entitled to the earlier completion date, but also are not
obligated to the contractor for the contractor's delay costs.
Excusable delays are typically provided for by the "Delays and
Extensions of Time" clause in the General Conditions. A typical
provision reads as follows:
"If Contractor's performance of this Contract is prevented or

delayed by any unforeseeable cause existing or future, which is
beyond the reasonable control of the parties and without the fault
or negligence of Contractor, Contractor shall, within twenty-four
hours of the commencement of any such delay, give written notice
thereof and within seven (7) calendar days of commencement of
the delay, a written description of the anticipated impact of the
delay on performance of work. Delays attributable to and within
the control of the Contractor’s suppliers or subcontractors of any
tier shall be deemed delays within the control of Contractor.
Within seven (7) calendar days after the termination of any
excusable delay, Contractor shall file a written notice specifying
the actual duration of the delay. Failure to give any of the above
notices shall be sufficient ground for denial of an extension of
time. If you determine that the delay was unforeseeable, beyond
the control and without the fault or negligence of Contractor, you
will determine the duration of the delay and will extend the time of
performance of this Contract by modifying the Special
Conditions. Such extension shall be the sole remedy for the
delay."
The general intent of this clause is to free the contractor from
liability for the effect of a superior force that cannot be anticipated
or controlled, sometimes referred to as Force Majeure. This would
typically include:
(1) Acts of God (e.g., flood, earthquakes)
(2) Strikes
(3) Unusually severe weather
(4) Fire

(5) Unusual delays in transportation

Some contracts specifically identify the events or types of events
that will constitute excusable delay. This may serve to limit the
contractor's relief to the listed events. A typical clause, however,
merely requires that the delay meet the following three criteria:
(1) Beyond the contractor's control; and
(2) without contractor's fault or negligence; and
(3) not foreseeable.
C. Compensable Delays
In addition to compensable delays that result from contract changes,
there are compensable delays that can arise in other ways. Such
compensable delays are delays, suspensions, or interruptions to all
or part of the work caused by an act or failure to act resulting from
your breach of an obligation, stated or implied, in the contract. If
the delay is compensable, the contractor is entitled not only to an
extension of time but also to an adjustment for any increase in costs
caused by the delay.
Generally contracts will authorize an extension of time for delays
beyond the contractor's reasonable control, but are silent regarding
compensation for your delay. Your right to control carries with it
the obligation to control with reasonable diligence and competence.
Inherent in construction contracts is an implied obligation on
your part not to unreasonably delay, interfere with, or hinder the
contractor's performance of its contract.
Accordingly, it is necessary to be aware that your actions or
inactions that result in unreasonably delaying or disrupting the
contractor could expose you to a claim for additional time or money
or both. Some examples are:
(1) Failure to properly and timely perform certain work
which necessarily precedes the work of a contractor.
(2) Interfering with a contractor's schedule and ordering
it to proceed under conditions (e.g., inclement
weather) which the contractor felt precluded its
satisfactory performance.
(3) Supplying erroneous information, not patently or
obviously erroneous, which misleads and disrupts the
contractor in its performance.
(4) Failure to disclose information necessary to the
contractor's satisfactory performance.
(5) Failure to provide timely inspection of completed
work.

MANUAL
(6) Improperly assuming the direction or execution of

field operations which are the responsibility of the
contractor.
(7) Requiring the contractor to perform by one particular
method when the contract does not specify any
particular method.
(8) Failure to competently coordinate the work of
separate contractors.
(9) Failure to timely process invoices, change orders or
amendments, and contractor submittals.
Contracts specifically address some potentially compensable delays
and provide for equitable adjustments. The usual equitable
adjustment clauses that apply to delay are:
(1) Changes and
(2) Differing Site Conditions
(3) Suspension
A typical Changes clause provides for equitable adjustments as follows:

1. Changes
“You may, at any time, without notice to the sureties, if any,
by written Change Notice unilaterally make any change in
the Work within the general scope of this Contract,
including but not limited to changes:
(a) in the drawings, designs or specifications;
(b) in the method, manner or sequence of Contractor's
work;
(c) in Owner or your furnished facilities, equipment,
materials, services or site(s);
(d) directing acceleration or deceleration in
performance of the work.
(e) modifying the Contract Schedule or the Contract
Milestones
“...If at any time Contractor believes that acts or
omissions of Owner or you constitute a change to the Work
not covered by a Change Notice, Contractor shall within
ten (10) calendar days of discovery of such act or omission
submit a written Change Notice Request explaining in
detail the basis for the request. You will either issue a
Change Notice or deny the request in writing.

If any change under this clause directly or indirectly causes

an increase or decrease in the cost of, or the time required
for, the performance of any part of the Work under this
contract whether or not changed by any order, an equitable
adjustment shall be made and the contract modified
accordingly ..."
The clause recognizes that changes in the work or changes in
the method, manner or sequence of performance may require
changes in the schedule or milestones and could necessitate
revisions in activity durations, sequence of work items, or
interrelationships of various tasks. The change may have a
direct impact on the schedule, as where a change in method
requires a greater or lesser period of performance. Also, its
effects may be more subtle, as where the change merely
rearranges priorities. Note that in addition to a time
extension, the contract clause provides for compensation for
any delay resulting from a contract change by allowing
payment for the increased cost of the performance of the
work caused by the change.
2. Differing Site Conditions
The portion of the clause addressing cost/time adjustments
for differing site conditions provides:
"If ... such conditions do materially so differ and cause an
increase or decrease in the Contractor's cost of or the time
required for performance of the Work under this Contract,
an equitable adjustment will be made pursuant to the
General Conditions titled “Changes”. No claim of
Contractor under this clause will be allowed unless
Contractor has given the required notice."
The intent is to leave the contractor neither damaged nor

enriched because of the resultant delay.
The Differing Site Conditions clause must not be confused
with the "Site Conditions" clause.
Reference Special Topics Section 7.2 "Basis for Claims"
Pgs. 12-13 and Section 7.11 "Differing Site
Conditions" for additional information on this subject.

MANUAL
f3. Suspension
“The Company may by written notice to Contractor,
suspend at any time the performance of all or any portion
of the Work to be performed under the contract...
If Contractor intends to assert a claim for equitable
adjustment under this clause, it must pursuant to the
General Condition titled “Changes” and within ten (10)
calendar days after receipt of notice to resume work,
submit the required written notification of claim and within
twenty (20) calendar days thereafter its written proposal
setting forth the impact of such claim.”
From time to time during the course of the work, it may be
necessary or desirable to suspend all or part of the work. In
this eventuality, the contractor is required to take the actions
enumerated in the provision. In order to establish a claim
for an equitable adjustment, the contractor must show that
the suspension was in no way caused by its own wrongdoing
or fault.
D. Concurrent Delays
Concurrent delay occurs when both you and the contractor are
responsible for the delay. Generally, if the delays are inextricably
intertwined, the contractor cannot be faulted for delay (forced to
accelerate, or be liable for liquidated damages) nor can it recover
delay damages against you in such circumstances. (Reference
Special Topics Section 7.8 "Delays and Extensions of Time.")
Until the development of CPM schedule analysis, there was no
reliable method available to distinguish the impact of contractor
delays from the impact of your delay. With the sophisticated
computerized techniques now available, however, it has become
possible sometimes to accurately segregate the impacts of
apparently concurrent delays.
If there is some basis for doing so, a court will apportion the fault
and allocate delay damages accordingly. However, delays on the
critical path cannot be offset by delays on a float path, and the
rights of the parties will be determined solely in accordance with the
critical path delays.
The critical path is commonly defined as the longest chain (in terms
of time) of interrelated activities through the project (from beginning
to end). Because this chain of activities takes the longest time to
complete, it is "critical" to completion of the project. If one of the
critical activities is delayed by one day and no pressure is applied to

the schedule or critical activity by resequencing, additional

manloading or acceleration, the project completion date will be
delayed by that one day. Delay involving work not on the critical
path generally has no impact on the eventual completion date of the
project.
It is vitally important that whenever a contractor asserts a claim for
an extension of time and related costs, you determine whether there
were any concurrent contractor-caused delays. You must always
ask whether the contractor was in fact prepared to proceed
according to schedule but for the owner (or your) delay or whether
the contractor would have been delayed anyway for reasons within
its own scope of responsibility or contractual assumption of risk.
In analyzing a delay claim, an analysis based on a comparison of the
contractor's approved CPM schedule with the as-built CPM
schedule should be performed to apportion properly responsibility
for delay.
E. Delay Notice Requirements
Contracts typically require that a delay claim be submitted in
writing within 7 days from commencement of the delay. Further,
within 7 days after the termination of any such delay, the contractor
is required to file a written notice with the company specifying the
actual duration of the delay. Failure to give either of the above
notices is sufficient ground for denial of an extension of time. By
receiving this notice, you are warned of the potential extra costs and
has a chance to take alternative action to avoid or reduce the costs.
However, delays do not always result from a single catastrophic
event. They frequently develop slowly during the course of the
work. Minor delays are generally overlooked by contractors until
the cumulative effect becomes financially burdensome. By the time
a contractor recognizes that there is a problem, many different
parties and natural forces have contributed to the situation. As a
practical matter, failure to comply with the notice requirements may
or may not defeat the claim. To avoid delay problems and potential
acceleration claims, it is best to:
• award time extensions timely;
• not order early (or inappropriate) completion;
• if Notice of Claim is given, respond timely and
specifically; and
• advise the contractor that you will extend its time if
justified.
6. Breach of Implied Warranty
Typically, contracts contain clauses that provide the flexibility that you

MANUAL
need to manage jobs that extend over long periods of time and which
involve changing and sometimes unforeseeable circumstances. On the
other hand, the contracts impose relatively few express obligations on you
other than payment. However, there are a number of implied obligations
or implied warranties to which you are held.
Some of these were mentioned above in the paragraph on non-excusable
delays. We mentioned a gray area where overstepping the bounds of
reasonableness might change a non-excusable delay into a compensable
delay. The burden of proof, of course, as in any claim situation, would be
on the party pressing the claim. Some other implied warranties would
include:
(A) Sufficient Plans and Specifications: This is the most widely
recognized implied warranty in a construction agreement. Inasmuch
as all delays due to defective specifications are per se unreasonable,
if you provide plans and specifications that are incomplete or
ambiguous and the contractor does not have sufficient time to seek
and receive adequate clarification, the resulting delay is
compensable (unless there is concurrent contractor-caused delay).
(B) Timely Review of Shop Drawings, Payment Requests, and
Change Notice Proposals: You must render a decision within the
period of time specified in the contract. If no time limitation is
stated, a standard of reasonableness is implied, typically two to
three weeks.
In issuing changes and making decisions, it is not unreasonable to
consume a reasonable period of time to process the change or to
ensure the correctness of the decision. The contractor should expect
some periods of time when it might halt work in a specific area
while changes are being made, just as it expects bad weather,
holidays and absenteeism. However, it is not anticipated that such
interruptions will be for an unreasonable amount of time.
(C) Proper Coordination of the Work: With the advent of the
construction management approach, this has become a growing
source of delay claims. When you have authority to coordinate and
sequence the work, you have a duty to do so in a proper and
efficient manner.
(D) Site Access: Courts disagree on the extent to which access to the
jobsite is guaranteed. As a general rule, you must, at a minimum,
do all that is reasonably possible to provide sufficient access. A
delay will be compensable if you cause the lack of access or knew in
advance that there would be an access problem and failed to divulge
this information to the contractor. The most common sources of
delay claims in this area are: failure to provide initial access to the

work site; failure to release a work area to a contractor on time; or

directing a contractor to surrender a work area for an unreasonable
period.
(E) Timely Performance: In addition to reviewing shop drawing

submittals, you must provide necessary information and make all
necessary decisions in a timely manner. If no time period is stated in
the contract, a reasonable period is implied.
(F) Acceleration and Disruption: Strictly speaking, these are not
delays. However, they are forms of interference in the progress of
the work and as such they are compensable. Disruption usually
occurs when you order a change in the sequence of the work, but
can also result from excessive changes, rescheduling and stop-and-
go situations. Acceleration can occur when you order the contractor
to increase its pace. This implies that an earlier completion date is
required. However, acceleration can develop constructively without
a change in completion date, if a contractor has an excusable delay
and is not timely granted a time extension. (Reference Section 7.8,
"Delays and Extensions of Time.")
7. Constructive Acceleration
If a contractor is entitled to a time extension, but the project schedule
requirements determine that a time extension is unacceptable, the
contractor may be directed to hold the original schedule despite an
excusable delay. Such direction may constitute "Constructive
Acceleration." (Reference Special Topics, Section 7.9 "Acceleration.")
8. Ripple or Impact Effect

