Requirements contained in this division are directly applicable to all other divisions. A thorough knowledge of the requirements of this division is necessary for the satisfactory administration of the other portions of the Specifications.
GENERAL
This section of the Specifications sets forth the intent of the contract provisions relative to adjustments to the terms of the contract as a result of changes in plans, deviations from contract quantities, extra work, and changed conditions, as well as requirements for maintenance and final cleanup. Engineers and others involved in construction cannot properly perform their function unless they are thoroughly familiar with the provisions of this section. A misinterpretation of, mishandling of, or a failure to follow these provisions may result in very costly expenditures by both the Department and the Contractor.
The Contractor should fully comply with the requirements of this section even if, in his opinion, he is clearly due additional compensation for the work. Conversely, when the Engineer receives a request for additional compensation or notice of intent to file a claim, he shall comply fully with the requirements of the Specifications in spite of the fact that he considers the request or claim to be unwarranted or frivolous.
A claim submitted by the Contractor may initially be denied by someone in the Department. When further reviewed by the approving authority level, their perspective may result in approval of the claim based on additional information or their experience. Documentation of all facts relevant to the claim, checking the Contractor's record keeping, and maintenance of accurate records of labor, equipment, and material utilized in performance of the work is imperative for all claims and disputed work.
104-1 INTENT OF CONTRACT
The responsibility of the Department is to produce a contract with the scope and payment of the work to be performed. It is the Contractor's responsibility to perform the work in accordance with the contract documents. In the event the method of construction or character of any part of the work is not covered by the plans, the Standard Specifications shall apply.
104-2 SUPPLEMENTAL AGREEMENTS
A supplemental agreement as defined in
Article 101-3 of the Specifications, is an instrument for making allowable modifications to the terms of the contract; however, modifications are limited to those which are
necessary for the satisfactory completion of the work. Instructions for preparing and handling the
Supplemental Agreement are contained in the Records and Reports Section of this Manual.
Execution of a supplemental agreement is required
prior to making any change in the terms of the contract, including but not limited to compensation, changes in the contract time, and modification of the Specifications. The Engineer must have on file a list of individuals authorized by the Contractor to execute Supplemental Agreements before processing an agreement.
A supplemental agreement must be executed prior to performing the affected work except as provided in
Subarticle 104-8(A). The supplemental agreement may be signed electronically by all parties to expedite the execution of the agreement. If the agreement is not executed electronically, then hand signatures are required. If the Engineer and the Contractor do not agree to a modification to the terms of the contract prior to the performance of the affected work, neither compensation nor time can be granted by execution of a supplemental agreement.
104-3 ALTERATIONS OF PLANS OR DETAILS OF CONSTRUCTION
The Engineer may make changes in the plans or details of construction as may be necessary or desirable. When the proposed changes extend beyond the original project termini, the Division Engineer shall make a written request for approval to the Chief Engineer providing details as to the necessity of extending the project beyond the original project limits.
The Contractor shall perform the modified work at the original contract unit or lump sum prices unless the character
and the cost of performing the work materially changed over that originally anticipated and bid upon in the contract.
This provision indicates that when a change in the contract is directed, which the Engineer determines will materially change the character of the work and the cost of performing the work, payment will be made in accordance with the provisions of
Subarticle 104-8(A). This provision has a twofold requirement. Both conditions, a material change in the character of the work
and the cost of performing the work, have to exist in order to modify the unit cost of the work in question. An increase or decrease in the cost of performing the changed work does not in itself constitute justifiable grounds for modifying the unit price in the contract. The character of the work has to materially change along with the cost of performing the work.
Whenever the Engineer makes changes in the plans or details of construction, he should review the changed work to determine if, in his opinion, the character of the work has changed and the cost of performing the work will decrease. If so, he should advise his Division Engineer and determine if a price reduction should be pursued with the Contractor.
When the Department requires the Contractor to perform work which the Contractor feels results in changing the character of the work and materially increases the cost of performing work, he can request additional compensation prior to beginning the work. If the Engineer agrees compensation is due, then payment should be made in accordance with
Subarticle 104-8(A).
If the Engineer disagrees with the Contractor's opinion, the Engineer must advise him in writing of the Department's decision. If the Contractor intends to pursue his request for compensation, he must advise the Engineer in writing prior to beginning work in order to protect his rights to recover the costs after the work is complete in accordance with
Subarticle 104-8(B).
