SECTION 104 – SCOPE OF WORK
104.01 Intent
The intent of the Contract is for the Contractor to construct the Work to be functionally complete and aesthetically acceptable. Perform work that may be reasonably inferred from the Contract as being required to produce the intended result under the Items of the Contract. Perform the Work using the best construction practices and provide materials and workmanship of the first quality to meet the Contract requirements. Perform the Work to ensure the least possible obstruction to traffic, while adhering to the highe st safety standards, and with the least inconvenience to local residents and the general public.
104.02 Value Engineering
104.02.01 Purpose and Scope
The intent of value engineering (VE) is to promote Contractor innovation, for which the Department will share with the Contractor 50 percent of the value of cost savings generated as a result of a Department approved VE proposal. The Department will only consider VE proposals that produce a cost savings to the Department without, in the sole judgment of the Department, impairing essential functions or characteristics of the Project. Essential functions that cannot be adversely impacte d include, but are not limited to , safety, service life, economy of operation, ease of maintenance, environmental compliance, and desired appearance. The Department will not consider VE proposals that change the Project’s original design criteria; merely eliminate work; are based on an unknown factor; do not show a cost savings; or extend Contract Time.
104.02.02 Conditions
The Department will consider VE proposals only after Award of the Contract and only in accordance with the following terms and conditions:
1.In the event that the Department rejects a VE proposal during any step of the process, the Contractor is required to complete the Work as specified in the Contract. The Contractor recognizes that the Department has the right to reject VE proposals and cannot base its bid on the anticipated approval of a VE proposal.
2.All VE proposals, approved or not approved by the Department for use in the Contract, apply only to the ongoing Contract or Contracts r eferenced in the VE proposal. The VE proposals shall become the property of the Department and shall contain no restrictions imposed by the Contractor on their use or disclosure. The Department will have the right to use, duplicate, and disclose in whole or in part any data necessary to use the VE proposal. The Department retains the right to use any accepted VE proposal or part thereof on any other or subsequent project without any obligation to the Contractor. This provision is not intended to deny ri ghts provided by law with respect to patented materials or processes.
3.If the Department already has under consideration certain revisions to the Contract that are subsequently incorporated in a VE proposal, the Department will reject the Contractor’s VE proposal and has the right to proceed with such revisions without obligation to the Contractor.
4.The RE will determine whether a VE proposal qualifies for consideration and evaluation by the Department, including whether the savings generated by the VE proposal are sufficient to warrant review and processing. The Department may still reject a final VE proposal after approval of the initial VE proposal.
5.The RE has the right to reject all or any portion of work performed according to an approved VE proposal if the RE determines that results do not meet the requirements of the VE proposal or the Contract. The RE has the right to direct the removal of such rejected work and require the Contractor to proceed according to the original Contract. If the Contractor is directed to proceed according to the original Contract, the Department will not make payment for the rejected work performed under the VE proposal, or for its removal. The Contractor is responsible for the consequential costs arising from the rejected work to complete the work as proposed under the original Contract, including the cost to Others.
6.The Contractor may only submit VE proposals based on Items scheduled to be performed by the Contractor. The Department will not consider anticipated cost savings based on revisions to utility relocations or other work to be performed by Others. The Contractor is responsible to obtain the concurrence of Utilities, property owners, governing bodies, and agencies for any work affected by the VE proposa l. The Department has the right to reject VE proposals that may increase the time or cost of work done by Others.
7.In calculating the value of cost savings, the Department has the right to disregard the Contract bid prices, if such prices do not represent the value of the work to be performed or to be deleted, and has the right to calculate the savings based on reasonable costs for such work.
8.Ensure that VE proposals are design ed according to the Department d esign manuals and other Department standards for the proposed work.
9.If additional information is needed to evaluate VE proposals, provide this information in the Department specified time period, otherwise the Department will reject the VE proposal. Additional information may include, where design changes are proposed, results of field investigations and surveys, design computations, and field change sheets.
10.The Department will not deduct the Department’s costs for review and processing of the VE proposal from the cost savings.
11.The Department will not make payment for the Contractor’s costs for development and submission of the VE proposal. The Contractor waives its right to claim for costs or delays incurred due to the Department’s review or rejection of a VE proposal. These costs include, but are not limited to, development costs, loss of anticipated profits, or increased material or labor costs resulting from delays in the review of such VE proposal.
12.The Department will not use the value of cost savings for: additional vehicle operating and delay costs incurred by the traveling public, compared to normal operating conditions, resulting from the establishment of construction, maintenance, or rehabilitation work zones (road user costs), or for costs to oversee the P roject (construction engineering costs).