Where Change Notices have been issued so frequently, making such
drastic changes that it soon becomes a matter of "changes on changes,"
the courts have considered that this can have a "ripple or impact" effect
upon the changed (and unchanged) portions of the work, thereby entitling
the contractor to its increased costs. This is probably one of the most
complex forms of claims and requires a detailed analysis of each change
and its cost and schedule impact.
Ripple or impact claims are generally based on the cumulative effect of

changes and other events under your control. Such claims are frequently
larger in dollar value than the value of the changes themselves. For
example, assume a $1,000,000 contract has had 65 changes issued, with a
total value of $400,000. In addition, there have been 625 Requests for
Information necessary due to incomplete information in the contract
documents. At the end of the contract, the contractor may submit an
impact claim of $800,000 for its increased costs of performance, based on
the effect of the changes (and the RFI's) on the unchanged (base contract)

MANUAL
work as well as the effect of the changes on one another.
Because of the magnitude of such claims, and because there is no

straightforward method by which such claims can be valued, it is
particularly important that ripple or impact claims be avoided wherever
possible. The most successful method of avoiding these claims is to
include in all settlements for changes the full effect of the change and to so
state in the Change Order that resolves the equitable adjustment for the
change. The following is an example of appropriate release language:
“The price adjustment and time extension (if any) granted under
this Change Order constitute payment in full for the work covered
by this Change Order, including without limitation, all direct
costs; indirect costs; overhead costs; general and administrative
expenses; profit; and all effects (direct, indirect, and
consequential, including impacts and "ripple effects") of the work
covered by this Change Order on all contract work, whether or not
changed by this Change Order."
To be certain that this language will be binding on the contractors, it

is important to note in the negotiation minutes that impact was
discussed and included in the settlement.
9. Loss of Productivity Claims

One of the more difficult contractor claims for the contractor to
prove and for you to analyze and respond to are claims for lost
productivity or inefficiency. A variety of methods of calculation
have been developed and accepted by the boards and courts. While
there is no set method for calculating loss of labor efficiency, the
boards and courts are suspect of methods of proof which do not
compare the contractor’s normal labor productivity to actual
productivity as affected by the claim event. A great variety of
factors can contribute to an overall loss such that it is impossible
to isolate and quantify an individual factor.
In addition, a contractor claim may involve other types of delay and

disruption damages which need separate analysis and proof of causation.
Consequently, the following analyses have evolved to provide such a
comparison.
There are two different techniques used to calculate lost

productivity claims; one is to measure the loss and the other is to
estimate the loss.

One measures the amount of lost productivity by making a

comparison of similar work activities in the same project. This
analysis compares identical activities on an impacted and non-
impacted basis. It constitutes the most accepted calculation for
lost labor productivity and is generally known as a “measured-
mile.” The key to a measured-mile analysis is demonstrating that
the period selected to represent the non-impacted performance is
substantial enough to serve as a baseline against which the
impacted period is then compared.
Estimating the inefficiency almost always includes a comparison of

the productivity rates (or performance factors) for the inefficient
period and a reasonable estimate of the anticipated productivity
rate (i.e., what the productivity rate would have been absent the
efficiency loss). Estimating the anticipated productivity rate is the
most difficult item of proof because of the uncertainty involved. A
satisfactory settlement of the claim will depend in large part on
how well this item is established. Such estimates are commonly
based on one or more of the following:
• other similar contracts
• industry standards
• project productivity studies
• estimated labor costs
• expert analysis
• bid comparisons
One thing to keep in mind in analyzing/evaluating loss of productivity

claims is that the burden of proof is on the contractor. Do not be swayed
by volumes of cost records showing contractor losses. The issue for the
contractor is to show the link to an event or circumstance for which you
are responsible.
Exculpatory Clauses
Many contracts contain exculpatory clauses which attempt to shift the risk of
unknowns to the contractor. These clauses disclaim responsibility for the
completeness or accuracy of the data provided and place responsibility on the
contractor for any problems that might result from relying on such data should
it prove to be defective or misleading. The concept is that the contractor is

MANUAL
warned to either seek confirmation of the information provided or to include a

contingency for some reasonable variation from the information provided as it
may affect the cost/time to perform the work.
Court decisions include numerous examples where an owner's exculpatory

clauses did not protect it when the case went to court. The requirement for
full disclosure has been emphasized earlier. In fact, the contract should
disclose all relevant facts affecting cost of performance which you knew or
should have known. Failure to do so could impose liability for
misrepresentation.
We cannot be assured of absolute protection by exculpatory clauses.

Although the validity of the clauses has been generally upheld, circumstances
are all important. When problems arise from these provisions, they are
usually of serious magnitude and require careful study and evaluation.
Liens
A lien is a claim against property. Generally, in construction when a laborer
or a contractor does work on real property or a supplier furnishes material
which is incorporated into the work on the real property, the person providing
the labor or material can place a lien on the real property if the person is not
paid. In the case of a laborer or a contractor or a subcontractor who does
work on the real property, the lien is known as a mechanic's lien. In the case
of the supplier of materials, the lien is known as a materialman's lien.
When work is performed on U.S. Government property, there are no property

lien rights available. Consequently, the Government requires its prime
contractors to provide a special bond (Miller Act bond) against which liens
may be filed.
Of course, one important step to take without fail is to obtain a Certificate of

Payment prior to paying any invoices. Be aware that if a contractor is paid its
invoice, but the contractor does not pay one of its subcontractors, that
subcontractor can file a lien and you can end up paying for the same work
twice.
So far as the construction industry is concerned, the rights, limitations, scope,

procedures, and nearly all other considerations regarding these liens
are set forth in the statutes of each of the fifty states. No general statements
can be made regarding these liens other than to make it clear that statutes in
every state are different. Consequently, when a lien problem arises, it is
always necessary to determine how the problem must be handled under the
laws of the particular state involved. (The specific procedural requirements
set forth in the state laws must be strictly adhered to.)

Reference Section 3.6 "Insurance and Bonds" pgs. 30-32.

SPECIAL TOPICS
7.3 NEGOTIATION
7.3.1 Purpose Negotiation is essentially communication of ideas by the parties in an effort to

reach an agreement which will maximize the benefits of all parties. Ethical
negotiations serve the needs of both contracting parties.
The objective of negotiations is not simply for one party to convince another
party that it is right or wrong. The objective of negotiations is to find a
combination of issues and price(s) that is acceptable to both parties. This is
first a process of education, then a process of persuasion.
The key principles for successful negotiation are:
Ÿ Preparation - Know the issues and the participants' needs
Ÿ Internal Accord - Achieve consensus among your team members

before entering negotiations
Ÿ Composure - Take issues seriously, but not personally; the tone

of all team participants should be controlled with
this in mind
Ÿ Confidence - Let the other side know you are comfortable with
your position and with your grasp of their
position
Ÿ Receptiveness - Be fair, reasonable and honest -- it puts pressure

on the other side to do the same
Ÿ Flexibility - Be willing to compromise on an issue that is

important for the other side to win, even if they
may not be right -- take the long view
Attempting to negotiate by coercion is generally ineffective and often

counterproductive. Coercion provokes polarization and makes it very difficult
for the coerced party to offer concessions or accept compromise.
Successful negotiation requires a knowledge of facts (to educate) and a

knowledge of people (to persuade).
7.3 NEGOTIATION
.
7.3.2 Lead Selection of Negotiator

Negotiator
Role and The Lead Negotiator's experience and capability should fit the expected
Responsibility complexity of the negotiations. The Lead Negotiator must be knowledgeable
of various negotiation techniques and must be familiar with Company policies
concerning negotiation. The most important criteria for the negotiator are
familiarity with the contract, familiarity with the issue(s), and negotiating
experience.
Negotiating Strategy
The Lead Negotiator should clearly understand the policy philosophy and the
aims and objectives of the negotiating team. A pre-negotiation plan is to be
developed on all matters to be discussed. The team members should rely on
their experience in researching and developing the pre-negotiation plan. The
Lead Negotiator should coordinate negotiation objectives with the Site or
Project Manager to make sure that the customer's and the project goals are
achieved. For all negotiations involving a potential commitment in excess of
$1 million (and other commitments when approval is at all in doubt),
appropriate commitment authority should be obtained in advance of
negotiations to avoid having to renege on negotiated points.
Create a consensus among the negotiating team to provide a united front. No

negotiation should be started before the full agreement of all members of the
team is assured.
Negotiation Session
If negotiations seem to be breaking down, the Lead Negotiator should request

a caucus to discuss what direction should be taken to resolve the issues and to
complete the negotiations. The negotiating team may agree that the other team
is not interested in resolution and may recommend termination of negotiations.
7.3 NEGOTIATION
7 SPECIAL TOPICS
7.4 INTERFACE COORDINATION
7.4.1 Purpose The designated contracts representative has the primary responsibility to
ensure that the contractor performs in accordance with the contract. It is
important to realize that although assigned only specific contracts, this
individual plays a major role in the total project team effort to construct a
quality project within the schedule and budget. To be successful in this
objective, the various contracts representatives must work in close
conjunction and harmony with each other as well as with others on the
project team to minimize or eliminate interface problems.
The contracts representative is involved in a wide variety of activities most if

not all of which require some type of coordination. Coordination is required
not only between the contractor and you or interfacing contractors but also
wherever the various supporting project entities (e.g., technical inspectors,
Procurement, technical specialists, Project Engineering, Field Engineering)
are involved with the contract in some way or other. It is important that all
official contact and communication with the contractor be coordinated
through the person(s) designated in the Division of Responsibilities (DOR)
matrix (reference Section 2.1 "Assignment of Tasks" of this Manual). This
eliminates possible misunderstandings with the contractor and keeps the line
of communication clear.
7.4.2 Initial Steps Keep in mind that the contractor has been living with the contract for a long
time before it was even awarded. You will be at a definite disadvantage if
you wait until the contractor arrives at the site to "come up to speed." The
first step is to be thoroughly familiar with the contract documents.
Remember to "RTFC — Read the Full Contract." You should be thoroughly
familiar with the contract before the work begins. The formation of a
company contract is a lengthy process involving participation by
Engineering, Construction, Contracts, Procurement, Legal, Project Controls
and sometimes the customer. The process is structured and provides several
opportunities for the contracts representative to participate in the pre-award
activities:
• The Project Team review of the proposed bid package
• The Pre-Bid Meeting
• The Pre-Award Meeting
If it is not possible to attend all of these meetings, the agenda and minutes of
the meetings located in the contract files should be reviewed. The bid
tabulation, the recommendation to the customer and other bid period
correspondence are important sources of background information.

CONTRACTS/SUBCONTRACT MANAGEMENT MANUAL
Before the contract work can start, two preliminaries remain:

Preconstruction Kick-Off Meeting
The "Agenda for the Preconstruction Kick-Off Meeting" (reference Section
3.3.2 and Exhibit 3.3.2-A) is a good checklist of the areas where the active
participation by the contracts representative as coordinator may be required.
This meeting is where the ground rules for working with the contractor
should be discussed and the last level of detail established. At this time it is
particularly important to note two basic provisions of the Contract General
Conditions which typically appear in contracts. They are:
1. "Independent Contractor...
Contractor represents that it is fully experienced, properly qualified,
registered, licensed, equipped, organized, and financed to perform the
Work under this contract. Contractor shall act as an independent
contractor and not as the agent for you or Owner in performing this
contract, maintaining complete control over its employees and all of its
suppliers and subcontractors. Nothing contained in this contract or any
purchase order or subcontract awarded by Contractor shall create any
contractual relationship between any such supplier or subcontractor
and either you or Owner. Contractor shall perform its work hereunder
in accordance with its own methods subject to compliance with the
contract."
2. "Authorized Representatives ...

Before starting work, Contractor shall designate in writing an
authorized representative acceptable to you to represent and act for
Contractor and shall specify any limitations of such representative's
authority. Such representative shall be present or be represented at the
Jobsite at all times when work is in progress, and shall be empowered to
receive communications in accordance with this contract on behalf of
Contractor. During periods when the work is suspended, arrangements
shall be made for an authorized representative acceptable to Company
for any emergency work that may be required. All communications
given to the authorized representative by you in accordance with this
contract shall be binding upon Contractor. You shall designate in
writing one or more representatives to represent and act for you and to
receive communications from Contractor. Notification of changes of
authorized representatives for either you or Contractor shall be
provided in advance, in writing to the other party.
These clauses establish that the contractor is solely responsible for all its
work and operations and establishes the channel of communication
through which interface coordination problems are resolved.