Changes which would allow negotiation for revised unit prices are the exception rather than the rule. A simple example would be when the Department directed the only pipe line on the project be shifted from a plan location in earth material to a location in solid rock so that blasting would be required in order to excavate for the pipe line. The Contractor would have to use equipment in the excavation process that could not have been anticipated during the bidding process. The character of the work has materially changed and obviously the cost of the work has increased. The Contractor would be eligible for additional compensation as the alteration met both conditions as outlined in this provision.
Another example would be when the Department directed the Contractor to remove concrete slabs and repair the area using ACBC, Type B 25.0 material. The contract contains the item, ACBC, Type B 25.0; however, all of the material was to be placed by an asphalt paving machine on the four and ten foot shoulders. The repair of areas where the slabs are removed will necessitate the use of hand tools for placement due to the confined area. The character of the work has changed due to the material change in the placement equipment, and the unit cost of performing the work has increased due to the decrease in the production. The Contractor may be due additional compensation under this provision of the contract.
104-4 SUSPENSIONS OF WORK ORDERED BY THE ENGINEER
(A) SUSPENSIONS OF THE WORK ORDERED BY THE ENGINEER
When the Engineer orders the suspension of the work, he must do so in writing. The notice should be sent to the Contractor by
Certified Mail and should include the date and the hour the suspension begins. When the Contractor believes that a work suspension issued by the Engineer has resulted in costs due to idle equipment and/or labor and the Contractor believes additional compensation is justifiable due to the suspension, the Contractor is required to notify the Engineer of his
intent to file a claim within
7 days of the date of the suspension. Upon receipt of the Contractor's notice, the Engineer should immediately begin checking the Contractor's record keeping to verify that the Contractor's equipment and/or labor are idle.
The Engineer must notify the Contractor in writing to resume work. The notice should be sent by
Certified Mail and should include the date and the time the work is to resume. Within
14 days of receipt of the notice to resume work, the Contractor is required to submit to the Engineer in writing his claim for additional compensation due to the suspension. The claim must be submitted in accordance with
Subarticle 104-8(C) and include any reasons and support for an adjustment in compensation.
(B) ALLEGED SUSPENSIONS
When the Contractor feels he is being prevented from performing all or any portion of the work and the Engineer has not suspended the work, the Contractor must notify the Engineer in writing of
intent to file a claim for additional compensation by reason of such alleged suspension.
No adjustment in compensation will be made for idle equipment and/or labor prior to the submission of the written notice of intent to file a claim for additional compensation by reason of alleged suspension. The Engineer should document receipt of notice of intent from the Contractor by writing the date and the time the notice was received on the notice. Upon receipt of the notice, the Engineer will promptly investigate the Contractor's allegations and should also determine available work throughout the project. If the Engineer agrees with the Contractor's allegations, he will notify the Contractor in writing of the suspension of all or part of the work and the Contractor will strictly adhere to the provisions of
Subarticle 104-8(C). When the Engineer determines that no portion of the work should be suspended, he will notify the Contractor in writing of his determination. The Engineer should also advise the Contractor of other work available. If the Contractor does not agree with the Engineer's determination, the provisions of
Subarticle 104-8(C) will be strictly followed.
Within
14 days after the last day of the alleged suspension, the Contractor is required to submit to the Engineer in writing his claim for additional compensation. The claim must be submitted in accordance with
Subarticle 104-8(C) and include any reasons and support for an adjustment in compensation.
(C) CONDITIONS
If the suspension is for a period of time not originally anticipated, customary, or inherent to the construction industry, is for reasons other than those stated in
Article 108-7, and is not the result of the fault or negligence of the Contractor, the Engineer may make an adjustment in compensation for the actual verified cost of the idle equipment and idle labor caused by the suspension determined in accordance with
Subarticle 104-8(C). No adjustment in compensation will be made for each occurrence of idle equipment and/or idle labor which has a duration of
twenty-four hours or less. If the suspension of all or any portion of the work and the notice to resume work are given by the Engineer within
twenty-four hours of each other, no adjustment in compensation will be made. If the Contractor submits a written notice of
intent to file a claim for additional compensation by reason of alleged suspension and subsequently resumes work within
twenty-four hours of the beginning of the alleged suspension, no adjustment in compensation will be made.
Additional compensation allowed as the result of the suspension of work is limited to idle labor which cannot be absorbed into other work, idle equipment paid at the rate specified for equipment held in readiness, and the percentages established for force account work in
Article 109-3.
104-5 OVERRUNS AND UNDERRUNS OF CONTRACT QUANTITIES
(A) GENERAL
Deviations in the final quantities in excess of the specified percentages
may be valid grounds for revising the unit price for that quantity in excess of the stated percentages if it can be shown that the overrun or underrun of work causes an increase in the unit cost of performing the work. An overrun or underrun in excess of the specified limits is not, in itself, sufficient grounds for revising the unit price.