13.The Contractor may submit VE proposals for an approved subcontractor, provided that payment is made by the Department to the Contractor and that the terms of the payment to the subcontractor are satisfactorily negotiated and accepted before the proposal is submitted to the Department. Submit revised agreements as specified in
108.01.1 Subcontractors may only submit a VE proposal through the Contractor.
104.02.03 Submittals
The Contractor may submit VE proposals electronically. With electronic submissions, submit the appropriate attachments and a printed copy. If the initial VE proposal is only submitted in printed form, provide at least 3 sets of documents. If the final VE proposal is only submitted in printed form, the Department will designate the required number of sets of documents. Submit initial and final VE proposals as follows:
1.Initial VE Proposal. Submit to the RE an initial VE proposal outlining the general technical concepts associated with the VE proposal and the estimated savings that will result. The Department will review the initial VE proposal and, if found to be c onceptually acceptable, will grant approval to submit a final VE proposal. A finding of conceptual acceptability of the initial proposal in no way obligates the Department to approve the final VE proposal.
2.Final VE Proposal. The Department will consider a final VE proposal only after the approval of the initial VE proposal. With each final VE proposal, submit, at a minimum, to the RE the following information:
a.A statement that the final VE proposal is submitted as a VE proposal with a reference to the approval of the initial VE proposal.
b.A description of the differences between the existing Contract requirements and the proposed change, and the comparative advantages and disadvantages of each. Document th e effects on safety, service life, economy of operations, ease of maintenance, environmental requirements, and desired appearance.
c.Complete plans, specifications, and calculations showing the proposed changes relative to the original Contract features and requirements. Ensure that plans and engineering calculations are signed and sealed by a Professional Engineer.
d.A complete cost analysis indicating the final estimated costs and quantities to be replaced by the VE proposal, the new costs and quantiti es generated by the final VE proposal, and the cost effects of the proposed changes on operational, maintenance, and other considerations.
e.An evaluation of the effect the final VE proposal has on Contract Time, including a revised schedule and a time impact evaluation as specified in 108.11.01.C.
f.A description of any previous use or testing of the final VE proposal on another Department project or elsewhere and the conditions and results. If the final VE proposal was previously submitted on another Department project, indicate the date, the project, and the action taken by the Department.
g.A letter of concurrence to the VE proposal from Others that are affected.
h.The specific date that the Change Order adopting the final VE proposal must be executed to ob tain the maximum cost reduction. Ensure that this date allows the Department ample time, usually a minimum of 60 days, for review and processing a Change Order. If the Department finds that there is insufficient time available for review and processing, it has the right to reject the final VE proposal solely on such basis. If the Department fails to respond to the final VE proposal by the date specified, the Contractor shall consider the final VE proposal rejected and shall make no claim against the Department as a result thereof.
i.Additional information requested by the Department.
104.02.04 Final Documents
If the final VE proposal is approved, submit working drawings for approval. The Department will designate the number of sets to be submitted.
104.02.05 Payment
If the VE proposal is approved, the Department will issue a Change Order incorporating the VE proposal and establishing payment for the cost savings. The Department will make payment to the Contractor for 50 percent of the cost savings from the VE proposal. It is understood that the payment includes all costs resulting as a consequence of the change, including but not limited to quantity increases to Items, and unanticipated work or expenses arising out of the change.
104.03 Changes To The Contract
104.03.01 Authority to Make Changes
The Department has the right to make changes to the Work at any time, including altering the Contract, altering the requirements of an Item, increasing or decreasing the quantities of any Item, or deleting any Item. Such changes neither invalidate the Contract, nor release the Surety. The Contractor agrees to perform the Work as changed. The Contractor may request changes to the Contract. The Department will direct changes using a written Field Order or Change Order as follows:
1.Field Orders. The RE has the right to unilaterally direct Contractor performance with a written Field Order. Upon receipt of a Field Order, proceed as directed by the Field Order. A Field Order will state whether the directions provided by the Field Order are eligible for payment or modification of Contract Time. The Department will provide such payment or modification to Contract Time in a subsequent Change Order.
2.Change Orders. The Department will modify the Contract with a Change Order. The Department has the right to unilaterally make the following changes: make minor increases or decreases in quantity; modify Contract Time as specified in 108.11; direct New Work to be performed on a force account basis; and establish payment modifications for damages, credits, bonuses, and penalties provided for in the Contract. For changes that require the Contractor’s assent, the RE will negotiate the terms of the change and the Department will offer a Change Order. If the Contractor accepts the offer, the Contractor will sign the Change Order, whereupon the Department may approve and issue the Change Order. By signing a Change Order, the Contractor agrees that the Change Order constitutes the full extent of the agreement between the Department and the Contractor, including the full extent of payment and modified Contract Time for the work and for any effects upon all and any part of the Work, and supersedes any prior written or oral agreement between the parties. Additionally, the Contractor acknowledges the sufficiency and propriety of the consideration for the work detailed in the Change Order, and understands that the agreement is binding. Upon receipt of an approved Change Order, proceed as directed by the Change Order. DBE, ESBE or SBE goals apply to work performed through Field Orde rs and Change Orders. On Federal Aid Projects, the Contractor is responsible for complying with the DBE program, rules and regulations of 49 CFR Part 26, the requirements as specified in 105.02.05, Federal Aid Project Attachments 1 through 11 for this work. On State Funded Projects, the Contractor is responsible for complying with SBE program rules and regulations, the requirements as specified in 105.02.05, and State Funded Project Attachments 1 through 6 for this work. Contractor resubmission of CR-266, CR-273, CR-272, and CR-274 forms may be required on the work performed through Field Orders and Change Orders. Do not deviate from the requirements of the Contract unless and until a Field Order is issued by the RE or a Change Order is approved by the Department.