The company shall designate in writing one or more representatives to

represent and act for the company and to receive communications from
contractor. Notification of changes of authorized representatives for either
the company or contractor shall be provided in advance, in writing, to the
other party.
Notice of Site Mobilization
Preliminary to site mobilization, the contracts representative alerts all jobsite

departments that a new contractor is arriving at the jobsite. This is
accomplished by issuing a "Notice of Site Mobilization." (Refer to Section
3.3.2 and Exhibit 3.3.2-C.) This should be done as early as possible but at
least two weeks before the required starting date to allow advance
preparation, if required.
By this time, individual contractor work areas, access routes, storage and
lay-down areas and priority of work operations have been established. Many
front end problems can be avoided through the foresight and active
involvement of the contracts representative at this stage.
Some things that need to be considered are:
• Is the contractor mobilizing as scheduled?
• Are there areas available to start work in?
• Is there adequate lead time for the contractor to erect office

buildings, warehouses and shop facilities, if applicable?
• Is fabrication on schedule?
• Will enough material be onsite to support field activity?
• Are materials, facilities, or equipment to be furnished by others

going to be available?
If the answer to any of these questions is negative, there will be problems.

Now is the time to start working to avoid or resolve them.
Before any work requiring third party authorization or approval is permitted,

the contract representative should ensure that necessary permits are obtained
by either you, the customer, or the contractor according to responsibilities
specified in the contract and in accordance with the Division of
Responsibility Matrix.
In addition, a contractor cannot commence work onsite without first having

the required Certificates of Insurance on file.

7.4.3 Construction The contracts representative is the key player in overall coordination and
Coordination control. This individual must be kept aware of all problems, potential
problems, and the status and daily progress of the contract. This is
accomplished through daily communications with other contract
representatives, review of the Daily Reports, and monitoring jobsite
activities. The Construction Manager should be kept fully informed and
advised of contract status and schedule through established jobsite channels.
A primary function of the contracts representative is to coordinate the

construction efforts of a contractor with other contractors, or company
forces, or both. This person must see to it that the contractor conducts its
operations in cooperation with all others in the vicinity and avoids
interference with others' work. The basic contract provision which typically
enables the contracts representative to do this is the General Condition titled
Cooperation With Others. This clause states:
"You, the Owner and other contractors may be working at the site
during the performance of this Contract, and Contractor's work, or
use of certain facilities, may be interfered with as a result of such
concurrent activities. You reserve the right to require Contractor to
schedule the order of performance of its work in such manner as
will minimize interference with the work of any of the parties
involved."
Bear in mind that this provision is part of each interfacing contract and
therefore applies equally to all contractors. The key words are "minimize
interference with the work of any of the parties involved."
As a matter of practical fact, each contractor will probably tend to interpret

this to mean the other contractors are supposed to stay out the way. You on
the other hand may have a tendency to regard this as a license to do what is
best for the project. This is an extremely important area of attention and
fraught with potential for "impact" claims or claims based on alleged delays,
interferences, and disruptions.
By being fair and reasonable, using good judgment, and thinking and
planning ahead, the contracts representative can minimize potential for such
claims.
Whenever possible, a detailed schedule or plan of operation with respect to

access, occupancy or work area, storage area, precedence of work
operations, etc. should be developed in advance.

The contracts representative must take appropriate steps to foresee probable

conflicts and interferences, and to arrange in advance for scheduling of the
work by the contractor to avoid, or at least minimize, all such difficulties.
To exercise this responsibility, the contracts representative must be
thoroughly familiar with the contractor's work under its contract, particularly
as it relates to the contractor's schedule and project.
Coordination problems may involve several contractors. In such instances,

the responsible contracts representative should arrange a meeting between the
contractors to encourage a solution of all difficulties by mutual cooperation
directly between the contractors.
Coordination problems may also involve a contractor and your direct-hire

operations. The basic approach is the same. Get the parties to the problem
together and work it out. The key to a successful and unstrained operation is
good communication. It is most important to communicate completely and
accurately with all parties involved, keeping them apprised of such things as
where work is in progress, work planned in other areas and dates, interfaces,
interferences, holds, craft densities, anticipated problem areas, etc. An effort
to agree on methods of correction of problems needs to be made as early as
possible to avoid any delays. All parties need to realize the urgency of each
others' activities related to schedule and be ready to have a hands-on attitude
for whatever is best for the project, even though it may not necessarily be in
their own best interests. This is the acid test for coordination. Agreements
shall be documented.
The astute observer may have noticed that there is a gray area here.
Whatever is best for the project may stretch the limits of cooperation beyond
what was intended by the contract. The contracts representative will
frequently be operating in gray areas. How well those situations are handled
will be the true measure of this person's stature and worth to the project. If a
contractor is fairly entitled to additional compensation or time as a result of a
"coordination" decision, the contracts representative should be prepared to
support and justify an appropriate contract change.
7.4.4 Interfaces Probably the most troublesome problem in managing major contracts in
congested areas is "interferences." As a general rule, two objects cannot
occupy the same space. An HVAC duct cannot be installed in its allotted
space if someone else installed a pipe or support or a cable tray first. The
best solution of course is to know the drawings. However, because much of
the work is field routed and, also, because field changes occur, you need to
keep in touch with what is going on generally. Communicate with your
direct-hire superintendents and other contracts representatives monitoring
contracts in the same area. If a space is allotted for a particular contractor's
work, make sure it stays open and thereby avoid an expensive "fix."

Another common interference problem is access. There may be room for a

contractor's work but the access to the space has been obstructed
(two-blocked) temporarily by other crafts, scaffolding, etc., or permanently
by other permanent plant equipment or materials. The solution is again the
same as outlined above. Sometimes the best solution is to get there first.
The sooner an item is put in place, the fewer interferences there will be for
that item. However, do not rush ahead and ignore a rationale priority.
Allowing "your" contractor to two-block another contractor just defers a
problem. It does not solve the problem. Try to get work scheduled for the
most advantageous installation. Sometimes it may even pay off to install
certain items in congested areas with temporary hangers or fastenings to
simplify access problems or to nail down the space.
When interferences do occur, as they surely will, be ready to discuss the

problem with the others on the project team, including the craft supervisor
responsible for the interference in case of a company interference and/or the
contracts representative assigned to the interfacing contractor to resolve the
problem. Jointly analyze the problem and decide which work would be most
desirable to change in terms of time and money and whether or not
engineering must be involved. If a contractor is asked to change its method
or sequence, ask how it proposes to do the change. Remember, the
contractor has the expertise, but the final decision is yours. Do not let the
contractor load the change with cost just for the sake of making its contract
more profitable.
Whatever the decision is, make it in a timely manner. In most cases, this
decision can and should be made the same day the interference occurs. It is
important to document fully these kinds of agreements, clearly stating each
party's responsibilities. If they are of relatively minor significance they
should, as a minimum, be noted in the "Daily Report."
7.4.5 Schedule Because Project Controls plays a major role in the successful management of
Coordination the project, it is vital that each contracts representative works in close
conjunction with the scheduler.
The Project Controls Manager is responsible to the Construction Manager

for the total project schedule. Therefore, it is imperative that Project
Controls is promptly given copies of all contractors' scheduling reports along
with the contracts representatives' comments.
Project Controls evaluates the contractor's reports and plots the contractor's
progress on the project master schedule. To manage the project successfully
and efficiently, it is mandatory that both the contracts representatives and
Project Controls work closely together to foresee and eliminate possible
conflicts that would be cause for project schedule slippage.

This area of coordination becomes of utmost importance when major

upheavals take place such as slowdowns, or deferral of some work because
of cash flow or other major problems. Important decisions need to be made
concerning possible suspension, partial suspension, termination or partial
termination or merely significant schedule changes. The contracts
representative can make important contributions to such decisions because of
intimate knowledge of the status of contract activities, impending problems
and interface requirements. This individual is in the best position to
determine the impact of major schedule decisions on the contract and can aid
in assessing the potential consequences and, if appropriate, recommend
alternate solutions.
7.4.6 Coordination with Many (but not all) major contracts include a provision in the Special
Procurement Conditions for you or the customer to furnish some or all of the equipment or
materials. Procurement plays an important role in the total project effort in
that it is responsible for the issue and administration of purchase orders and
the receipt and issue of customer-furnished material and equipment.
Materials delivered too long before they are needed may adversely affect cash
flow or create storage and handling problems. On the other hand, materials
or equipment delivered late are likely to delay not only a contractor but could
impact and delay other contractors or even the total project and result
ultimately in disputes or claims. Material purchase and delivery schedules
are initially coordinated with construction requirements. Consider expediters
to assist in obtaining a smooth flow of manufactured equipment and
prefabricated materials, including contractor-furnished equipment and
materials.
The contracts representative must keep fully informed of the progress of the
various parts of the work and the status of related procurement activities to
ensure that all elements are in balance.
Purchase orders sometimes may require that a manufacturer's representative
be present during the installation of the equipment by a contractor. When
this occurs, the contracts representative, in monitoring the contractor's
progress, will coordinate with the contractor and the manufacturer to
establish the required date for the manufacturer's representative to be onsite.
7.4.7 Coordinating The contractor is typically obligated by the terms of its contract to keep its
Clean-Up and work areas in a neat, clean and safe condition.
Housekeeping

Because work in and around a construction site can be confined and create
very close working conditions among contractors, daily cleanup is an
absolute necessity. Enforcement of this contract provision must be exercised
regularly and vigorously. A clean job is a safer job and most likely a more
efficient one.
If trash and debris are allowed to accumulate, it becomes impossible after a

few days to identify the trash belonging to a particular contractor, resulting
in each contractor refusing to accept the responsibility. Hence, cleanup and
housekeeping can also be an important interface coordination problem. The
contracts representative must give particular attention during inspections to
the contractor's daily housekeeping practices. If there are any deficiencies,
notice must be given by the contracts representative to the contractor
insisting that corrective action be taken. If the contractor fails to take
appropriate action, as a last resort, and with notice to the contractor, you
may arrange for the work to be done by your own forces or by others as a
backcharge to the contractor (reference Section 4.7 "Backcharges") in
accordance with the terms and conditions of the contract.
7.4.8 Other It is immediately evident from a review of the General and Special
Coordination Conditions of the contract that the administration of all the provisions will
Interfaces require the involvement or assistance of numerous participants. The contract
is likely to interface at some time or other with:
• Health and Safety

• Security
• Environmental
• Labor Relations
• Document Control
• Field Engineering
• Testing Laboratories
• Resident Engineer (when assigned)
• Surveyors
• Project Engineering
• Start-up
• Project Controls
• Controller
• Customer
• Local building code inspectors
• Supervision
The knowledgeable attention and timely coordination effort in all of these

areas is a basic responsibility of the contracts representative who must be
very familiar with contract requirements.

7.4.9 Sub-Tier The contracts representative must not do any coordinating between a
Subcontractors contractor and its subcontractors or subcontractors of different contractors
engaged on the project. This type of coordination is the function and
responsibility of the contractor(s). Subcontractors are not to be regarded as
separate contractual entities, but should be treated as part of the contractor's
force. Conflicts between subcontractors should be brought to the attention of
the contractor's field representative.
7.4.10 Conclusion Contractors are required by contract to cooperate with other contractors.
Situations frequently occur that require the contracts representative to
coordinate the work of one contractor with that of other contractors and/or
with Supervision. The contract also gives rise to extensive and varied
interface coordination requirements.
The primary tools of the contracts representative in minimizing coordination

and interface problems are the approval of schedules and Progress Review
Meetings. In addition, Contractors Coordination Meetings should be held as
often as necessary with all the major contractors. (Reference Section 4.3
"Schedule" and Section 5.2 "Progress Review and Coordination Meetings.")
The purpose of these meetings should be to expose and resolve potential
problems and to promote an easy working relationship between contractors
and your organization.
When the problem involves interface conflicts with two or more contractors,
the meetings should be arranged between the contractors, with you acting
only as a moderator and encouraging solutions directly between the
contractors by mutual cooperation.
In executing coordination responsibilities, the contracts representative must

be careful not to render decisions that might lead to claims against you and
your customer. No decisions that impact others or have significant impact on
the project should be made in any case without the involvement and approval
of the responsible supervisory personnel in the field.