Adjustment of unit prices is provided both
"before the fact" and
"after the fact" due to the overrun or underrun of contract items in excess of the specified limits. In view of this, it is imperative that the Engineer keep the estimated quantities of work performed by the Contractor current and accurate at all times.
When an overrun or underrun of a contract item in excess of the specified limits is anticipated, the Engineer should notify the Contractor in writing of the anticipated overrun or underrun. The Engineer should consider executing a supplemental agreement at a reduced unit price or the contract unit price for the anticipated excess quantity. If the Contractor is not willing to execute a supplemental agreement at a reduced unit price or the contract unit price, the Engineer should keep detailed cost records for the quantity that exceeds the specified percentages. The Contractor has the responsibility to initiate any increase in unit price; however, such adjustments do not require prior written notice by the Contractor.
Projects are designed utilizing input from each of the preconstruction disciplines. The final product is a design based on sound engineering principals which can be constructed at the most economic cost and within a reasonable time. However, there are times when conditions or circumstances arise during the construction of a project that require a revision to the design or plan quantities. In these instances, the originating design unit should be given an opportunity to re-evaluate the revised circumstances.
The Division Engineer or his representative will consult with the design unit responsible for establishing a contract item when he anticipates either:
the final quantity will exceed the original contract quantity of a major contract
item by more than
15%
OR
the final quantity will exceed the original contract quantity of a minor contract
item by more than
100% and the cost of the overrun amounts to more than
$50,000.00
OR
the cost of the overrun of a minor contract item amounts to more than
$100,000.00.
The design unit representative will make a recommendation to the State Construction Engineer, either directly or through the Division Engineer, as to whether the additional overrun is warranted. This recommendation should include a cost analysis of the total anticipated overrun and comparisons with other possible alternatives. Following consultation with the Division Engineer, the State Construction Engineer will make a determination whether the additional overrun is warranted.
In addition, each time the total contract overrun is expected to increase by an increment of
$500,000.00, the Division Engineer or his representative will consult the
Program Development Branch, who will be responsible for the funding of the overrun.
(B) OVERRUNS -- INCREASE IN UNIT PRICES
The Contractor may request an increase in unit price at any time. An increase in unit price made will be made based upon the Contractor's cost records for the work previously performed. An increase made in the unit price after the work is performed will be made by the Engineer based upon a comparison of the Contractor's verified cost records for the work performed and the contract unit price. The increase in the unit price applies only to those quantities beyond the stated percentages. It is incumbent on the Contractor to provide detailed cost records that can be verified by the Engineer. This shall include a daily record of the hours each employee or piece of equipment was used in the work and invoices for all materials used in the work. The Engineer may request other information to be used in his evaluation of the claim, including the Contractor's original or certified copies of original bid document.
(C) UNDERRUNS -- INCREASE IN UNIT PRICES
The Contractor may request an increase in unit price at any time. The Contractor is required to provide sufficient documentation to satisfy the Engineer of the requested additional compensation. He shall provide original or certified copies of original bid documents to support any request for non-recovered fixed costs. When the requested increase in unit prices is for cost other than non-recovered fixed costs, he shall provide documented cost records for the work performed together with documentation that the increased cost was caused by the underrun. The Contractor may not receive additional compensation when a minor item underruns.
(D) OVERRUNS AND UNDERRUNS -- REDUCTION IN UNIT PRICES
A reduction in the contract unit price may be made when a contract item overruns or underruns in excess of the allowable limits. The Engineer has the responsibility to initiate any decrease in unit price prior to the work being performed. When an agreement cannot be reached regarding the reduction in the unit price to be made, the decision whether to direct the Contractor to perform the work on a force account basis will be made by the Division Engineer and in consultation with the State Construction Engineer.
104-6 ELIMINATED CONTRACT ITEMS
The Engineer may eliminate any item of work in the contract; however, prior to eliminating any item of work, the Engineer may wish to consult with the Division Engineer, the Division Construction Engineer, and/or the Area Construction Engineer. This article also provides that the Contractor shall be reimbursed for any work performed on an eliminated item prior to being notified of said elimination. The Engineer is responsible for being familiar with the work being performed such that the need to eliminate work can be identified as soon as possible. He is also responsible for notifying the Contractor of any eliminated items of work in a timely manner. Notification of eliminated work should be documented in the project diary and confirmed in writing to the Contractor.
