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Chapter 9: Construction

  1. General
    1. Owner’s Representative: The Owner’s Representative, or Construction Project Manager, assumes management of the project after the award of contract.
    2. Pre-construction Meeting: The Owner’s Representative shall arrange a Pre-construction Meeting before each project begins. The meeting provides a forum for the discussion of such items as the routing of communication, the construction schedule, construction documents, roof warranty requirements (if applicable), contractor submittals, use of the premises, special project requirements, and potential change orders.
          The Owner’s Representative introduces project participants, reviews the General Conditions, conducts the meeting in the format of the Preconstruction Meeting Notes, and verbally reviews the examples contained in the Preconstruction Orientation Booklet, Exhibit IX-1.
    3. Notice to Proceed: No work is permitted on site until the Notice to Proceed is received by the Contractor. An example Notice to Proceed is in Exhibit IX-2.
    4. Reports and Communication: The Owner’s Representative coordinates reports and communication among the University, consultant, contractor, and client throughout the construction phase. With few exceptions, all communications and reports regarding the project flow through the Owner’s Representative. The Owner’s Representative shall maintain a record of project actions including phone calls, letters, and memos. Further information is found in Exhibit IX-3.
  2. Field Administration
    1. Construction Observation
      1. The Consultant is responsible to make periodic site visits to review the work. The Consultant shall visit the site as required by the Construction Project Manager to assure the construction conformance to the drawings and specifications.
      2. Additional Testing and Inspection. If there are specialty items requiring inspection or testing, the University should hire a firm with the expertise required to perform such testing, such as concrete testing, weld testing, etc.
    2. Safety
      1. Contractor’s Responsibilities: The Contractor is solely responsible for the safety of its employees on the job site. As required by the General Conditions, the Contractor must comply with the provisions of the Associated General Contractor’s (AGC) Manual of Accident Prevention in Construction and with the requirements of the Williams-Steiger Occupational Safety and Health Act of 1970 (See Occupational Safety and Health, Volume III, Construction Standards and Interpretations.)
      2. Owner’s Representative Responsibilities: Although the Owner’s Representative does not direct the Contractor regarding safety inside the perimeter of the job site, a potential safety hazard should be pointed out. If a life-threatening situation is observed, the Owner’s Representative may shut down the job and require remedial action by the Contractor. The Owner’s Representative may direct the contractor in removing any potential hazard to students, faculty or staff, to members of the general public or to property.
      3. Contractor’s Job Site Accident Report: If a contractor’s employee is injured on the job site and requires medical attention, the Contractor is required to submit an Injury Report to the Division of Workmen’s Compensation. The Owner’s Representative requests a copy of the report from the Contractor. It is given to the Campus Facilities Administrator for review and is ultimately placed in the Project File.
    3. M/WBE Participation: The Owner’s Representative will monitor the status of the M/WBE subcontractors or suppliers on the project and notify the UM Director Facilities Planning and Development should the Contractor drop or change a M/WBE subcontractor or supplier.
          The contractor must maintain the M/WBE percent goal indicated in the awarded contract. If the contractor must remove any M/WBE subcontractor or supplier, the contractor must notify the Owner’s Representative. The Contractor must make a good faith effort to replace the participation with another M/WBE, and satisfactorily explain why the removal was necessary. The UM Director Facilities Planning and Development will review all contractor requests to remove or change of any M/WBE from the project. The UM Director Facilities Planning and Development will recommend appropriate action to the Contracting Officer including acceptance, or declaring the contractor ineligible for future University contractors for no more than 6 months, or finding the contractor in material breach of the contract.
  3. Change Orders
    1. Definition: A Change Order is a written agreement executed between the University and the Contractor, after execution of the Contract authorizing a change in the work, contract amount, or contract completion date. After the Contract has been signed, any additions, deletions, or modifications of the work to be done are accomplished by Change Order. Change Orders can be issued at any time during the contract period. The Owner’s Representative must provide documentation to support all Change Orders.
    2. Limitations on Change Orders
      1. Total aggregate project Change Orders not exceeding 10 percent of the initial Contract Price and individually less than $100,000 and within the original project scope are approved by the campus.
      2. When aggregate project Change Orders exceed 10 percent of the initial Contract Price or individually greater than $100,000 or outside the original project’s scope on those requiring significant design modifications, must be approved by the UM Director of Facilities Planning and Development. The UM Director of Facilities Planning and Development will also determine if Board of Curator’s approval is required. For contracts less than $100,000, only aggregate change orders over $10,000 require UM approval.