7 SPECIAL TOPICS
7.5 LABOR AND INDUSTRIAL RELATIONS
7.5.1 Purpose Your responsibilities relating to the labor and industrial relations obligations
of contractors will be dependent upon whether the project is being performed
on a union, open shop or merit shop basis. This guideline generally describes
how to monitor a contractor's conformance to site labor relations
requirements on a union project, where this responsibility is within the scope
of your responsibilities.
It is vitally important to the overall success of any project to ensure that

labor harmony exists between the different work forces on site. The
contractor is nevertheless responsible for administering its own labor
relations.
7.5.2 Procedure Become familiar with applicable labor agreements and site work rules.
Monitor contractor compliance with and enforcement of applicable labor

agreements to include, but not limited to:
• Craft work assignments

• Late starts, early quits
• Unauthorized breaks
• Wage and fringe payment agreements
• Compliance with Federal, state, and local laws
• Certified Weekly Payroll Reports (if required)
Notify the contractor if improper administration of the applicable labor

agreements or work rules is adversely affecting the project. Such notification
may first be oral (documented on the Daily Report) and followed up with
formal correspondence.
Follow up and close out open labor issues.
Immediately notify company management of any unauthorized work stoppages.
Monitor that contractor labor is paid in accordance with site labor

agreements and other governing regulations such as for Davis-Bacon work.
7.5.3 Checklist Labor Relations Checklist (Exhibit 7.5.3)

Labor Relations Checklist (EXHIBIT 7.5.3)
Contract Number:______________________ Contractor:_______________________________
Contract Scope:
1. The contract requires a labor agreement. YES NO

Comments:
2. Company Labor Relations has been notified of contractor's scope, labor requirements YES NO
and mobilization schedule.
Comments:
3. Potential labor issues have been identified and resolved. YES NO

Comments:
4. Contractor has received and acknowledged site work rules. YES NO

Comments:
5. Contractor's daily labor management is routinely monitored and deficiencies noted on YES NO
Daily Reports.
Comments:
6. When required, contractor submittals such as certified payrolls are available and YES NO
submitted on time.
Comments:
7. YES NO
Comments:
8. YES NO
Comments:
Name:________________________________ Date:_____________________________

7 SPECIAL TOPICS
7.6 FORCE ACCOUNTS
7.6.1 Purpose This procedure describes the process for identifying, documenting, verifying
and dispositioning force accounts. Specific responsibilities for initiating such
accounts, approving charges, tracking and closing-out such accounts must be
assigned on a project basis between Field Engineering, Project Controls and
Contract Administration.
7.6.2 Discussion Several circumstances give rise to the need for force accounts which are an
accounting method for accumulating costs as incurred with concurrent
approval by you in the field. Typical applications are:
• New or modified tasks which are difficult or impractical to

accurately estimate, but for which costs can be reasonably
segregated during performance. "Inspect and repair as necessary"
and "excavation in unknown conditions" are examples.
• Changes, warranty work or variations where estimated values are in

dispute.
• Work undertaken with incomplete design information or where

significant rework, disruption, interferences or revisions are
anticipated.
Force accounts accumulate actual labor, material, and equipment charges

incurred by contractors and approved by you. They may also accumulate
your direct hire costs for similar purposes. Costs are tracked and reported
until dispositioned through Change Notice negotiations, backcharges, or
completion of the task. It should be recognized that only direct costs can be
coded to force accounts and that indirects, overheads, and impact costs on
related work must be separately estimated when applicable.
7.6.3 Procedure Initiating Force Accounts -- A limited number of designated management

staff (perhaps only the construction manager) should be authorized to initiate a force account.
A "not to exceed" funding limitation will be established and monitored. A

commitment authorization for this amount will be processed at the time the
force account is initiated.
Cost Accounting will assign a unique cost code with an appropriate

descriptive title and include it in the project reporting scheme.
SECTION 7. SPECIAL TOPICS 7.6 FORCE ACCOUNTS Page 46 of

67
Each account will be assigned to a specific individual for authorization of

charges. That individual will be responsible to ensure that labor, material
and equipment costs being charged to each account are:
• Reasonable
• Necessary
• Actual
Individual timesheets coded to the force account should be reviewed and

signed by the assigned individual.
Material and equipment costs must also be individually authorized.
Reporting -- The contractor will be required to submit for approval a Daily

Report of Force Account Work (reference Exhibit 7.6.3). Periodic cost
reports must identify all open force account codes and summarize
expenditures on as current a basis as possible. Funding limitations shall not
be exceeded, but may be increased with appropriate approval. Labor,
equipment, and material charges should be differentiated.
Disposition -- In most cases, force accounts should only be used as an

interim measure to accumulate cost information. When sufficient
documentation has been developed, lump sum changes should be negotiated
and the force account discontinued or closed. However, under the “Pricing
of Adjustments” clause, you may direct payment on a cost reimbursable
basis.
If backcharges or warranty claims are involved, the final costs will be priced
in accordance with contract agreements or normal pricing practices and
submitted for collection in accordance with project procedures.
When appropriate, costs may be transferred into standard accounts when

documentation objectives have been accomplished.
7.6.4 Exhibit Daily Report of Force Account Work (Exhibit 7.6.3)
7.6 FORCE ACCOUNTS

Daily Report of Force
Account Work

CURRENCY:
BC NO.:
LOCATION: DATE: 03/30/1999
LABOR EQUIPMENT

OTHER
TOTAL OTHER
REMARKS
TITLE TITLE
Expedition
7 SPECIAL TOPICS
7.7 LIQUIDATED DAMAGES
Many contracts provide for liquidated damages as the measure of damages

contractually agreed by the parties as just compensation for a party's failure
to satisfy a term of the contract. Typically, liquidated damages are used to
assess a party's liability on a daily basis for failure to meet schedule
milestones or the contract completion date. They are also sometimes applied
to a contractor's failure to meet specified performance criteria.
Parties to a contract may stipulate in their contract the amount of damages
("liquidated damages") that will be paid where the harm which will be
caused by the breach is difficult to assess accurately and the parties have in
good faith endeavored to make a reasonable estimate. Unless this condition
is met, Common Law courts (primarily in those nations deriving their legal
system from England), will not enforce the parties’ agreement on the basis
that the law will not give effect to a "penalty." (Where the actual damages
turn out to be more or less than the stipulated liquidated damages, the courts
will nevertheless enforce the parties' original agreement.)
International Work: In Civil Law jurisdictions (the majority of non-

Common Law states and specifically in the developed countries of
continental Europe and their former colonies) penalties are permitted.
However, Civil Law courts will vary in determining their validity. For
example, under the French code, penalties are normally strictly enforced,
whereas the German code applies a reasonableness test. Although this
approach permits greater flexibility in setting liquidated damages, application
of these guidelines are also the best way to meet Civil Law requirements.
Provided the contract states that the liquidated sum represents the
contractor's entire liability for the identified performance failure, this will be
the sole measure of damages. In this case, liquidated damages serve as a
limitation on a contractor's liability. In the absence of an agreement
stipulating the liquidated damages or any other contractual limitation, the
contractor may be fully liable for all of the actual damages (including
indirect or consequential) resulting from its failure to perform. Where the
measure of damages has been agreed in advance (liquidated), the only real
controversy will be whether damages are due (entitlement) and not the
amount. However, realistically it may require litigation to recover damages
from the contractor to the extent the damages exceed retention or other
amounts owed to the contractor.
The inclusion of liquidated damages clauses in a contract makes it imperative

that the deliverables associated with the liquidated damages be carefully
monitored and damages collected when milestones are missed. There has to
be a clear understanding of what the deliverable is and when it is required.

Enforcement of liquidated damages will require thorough documentation of

the contractor's failure to achieve the pre-established milestone activity or
performance criteria. Changes and time extensions will generally require
modification to the liquidated damages dates.

SECTION 7. SPECIAL TOPICS Page 49a of 67
7 SPECIAL TOPICS
7.8 DELAYS AND EXTENSIONS OF TIME
Often events outside of a contractor's control or conditions arise which cause

delay (e.g., acts of God commonly referred to as "force majeure" events or
your delays) to the contractor’s completion schedule. The contract generally
provides that when these events or conditions occur the contract completion
date can be extended. Some contracts specifically address whether the
contractor is also entitled to compensation to recover its costs incurred as a
result of certain delays. Once time extensions have been agreed with the
contractor, they must be incorporated into the contract by Change Order.
Analyzing delays and requests for extensions of time is frequently difficult.

In most cases a clear analysis cannot be performed without having an
approved critical path schedule available as a baseline. Time extensions are
only to be provided when the schedule critical path is impacted.
The contractor is typically required to give written notice to you when an

event or condition occurs which has the potential to delay any portion of the
work, even if it is uncertain whether the contract schedule will be extended or
delayed. If the contractor's delay or failure to give notice prejudices the
company's ability to take alternative courses of action, this can be grounds
for denying the contractor additional time.
A contractor's notice of delay should be followed by the contractor's request

for a specific extension of time. It is also the contractor's obligation to
support any such request to your satisfaction.
Suggested response to a contractor request for time extension:
"The contractor, in accordance with article _______, has requested a

schedule adjustment. The contractor shall submit a written schedule analysis
illustrating the effect of the [change] [delay] [your request] on the current
contract schedule completion date. The schedule analysis shall include a
network analysis demonstrating how the contractor proposes to incorporate
the [change notice] [delay] [your request] into the contract schedule. The
analysis shall demonstrate the time impact based on the date the change was
given to the contractor; use of float; the status of construction at that point in
time; and the event time computation of all affected activities. The event
times used in the analysis shall be those included in the latest updated copy of
the detailed progress schedule or as previously adjusted by mutual
agreement.

If the request for an extension to the schedule is denied by you (e.g.,

contractor-caused or controlled), the contractor is faced with three courses of
action. First, the contractor can accept the decision and proceed. Second,
the contractor can advise you that its wrongful refusal to grant an extension
of time will result in the project being completed later than originally
scheduled. Third, the contractor can treat your refusal to grant an extension
of time as a direction to accelerate the work to maintain the original schedule.
If the contractor was actually entitled to a time extension, and if you denied
this request and subsequently the contractor accelerated the work to maintain
the original contract schedule, the contractor may have grounds for cost
recovery associated with the acceleration effort. If the contractor accelerates
the work to meet the project schedule without first providing notice to you
giving you the option to have project completion extended or alternatively
pay the acceleration costs, the contractor may be unable to recover its
acceleration costs.
One of the more difficult and complex aspects of delay analysis is the
resolution of concurrent delays. If a critical path delay is caused by (or is the
responsibility of) one party, that party bears the responsibility for the delay.
For example, if a delay on a fixed price project is a contractor-caused delay,
in the absence of any other circumstances, the contractor would be
responsible for the additional costs necessary to make up for the delay (or be
responsible for you or your customer's actual damages or contractually
specified liquidated damages to the extent project completion is delayed).
However, sometimes all or a portion of one delay may overlap or occur
concurrently with all or a portion of another delay. Such delays are referred
to as "concurrent". Their implications for contract management are
important to understand. (Refer to Special Topics Section 7.2 "Basis for
Claims" pg. 22.)
If there are two delays (occurring simultaneously and with the same delay to
the critical path) and one is the responsibility of the contractor and the other
is the company's responsibility, each party must bear the financial
consequences of the delay but the contractor would typically be entitled to a
time extension for the duration of the delay (i.e., an "excusable delay"
equivalent to force majeure). If you were to refuse to grant a time extension
and the contractor was compelled to accelerate its work to meet the original
schedule, the additional costs incurred by the contractor would be to you or
your customer’s account (even though the contractor's delay was concurrent
with your’s).
Generally, the concept of concurrent delays applies to only those portions of

the delays that actually overlap. Any preceding and succeeding portions of
either delay are the responsibility of the party causing that delay. Obviously,
concurrent delay analyses can be complicated. Therefore, the advice of
experienced schedulers, claims analysts and legal professionals should be

sought when concurrent delay issues arise.
Contractor delays which are not excusable (i.e., are the fault or responsibility
of the contractor) must be overcome by the contractor by accelerating the
work. Otherwise, you may be entitled to assess liquidated damages at a
specified amount per day of delay (if the contract so provides).
Alternatively, if liquidated damages are not specified in the contract, you
may be entitled to actual damages sustained by you or your customer
because of the contractor's inexcusable delays. Such damages may be
withheld from the contractor's retention or amounts otherwise due to
contractor.
A dispute may arise with respect to entitlement for an excusable delay. If an

event occurs that the company does not agree warrants an extension (but the
project is not disadvantaged by the contractor's delay), you may decide not to
direct the contractor to complete on time and not to extend the schedule
pending a complete schedule review. Depending on the circumstances, the
contractor may want to rely on its claimed entitlement and complete the work
based upon a schedule extended by the period of excusable delay.
Alternatively, the contractor may accelerate the work and attempt to charge
the resulting costs of acceleration to you. (Refer to Special Topics, Section
7.9 "Acceleration".)
Note: For additional discussion on delays, see Section 7.2 "Basis for
Claims" pps. 15-23.
Float Ownership
Activity delays shall not automatically mean that an extension of the contract
completion date is warranted or due the contractor. A Contract Change
Notice or delay may not affect existing critical activities or cause non-critical
activities to become critical. A Change Notice or delay may result in only
absorbing a part of the available total float that may exist within the
schedule, thereby not causing any effect on any interim milestone date or the
contract completion date.
Total float is defined as the amount of time between the early start date and
the late start date, or between early finish date and the late finish date, for
each and every activity in the schedule. Float is not for the exclusive use or
benefit of either you or the contractor. Extensions of time to interim
milestone dates or the contract completion date under the contract will be
granted only to the extent that equitable time adjustments to the activity or
activities affected by the Change Notice or delay exceeds the total float of the
affected activity or subsequent paths and extends any interim milestone date
or the contract completion date.

