Additional funding problem

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Author Message David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 1007 Registered: 03-2002 Posted on Tuesday, May 20, 2008 - 03:55 pm:    I am currently working on a $60M school project where the State has authorized additional funding of $10M to go some additional upgrades. The $10M is not part of the $60M package and must be accounted for separately. The $10M can’t be used, for example, to pay off cost overruns or change orders for the $60M project. To make matters worse the $60M portion of the work has alternates. The $10M portion is basically a list of items that the teachers/staff have chosen. But there is no order of preference for the upgrades. For example if replacing the gym floor is too high they might choose to refinish instead. It’s a very complicated mess. So how do I specify these additional upgrades? I am thinking of "alternates" but they are not really alternates for the base bid. Instead they are more like alternates for a second project but being bid by the same contractor. I'm confused. Ralph Liebing, RA, CSI Senior Member Username: rliebing Post Number: 846 Registered: 02-2003 Posted on Tuesday, May 20, 2008 - 04:14 pm:    Maybe[????] list the added items distinctly IDed as such in the Summary of Work-- up front. And note that they are to be priced in the bid form as noted, but shall only be funded via the additional funding that is NOT a contingency for the primary project. Then on the Bid Form, list again, with price blanks, the added items for individual pricing. Then the contract [whoever writes it] must also show and list the items separately. Have no good idea how to title them except "Added Items for Considerations". Just try to describe the "situation" as you did above. David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 1008 Registered: 03-2002 Posted on Tuesday, May 20, 2008 - 04:21 pm:    Thanks Ralph. I am not sure that I (or anyone else on the team) fully understands the situation. It sounds good at first, but will be tricky to implement. With so many variables, I have no idea how they are going to award the bid. Nathan Woods, CCCA, LEED AP Senior Member Username: nwoods Post Number: 249 Registered: 08-2005 Posted on Tuesday, May 20, 2008 - 04:45 pm:    Okay, some basic questions that come to mind for me are: 1. If treated as a seperate project, do you need to submit plans to DSA or some other agency for a new permit, or are you going for permit modification? 2. If new permit, I think you will need a new contract, and that means new bid bond, performance bond, insurance, etc.... You loose some efficiencies, even though you have the same GC. 3. Does state law allow you to do negotiated bid with the same GC for this new work? Or are you required to bid it publically? I think identifying some of these basic delivery method parameters will help you zero in on how to package the bid/funding changes. Wayne Yancey Senior Member Username: wayne_yancey Post Number: 51 Registered: 01-2008 Posted on Tuesday, May 20, 2008 - 04:47 pm:    David, How about "Work under other contracts." WORK UNDER OTHER CONTRACTS A. General: Cooperate fully with separate contractors so work on those contracts may be carried out smoothly, without interfering with or delaying work under this Contract. Coordinate the Work of this Contract with work performed under separate contracts. B. Concurrent Work: Owner [has awarded] [will award] separate contract(s) for the following construction operations at Project site. Those operations will be conducted simultaneously with work under this Contract. Copy and re-edit subparagraph below for each separate contract. 1. <Insert name of the Contract>: A separate contract [has been] [will be] awarded to <Insert name of separate Contractor> [to] [for] <Insert a brief description of work performed under separate contract>. Retain paragraph and subparagraph below if work under future contracts depend on successful completion of work performed under this Contract. revise to suit Project. C. Future Work: Owner [has awarded] [will award] separate contract(s) for the following additional work to be performed at site after Substantial Completion. Completion of that work will depend on successful completion of preparatory work under this Contract. Copy and re-edit subparagraph below for each separate contract. 1. <Insert name of the Contract>: A separate contract [has been] [will be] awarded to <Insert name of separate Contractor> [to] [for] <Insert a brief description of work performed under separate contract>. These are from the AIA MasterSpec Summary Section. David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 1009 Registered: 03-2002 Posted on Tuesday, May 20, 2008 - 05:00 pm:    Nathan, The additional funding work is to be done by the same general contractor under the same permit and at the same time. The only thing that is separate is the accounting. Let me explain a little more. BTW, This is a very tense political situation. This project involves renovating an existing high school and building a new middle school on the same campus. In short the high school teachers felt slighted because the middle school