The Contractor shall be reimbursed for the cost of materials which have been fabricated or partially fabricated for use in the eliminated work when such materials are not considered to be a stock item or for materials which have been delivered to the project for use in the eliminated item. The Engineer should consult with the Division Engineer, the Division Construction Engineer, and/or the Area Construction Engineer to determine if the Department has a need for the material and, if so, the location where the materials are to be delivered. Payment for delivered materials shall be in accordance with
Article 109-6. If the Engineer determines the Department does not have a need for the materials, the Engineer should advise the Contractor that he is to retain possession of the materials and request that he furnish an invoice for the materials showing the cost of the materials including any transportation charges and less any discounts the Contractor received. The invoice shall also reflect any credit for the salvage value of the materials. Upon receipt of the invoice, the Engineer should verify that the salvage value allowed is reasonable and submit the invoice with his recommendation regarding payment to the Division Engineer for approval. See the Records and Reports Section of this manual for the procedures for
'Payment for Leftover Materials'.
The Contractor shall be reimbursed for the verified actual cost of items of work that have been partially completed prior to notification of the elimination of the work. This actual cost shall not include profit or anticipated profit. Since the Contractor and the Engineer were not keeping detailed records of the cost of performing the eliminated work, the records submitted by the Contractor must be verified by the Engineer as being accurate based upon his engineering judgment. When the verified cost on the partially completed work is less than
$5,000.00, the Engineer should make payment for the work on the next estimate. When the verified cost on the partially completed work is
$5,000.00 or more, the verified cost records should be submitted to the Division Engineer for verification and approval prior to making payment for the work. The verified cost records should be submitted with the
Final Estimate Assembly.
If it is a federally funded project, the costs should be reviewed by the Construction Unit prior to payment of the eliminated materials. See the Records and Reports Section of this manual for the procedures for
payment of partially completed items of work.
104-7 EXTRA WORK
Extra work is defined in
Article 101-3 of the Standard Specifications. To determine if there is extra work, the Engineer must be familiar with the "Description of the Work" and "Measurement and Payment" as set forth in the Standard Specifications or the Special Provisions for the various bid items. The Engineer should never knowingly instruct the Contractor to perform extra work without advising him that the work is indeed extra work and establishing a basis of payment for the work.
Extra work may be developed as a result of circumstances including but not limited to the following: (a) omission of necessary bid items from the contract, (b) failure to include a basis of payment in the contract for work necessary to be performed under the terms of the contract, or (c) necessary plan revisions. When any of these circumstances occur, the Contractor and the Engineer should be alerted to the possibility of extra work being required. Compensation for extra work shall be made in accordance with
Article 104-8. When the Engineer determines that extra work is warranted, he should determine if an extension of the contract time is warranted for performance of the extra work. See the Records and Reports section of this Manual for
Supplemental Agreement procedures.
Approval of extra work is normally secured by the execution of a Supplemental Agreement. When work is to be performed on a force account basis as provided by
Article 109-3, a force account notice
should be issued by the Engineer prior to the work beginning. The approval of the necessity for performing extra work and the cost of performing the work should be secured in writing from an individual authorized to approve a supplemental agreement for the work. This approval
must be obtained before the Contractor is authorized to perform the work. If there is any question as to whether extra work is required, the Engineer should immediately consult with the Division Construction Engineer and/or the Area Construction Engineer. In addition, after determining that the extra work is warranted, the Engineer should determine if a contract time extension is warranted by the required extra work.
104-8 COMPENSATION AND RECORD KEEPING
(A) COMPENSATION FOR ARTICLES 104-3 OR 104-7
When the Engineer and the Contractor agree compensation is due under the provisions of
Articles 104-3, 109, or
104-7, payment shall be as follows: (1) when the Engineer and the Contractor agree to the prices to be paid, such agreement shall be documented through the execution of a supplemental agreement; or (2) when the Engineer and the Contractor cannot agree to the prices to be paid, the Engineer should issue a
force account notice and the affected work shall be performed as directed by the Engineer with compensation in accordance with
Article 109-3. See the Records and Reports Section of this Manual for additional information regarding
supplemental agreements and
force account work.
(B) CLAIM FOR ADDITIONAL COMPENSATION
The Contractor is required to give written notice of
intent to file a claim for additional compensation under the provisions of
Articles 104-3 and
104-7.
Written notice of intent to file a claim shall include the following: (1)
identify the project and plainly state that the document is notice of intent to file a claim; (2) specifically identify the affected work and provisions of the contract upon which the claim is based; (3) specifically state the Department's act or failure to act that is the basis for the claim; and (4) list all labor, equipment, materials, and overhead expenses that will be affected by the claim. When the Contractor gives apparent notice of intent to file a claim and such notice does not provide the information specified above, the Engineer should immediately advise the Contractor to clarify the notice.