SPECIAL TOPICS
7.9 ACCELERATION
The contract Changes article in a typical contract establishes your right to

accelerate the work. Whether the contract contains an acceleration provision or
not, the contractor is entitled to an equitable adjustment for its acceleration costs if
you order the contractor to accelerate the work, or does so indirectly by not
granting a time extension when the contractor is otherwise entitled to an extension.
(The term "constructive acceleration" is sometimes used to describe the situation
where a contractor is denied valid time extensions and is forced to accelerate its
efforts to meet the original schedule.) Certain steps must be followed, however,
before entitlement is established.
The steps which the contractor must follow to establish the basis for recovering its
acceleration costs are the following:
Ÿ The contractor must be properly entitled to an extension of time. (For

example, where there was an excusable delay based on force majeure; or
your delays; or major changes are added to a contractor's scope and the
company refuses to grant an extension of time.)
Ÿ The contractor must request a time extension, unless it would be useless

to do so (for example, if you have by your conduct or unreasonable delay
in responding to the contractor's request made it clear that no extensions
would be granted). In this case, the contractor may be able to claim that
it has been constructively accelerated. (Reference Special Topics Section
7.8 "Delays and Extensions of Time" and Section 7.2 "Basis for Claims"
pg. 25.)
Ÿ Upon either express or implied (for example, passage of a reasonable

period of time with no response) denial by you, the contractor must notify
you that the denial (or lack of timely response to the request) will cause
the contractor to accelerate the work and that the cost of doing so will be
for your account.
Ÿ The contractor must then actually accelerate the work. (The acceleration
effort need not be entirely successful. A good faith and reasonable
attempt is all that is required, yet all costs expended in good faith will be
compensable.)
Unless these steps are carefully followed giving you the opportunity to decide
whether it is willing to extend completion of the project or alternatively whether it
will pay for the costs of acceleration, the contractor may not be able to recover its
costs for accelerating the work.
7.9 ACCELERATION
7 SPECIAL TOPICS
7.10 SUSPENSION OF WORK
Occasions arise when it is necessary or desirable to suspend all or some

portion of a contractor’s work without a known date for resumption. If the
period of suspension is known with some certainty, then the Changes clause
is the proper authority to modify the contract period of performance.
Typical reasons for suspension include:
− Unsatisfactory or defective performance by the contractor requiring

an indefinite period of time to fix the problem.
− project interface conflicts with others of uncertain duration.
− force majeure conditions where continued work would create

unacceptable safety conditions of undetermined duration.
− changes or performance problems caused by the customer requiring

significant replanning before work can continue in a cost effective
manner.
A typical suspension clause reads, in part:
“You may by written notice to Contractor, suspend at any time the

performance of all or any portion of the Work to be performed under the
contract...
If Contractor intends to assert a claim for equitable adjustment under this

clause it must, pursuant to the General Condition titled “Changes” and
within ten (10) calendar days after receipt of notice to resume work, submit
the required written notification of claim and within twenty (20) calendar
days thereafter its written proposal setting forth the impact of such claim.”
The suspension clause normally authorizes (1) complete or partial

suspension; (2) flexibility in the definition of what is to stop, what is to
continue, and what preservation measures are to be taken; (3) full
cooperation and mitigation of impact by the contractor; (4) the obligation to
resume as instructed; (5) contractor liability for suspensions required to
remedy its own problems; and (6) equitable adjustment in price and schedule
for the unavoidable impact of suspensions on performance. Unlike some
contract clauses, which deny profit or suspension costs or disallow
adjustments for impact on the cost of the work when resumed, the typical

clause allows full equitable adjustment and must therefore be carefully

coordinated with the provisions of your prime contract. You do not want to
unknowingly give a contractor a benefit that you do not have in your prime
contract.
Suspension notices should be absolutely clear when issued to define the scope
of the suspension and any special instructions. Suspension caused by
contractor problems should cite the nature of contractual liability for such
problems and should describe a course of action required to lift the
suspension. Any notice to suspend or to resume work must be in writing
from your authorized representative.

SECTION 7. SPECIAL TOPICS Page 54a of 67
7 SPECIAL TOPICS
7.11 DIFFERING SITE CONDITIONS
One of the most common types of variation, as well as one of the most
contentious, is the differing site condition. Contract clauses vary concerning
entitlement, but most contain the same elements.
The typical Differing Site Conditions clause provides for additional

compensation and time to the contractor if its costs increase or it is delayed
as a result of conditions which differ from those indicated in the contract, or
which are of an unusual nature and differ from those ordinarily encountered
and inherent in the type of work being performed under the contract.
Although differing site conditions generally involve subsurface soil
conditions, other conditions at the site different from those represented in the
contract or by the customer may be the basis for a claim for additional time
or money (e.g., a misrepresentation of the nature of a structure to be
demolished.)
The contractor must provide written notice of a differing site condition

immediately after its discovery. There are two reasons for timely
notification. One, you must be given the opportunity to make its own
assessment of the conditions encountered before they are disturbed. Second,
in the event you concur that there is a differing site condition but the
contractor has undertaken on its own a costly solution to deal with the
conditions, you have been precluded from directing a more cost-effective
approach. Videotapes and photographs are useful ways to record the
conditions which were encountered and the actions taken.
Even if the contract does not contain a Differing Site Conditions clause, the
contractor may still be able to recover the costs and time resulting from
the differing site conditions which were encountered. If you have
misrepresented the conditions, or has withheld pertinent information from the
contractors bidding the project, the contractor may still have entitlement.
Note: Refer to Special Topics Section 7.2 "Basis for Claims" pgs. 12 & 13.
7.11 DIFFERING SITE CONDITIONS

SECTION 7. SPECIAL TOPICS Page 55 of 67 .
7 SPECIAL TOPICS
7.12 TERMINATIONS
7.12.1 Purpose This procedure describes the process for terminating the services, in whole or
in part, of contractors; either for default or for convenience (optional
termination for you or your customer's convenience).
Termination for default is generally an act of desperation and is

generally undertaken in the heat of battle. For these reasons (and others)
reconsider carefully any threats or actions taken that will be perceived as
precursors to termination for default. This word of caution is not intended to
dissuade projects from liberal use of notice letters, e.g., pointing out items of
potential concern (reference Exhibit 7.12.1 for a sample). Keeping a
contractor on notice that schedule milestones must be met or that quality
concerns must be resolved accomplishes two objectives. First, these notices
maintain focus and attention on intermediate potential failures and help avoid
an accumulation of such failures leading to significant schedule or quality
problems. Second, should actual termination be necessary and appropriate,
the intermediate notices assure you have not waived your rights by tacit
acceptance of the intermediate failures.
7.12.2 Discussion Terminations have potentially significant, long range implications and must
have adequate management and legal review to ensure an understanding of
probable liabilities and to evaluate direct hire or contracting alternatives to
achieve project objectives.
Notices and instructions relating to terminations can be especially significant

and contract provisions must be strictly followed. In addition, in a
termination for default for which you expect the contractor's bonding
company to be financially responsible, the bonding company must be:
1) Copied when the Cure Notice is sent; 2) Copied when the Default
Notification is sent; and 3) Given an opportunity to complete the work.
Wrongful or improper default termination procedures may result in the loss

of contractual remedies and protection. Contract provisions are normally
written to define specifically the administrative process and to describe or
limit the recovery of damages.
7.12.3 Procedure Termination for Convenience (Optional Termination)
Under many contracts, you have the right to terminate all or a portion of the
incomplete work under a clause entitled "Termination for Convenience" or
"Optional Termination." Although the Termination article may refer to the
Changes article for determination of compensation, Termination for
7.12 TERMINATIONS
Convenience clauses normally have specific provisions defining the

contractor's entitlement. For this reason, the Termination for Convenience
clause should be carefully examined to determine which costs (direct and
indirect) the contractor would be entitled to recover upon termination.
Another mechanism to delete work from the contract is a deductive change

order. Generally, the clause which is applicable depends upon the scope and
magnitude of the portion terminated/deleted. The decision whether a scope
reduction is a deductive change or a convenience termination is not simple
and there are no clear guidelines for making such a determination. Typically,
the adjustment for a deductive change is based on "what it would have cost"
to perform the deleted work. The adjustment for a termination for
convenience is typically based on the contract price for the work terminated.
Since the decision of which approach to take can have significant financial
consequences for you, it is important to calculate the adjustment using each
approach and then to encourage settlement of the adjustment on terms most
advantageous to you.
If in the best interests of the project it is desirable to terminate (in whole or in

part) a contractor's work for convenience, a plan explaining the benefits and
recommendation shall be prepared for review and approval by management
and, as appropriate, the customer.
Prepare a package describing the circumstances which prompt consideration

of a contract termination for convenience (including why termination for
default is not appropriate) and the contractual basis for this recommendation,
a draft of the termination letter, a summary of current contract progress and
status (cost, schedule, financial), and a contingency plan for completing the
work (if work has not been deleted). Obtain required Management approvals
before notifying the contractor.
Notify the contractor (only once, no prior notice is required as no "cure" is

desired) stating exactly what is terminated and the effective date of
termination. Include any appropriate instructions such as those suggested
below. (Reference Exhibit 7.12.3-A for a sample Termination For
Convenience Letter.)
Schedule a discussion with the contractor to communicate the termination, to

initiate/review the contractor's demobilization plan, and to review the
contract close out procedures.
Request the contractor to submit a termination settlement claim in accordance

with the terms of the contract.
7.12 TERMINATIONS
Prepare a Contract Amendment describing the terminated work,

incorporating the negotiated settlement, and establishing the modified or final
contract price and schedule (with appropriate release language).
Termination for Default (Termination for Cause)
Appropriate grounds for termination for default are normally set out in the
contract and include continued and uncorrected defective work, failure to
complete, failure to make progress and insolvency. Termination for default
requires extensive Legal and management involvement. Prior to taking
action that leads directly to a termination for default, the following steps will
be taken:
If grounds for default appear to exist, a proposed scope and justification

together with an alternative source plan shall be prepared and reviewed
and approved by you and, as appropriate, customer management. The
plan must provide for the contractually required notices and opportunity
to cure the existing default.
Notify the contractor and its surety of the defect or non-performance and
your intent to partially or entirely terminate for default and provide a
reasonable opportunity in the notice for the contractor to remedy the
problems. (Refer to Exhibits 7.12.3-B.1, 7.12.3-B.2, and 7.12.3-B.3 for
sample Cure Notice Letters.)
If the problems are not resolved, proceed with the following steps:
Prepare a brief document describing the circumstances which prompt

consideration of a contract termination for contractor default and state
the contractual basis for this recommendation.
Include a chronology of events and correspondence and the current status

of the event(s) leading to the termination. It is important that this
document accurately and fairly reflect your position and the contractor's
position.
Prepare a package containing the descriptive statement, a summary of

current contract progress and status (cost, schedule, financial), and a
contingency plan for completing the work, including an assessment of the
likelihood that the surety will elect to complete the work.
If the decision is to terminate for default, produce a second notice stating

exactly what is terminated (refer to Exhibit 7.12.3-C for a sample
7.12 TERMINATIONS
Default Termination Notice Letter) and the effective date of termination.

