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Hello, Brian weeks here again with another MMCD Contract Consideration.
This video clip will cover the topic of
The Contemplated Change Order
and Request for Quotation.
This is a companion video to the two titled "Responding to an RFQ" and
Issuing a Change Order.
This video will review the process to generate a change order under the
MMCD.
with a reminder about the implications of changes verses extra work.
We'll look at an example of an extra work
that an owner is considering
and use it to see how to fill out the contemplated change order
or CCO form.
First though,
remember the joke about contractors making all their profits on change orders
This need not become reality
if the change order process is properly managed.
It's up to the contract administrator
the C.A.
to get pricing
and to negotiate those prices if necessary.
This may not always be possible given timing or circumstances but it should be
the goal
The document which enables control
is the contemplated change order
which also functions as a request for quotation
in the MMCD
keep in mind that under the MMCD
the additional work the owner wishes to consider
must first be classified
as to whether it is a contract change
or extra work
if you need a refresher on the difference
see the contract consideration video titled
Change vs. Extra
The important thing is
that if the additional item being considered is a change,
than both the owner and the contractor have
no choice but for the contractor to do the work if it goes ahead.
Furthermore
if a quotation is requested,
provisional one,
will be mandatory.
On the other hand,
if the additional item is extra work,
both the owner and the contractor
have the ability not to deal with each other on this matter.
In the normal
situation the MMCD change process has several steps...
Number one
the C.A. would first get drawings and specifications which would completely
define the scope of that additional work.
Number two, the C.A. would then determine if the proposed work
would be a change or extra work
Number three
the third step is to create and issue the contemplative change order,
which also acts as the request for quotation.
Normally the contractor will prepare and submit a quotation
for the contemplative change.
The fifth step is for the C.A to evaluate and perhaps negotiate the
quotation with the contractor.
If acceptable,
the C.A. will issue the formal change order to modify the contract,
to include the additional work,
and its time and cost implications.
Number seven,
in some circumstances the change order will be issued before pricing is
finalized.
In these cases the contractor must submit
daily force account forms detailing the components of the daily costs
until the work is done
or until pricing agreement has been reached.
Lets look at an example,
On a street improvement project
the owners asked the C.A. to investigate whether it makes sense
to build a short retaining wall
to minimize the volume of side hill
that would otherwise need to be removed.
Step one is for the C.A to get the design consultant
to generate a drawing
of the proposed work while a C.A. verifies that all necessary
specifications
are available in the current MMCD edition
or by separate issue
A quick look at the example,
shows the simple block wall with three rows high by thirty blocks long,
with a couple of geotextile layers
and a drainage layer and drainage pipe just behind the base of the wall.
One potential difficulty for the contractor
will be the undefined amount of site grading that must be done to meet the
required slopes.
Step Two, is to determine if the proposed work is a change or an extra.
The C.A. reviews the definition
and determines that although the new wall would be within the limits of the
place of the work
there is nothing in the schedule of quantities and prices
which is directly similar.
Thus, the proposed work would be extra work if it's to proceed.
Step three, has the C.A. create
the contimplated change order form.
the CCO is a key document
from which others will be derived.
Like any other foundation
it needs to be done right or everything else gets harder.
I've created a CCO for this example using the form on the MMCD website as
the basic template
form you use
can be the owners standard form,
the MMCD form,
or a form provided by the design for project management firm.
Just make sure it has nessesities shown on the MMCD form.
Let's look at some of the highlighted points...
Every CCO should have a unique number for tracking all related documents and
conversations.
Ideally this number will have some relationship to the number sequence in
the schedule of quantities and prices
but that's not essential.
The contract title
and reference number are normally from the primary contract authorization data.
Note that i've clearly identified that this is a potential extra work,
so the contractor is not obligated to respond with a quotation.
If he does
there's a specified closing date.
It is a good idea to create separate contemplate change orders
for items which are significantly different function or cost implication.
In this ,
there is one simple package
albeit with four stages.
One of the key philosophies of the MMCD
is the underlying principle "to say it once"
this is an extremely good rule to follow when creating any contemplated change order.
do not repeat information shown on other documents
such as drawings or specifications.
Link to the existing conditions as much as possible
In this example
i've attached the drawing created
to show the contractor what work is required,
i've been specify that drawing number and it's revision
only once on the CCO.
In this way
I do not repeat information
and should the drawing change,
it only takes one minor change here to update all necessary references.
Although there are several stages to this work,
I use the phrase as shown
to repeatedly refer the drawing
without having to re-list the number.
The drawing itself
calls up both new products (the geo textile)
and existing specifications from the platinum addition for the drain dropped
p_v_c_ pipe
and hydro seeding.
these should only be mentioned once for ease of corrections if necessary,
when it's helpful for clarity identify specific extra cost the contractor is to
include
such as i did by mentioning the disposal the excess cut material.
If there's a limited time frame or window for the work to be done
this must be clearly stated here to avoid potential claims later.
I find it good practice to remind the contractor
to include mentioned at the time impact on the overall schedule
as well as how i'd prefer see the cost quoted.
Finally, to make this a legal document
the C.A. should sign it and date it.
Note that it is not necessary for the contractor to sign it to make it a legal
document
The contractors signature is just for confirmation that it was received.
Step four, is for the contractor to provide a quotation
or declined to do so.
I'll deal with that in the contract consideration video titled...
Responding to a Request for Quotation.
Steps five six and seven
will be covered in the contract consideration video
Issuing a Change Order
So to summarize,
the contemplated change order is the foundation of professional cost
management
and deserves enough attention to be done right.
The C.A. must know if the proposed additional work
is classified as a change or extra work
to know if the contractor can decline it.
A good contemplated change order
will be complete as to scope and specifications.
A good contemplated change order
will be clear
as to expectations for time and cost, including any new deadlines.
A good contemplated change order will follow the say it once principle
to make changes or corrections simple
while avoiding the possibility of conflicting information
causing confusion.
I hope this is help clarify this contract consideration.
Please check our website for further assistance
and to see what other topics
are presented in this series
Thanks for watching!
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