No exception will be allowed to the requirement that
written notice be given of intent to file a claim prior to performing the work. Verbal notice of intent is not acceptable and does not meet the requirements of the Specifications. Written notice will be required in all situations. A copy of each intent should be sent via e-mail to the Area Construction Engineer.
The Contractor is required to submit separate records each week for each occurrence for which he has given notice of intent to file a claim. The Engineer should promptly check the Contractor's records and notify him of any difference between the Contractor's records and the Engineer's records. When the difference between the records cannot be resolved, the Engineer should document the cause of the difference. In addition, the Engineer should have his representative compare records with the Contractor's representative at the end of each day's operations and note in the diary any difference in the records. If the Engineer cannot verify the records within
7 days, the Contractor should be notified in writing that the records have been received but not verified.
In all cases, whether the records are verified or not, receipt should be acknowledged for each set of records received and the Contractor advised that receipt of records does not imply validity of the claim. See the Records and Reports Section of this Manual for
claim processing procedures.
If the Contractor chooses to pursue the claim after the disputed work is complete, he shall submit a written claim to the Engineer for an adjustment in compensation based upon his cost records within
120 calendar days after completion of the disputed work.
The claim shall be accompanied by a certification from an officer of the company or person authorized to execute supplemental agreements, stating that the claim is truthful and accurate. The Contractor may submit a claim on the
Contractor Claim Submittal Form (CCSF-1).
Claim correspondence for contract construction projects should be processed as follows:
- Enter claim information in Claims Tracking
(HiCAMS).
-
The Division Engineer should follow the
claim review process outlined in the Records and Reports section of this manual.
(C) COMPENSATION FOR ARTICLE 104-4
The Engineer should keep detailed records regardless of whether the suspension is directed by the Department or alleged by the Contractor. Complete diary entries should be made concerning the affected work. In the event a claim is submitted by the Contractor as a result of an alleged suspension, records detailing labor, equipment, and materials for each operation will be available to verify or dispute the Contractor's contentions. The Engineer should promptly review records submitted by the Contractor and promptly notify him of any disagreement with his records. The Engineer should also evaluate the justifications submitted by the Contractor as to why the equipment cannot be absorbed into other work on the project and why the labor cannot be absorbed into other work on the project or on other projects. In addition, the Engineer should evaluate the anticipated duration of the suspension to determine if payment should be authorized for mobilization cost to allow equipment to be absorbed into work on other projects.
(D) NOTIFICATION OF DETERMINATION
Failure of the Engineer to notify the Contractor of his determination within the specified time shall result in payment of interest on any monies determined due from the request for adjustment in compensation. Therefore, it is important for the claims to be promptly reviewed by the Resident, Division Construction Engineers, and Area Construction Engineers. See Records and Reports Section of this Manual for
claim processing procedures.
If the Contractor fails to receive such adjustment in compensation as he believes he is entitled under the terms of the contract, he may resubmit the claim as a final claim upon completion of the project. A claim for additional compensation under the provisions of
Articles 104-3,
104-4, and
104-7 can be
resubmitted only as a part of the Contractor's
final claim upon completion of the project.
104-10 MAINTENANCE OF THE PROJECT
The Contractor is required to maintain the project from the availability date or date of beginning work - whichever occurs first - until the project is accepted, except when a portion of the work is accepted as provided in
Article 105-17.
Maintenance of the various items of work during the course of construction is important. Maintenance is also an inherent part of the work upon which the Contractor has based his bid. Accordingly, it is the Engineer's responsibility to require adequate maintenance of the project, and it is the Contractor's contractual obligation to perform the maintenance work as required in a timely and cooperative manner.
Adequate and continuous maintenance of the work will provide a great return to the Contractor and the Department. As an example, on grading projects, the Contractor who maintains adequate drainage will be able to effectively work more days than one who does not adequately maintain the project. Benefits realized by the Contractor are a decrease in the number of days lost to weather, which results in a net increase in days available to pursue the work, potential increase in project productivity, and the reduction/elimination of liquidated damages which have the potential to decrease the margin of profit for the Contractor.