104.03.02 Protests to Change Orders
If the Contr actor disagrees with any terms or conditions set forth in a Change Order, submit a written protest to the Department within 15 days after the date of receipt of the Change Order. A protest is notice that the terms and conditions for proposed work are not i n accordance with the Contract, quantity adjustments are incorrect, or that the modification for Contract Time is incorrect. A protest is not a substitute for notice as specified in 104.03.04. Providing a protest within 15 days after the date of the receipt of a Change Order may not meet the requirements of 104.03.04 or N.J.S.A 59:13-5 and the Department will not make payment for th e costs of a claim if recovery is barred by other provisions in the Contract. In the protest, list the points of disagreement, and, if possible, the specification references, quantities, and costs involved. Ensure that the protest is a specific, detailed statement of the points of disagreement. The Department will reject general protests. If the Department rejects a protest for being a general protest, provide a specific, detailed statement within 7 days of such rejection. If an acceptable written protes t is not submitted within 15 days after the date of receipt of the Change Order or within 7 days of the initial rejection, the Department will make payment and modify Contract Time as set forth in the Change Order. Such payment is full payment for all wor k included or required by the Change Order and is conclusive as to any Contract Time modifications provided for therein or in establishing that no Contract Time modification was warranted. For Change Orders that require the Contractor’s assent, if the Department processes the Change Order within 15 days of receiving the Contractor’s signature, the Contractor is barred from protesting the approved Change Order. Protest does not relieve the Contractor from the obligation to proceed with work directed by an approved Change Order.
104.03.03 Types of Changes
The Department will address all changes under one or a combination of the following types:
1.Quantity Increases and Decreases. The Department has the right to increase or decrease the quantities of work to be performed. If the quantity of an Item is cumulatively increased or dec reased by 25 percent or less from the Proposal quantity, the Department will consider the quantity adjustment to be a minor change in quantity. If the quantity of an Item is cumulatively increased or decreased by more than 25 percent from the Proposal quantity, the Department will consider the quantity adjustment a major change in quantity. For the purpose of this subsection, the term “Proposal quantity” is the quantity indicated in the Proposal less the quantities designated on the Plans as “if and where directed.” Also for the purpose of this subsection, the term “Proposal Quantity” is the quantity indicated in the proposal for TRAFFIC STRIPES, LATEX and TRAFFIC STRIPES. For minor changes in quantity, the Department will make payment for the quantity of the Item performed at the bid price for the Item. For major increases in quantity, the Department or the Contractor may request to renegotiate the price for the quantity in excess of 125 percent of the Proposal quantity. For Items that are measured by Unit, the Department will not renegotiate a price for a fraction of a Unit, rather a Unit is eligible for renegotiation if it causes the quantity to be in excess of 125 percent of the Proposal quantity. If a mutual agreement cannot be reached on a renegotiated price, the Department will make payment by force account as specified in 104.03.08. For major decreases in quantity, the Department or the Contractor may request to renegotiate the price for the quantity of work performed. If a mutual agreement cannot be reached on a renegotiated price, the Department will make payment by force account as specified i n 104.03.08. However, the Department will not make payment in an amount that exceeds 75 percent of the value of the bid price multiplied by the Proposal quantity. The Department will consider making payment for costs attributed to a disproportionate allocation of costs for work for which no Item is provided in the Contract if the Contractor has escrowed its bid documents as specified in 103.05. The Department will not make payment for lost anticipated profits. If the difference in cost (C) is less than $5 ,000, the Department will not make a modification, and will make payment for the quantity of the Item performed at the bid price. Calculate C as follows: C = Q × (PB – PR) Where: C = Cost. PB = Bid price. PR = Renegotiated price. Q = Quantity of work performed at the renegotiated price. If a change results in a major change in quantity and results in a renegotiated price for the quantity in excess of 125 percent from the Proposal quantity, the RE will determine the locations of which work is to be performed at the renegotiated price and which locations of work is performed at the bid price. For subsequent increases in quantities, perform the work at the renegotiated price. However, if the quantities of subsequent increases exceed 25 percent of the Proposal quantity and 25 percent of the adjusted quantity for the Item at the renegotiated price, either party may request to re-renegotiate the price for the excess quantity. When the locations of the work to be performed at a renegotiated price are established, subsequent decreases in quantities of work at the bid price will not affect the quantity of work at the renegotiated price. Deleted work is work deleted from the Contract by decreasing the quantity of an Item, except the provisions for deleted work do not apply to quantities designated as “if and where directed.” If the Department deletes work from the Contract, immediately cancel orders for materials for that Item. If