109.05 Payment for Contract Revisions - Revision history

Clarkj25: /* Negotiated Prices (109.05.C) */

2024-10-29T17:35:08Z

Negotiated Prices (109.05.C)

Clarkj25: /* Negotiated Prices (109.05.C) */

2024-10-29T17:34:29Z

Negotiated Prices (109.05.C)

Clarkj25 at 17:34, 29 October 2024

2024-10-29T17:34:14Z

Clarkj25 at 17:31, 29 October 2024

2024-10-29T17:31:32Z

Clarkj25 at 17:30, 29 October 2024

2024-10-29T17:30:58Z

Clarkj25: /* Negotiated Prices (109.05.C) */

2024-10-23T21:15:08Z

Negotiated Prices (109.05.C)

Clarkj25: /* Negotiated Prices (109.05.C) */

2023-06-06T17:19:53Z

Negotiated Prices (109.05.C)

Clarkj25 at 15:37, 5 April 2023

2023-04-05T15:37:08Z

Clarkj25: /* FORCE ACCOUNT WORK */

2023-04-05T15:31:18Z

FORCE ACCOUNT WORK

Show changes

Clarkj25: /* FORCE ACCOUNT WORK */

2023-04-05T15:27:02Z

FORCE ACCOUNT WORK

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 The preceding information and cost justification are to be noted in the reason section for extra work items on [[103.02_Contract_Revisions|<u>103.02 Contract Revisions - Change Orders</u>]] with supporting documentation both noted on the contract change order and placed in the project file.
-After mutual agreement is reached between the engineer and contractor on pricing the extra work from unit price or negotiated price methods, the engineer should prepare a contract change order to document the agreement and begin the payment process per the guidance in [http://mdotwiki.state.mi.us/construction/index.php/Construction_Contract_Modification_Process_Overview#Contract_Modification_Development Contract Change Order Development].
+After mutual agreement is reached between the engineer and contractor on pricing the extra work from unit price or negotiated price methods, the engineer should prepare a contract change order to document the agreement and begin the payment process per the guidance in [http://mdotwiki.state.mi.us/construction/index.php/Construction_Contract_Modification_Process_Overview#Contract_Modification_Development <u>Contract Change Order Development</u>].
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 It is the engineer’s responsibility to ensure all cost negotiations are complete and mutually agreed to prior to the start of work, or default to approval of a work plan and properly track associated costs according to subsection 109.05.D.  Force Account and this Construction Manual.  The purpose is to have meaningful negotiations, collaborative cost agreement, and reasonable allocation of risk prior to the start of work.  If at any time a negotiated price is not used, proper force account procedures must be immediately followed in accordance with subsection 109.05.D.
-The preceding information and cost justification are to be noted in the reason section for extra work items on [[103.02_Contract_Revisions|<u>103.02 Contract Revisions - Change Orders</u>] with supporting documentation both noted on the contract change order and placed in the project file.
+The preceding information and cost justification are to be noted in the reason section for extra work items on [[103.02_Contract_Revisions|<u>103.02 Contract Revisions - Change Orders</u>]] with supporting documentation both noted on the contract change order and placed in the project file.
 After mutual agreement is reached between the engineer and contractor on pricing the extra work from unit price or negotiated price methods, the engineer should prepare a contract change order to document the agreement and begin the payment process per the guidance in [http://mdotwiki.state.mi.us/construction/index.php/Construction_Contract_Modification_Process_Overview#Contract_Modification_Development Contract Change Order Development].

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 It is the engineer’s responsibility to ensure all cost negotiations are complete and mutually agreed to prior to the start of work, or default to approval of a work plan and properly track associated costs according to subsection 109.05.D.  Force Account and this Construction Manual.  The purpose is to have meaningful negotiations, collaborative cost agreement, and reasonable allocation of risk prior to the start of work.  If at any time a negotiated price is not used, proper force account procedures must be immediately followed in accordance with subsection 109.05.D.
-The preceding information and cost justification are to be noted in the reason section for extra work items on contract change orders with supporting documentation both noted on the contract change order and placed in the project file.
+The preceding information and cost justification are to be noted in the reason section for extra work items on [[103.02_Contract_Revisions|<u>103.02 Contract Revisions - Change Orders</u>] with supporting documentation both noted on the contract change order and placed in the project file.
 After mutual agreement is reached between the engineer and contractor on pricing the extra work from unit price or negotiated price methods, the engineer should prepare a contract change order to document the agreement and begin the payment process per the guidance in [http://mdotwiki.state.mi.us/construction/index.php/Construction_Contract_Modification_Process_Overview#Contract_Modification_Development Contract Change Order Development].