Include any appropriate instructions regarding:
• Demobilization of personnel
• Retention of equipment, tools and materials
• Turnover or transition of work to others
• Cancellation or assignment of purchase orders and
subcontracts
• Protection of work in progress
Establish a force account for record purposes and accumulate costs

incurred as a result of the default (including reprocurement) for future
claims against the contractors or its surety.
Provide the surety a reasonable period to initiate completion of the work.
Arrange for inspections, inventory and documentation of progress at the

time of termination.
Proceed with the alternative plan as authorized by management.
Prepare a Contract Amendment describing the terminated work,

incorporating the negotiated settlement of any termination claims or
counterclaims, and establishing the modified or final contract price and
schedule.
7.12.4 Exhibits Notice Letter — Schedule Submittal Unacceptable [Sample] (Exhibit 7.12.1)
Termination for Convenience Letter [Sample] (Exhibit 7.12.3-A)
Cure Notices [Sample] (Exhibits 7.12.3-B.1; 7.12.3-B.2; and 7.12.3-B.3)
Termination for Default Letter [Sample] (Exhibit 7.12.3-C)
7.12.5 Checklists Contract Termination Checklist/Termination for Convenience (Exhibit

7.12.5-A)
Contract Termination Checklist/Termination for Default (Cause) (Exhibit
7.12.5-B)
7.12 TERMINATIONS
Notice Letter — Schedule Submittal Unacceptable [SAMPLE] (EXHIBIT 7.12.1)
[Date]
[Contractor - Formal Notice Address]
Reference: Schedule Submittal

[Letter]/[Transmittal] No. ______, dated ________
Dear _______________:
The referenced submittal contains proposed schedule dates which do not meet the contract milestone dates.
The proposed dates are not acceptable. Please take appropriate action to recover the schedule and submit,
within five (5) days, a revised submittal which reflects completion of contract work in accordance with the
contract milestone dates.
Very truly yours,
7.12 TERMINATIONS
Termination for Convenience Letter [SAMPLE] (EXHIBIT 7.12.3-A)
[Date]
Subject: Termination for Convenience
Dear _______________:
[Contractor's name] is hereby notified in accordance with the General Conditions, Article __, entitled
OPTIONAL TERMINATION, that the contract is terminated for convenience. By copy of this letter,
contractor's Surety is also advised of this Notice.*
[Provide specific instructions with respect to disposition of work in progress, sub-tier suppliers and
subcontractors, and similar direction, in accordance with the termination article.]
Very truly yours,
cc [Surety Bonding Company] registered letter
* If the contract has no performance bond, delete the reference to the bonding company and the cc.
7.12 TERMINATIONS
Cure Notice — Refusal to Proceed [SAMPLE] (EXHIBIT 7.12.3-B.1)
[Date]
Reference: 1. [Company's Direction Letter]

2. [Contractor's Refusal Letter]
Dear _______________:
Reference 1 directed [contractor's name] to take action to correct repeated quality deficiencies in its work,
"whether or not contractor considered such action to be a change."
[Contractor's name] has indicated, [Reference 2, if refusal is by letter] [by its actions, if contractor just
declines to accept work, but will not formally acknowledge its refusal] that it does not intend to proceed
with the direction in Reference 1.
The Contract General Conditions, Article __, entitled CONTRACT INTERPRETATION, provides, in
part: "At all times CONTRACTOR shall proceed in accordance with the work in accordance with the
determinations, instructions, and clarifications of COMPANY."
The contract General Conditions, Article __, entitled TERMINATION FOR DEFAULT, provides, in part:
"...CONTRACTOR shall be considered in default of its contractual obligations under this contract if it
abandons or refuses to proceed with any or all work, including modifications directed pursuant to the
clause entitled 'CHANGES'."
It is the company's determination that the reference direction is appropriate. This letter is formal notice that
[contractor's name] is to demonstrate by its actions that it intends to comply immediately with the direction,
and further, that [contractor's name] is to provide within three (3) days, written confirmation of its intent to
comply with the company's direction. By copy of this letter, contractor's Surety is also advised of this
Notice.*
Very truly yours
* If the contract has no performance bond, delete the reference to the bonding company and the
cc.
7.12 TERMINATIONS
Cure Notice — Schedule Performance Endangering Contract Milestones

[SAMPLE] (EXHIBIT 7.12.3-B.2)
[Date]
Dear _______________:
The company has determined that [contractor's name]'s performance is endangering the contract milestone
dates.
The Contract Special Conditions, Article __, entitled COMMENCEMENT, PROGRESS AND
COMPLETION OF THE WORK, provides in part: "If at any time, CONTRACTOR'S actual progress is
inadequate to meet the requirements of this contract, COMPANY may notify CONTRACTOR to take
such steps as may be necessary to improve its progress."
The Contract General Conditions, Article __, entitled TERMINATION FOR DEFAULT, provides, in part:
"...CONTRACTOR shall be considered in default of its contractual obligations under this contract if it...
fails to make progress so as to endanger performance of this contract."
The Contract Special Conditions, Article __, entitled COMMENCEMENT, PROGRESS AND
COMPLETION OF THE WORK, provides, in part: ” If within a reasonable period as determined by
COMPANY, CONTRACTOR does not improve performance to meet the Contract Milestones ....
COMPANY may require an increase in CONTRACTOR’S labor force, the number of shifts, overtime
operations, additional days of work per week, expedited shipment(s) of equipment and materials, and an
increase in the amount of construction plant and equipment, all without additional cost to COMPANY."
[Contractor's name] is directed to take appropriate action to recover the schedule and to submit, within
three (3) working days, a revised submittal which reflects completion of contract work in accordance with
the contract milestone dates. [Provide details whether contractor is specifically directed to increase its
labor force, the number of shifts, overtime operations, additional days of work per week and an
increase in the amount of construction plant as is necessary to achieve the contract milestone dates.]
By copy of this letter, contractor's Surety is also advised of this Notice.*
Very truly yours
cc.
7.12 TERMINATIONS
Cure Notice — Schedule Submittal with Unacceptable Milestones

[SAMPLE] (EXHIBIT 7.12.3-B.3)
[Date]
Reference: Schedule Submittal

[Letter]/[Transmittal] No. ______, dated ________
Dear _______________:
The referenced submittal contains proposed schedule dates which do not meet the contract milestone dates.
The proposed dates are not acceptable.
The Contract Special Conditions, Article ____, entitled COMMENCEMENT, PROGRESS AND
COMPLETION OF THE WORK, provides, in part: "If at any time, CONTRACTOR'S actual progress is
inadequate to meet the requirements of this contract, COMPANY may notify CONTRACTOR to take
such steps as may be necessary to improve its progress."
The Contract General Conditions, Article _____, entitled TERMINATION FOR DEFAULT, provides, in
part: "...CONTRACTOR shall be considered in default of its contractual obligations under this contract if
it...fails to make progress so as to endanger performance of this contract..."
[Contractor's name] is directed to take appropriate action to recover the schedule and to submit, within
three (3) days, a revised submittal which reflects completion of contract work in accordance with the
contract milestone dates. By copy of this letter, contractor's Surety is also advised of this Notice.*
Very truly yours
cc.
7.12 TERMINATIONS
Termination for Default Letter [SAMPLE] (EXHIBIT 7.12.3-C)
[Date]
Subject: Termination for Default
Reference: [Company's Cure Notice Letter]
Dear _______________:
The reference letter, copy attached, provided specific instructions and a schedule to cure a material breach
of the contract. The period for curing the failure has lapsed. [Contractor's name] has not cured the failure,
and is hereby notified in accordance with the General Conditions, Article __, TERMINATION FOR
DEFAULT that the contract is terminated.
By copy of this notice, contractor's Surety is also advised of this notification of termination for default.
The Surety has ten (10) days from the date of receipt of this letter to respond with respect to its intent
to complete the work.*
[Provide specific instructions with respect to disposition of work in progress, sub-tier suppliers and
subcontractors, and similar direction, in accordance with items (g) through (k) of the termination
article.]
Very truly yours
cc.
7.12 TERMINATIONS
Contract Termination Checklist/Termination for Convenience (EXHIBIT 7.12.5-A)
Contract Number:__________________________
Contractor:____________________________________
Contract Scope:
This checklist is not for terminations for default

1. The contract terms for termination have been reviewed and are understood. YES NO
Comments:
2. Alternate work completion plan has been prepared and approved. YES NO
Comments:
3. A termination package has been prepared. YES NO

Comments:
4. The Site Manager has approved the contract termination package. YES NO
Comments:
5. Company management and Legal have approved the termination package. YES NO
Comments:
6. Other required approvals, if any have been obtained. YES NO

Comments:
7. YES NO
Comments:
8. YES NO
Comments:
Name:____________________________________________
Date:________________________________________
7.12 TERMINATIONS
Contract Termination Checklist/Termination for Default (Cause) (EXHIBIT 7.12.5-B)
Contract Number:__________________________
Contractor:____________________________________
Contract Scope:
This checklist is not for termination for convenience.

1. The contract terms for termination have been reviewed and are understood. YES NO
Comments:
2. The contractor has been given a Notice of Default with a reasonable period to "cure" YES NO
the default.
Comments:
3. A contingency plan has been prepared to deal with the results of the contract YES NO
termination addressing work completion.
Comments:
4. A detailed description with adequate supporting back up of why the contract is being YES NO
terminated (termination package) has been prepared.
Comments:
5. The Site Manager has approved the contract termination package. YES NO
Comments:
6. The Legal Department has reviewed the termination package. YES NO

Comments:
7. Company management has approved the termination package. YES NO

Comments:
8. Other required approvals have been obtained. YES NO

Comments:
9. Contractor's Surety has been contacted to determine when/whether it will complete YES NO
the work.
Comments:
7.12 TERMINATIONS
Name:____________________________________________
Date:________________________________________
7.12 TERMINATIONS
7 SPECIAL TOPICS
7.13 PROJECT ENVIRONMENTAL CONTROLS
7.13.1 Purpose The proliferation of federal, state, local, and international environmental
regulations and public concerns has increased the need for environmental
planning for construction projects of all kinds.
Complicating the planning process is the multitude of agencies, organizations
and authorities that have cognizance over the various environmental aspects
of a project. Their overlapping and sometimes conflicting requirements
must be factored into the early planning of a project.
Environmental planning and control goes beyond basic compliance with

applicable regulations. Selection of environmentally compatible construction
materials (such as aerosols, recyclable containers, and biodegradable
materials) will simplify disposal of construction debris and reduce the cost
of handling, as well as the potential of later cleanup costs. Constructability
reviews of the design and planning of construction work methods can
effectively integrate the necessary personnel and processes for
environmental compliance and reduce the production of waste products.
Failure to comply with environmental laws and regulations, even where

inadvertent, has the potential to expose both the company and its employees
to civil and or criminal liability, including fines, penalties and imprisonment.
7.13.2 Overview - Environmental Controls planning begins during the project proposal or bid
Strategic cycle. Working with your environmental specialists, the proposal and
Planning project managers should review the Request for Proposal for
environmental requirements. Research may be required to identify
significant legislative or community requirements that may affect the project
but which are not mentioned in the bid documents. The potential cost of
compliance activities, the compatibility of the project location, design, and
layout with environmental requirements, and the time required to obtain
permits, agency reviews and other approvals are important elements in
evaluating a prospective project.
Successful projects are based on early planning, followed by carefully

monitored implementation, as shown in the attached Matrix (Exhibit 7.13.2
).
7.13.3 Phase I - The effectiveness of the initial planning will set the tone of the project.
Planning Clear understanding of the areas of responsibility and authority among the
customer, the project designers, and the constructor is essential. The
Project Division of Responsibility, often reduced to a matrix for ease of
understanding, should include such topics as:

• Applicable Environmental Laws and Regulations

The regulations and agencies that will be involved in a project should be
identified and the applicability and requirements of each thoroughly
understood. Those requirements should be considered in developing
the project cost and schedule . Agencies may have conflicting
requirements that should be addressed. These issues should be
identified and reconciled early in the project planning phase.
• Environmental Constraints
One of the early steps in project planning or development is the
identification of environmental constraints that may affect the project.
Environmental requirements are reviewed to identify which, if any, have
the potential to have a significant impact on the project’s location,
design, layout, cost, schedule, or viability. These environmental issues
or constraints are important to identify early to determine if any are
incompatible with the project development basis, including feasibility,
and to avoid unnecessary cost and schedule implications for you, the
customer, or contractors.
• Permitting Plan
The final phase of the planning stage is a permitting plan or matrix,
listing and scheduling applicable permits and licenses that must be
obtained by you in the performance of its work. (Refer to Exhibit
7.13.2). This information assists in the identification of those which the
customer or Project will obtain, those you are responsible to obtain (if
any), and those which are to be included in the scope of contractors.
7.13.4 Phase II - During the design phase of the project, the strategy for environmental
Design compliance established in the planning phase can be integrated into the
engineering activities.
• Environmental Compliance Plan

The Environmental Compliance Plan (ECP) establishes the deliverables,
the schedule for the deliverables and responsibility for the preparation
of the deliverables. Implementation of the ECP begins with design.
• Environmental Design Criteria
During initial stages of engineering, environmental design criteria should
be identified and incorporated into the design basis as appropriate to
facilitate later project review and approval by regulatory agencies.
These design criteria are essential to complying with environmental
regulations, and in some cases, can avoid the need for certain permits
and other approvals. In developing the design criteria, it is important to
maintain appropriate interface between the customer, the design team,

construction and any contractors.