There are maintenance operations required which are strictly "dead expense" items of work which are related to public safety and health issues. These include but are not limited to maintenance of drainage, removal, and disposal of dead animals and maintenance of pavements and surfaces over which public traffic passes. It is in these and similar areas of maintenance that the work is most needed and, in some instances, the most difficult done by Contractor's forces. The need is derived from the fact that faulty or negligent maintenance in these areas result in inferior end products that possibly cannot be documented by normal means of measurement; however, they show up as hazards or inconvenience to the traveling public, damage to adjacent property and poor public relations which ultimately reduce the image and prestige of the Department. The Engineer's approach toward getting this work performed must be firm but tactful. If the Contractor fails to perform maintenance in time commensurate with the need, the Engineer may invoke the sanctions provided in
Article 105-16 of the Standard Specifications. The procedure for invoking these sanctions are contained in
Article 105-16 of this Manual.
When damage occurs to existing facilities as a result of the Contractor’s operations, the Engineer must determine if the damage is due to the Contractor’s negligence. For example, if the Contractor is crossing a road with off-road trucks which exceed legal weight limits and damages the pavement, repair will be performed at no cost to the Department. However, if the pavement is damaged by the Contractor hauling legal loads and repair is necessary, the Department should bear the cost of repair.
The Engineer should maintain open communications with other work units within the Department where the project is located and develop a contingency plan to manage emergency situations which require response during normal non-working periods. A complete listing of personnel available for emergency call back should be submitted by the contractor at the preconstruction conference and then updated throughout the life of the project. This list should be accessible by the Engineer and assigned project personnel to facilitate a prompt response to possible emergencies. The SharePoint team site should be updated to include all emergency contact information once it has been provided by the Contractor.
Specific guidelines for inspection of maintenance of the various items of work are included in the applicable divisions of this Manual and project personnel should assure that the Contractor adheres to these requirements. Continuous, effective maintenance often can prevent a minor maintenance problem from becoming a critical problem that requires emergency after-hours repair.
104-11 FINAL CLEANING UP
Prior to acceptance of the project, the Contractor shall remove all rubbish, excess materials that are to remain the property of the Contractor, temporary structures, and equipment from the highway right of way, borrow areas, and waste areas.
On resurfacing projects the Contractor will be required to remove all rubbish resulting from his operations. Rubbish includes chunks of asphalt generated from widening or patching operations, sod trimmings generated when the edge of pavement is cleaned for paving that may impair future maintenance of the facility, and any other debris which is a direct result of the resurfacing operation
.
104-12 VALUE ENGINEERING
PROPOSAL
General
The
purpose of the Value Engineering Proposal (VEP) is to encourage Contractors to incorporate innovative thinking into the Department's construction projects. This section will provide guidance and address some
FAQs about a VEP. A VEP is a post-award proposal submitted by the Contractor and should produce either cost savings, time savings and/or an innovative solution while providing the same or better improvements. Materials substitutions of permanent features, design alternatives in contract plans and plan errors submitted as a VEP are not allowed (see Design-Build section for exclusions). Additionally, depending on the complexity of its evaluation and implementation, VEPs with estimated net cost savings of less than $10,000 may not be considered. Any idea conceived by the Contractor that meets these criteria and does not impair the essential functions of the project can be submitted as a VEP for review. The achieved net cost savings will be split equally between the Contractor and the Department.
Requirements
Ideas for a VEP can originate from the prime Contractor or a subcontractor; however, the VEP can only be submitted to the Department by the prime Contractor. Prior to submittal, it is recommended that the Contractor discuss VEP ideas with the Resident Engineer at meetings, or even hold a separate meeting/workshop for a more complex VEP, to get preliminary feedback on the concept. A meeting/workshop has also been proven helpful when there are multiple ideas for VEPs. To ensure a project's critical path and schedule are not impacted, it is important to establish and adhere to a timeline for the Department's review and approval.
A Preliminary Proposal is an optional but recommended step, especially for a complex VEP, to get preliminary feedback on the merit of a concept prior to the Contractor spending time and money developing a more detailed Final Proposal. A Contractor may elect to submit only a Final Proposal which contains the required level of detail for review. The Contractor should send a copy of each proposal concurrently to the State Value Management Engineer at ValueManagementUnit@ncdot.gov, the Resident Engineer, and Design-Build Unit (if applicable). The
Value Engineering Proposal (VEP) Submittal Form is required for any submission after January 1, 2021 and encouraged to be used for any submission prior to the requirement date. The VEP Submittal Form serves as a statement that the modification request is being made as a VEP and summarizes the proposed VEP;
with attachments added, as necessary. The Department's review of each submitted proposal (preliminary and final) will take approximately 20 business days, and Contractors remain obligated to continue doing scheduled contract work while the VEP is being reviewed and processed. An overview of the
VEP Review Process is described below. No time extensions will be granted for the time required to prepare or review a Preliminary Proposal or Final Proposal.
a.