      3. Change orders less than $5,000 may be approved by the Owner’s Representative as a Field Order. Field orders serve to expedite the change order process for small contract changes. Authorization to use field orders may be granted to Construction Project Managers who have demonstrated superior knowledge of the standard change order process. Field orders may not be issued for changes exceeding $5,000, 10% of the contract amount, or the balance of the contingency. Issuance of the completed Field Order, co-signed by the Owner’s Representative and the Contractors authorized representative serves as the authorization to proceed with the change order work.
    3. Optional Change Orders: An optional change order is not required, or necessary, for the completion of the original contract. Any change for work not covered in, or unrelated to, the original project is optional. Optional Change Orders will not be used unless the University gains no advantage from competitively bidding the work.
    4. Design Requirements: Design is required when the change alters a diagramed, sketched or drawn detail or arrangement, or when a drawing, sketch or other specific technical input is necessary from the Consultant. Design is typically not required when the change affects specified items, unforeseen conditions, or items of a minor nature which can be noted on an as-built drawing. Additional design fees will be paid for change orders requiring additional design work.
    5. Change Order Procedures: Change Order procedures for the Owner’s Representative are given in Exhibit IX-5.Change Order procedures for the Consultant are given in the University of Missouri Consultant Procedure and Design Guidelines.
  4. Schedule and Payroll Records
    1. Project Schedule: The Contractor is required to submit a schedule of planned progress on construction work. As the work proceeds, the Owner’s Representative is responsible for tracking project progress. 
      When monthly contractor payments are processed, a computerized monthly Project Schedule should be generated which compares scheduled progress and actual progress. The Owner’s Representative should use this schedule to encourage the Contractor to conform to the Project Schedule.
    2. Payroll Records
      1. The Contractor is responsible for paying prevailing wage rates and benefits and keeping supporting payroll records. The University has the right to inspect those payroll records (see General Conditions).
      2. Examples of situations requiring payroll inspection include:
        • Resolving questions on payment of proper wage rates.
        • Checking support data for time and material change orders.
        • Verifying Contractor’s certification that all wage rates and benefits have been paid.
      3. Wage rate disputes shall be forwarded to the UM Director of Facilities Planning and Development for resolution.
  5. Payments
    1. Breakdown of Costs: The Breakdown of Costs submitted by the Contractor serves as the basis for the Contractor payment process. The Owner’s Representative reviews and approves the Breakdown of Costs (prepared in accordance with Instructions for Completing the Breakdown of Costs) and works directly with the Contractor in resolving any discrepancies.
          The approved Breakdown is entered into the computer. A computerized Breakdown of Costs Report should be generated and placed on file, along with a copy of the original Breakdown.
    2. Contractor Payment Process: After the Breakdown of Costs data has been entered, the Owner’s Representative sends the Contractor forms for use in requesting periodic payments.
          The Contractor should be instructed to submit a request for monthly payment using the Periodic Estimate for Partial Payment forms referenced above. Prior to the submittal of the request, the Contractor is required to obtain approval of the percentage of work completed from the Owner’s Representative, who reviews the work in place and materials stored to verify the accuracy of the Periodic Estimates. One copy of the Contractor Payment Report should be routed to the Consultant. If the Consultant does not agree with the Report, the Owner’s Representative should be notified.
         The Contractor will be paid in a timely manner. The Campus should issue a check within 2 weeks of approving the Contractor’s payment request. The Owner’s Representative will make payment information available to subcontractors.
    3. Retainage: Each month, the Contractor is paid for 90 percent of the earned value of all completed work (including the associated cost of labor, materials, overhead and profit), less previous monthly payments, until work completed is equal to 50 percent of the adjusted contract amount including Change Orders.
          After the work completed is greater than 50 percent of the adjusted contract price, the Contractor may be paid 95 percent of the earned value of work completed, less previous monthly payments, if approval is given by the Consultant and the Owner’s Representative. If the Contractor falls behind schedule after work complete is greater than 50 percent, the Owner’s Representative may reduce the payment rate back to 90 percent.
         This 5 percent or 10 percent retainage is protection for the University should the Contractor be unable to continue with the project. When project close-out requirements are met, the Contractor is reimbursed in the final payment for 100 percent of the adjusted contract amount, less previous monthly payments.