• Environmental Impact Assessments (EIA)
Often the customer elects to develop, apply for and obtain approval of
the project EIA, but will still require support from the project in the form
of design details or other information. Early identification of the
information and the dates by which it is required is essential in
facilitating the EIA preparation and review process. If the company has
a contractor preparing an EIA, it is important to monitor design and
schedule commitments made in the EIA and how they may affect cost.
• Permit and License Acquisition
The acquisition of permits and other approvals for a project is generally
apportioned among the customer, you, other contractor(s) and
subcontractors. Regardless of who has responsibility for obtaining the
permits, the progress of permit acquisition should be monitored against
the ECP. The design team also needs to stay current with design
commitments made in the permit applications and requirements
associated with permit terms and conditions that must be met in the
final design and construction of the facility. Such requirements also
need to be communicated to contractors, as appropriate.
• Constructability Review
As design evolves, environmental input to constructability reviews can
assist in the development of a more effective and constructable design.
Reviews will typically pinpoint areas of potential over-design, increased
ease of assembly or installation, and improved maintenance of the
completed facility. Environmental review may also identify regulatory
requirements that may affect construction schedule, cost, access, or
techniques that should be addressed during construction planning.
• Material and Source Selection
It is important to review the scope and design criteria of each facility
or construction element for materials that can effectively reduce cost
and construction duration yet comply with environmental restrictions.
Disposal of hazardous waste is a major area of potential long-term
liability. Selection of materials and processes should be done with
attention to reducing the amount of hazardous waste generated.
• Trade and Labor Availability Studies
Market and trade studies on the current availability of environmentally
sound construction materials and the availability of environmentally
trained, qualified labor should be performed. In cases of actual or
anticipated shortages that could affect the project, recommendations
can be provided for alternative methods or materials that would avoid

delays or increased costs of construction.
• Work Subcontract Packaging

Often the sequencing of work will require the installation or use of
construction aids (such as temporary on-site storage of materials or
disposal of wastes). These can be most economically provided when
combined into manageable work releases or contract packages. Work
packaging will determine the most effective grouping of work elements
into packages for bid and award using a phased construction approach
to minimize the overall onsite duration of these special aids. It will
establish a sequenced schedule for finalizing increments of design and
the release of material/equipment acquisition that supports the overall
project schedule requirements.
7.13.5 Phase III - • Construction Environmental Control Plan

Pre -Construction Prior to the start of construction, it is important to identify regulatory
requirements. The Project Manager is responsible for having the CECP
prepared prior to site mobilization. The plan must be prepared, or at a
minimum reviewed by your environmental specialists. Each contractor
should be provided a copy of the CECP, and advised that they must
comply, at a minimum, with all requirements in it applicable to their
work, as well as all other laws and regulations applicable to their work,
which they are solely responsible for determining.
• Contracting Plan
The requirements for environmental compliance, including flowdown of
requirements from the prime contract, must be included in all contracts
and, in many cases, in material purchase orders. When the project
develops the construction contract terms and conditions it must include
environmental compliance, training and certification requirements.
• Preconstruction Surveys
The terms and conditions of a project’s permits may require project-
specific preconstruction surveys to document the presence, extent, and
condition of environmental resources (e.g. sensitive plants, fish and
wildlife, cultural resources). These surveys are often required during
specific timeframes, may involve approved survey areas and
techniques, and often must be documented and submitted to an
agency(ies) prior to start of construction. The need for and
responsibility for timing of such surveys should be communicated to
contractors in advance of construction mobilization to avoid initiation of
site activities prior to satisfying these regulatory requirements.

• Asbestos Inspection and Notification

Whenever your scope of work or that of a contractor involves
demolition or renovation, an asbestos inspection must be performed by
a certified asbestos contractor prior to commencement of work. Both
the customer of the building and the “operator” of the
demolition/renovation are responsible for this activity. In preparing
contract documents, it is important to determine whether the customer
is going to perform the inspection, or already has, and to make that
clear in the bid package/contract documents. If the customer is doing
the inspection, their survey/inspection report should be attached to the
bid documents. If the customer is not conducting the inspection, the
company should make it clear to the contractor in the bid documents
that it is their responsibility to have a licensed asbestos consultant
inspect before beginning any demolition or renovation activity. Once
the inspection has been conducted, written notice is required to the
EPA or designated state agency 10 days prior to (1) any demolition or
(2) certain renovation activities where asbestos was found to exceed
the prescribed threshold levels.
• Permit or EIS-required Plans or Submittals

Often a project is authorized to proceed with permit conditions that
require the preparation, submittal, and approval of additional project-
specific environmental plans or documentation prior to the initiation of
project construction. These requirements are binding on a project, and
should be carefully complied with by the customer, company, or
contractors, as appropriate, prior to initiation of site activities. Such
requirements should be communicated to contractors so that they do not
begin activities before final agency authorizations are received.
• Personnel Training
In almost every aspect of construction, personnel must acquire specific
training for performance of various aspects of the work. The selection
of contractors who can provide environmentally trained personnel is
critical. Appropriate training of customer, your or other project
personnel is of equal importance, not only at the inception of the project
but on a continuous basis throughout the life of the project. The
development and implementation of an environmental training plan and
training records may be a valuable asset to the project.
• Delineation of Required Exclusion Areas

Permits and other regulatory approvals may require protection of
sensitive areas or resources through exclusion of specific or all
construction activities. Any such exclusion areas should be carefully

delineated and marked (e.g. flagged, staked) prior to initiation of

construction activities, and the need to avoid such areas must be
communicated to all of your and the contractor field personnel.
7.13.6 Phase IV - The planning and process development actions taken during the planning,
Construction design and preconstruction phases of the project will be implemented at the
work site. Contract management will include oversight that contractors are
operating in accordance with the project environmental controls. Site
activities include a number of key elements as follows:
• Implementation of Construction Environmental Control Plan (CECP)

The CECP prepared during the construction planning phase will be
implemented with the start of construction jobsite activities. The Site
Manager is ultimately responsible for overseeing implementation of the
company’s environmental compliance under the day-to-day direction of
the Construction Environmental Coordinator designated in the CECP.
• Regulatory Reporting
Two types of reporting to regulatory agencies may be necessary on a
project. First, routine reporting may be required under permit or other
approval conditions (e.g. construction inspection reports, monitoring of
sensitive resources). Second, reporting may be required in response to
non-routine events on the jobsite (e.g. spills or releases of hazardous
substances). Routine reporting requirements will be identified in the
CECP and should be complied with by jobsite personnel. Reporting
requirements should also be communicated to contractors, as
appropriate.
• Document Control and Records Retention
Documenting the design, quality and construction performance is a
basic project requirement. Added to these standard processes should
be the documentation of compliance with environmental regulations and
the heath and safety status of personnel engaged in the work. These
requirements should be incorporated into the project document control
program to insure that the performance is recorded and maintained in a
complete and cost effective manner.
• Environmental Trends and Cost Control Program

Maintain a schedule and cost tracking system that reflects the
effectiveness of the project’s environmental control program.
Variances from the plan can then be quickly identified for prompt
action.
7.13.7 Phase V - Project As construction of individual facilities or the overall project nears
Completion completion, a wide range of complex functions must be carried out to

demonstrate to the customer that the technical, financial and contractual

requirements of the constructed work have been completed in an integrated
manner. The information and documents gathered during the preceding
phases of the project are utilized to close out the project smoothly and
effectively. Major components of the closeout phase include:
• Surplus Materials and Waste Disposal

As the construction site demobilizes, special care is required during
disposal of surplus materials and construction waste and debris. These
materials must be disposed of in accordance with the Construction
Environmental Control Plan. Disposal of solvents, used petroleum
products, coolants, coatings and similar materials require special
handling. Material requiring manifesting or disposal at a qualified
landfill require special documentation. Special regulatory requirements
apply to the transport and disposal of hazardous waste. Disposal
records created by the project should be flagged for retention in the
project files in accordance with the document retention policy.
• Restoration or Revegetation
Restoration and revegetation activities must be performed to meet all
specifications in project-approved plans and permits. Restoration and
revegetation plans and approval also may require documentation to,
inspection by, and/or sign-off by agencies. These requirements will be
identified in the project’s CECP, and should be communicated to
contractors whose work may be affected by such requirements.
• Post-Construction or Startup Monitoring
Permits and other regulatory approvals may include conditions
specifically requiring monitoring during post-construction or startup
activities. These requirements must be satisfied as specified, and
should be included in contractor communications as applicable.
• Final Inspections and Turnover

As part of project completion, the documented closeout of
environmental requirements plays an important role in reducing any
exposure of you or the customer to future costs or legal liability. A
series of final inspections, acceptance of completed contractor work,
and turnovers to the customer should be planned and implemented in a
smooth sequence. Part of the final inspection process may involve site
visits by responsible environmental agencies. These activities should, if
possible, be scheduled well enough in advance of the planned
completion date so that unnecessary delays are avoided. Completed
contractor releases should be received before acceptance of the
contract.
7.13.8 Exhibits

INDEX
Acceleration of work, Section 7, pg 53

Constructive Acceleration, Section 7, pg 24, 50, 52, 53
Acceptance, Section 6, pg 1, 6, 7
Accidents (See Insurance)
Action Checklists (See Checklists)
Advance Payment
Bonds, Section 3, pg 30-31
Credit Review, Section 3, pg 8
Amendments (See Changes)
Backcharges, Section 4, pg 58-63

Backcharge Log, Section 4, pg 61
Daily Summary of Backcharge Work, Section 4, pg 62
Notice of Backcharge, Section 4, pg 60
Notice of Backcharge Completion, Section 4, pg 63
Beneficial Occupancy, Section 6, pg 10-13, 15
Punch List, Section 6, pg 19-22
Bid Clarification Meeting, Section 3, pg 1,2
Bonds
Advance Payment Bonds, Section 3, pg 31
Bid Bonds, returning, Section 3, pg 30
Extra Work, Section 4, pg 5
Lien Bonds, Section 3, pg 32
Maintenance Bonds, Section 3, pg 32
Payment Bonds, Section 3, pg 30-32
Performance Bonds, Section 3, pg 30-32
Warranty Bonds, Section 3, pg 32
Breach of Contract, Section 7, pg 9, 10
Breach of Implied Warranty, Section 7, pg 22-24
INDEX Page 1 of 7
Certificate of Acceptance, Partial, Section 6, pg 1, 6

