Use contract documents to reduce risk and cost

Posted in: Municipal, Water

Businessman and engineer handshake closing a deal in construction site. Sucessful,engineering and business concept.Risk and cost control begins during the project planning stage and doesn’t end until a project is complete and in service. Several factors are generally considered in design plans—existing right-of-way constraints, geotechnical and groundwater conditions, subsurface utility conflicts and service to existing customers among them. But successfully bringing the project to completion, without change orders, goes beyond assessing common factors.

Engage field personnel

Engaging field personnel throughout the project process is often overlooked. During the design stage, this engagement instills a sense of ownership and familiarity that continues through bidding and construction. The project benefits can be substantial. Designated Construction Engineering & Inspection (CEI) representatives should have a role during project design. They provide a different perspective and provide input that improves the accuracy of cost estimates and constructability. During the QAQC stage, field and CEI personnel provide unique insight that improves the quality and completeness of the final design.

Don’t forget about contractual tools

Including contractual tools in the contract is vital. Contract administrators need payment tools to predict problems and provide immediate solutions when conflicts arise in the field. Contractual tools include provisions in the specifications requiring the contractor to ‘Field, Locate, and Expose’ existing utilities in advance of construction. This should be provided in the schedule of values. The schedule of values should also include items for ‘Additional Fittings’, ‘Muck/Debris removal and ‘Rock’ excavation, if geotechnical evaluations indicate the presence of either. Requiring the contractor to identify conflicts in advance reduces the potential for costly delay claims.

Plan for the unexpected

Contingencies within existing pay items need to be available in the contract and budget so changes can be made in the field without going through change order procedures. Change orders can usually be avoided by incorporating some contingency within unit price estimates. Completely describing pay items and contractor’s responsibilities within the measurement and payment section places additional contractual liability on the contractor, thereby reducing risk for the Engineer and Owner. It also gives field representatives the tools they need to require the Contractor to make field adjustments without delaying production. If ‘excess’ pay items are not expended, they come back to the owner in the form of a credit or deductive change order.

Engaging experienced CEI representatives throughout the design and QAQC process can help your project be successful, as can adding contractual tools so that contract administrators can adjust to developments that occur in the field. A good construction contract and schedule of values should have payment descriptions that place most of the risk on the contractor and reduce the owner’s risk and cost when conflicts arise. Conflicts are unavoidable; planning for the unexpected is always the correct choice.

Brad Blais, PE

About the Author

Brad Blais, P.E., is an expert in water and wastewater treatment. Prior to joining Mead & Hunt he was president of a Florida-based firm, where he designed treatment facilities and published articles on advanced wastewater treatment processes. Brad is a Florida-native who enjoys all water-related and sporting activities.

Read more posts by Brad Blais, PE

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