    4. Breach of Contract: The General Conditions outline breach of contract conditions. The Owner’s Representative will issue all correspondence to the Contractor regarding any breach of contract. 
         The first correspondence to the Contractor beginning a contract problem should be sent to the Contractor identifying the problem. The correspondence shall indicate a specific time period for the Contractor to respond.
          If the Contractor fails to respond, a second letter should be written with copies sent to the Contractor’s bonding company and the UM Director of Facilities Planning and Development.
         If the Contractor fails to respond or provide corrective actions, the project may need to be turned over to the bonding company. Correspondence to the bonding company should be copied to the Contractor and to the UM Director of Facilities Planning and Development.
    5. Damage For Delay
      1. Purpose: The University may assess the contractor Damages for Delay, see II.C. The General Conditions inform the Contractor of liability for actual damages due to the delay and in the Construction Agreement. The Contractor agrees to a reduction in the Contract Price as provided in the Contract Documents. Damages are costs the University measures because the project is not finished within the agreed time. Examples include:
        1. Loss in revenue from revenue generating facilities such as bookstores, parking structures, or residence halls.
        2. Increased interest costs on construction financing.
        3. Loss of research grants.
        4. Additional administrative costs.
      2. Actual Damages: Actual Damages are specified in the UM General Conditions if no Liquidated Damages are specified. Actual Damages are calculated once the delay is over and all costs have been realized.
      3. Liquidated Damages: Liquidated Damages must be identified on the bid form under schedule requirements. The delay costs are predicted by the University and expressed as a dollar per day charge.
      4. Withhold Payment: The University will retain the right to withhold payments for where there is reasonable doubt the contract can be completed within the time specified.
    6. Materials Stored at Site: To provide incentive for the Contractor to purchase long lead items critical to the project completion, items considered to be major items of considerable magnitude, if suitably stored in a Bonded Warehouse (not owned or operated by the Contractor or material supplier) or on the site, will be allowed in estimates on the basis of ninety percent (90%) of original invoices. The Periodic Estimate for Partial Payment includes a form to allow the Contractor to make payment claims for materials store on the site.
  6. Administrative Review
    1. Process: All unresolved claims by the Contractor and disputes between the Contractor and the University must follow the process set forth in General Conditions. The process in the above articles consists of:
      1. Claim or dispute submittal by the Contractor to the Owner’s Representative.
      2. The Owner’s Representative may request review of claim or dispute by the Architect. The claim or dispute may be resolved at this step.
      3. If not resolved, recommendation by Architect to Owner’s Representative.
      4. Decision by Owner’s Representative.
      5. Agreement or disagreement by Contractor.
      6. If disagreement, Administrative Review initiated by Campus Facilities Administrator.
      7. Agreement or disagreement by Contractor.
      8. If disagreement, further Administrative Review by the Contracting Officer via the UM Director of Facilities Planning and Development. This is end of Administrative Review.
      9. Agreement or disagreement by Contractor.
      10. If disagreement, Contractor may litigate.
  7. Project Closeout
    1. General: Project Completion includes all work completed, clean-up, punch list items, and work added by contract change order. The University may lose the benefit of the contract provisions with respect to items of work which were deficiently performed or not completed by the Contractor if the Final Certification is sent prematurely. Exhibit IX-1, Preconstruction Meeting Booklet, contains Closeout Procedures.
    2. Partial Acceptance: The University may request Partial Acceptance of an individual piece of equipment, system, or area prior to Final Completion. The punch list for that equipment, system, or area must be performed prior to partial occupancy. The Owner’s Representative will send a Letter of Partial Acceptance to the Contractor detailing the area accepted for use by the University.
    3. Substantial Completion: The University may take possession of the facility before Final Completion. Substantial Completion will include all submittals and work required under the contract, except minor items that will not interfere with the use of the facility.
    4. Final Certification: When the Consultant is satisfied that all items have been completed, the Consultant makes a Final Certification (Exhibit IX-3) in writing to the Owner’s Representative that the job has been completed according to the plans and specifications as modified by change orders. The date of Final Completion is recorded in the Letter of Certification. The Consultant’s Certification is required prior to processing Contractor’s final payment request.
    5. Final Payment: Final payment is made to the Contractor only after the Contractor fulfills all the above project close-out requirements. 
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