Preliminary Proposal Submission and Review
A Preliminary Proposal gives the Department a chance to review the merit of the VEP concept prior to the Contractor spending time and money to develop a Final Proposal.
Preliminary Proposal submittals consist of the VEP Submittal Form. The following information should be included or attached, as necessary:
- Description of the proposed change and the associated benefits,
- Estimate of cost savings (with a breakdown, if available), and
- Sketches or mark-ups on existing plan sheets. If plan sheet markups are not included as part of the VEP package, indicate or attach impacted plan sheets for ease of review.
Review
- Upon submission, Value Management (VM) and the Resident Engineer confirm that all requirements are met, and determine if the idea should be pursued before advancing the VEP for review of its technical merit.
- During technical review, VM will notify the Design Project Manager (PM) of the potential design changes. Prior to distribution to the Division and the Resident Engineer, VM reviews comments and concerns with the State Construction Engineer.
- The State Construction Engineer will send a memo to the Division's contract administrator regarding the status of the preliminary VEP.
-
The Resident Engineer notifies the Contractor, in writing, of the outcome of the review (conceptual acceptance or rejection), copying the PM.
The Contractor will address any comments or concerns for a conceptually approved VEP and resubmit the VEP as a Final Proposal or discontinue pursuit of the VEP.
The Department in no way warrants that a favorable response to a Preliminary VEP will translate into a favorable response to a Final VEP. Likewise, a favorable response to a Preliminary VEP is not sufficient to incorporate the concept into the contract.
For an example of a VEP submission, see
Records & Reports Section.
b. Final Proposal Submission and Review
A Final Proposal represents a fully developed VEP concept, for an alternative which will result in lower cost and/or time saving construction methods while providing the same or better improvements. The Final Proposal consists of the VEP Submittal Form, with the following information included or attached:
- Design calculations (if applicable),
- Contract plan sheet modifications, and
- Contract document changes and a cost savings estimate based on contract line items. For Design-Build projects, the cost savings estimate shall include a line item break down with unit prices for each line item.
Review
- Upon submission, VM and the Resident Engineer confirm that all requirements are met before advancing the VEP for review to confirm it is technically acceptable. (If a Preliminary Proposal was not submitted, the Project Manager (PM) is notified of the potential design change.)
-
Prior to distribution to the Division and the Resident Engineer for review, VM reviews comments and concerns with the State Construction Engineer.
-
The State Construction Engineer will send a memo to the Division's contract administrator regarding the status of the preliminary VEP.
- The Resident Engineer notifies the Contractor, in writing, of the final decision (acceptance or rejection), copying the PM.
Within 10 days of approval, the Contractor shall submit a final set of plans incorporating the approved changes to the Value Management Office, Resident Engineer and Design-Build Unit (if applicable). Based on the approved VEP, the Resident Engineer prepares a Supplemental Agreement (SA) that incorporates the new changes. If the required documents are not submitted within 10 business days, either party may elect to withdraw the VEP and not execute a SA. Pending execution of a SA implementing the approved VEP, the Contractor shall remain obligated to perform all work in accordance with the terms of the existing contract.
For an example of a VEP submission, see
Records & Reports Section.
Design-Build VEPs
Review of a Design-Build VEP follows the process described above, but only a VEP, which alters the requirements of the RFP issued by the Department and/or the Technical Proposal submitted by the Design-Build Team, will be considered as a VEP. A previously submitted ATC (Alternate Technical Concept) that was not approved can be resubmitted for consideration as a VEP, if applicable.
Note: In addition to the technical review, a Design-Build VEP will be reviewed by
- the Design-Build Unit for Contractual compliance, and
- the Estimating Management Group to confirm that the approximate savings noted by the Contractor is fair and reasonable, since there are no unit prices. Additional review time may be needed and should be anticipated. VM coordinates all the necessary reviews.
Supplemental Agreement
For approved VEPs, an executed Supplemental Agreement must be required prior to performing work associated with the VEP.
For guidance on entering Value Engineering Proposals in HiCAMS, see the HiCAMS User Guide
Review Supplemental Agreements – Entering VEPs and
Review Supplemental Agreements.
Savings & Payments
Following execution of the Supplemental Agreement, the final net cost savings will be split between the Contractor and the Department with each party receiving 50% of the net savings. Net savings shall be calculated as follows:
Net Savings = Original Contract Costs – Proposed VEP Costs
The Contractor shall be responsible for covering the costs of developing all preliminary and final proposals. Thus, the costs associated with developing and reviewing the VEP, by either the Contractor or the Department, will not be considered in the net savings calculation. If a subcontractor idea was submitted as a VEP, the Contractor may choose any arrangement for the subcontractor value engineering cost sharing, but the payment arrangement shall not impact the Department's 50% of the final net cost savings.