Certificate of Final Acceptance, Section 6, pg 1, 7
Certificate of Final Payment (See Closeout)
Certificate of Payment, Section 5, pg 13,16
Changes, Section 4, pg 1-26
Amendments
Amendment Form, Section 4, pg 17, 18
Definition, Section 4, pg 1
Log, Section 4, pg 19
Change Notice
Change Notice Form, Section 4, pg 11,12
Definition, Section 4, pg 1,2
Procedure, Section 4, pg 6-7
Change Order
Change Order Form, Section 4, pg 15-16
Definition, Section 4, pg 2
Procedure, Section 4, pg 6, 7
Commitment Approvals (See Commitment Approvals)
Company Initiated, Section 4, pg 3, 4
Contractor Initiated, Section 4, pg 4, 5
Cost Records For Changes, Section 4, pg 10
Daily Summary of Time and Material Work, Section 4, pg 21
Directive to Proceed, Section 4, pg 2, 20
Equitable Adjustments, Section 4, pg 7-10, 23
Extra Work (See Extra Work)
Flowchart, Section 4, pg 23
Impact/Ripple, Section 7, pg 24-25
Log, Section 4, pg 4-5, 13, 16-19
Negotiations, Section 4, pg 5, Section 7, pg 29-34
Price Adjustment, Section 4, pg 7-9
Proposals Log, Section 4, pg 14
Release Language, Section 7, pg 25
RFI's Not To Be Used For Changes, Section 4, pg 40
Schedule Adjustment, Section 4, pg 7
INDEX Page 2 of 7
Checklists
Contract Amendment, Section 4, pg 23
Contract Change Notice, Section 4, pg 24
Contract Change Order, Section 4
Contract Closeout, Section 6, pg 5
Contractor Proposals, Section 4, pg 26
Contractor Demobilization Checklist, Section 6, pg 4
Coordination Meeting, Section 5, pg 10
Cost Commitment, Section 4, pg 29
Daily Report, Section 5, pg 6
Environmental, Section 5, pg 33
Insurance and Bonds, Section 3, pg 38
Invoice Processing, Section 5, pg 20
Labor Relations, Section 7, pg 45
Mobilization Payment, Section 5, pg 19
Pre-Award Action, Section 3, pg 7
Pre-Bid and Site Inspection Visit, Section 3, pg 5
Pre-Construction Meeting, Section 3, pg 18
Progress Review Meeting, Section 5, pg 9
Safety & Health, Section 5, pg 30
Schedule, Section 5, pg 11
Technical Transmittals, Section 4, pg 46
Termination For Convenience, Section 7, pg 66
Termination For Default (Cause), Section 7, pg 67
Claims, Section 4, pg 47-57
Basis For, Section 7, pg 12-28
Flowchart, Section 4, pg 56
Log, Section 4, pg 14, 49
Closeout, Section 6, pg 1-9
Certificate of Final Acceptance, Section 6, pg 1, 7
Checklist, Section 6, pg 1, 5
Demobilization (See Demobilization)
Files, Section 3, pg 20
Inspection (See Inspection)
Lien, Release of, (See Release and Certificate of Final Payment)
Partial Release and Certificate of Payment, Section 6, pg 1, 8a
Punch List (See Punch List)
Records Retention, Section 3, pg 20; Section 6, pg 5
Release and Certificate of Final Payment, Section 6, pg 1, 8
Substantial Completion (See Substantial Completion)
Completion, Acceptance (See Closeout)
Commitment Approvals, Section 4, pg 27-36
Commitment Authorization, Section 4, pg 27-36
Commitment Register, (See PTS Commitment Register)
Concurrent Delay (See Delay)
Contract Law, Section 7, pg 1-11
Convenience Termination (See Termination)
Coordination, Section 7, pg 35-43
Meeting, Section 5, pg 8, 10
INDEX Page 3 of 7
Correspondence
Action Items, Section 3, pg 25, 26
Control, Section 3, pg 25, 26
Logs, Section 3, pg 27, 28
Closeout, Section 3, pg 25
Effective Correspondence, Section 3, pg 25,26
Filing System, Section 3, pg 19-24
Contract Administration Filing Index, Section 3, pg 22-24
Point of Contact, Section 3, pg 15,16,26
Records Retention, Section 3, pg 20
Credit Review, Section 3, pg 8
Critical Path (See Schedule)
Cure Note (See Termination)
Daily Reports, Section 5, pg 1-6

Default (See Termination)
Delays
Changes Leading To, Section 7, pg 19,20
Compensable Delay, Section 7, pg 18-21
Concurrent Delay, Section 7, pg 21,22,51
Delays and Extensions of Time, Section 7, pg 15-24, 50-52
Excusable Delay, Section 7, pg 16-18, 52
Float Ownership, Section 7, pg 52
Non-Excusable Delay, Section 7, pg 16, 51
Demobilization, Section 6, pg 1, 4
Checklist, Section 6, pg 1, 4
Differing Site Conditions, Section 7, pg 12-13, 20, 55
Difficulty of Performance, Section 7, pg 11, 15
Disputes, Section 4, pg 54
Division of Responsibilities (DOR) Matrix, Section 2, pg 1-11
Documentation (See Filing)
Transfer, Section 3, pg 8
Drawings, Section 4, pg 37-38, 44-46
Bid Drawings, Section 3, pg 2
Review, Issued for Construction, Section 3, pg 2
Environmental, Section 5, pg 31-33

Project Environmental Controls Matrix, Section 7.13, pgs 1-9
Equitable Adjustments (See Changes)
Excusable Delays (See Delays)
Exhibits (See Forms)
Extension Of Time (See Delays)
Extra Work, Section 4, pg 2, 3, 5, 6
INDEX Page 4 of 7
Fact Sheet, Section 6, pg 9

Filing
Index, Section 3, pg 22-24
Flowchart of Changes/Claims, Section 4, pg 23
System, Section 3, pg 19-24
Force Accounts, Section 4, pg 9; Section 7, pg 46-48
Force Majeure (See Delays, Excusable)
Forms (See Forms Index behind Forms Tab)
Hazardous Materials, (See Environmental)

Health (See Safety & Health)
Historical Fact Sheet (See Fact Sheet)
Housekeeping/Clean-up, Section 7, pg 41-42
Impact/Ripple, Section 7, pg 24, 25

Impossibility of Performance, Section 7, pg 11, 15
Inspection, Section 6, pg 1, 3, 10, 14, 16, 18-22
Insurance, Section 3, pg 30-38
Certificates, Section 3, pg 7, 30, 33-35
Register, Section 3, pg 30,37
Interferences, Section 7, pg 39-40
Interpretation, Section 7, pg 1-5
Invoice
Concurrence Sheet, Section 5, pg 13, 17
Progress Payment, Section 5, pg 14, 15
Kickoff
Letter, Section 3, pg 14-16
Meeting, Section 3, pg 9-18; Section 7, pg 36-37
Labor Relations, Section 7, pg 44, 45

Liens, Section 7, pg 27-28
Bonds to Avoid, Section 3, pg 30-32
Liquidated Damages, Section 7, pg 49
Relief From, Section 7, pg 16-18, 51
Logs (See Correspondence)
INDEX Page 5 of 7
Meetings
Coordination, Section 5, pg 8, 10-11
Minutes/Action Lists, Section 3, pg 1
Pre-Award, Section 3, pg 1-3, 6, 7
Pre-Bid, Section 3, pg 1-2, 4-5
Pre-Construction, Section 3, pg 3, 9-18
Progress Review, Section 5, pg 7, 9
Site Visit, Section 3, pg 1-2, 4-5
Mobilization
Notice of, Section 3, pg 10, 17; Section 7, pg 37
Payment, Section 5, pg 12
MSDS (Material Safety Data Sheet, see Environmental)
Negotiation, Section 4, pg 5-6; Section 7, pg 29-34

Notices (See Individual Topics)
Payment Procedures, Section 5, pg 12-20

Pre-Award Meeting, Section 3, pg 1-3, 6, 7
Pre-Bid Meeting, Section 3, pg 1-2, 4-5
Pre-Bid Site Visit, Section 3, pg 1-2, 4-5
Pre-Construction Meeting, Section 3, pg 3, 9-18
Pre-Job Conference, Section 3, pg 12
Procurement Transfer Package, Section 3, pg 8
Project Environmental Controls Matrix, Section 7.13, pgs 1-9
Progress Measurement and Payments, Section 5, pg 12-20
Progress Measurement Procedure (Sample), Section 5, pg 18
Progress Payments, Section 5, pg 12-20
Progress Review Meeting, Section 5, pg 7-9
PTS Commitment Register, Section 4, 28, 35
Beneficial Occupancy, Section 6, pg 11
Substantial Completion, Section 6, pg 14-15
Quality Surveillance, Section 5, pg 21
Reports (See Daily Reports)

Request for Information (RFI), Section 4, pg 38-43
Responsibilities
Division of Responsibility (DOR) Matrix, Section 2, pg 1-11
Retention
Release, Section 6, pg 1
Release and Bonds (See Bonds, Lien)
INDEX Page 6 of 7
Safety and Health, Section 5, pg 22-30

Citations, Section 5, pg 24
Confirmation of Non-Compliance, Section 5, pg 23, 29
History, Section 5, pg 23, 25-28a
Program, Section 5, pg 22
Violation, Section 5, pg 22-24
Schedule, Section 4, pg 37; Section 5, pg 7-11; Section 7, pg 40-41
Acceleration, Section 7, pg 53
Changes, Section 4, pg 7
Critical Path, Section 7, pg 21
Delays and Extensions of Time, Section 7, pg 50-52
Extension vs. Acceleration, Section 7, pg 50-52
Submittal Requirements, Section 3, pg 37; Section 4, pg 30; Section 5, pg 7
Site Conditions (See Differing Site Conditions)
Site Mobilization, Section 3, pg 10, 17
Site Visit, Pre-Bid, Section 3, pg 1-2, 4-5
Substantial Completion, Section 6, pg 14-18 (See also Closeout)
Certificate, Section 6, pg 15, 18
Suspension of Work, Section 7, pg 54
Technical Transmittals, Section 4, pg 44-46

Comments Requiring Change Notice, Section 4, pg 44
Termination, Section 7, pg 9-11, 56-67
Time and Materials Work, Section 4, pg 9, 21
Transfer Documentation, Section 3, pg 8
Unit Price Quantity Variation, Section 7, pg 14-15
Waiver and Liens, Release of, (See Closeout)

Warranty, Section 6, pg 23-27
Backcharge, Section 6, pg 24
Bonds, Section 3, pg 30-31
Correction, Section 6, pg 27
Evergreen, Section 6, pg 24
Full Wrap, Section 6, pg 24
Subtier Work, Section 6, pg 26
Written Communication (See Correspondence)
INDEX Page 7 of 7

Procedures For Managing Subcontracts Brown Book)

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Procedures For Managing Subcontracts Brown Book)

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Contract/Subcontract

Management User Guide

Copyright  1999. All Rights Reserved.

TABLE OF CONTENTS Page i of v

6.1 Contract Closeout

TABLE OF CONTENTS Page ii of v

1.2 Scope This Guide provides procedures for managing subcontracts.

Many of the procedures in this Guide include a work practice Checklist to

A clear understanding of the terms and conditions of the contract being

This Guide should be used in conjunction with approved Project procedures

SECTION 1. INTRODUCTION Page 1 of 1

2.1 ASSIGNMENT OF TASKS.......................................................................................................1

2.1 ASSIGNMENT OF TASKS

Contract management is a team effort. Optimizing a project’s personnel

The generic DOR Matrix in this procedure is a guideline for development of a

2.1.4 Exhibit Division of Responsibility (DOR) Matrix (Exhibit 2.1.3)

2.1 ASSIGNMENT OF TASKS

DIVISION OF RESPONSIBILITY MATRIX✶ (Exhibit 2.1.3)

2.1 ASSIGNMENT OF TASKS

Division of Initial Updates Historical file

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

Contract Review turnover Compose Monitor and Establish

Lead:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

Pre-construction Prepare meeting Monitor and

Lead________ Assigned to:__________ Assigned to:__________

2.1 ASSIGNMENT OF TASKS

Labor Relations Administer Coordinate labor Receive Record nature,

File/Route Safety / Security

2.1 ASSIGNMENT OF TASKS

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

2.1 ASSIGNMENT OF TASKS

Progress Obtain, review for Establish method Review, Approve

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

Technical Receive copies of Sign Change Assemble and

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

2.1 ASSIGNMENT OF TASKS

Contractor Prepare cost and

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

Contractor's Obtain reports Review and Log and retain

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

Contractor Obtain copy of Analyze, review Resolve open

Lead:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

2.1 ASSIGNMENT OF TASKS

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

2.1 ASSIGNMENT OF TASKS

Environmental Obtain Hazardous Review Determine Monitor written Develop and

Monthly Provide data or Summarize and Approve and

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

2.1 ASSIGNMENT OF TASKS

Coordination Chair meetings Prepare agenda, Resolve

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

Liquidated Identify triggering Monitor Collect/deduct

Lead__________ Assigned to:__________ Assigned to:__________ Assigned to:__________

2.1 ASSIGNMENT OF TASKS

Release of Lien Obtain Issue final check

2.1 ASSIGNMENT OF TASKS

3.1 PRE-AWARD ACTIVITIES ......................................................................................................1

Certificate of Insurance (EXHIBIT 3.5.4-A - Attachment A) ............................................................ 36

3.1 PRE-AWARD ACTIVITIES

• Each meeting will have an agenda prepared in advance.

• The Pre-Bid Meeting is an opportunity to elaborate on the

3.1 PRE-AWARD ACTIVITIES

Lead Assigned to: Assigned to: Assigned to:

Lead: Assigned to: Assigned to: Assigned to: Assigned to:__

Lead Assigned to: Assigned to:____

Lead Assigned to: Assigned to: Assigned to: Assigned to:__

Lead Assigned to: Assigned to: Assigned to: Assigned to:__

Lead Assigned to: Assigned to: Assigned to:

Lead Assigned to: Assigned to: Assigned to: Assigned to:__

Lead Assigned to: Assigned to: Assigned to:

Lead: Assigned to: Assigned to: Assigned to:

Lead Assigned to: Assigned to: Assigned to: Assigned to:__

Lead Assigned to: Assigned to: Assigned to:

Lead Assigned to: Assigned to: Assigned to:

Lead Assigned to: Assigned to: Assigned to: