Managing Changes on Construction Contracts. Bob Pappe, P.E., PLS ODOT Contract Administration Engineer 503-986-3012 ODOT Contract Administration Engineer since Spring 1999 First AGC meeting as CAE: Problem : it takes too long to get paid for CCO work!
Bob Pappe, P.E., PLS
ODOT Contract Administration Engineer
ODOT Contract Administration Engineer since Spring 1999
First AGC meeting as CAE:
Recent Project Manager training about ‘Changes’.
Can the Agency require a change?YES
“Changes to the Plans, quantities, or details of construction are inherent in the nature of construction and may benecessary or desirable during the course of the Project construction.
Without impairing the Contract, the Agency reserves the right to require changes it deems necessary or desirable within the scope of the Project. Changes may modify, without limitation:
Changes may modify, without limitation:
Adjust Payment per 00195.20
Adjust Contract Time per 00180.80
195.20(a) Insignificant Changed Work – If the changes made under 00140.30 do not significantly change the character or unit cost of the Work to be performed…will pay at the unit item price.
Insignificant Changed work Examples:
(b) Significant Changed Work –
If the changes made under 00140.30 significantly alter the character, unit cost, or lump sum cost of the Work, the Agency will adjust the Contract.
Adjustments will exclude loss of any anticipated profit.
The parties shall agree upon the basis of payment and the amount of adjustment prior to the contractor commencing the Changed Work.
If the basis and amount cannot be agreed upon, the Engineer will make an equitable adjustment, which may increase or decrease the Contract amount and contract time.
Any such adjustments will not be more than the amount justified by the Engineer on the basis of the established procedure set out in Section 00197 for determining rates.
Amends the Contract- Adds work, subtracts work, changes work, changes terms of the work,…
Unilateral CCO Process:
Unilateral CCO Process:
Process is intended to solve the problem of it taking too long to pay for change order work.
Unilateral CCO provides a budget to pay what the PM has determined to be the value of the change.
This process is intended to allow the PM to later adjust payment made with the unilateral CCO to match what the PM determines the actual cost of the change to be once the changed work is complete.
Not intended to shut off discussion and further negotiation.
MUST be one of these two:
00196.10 Negotiated Price (Signed CCO)
PM provides written scope of work for this Extra Work.
Contractor provides estimate of cost and additional time, if any.
PM and Contractor agree to and both sign the CCO.
Extra Work now becomes Contract Work. Contractor is now responsible for means, methods, progress, damage from public traffic, etc.
00196.20 Force Account
If the Engineer and Contractor cannot agree on a price for the Extra Work, the Engineer may issue a Force Account Work order requiring the Extra Work be paid as Force Account Work. Force Account Work records and payment will be governed by Section 00197.
Oregon Racketeer Influenced and Corrupt Organization Act
Means to commit, to attempt to commit, to conspire to commit, or to solicit, coerce or intimidate another person to commit any conduct that constitutes a crime.
“Pattern of racketeering activity”
Means engaging in at least two incidents of racketeering activity that have the same or similar intents, results, accomplices, victims or methods of commission or otherwise are interrelated by distinguishing characteristics, including a nexus to the same enterprise, and are not isolated incidents.
Strongly committed to maintaining the integrity of the State’s contracting system
Make good any defective work. 00170.85
Remain liable for all latent defects – even past expiration of warranty if latent defect results from fraud or gross mistake that amounts to fraud. 00170.85
Keep full and complete records of costs incurred for submitted claims. 00150.40; 00170; 00199.20
Furnish all work, with materials, equipment, labor necessary to complete projectBy the terms of the Contract…Contractor’s Duties
Do not make false entries, or alter, or destroy true entries, or fail to make true entries in business records, with the intent to defraud. Falsifying Business Records. ORS 165.080
Take, and attempt to take, only the money you earned. Do not:
Take, or attempt to take taxpayer’s money by deception. ORS 164.085
Create or confirm a false impression
Fail to correct a false impression you created
Prevent another from acquiring information pertinent to the disposition of the property involved
Promise performance you do not intend to perform
Tell the truth
When swearing to or certifying expenses claimed. False Swearing, ORS 162.075. Unsworn Falsification, ORS 162.085
Do not commit wire fraud or mail fraud
By using faxes, phones, or US mails to facilitate the commission of a fraud. 18 USC 1343
Do not use intentional deception
To obtain checks or other written instruments affecting a pecuniary interest. Obtaining Execution of Documents by Deception, ORS 165.102
Do not intentionally obstruct government
By impairing or hindering it by means of economic interference or other obstacle.ORS 162.235Imposed by criminal law…Contractor’s Duties
Value of the claim in relation to the original bid;
Claim poorly documented. Claim as submitted does not tell the story, its just volumes of misc paper, “its all in there -you find it” approach;
Few or no actual supporting records and an unwillingness to provide (timecards, invoices, daily logs,…);
Claimed costs for the same disputed work is in multiple claim issues;
Multiple instances of apparent inflated hours, inflated rates;
Claimed Overtime for salaried Superintendents who are not paid OT;
Multiple cases of double billing, contract work included with disputed work
Major portions of claim pertains to only prime and/or its “related” subcontractor or supplier, not other subs associated with work;
Invoices appear fabricated;
Claimed cost aren’t real costs, only real if ODOT pays them.
Claimed “actual costs incurred” should show up in Contractor’s accounting system records.
The ORICO Allegations