got a new building while the high school got a crappy building with a new coat of paint. (Not really but that is the perception anyway.) The high school teachers complained so loudly that the school board allocated more money for added improvements to the high school. The added bonus is that the teachers/staff get to decide on what items they would like to have (a shopping list per se). So we can't commingle the funds or we will have a real mess on our hands. Nathan Woods, CCCA, LEED AP Senior Member Username: nwoods Post Number: 250 Registered: 08-2005 Posted on Tuesday, May 20, 2008 - 05:13 pm:    Interesting, but seems fairly straightforward when boiled down like that. I would issue each item as a Proposal Request or Change Order Request, then tabulate the pricing results, and let the District rank and prioritze as needed. From that point, you create a change order to incorporate the selected scope items. One word of advice, allow at least 10% contingency for remodel work! I also have some concerns about the permitting issues and allowing for related costs to the architect to get approvals, allowing money for ADA upgrades, Energy code upgrades, etc... but that's a seperate subject. Bob Woodburn, RA CSI CCS CCCA LEED AP Senior Member Username: bwoodburn Post Number: 248 Registered: 01-2005 Posted on Tuesday, May 20, 2008 - 06:12 pm:    Seems fairly simple - these are "alternates" to be selected after the bids are in. The only differences are the separate source of funds (the critical issue) and the entity responsible for selection. Treat them as alternates, but call them "separately-funded alternates" etc., list them on the bid form under a separate heading, use a different alphanumeric identification system for them, and require that all work for them be separately accounted for (separate or broken-down pay applications, etc.) Bonding, insurance, permitting and other O&P costs would have to be separated or divided pro rata, as well. Since change order work is usually separately accounted for, you might also reserve the right to select and include any of these alternates by change order later (but within a reasonable time frame identified in advance). If the base contract is a new middle school, and all the separately-funded work is for the renovation of a completely different building, they would likely need to be done under separate permits. Wayne Yancey Senior Member Username: wayne_yancey Post Number: 52 Registered: 01-2008 Posted on Tuesday, May 20, 2008 - 06:29 pm:    David, This is an interesting subject. IMHO "Alternates" are usually ADD or DEDUCT from the base bid price. Use the term alternate if this is the intent I recommend they be considered "Separate Prices", not part of the base bid, but which is an integral part of the Bid Form. CAUTION: The Bidders require a specific and exact description of the requested Separate Price including all peripheral conditions affecting it. Also indicate whether overhead, profit, taxes, or other factors are included or excluded. For example: Separate price # 1: [describe the exact item and conditions required for this separate price] Separate Price # 2: [same] Incorporate the "Separate Price" items with a Change Order. Another option may be to use the $10 million as a Cash Allowance to add the bells and whistles in the shopping list not included in the original program. Please keep us informed as to your eventual methodology. Wayne John Bunzick, CCS, CCCA, LEED AP Senior Member Username: bunzick Post Number: 907 Registered: 03-2002 Posted on Tuesday, May 20, 2008 - 06:48 pm:    I agree with Bob's assessment. The base bid alternates are listed separately from the separately funded ones. In one respect, the bidders do not really care where the money comes from at all. They only need to know that of the second batch, up to $10 million will be selected. (I'd advise the owner to select only $9.5 million, so there's a contingency for the second batch of money too.) And, they need to know that there is a fair and objective process for selecting a bidder. From your question it sounds like the normal public process is to select alternates in order (like Massachusetts) and award on the basis of the lowest bid with selected alternates. Assuming that the second batch of alternates does not violate the public bidding laws (which it would in MA), the easiest thing to do is award the contract based upon the selected alternates to the base bid. Then, the separately-funded alternates are selected from low bidder's listing. The idea is to have a very specific process that is free from possible political maneuvering to get the preferred contractor--low bidder based on selected base bid alternates is clear and objective. The client's attorney should make the final decision on this process based on applicable law, and you should have your firm put in writing that you don't know if what you suggest passes legal muster. David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 1010 Registered: 03-2002 Posted on Tuesday, May 20, 2008 - 06:59 pm:    Wayne thanks for the advice. One big concern of mine is if part of the additional $10M funding impacts the work of the $60M project. Whatever we do it is going to be messy!