104-13 RECYCLED MATERIALS & SOLID WASTE MATERIALS
General
North Carolina's General Statutes (G.S. 136-28.8(g)andG.S.130A-309.14(3)) require that NCDOT increase the use of recycled materials within its construction and maintenance programs; therefore, it is NCDOT's policy to help reduce the volume of materials that contribute to the solid waste stream. Accordingly, the Resource Conservation Program (RCP) exists to promote the use of recycled products and solid waste materials within NCDOT programs. The program is intended to provide expertise to Contractors on the identification, selection and recommended use of recycled products and materials. Before Contractors can use any recycled products or materials on their projects, approval is required by the Department. The Resource Conservation Program within the Materials and Tests Unit is responsible for facilitating this approval.
Proposal
Any Contractor that would like to incorporate recycled products or solid waste materials into their construction projects must submit a Recycled Products or Solid Waste Materials Proposal to the Department.
A Recycled Products or Solid Waste Materials proposal is used to review and approve the Contractor's desire to use recycled materials.
This requirement does not apply to recycled products or solid waste materials that have already been specified for use by the Department, nor does it
apply to reclaimed asphalt materials referenced by
Section 610
of the Standard Specifications.
The proposal must include a statement that the modification to the materials used is being made as a Recycled Products or Solid Waste Materials Proposal. Additionally, the proposal must include a description of the difference between the existing contract and proposed modifications, a set of design drawings with the proposed modifications, a set of design calculations, an itemized list of contract requirements to be modified, a detailed cost estimate for the proposed modification, and a statement of when approval of the proposal should be issued by the Department in order to achieve the total estimated cost reduction. Proposals should be submitted to the Resident Engineer and carbon copy resourceconservation@ncdot.govfor review and approval. However, if Contractors wish to submit a proposal that includes cost savings, a copy of the proposal should also be sent to the State Value Management Engineer at
ValueManagementUnit@ncdot.gov.
The Resident Engineer will be the sole judge of the acceptability, the value, and the estimated net savings or additional compensation to be paid to the Contractor. If the proposal is rejected, no further action is taken. The Department has the right to reject any proposal, and the Contractor is not entitled to any additional compensation or additional contract time if the proposal is rejected. If the Recycled Products and Solid Waste Materials Proposal is approved, a supplemental agreement is created to implement the proposed modifications. It is the Contractor's responsibility to provide certifications verifying the source of the material and percentage of materials to be used and to obtain permits required to handle and store the materials to be used. The Contractor also remains obligated to perform existing contract work during execution of the supplemental agreement. After implementation of the supplemental agreement, the Department has the right to use, duplicate or disclose any information about the modification on other projects without restrictions from the Contractor.
Savings
An approved Recycled Products & Solid Waste Materials Proposal may introduce net savings to a project. Net savings is calculated as the difference between the existing contract costs and the actual final cost as a result of the modifications implemented by the proposal; the cost of developing a proposal is not included in this calculation. The terms of the savings and how the savings will be distributed between the Contractor and the Department will be reflected in the supplemental agreement. In accordance with
Article 104-12
of the Standard Specifications, if a proposal results in savings, 50% of the net savings will be distributed to the Contractor following the execution of the supplemental agreement. If a proposal doesn't achieve savings and increases costs, but results in a significant effect of long-term markets for materials or significant beneficial usage, the Department will be responsible for the increased costs. When a proposal results in increased cost, but is innovative and completely new to Department projects, the Department will cover this cost, and at least $500 but no more than $2,500 may be awarded to the contractor.
Annual Report
Each year, the Department publishes an Annual Recycled Products and Solid Waste Utilization Report and provides it to the Secretary of Transportation; thus, Contractors must report their use of recycled products and materials to the Department annually via the
Annual Recycling Report Form found on the
Resource Conservation Program website. The purpose of the form is to solicit recycling data from Contractors in order to quantitatively represent the Department's efforts to recycle construction and maintenance materials. On the form, Contractors must provide quantities of reused or recycled materials incorporated in a project or diverted from landfills, and any practices which minimized environmental impacts. The Annual Recycling Report Form is due by July 1st, annually; however, Contractors don't have to restrict themselves to entering data into the form only once during the year. This form can be accessed multiple times which allows the Contractor to input data on the same project throughout the year.