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-See [[103.02_Contract_Revisions|Section 103.02 Contract Revisions]] for information regarding change orders for any contract revisions.
+See [[103.02_Contract_Revisions|<u>Section 103.02 Contract Revisions</u>]] for information regarding change orders for any contract revisions.
 ===[[#DOCUMENTING PRICE NEGOTIATIONS |DOCUMENTING PRICE NEGOTIATIONS]]===

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-See [[103.02_Contract_Revisions|Section 103.02 Contract Revisions]] for information regarding payment for Contract Revisions.
+See [[103.02_Contract_Revisions|Section 103.02 Contract Revisions]] for information regarding change orders for any contract revisions.
 ===[[#DOCUMENTING PRICE NEGOTIATIONS |DOCUMENTING PRICE NEGOTIATIONS]]===

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 * Cost analysis based on planned labor, equipment, and materials to be used for the work.
-** If the engineer requests a detailed cost estimate per subsection 109.05.C, the contractor must provide the detailed estimate within 5 calendar days.  A detailed cost estimate is recommended for justification of complex or unique situations or when the work has the potential to escalate a contract modification into a higher tier of approval.
+** If the engineer requests a detailed cost estimate per subsection 109.05.C, the contractor must provide the detailed estimate within 5 calendar days.  A detailed cost estimate is recommended for justification of complex or unique situations or when the work has the potential to escalate a contract change order into a higher tier of approval.
 ** The engineer should evaluate the quantity of work to be completed; equipment required to complete the work, materials, and other items detailed in the contractor’s estimate.  Other items to consider may include the impacts of weather, procurement, mobilization, mobility, staging, restrictions, expedited schedules, etc. which may impact pricing.
 ** Use of production rates, estimating manuals, and/or national cost estimating publications can also be used to help support the cost analysis.
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 It is the engineer’s responsibility to ensure all cost negotiations are complete and mutually agreed to prior to the start of work, or default to approval of a work plan and properly track associated costs according to subsection 109.05.D.  Force Account and this Construction Manual.  The purpose is to have meaningful negotiations, collaborative cost agreement, and reasonable allocation of risk prior to the start of work.  If at any time a negotiated price is not used, proper force account procedures must be immediately followed in accordance with subsection 109.05.D.
-The preceding information and cost justification are to be noted in the reason section for extra work items on contract modifications with supporting documentation both noted on the contract modification and placed in the project file.
+The preceding information and cost justification are to be noted in the reason section for extra work items on contract change orders with supporting documentation both noted on the contract change order and placed in the project file.
-After mutual agreement is reached between the engineer and contractor on pricing the extra work from unit price or negotiated price methods, the engineer should prepare a contract modification to document the agreement and begin the payment process per the guidance in [http://mdotwiki.state.mi.us/construction/index.php/Construction_Contract_Modification_Process_Overview#Contract_Modification_Development Contract Modification Development].
+After mutual agreement is reached between the engineer and contractor on pricing the extra work from unit price or negotiated price methods, the engineer should prepare a contract change order to document the agreement and begin the payment process per the guidance in [http://mdotwiki.state.mi.us/construction/index.php/Construction_Contract_Modification_Process_Overview#Contract_Modification_Development Contract Change Order Development].
 <div style="text-align: right;">[mailto:Change?body=http://mdotwiki.state.mi.us/construction/index.php/109.05_Payment_for_Contract_Revisions Email this Page]</div>
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 ** Consider impacts of scale and small quantities on unit prices as smaller quantities tend to have higher prices.
 ** Consider any unique factors affecting unit prices (mobilization, weather, mobility, procurement, staging, restrictions, expedited schedules, etc.) and their potential impact upon unit prices.
-** When considering a lump sum price and unit prices (other projects, weighted average, or historical) are used for justification of the lump sum additional details may be required to clarify the comparison.
+** When considering a lump sum price and unit prices (other projects, weighted average, or historical) are used for justification of the lump sum and additional details may be required to clarify the comparison.  For more information see [https://mdotwiki.state.mi.us/construction/index.php/103.02_Contract_Revisions#Generating_Contract_Modifications Contract Revisions] for required documentation on negotiated prices.
 * Cost analysis based on planned labor, equipment, and materials to be used for the work.

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 When the previous two methods do not provide an agreement or any time work starts prior to a price being established, then force account procedures shall be used.  The Work Plan and daily reconciliation forms are required any time work commenced prior to price being established.  Furthermore, when work commences under the force account method but is then later negotiated by the engineer and contractor to be a lump sum item of work (pay item 1090003 Negotiated Force Account), the force account records under which work started must still be retained within the project files.
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 ===[[#FORCE ACCOUNT WORK|FORCE ACCOUNT WORK]]===
-Force accounts are a tool the engineer may use to compensate the contractor for the performance of extra work at actual costs incurred plus additional markups as detailed in the [http://mdotcf.state.mi.us/public/specbook/2012/ Standard Specifications for Construction] subsection [http://mdotcf.state.mi.us/public/specbook/files/2012/109%20Measurement%20&%20Payment.pdf 109.05]. Force accounts are to be used only in rare circumstances where the contractor and engineer cannot agree on a price, the scope of work cannot reasonably be determined, or other payment methods for compensation are impractical.   Prior to commencing force account work the Region Construction Engineer must approve the additional work (Approval can be documented on an IDR or an e-mail).
+Force accounts are a tool the engineer may use to compensate the contractor for the performance of extra work at actual costs incurred plus additional markups as detailed in the [https://www.michigan.gov/mdot/-/media/Project/Websites/MDOT/Business/Construction/Standard-Specifications-Construction/2020-Standard-Specifications-Construction.pdf#page114 Standard Specifications for Construction] subsection 109.05]. Force accounts are to be used only in rare circumstances where the contractor and engineer cannot agree on a price, the scope of work cannot reasonably be determined, or other payment methods for compensation are impractical.   Prior to commencing force account work the Region Construction Engineer must approve the additional work (Approval can be documented on an IDR or an e-mail).
 Also see [[Force_Account_Work |Force Account Work]].