the Contractor has ordered acceptable material for work deleted from the Contract before the date the RE notified the Contractor that the work was deleted and the material cannot be returned to the vendor, the Department will make payment based on the cost of the material, as evidenced by paid invoices. In that event, the Department becomes the owner of the material, and the Contractor will deliver the material to a location as directed by the RE. The Department will only make payment for material that meets the requirements of the Contract. If the Contractor has ordered acceptable material for work deleted from the Contract before the date the RE notified the Contractor that the work was deleted, the material is returnable to the vendor, and the RE directs the material be returned, the Contractor shall return the material. The Department will make payment for actual vendor charges for returning and restocking the material. For deleted work, the Department will make payment for material costs and vendor restocking charges as specified in 104.03.08; except that the Department will not apply profit, and the total payment may not exceed the bid price multiplied by the deleted quantity. If the Department directs the material to be delivered to a designated location, the Department will make payment for the associated handling and delivery costs. If a price for these handling and delivery costs cannot be agreed upon, the Department will make payment by force account as specified in 104.03.08. When the entire quantity of an Item is designated “if and where dir ected,” with the exception of TRAFFIC STRIPES, LATEX and TRAFFIC STRIPES, and is increased by more than 100 percent of the Proposal quantity, the Department or the Contractor may request to renegotiate payment fo r the quantity in excess of 200 percent of the Proposal quantity. If a mutual agreement for a renegotiated price cannot be achieved, the Department will make payment by force account as specified in 104.03.08. When the entire quantity of an Item is designated “if and where directed,” with the exception of TRAFFIC STRIPES, LATEX and TRAFFIC STRIPES, and is decreased by any amount, the Department will make payment for work performed at the rate of the bid price. When the entire quantity of an Item is designated “if and where directed,” and is deleted, the Department will not make a modification, and will not make payment for the quantity of the Item performed at the bid price.
2.New Work. When requested by the RE, submit to the RE a detailed cost proposal as specified in 104.03.08, for performance of New Work. If a price for a New Work cannot be mutually agreed upon, the Department will make payment by force account as specified in 104.03.08.
3.Changes in the Character of Work. A change in the character of work is a change that causes the work to substantially differ in kind or nature from the original proposed construction. The Department may make payment for a change in the character of work whether the change directly causes a change in the character of the work or causes other work to become significantly different in character. Efficiencies or inefficiencies resulting from minor increases or decreases in quantities of work are not a change in the character of work. If a change in the character of the work results in a decreased cost to perform the work, the RE will revise the price to reflect this reduced cost. For changes in the character of work, the Department will base the modification on the difference between what the actual cost to perform the work of the Item or portion thereof involved would have been if there were no change, and the actual cost of performing the work or portion of work as changed. The modification shall only apply to the portion of the work for an Item actually affected by the change. If a modification cannot be reached by agreement, the Department will make payment by force account as specified in 104.03.08. Specific changes in character of work have the following requirements:
a.Differing Site Condition. A condition is considered to be a Type 1 Differing Site Condition when a subsurface or latent physical condition at the site differs materially from those specified in the Contract. A condition is considered to be a Type 2 Differing Site Condition when unusual conditions are encountered that differ materially from those ordinarily encountered or is generally recognized as inherent in the work that could not have been reasonably anticipated from the pre -bid examination as specified in 102.04 or from the preparation of the bid as specified in 102.07. The Department will make payment for increased costs resulting from a Type 1 or Type 2 Differing Site Condition as a change in the character of work; however, the Department will not consider making payment for a differing site condition unless the resulting change in cost exceeds $7,500. Except, if the Contractor incurs cost as the result of multiple differing site conditions, with the cost of each separate differing site condition having a value of at least $1,500 but not more than $7,500, the Department will consider making payment for such costs if the aggregate cost of the multiple differing site conditions exceeds $7,500. If the change in cost exceeds these amounts, the Department will base the modification on the total cost of the change, and the Department will not deduct the threshold amount of $7,500 from the cost of the change.
b.Constructive Acceleration. The Department will make payment for costs resulting from constructive acceleration as a change in the character of work if there was an excusable compensable delay for which the Department improperly rejected the Contractor’s notice requesting an extension of Contract Time, and for which the Contractor incurred additional costs. Payment for constructive acceleration may not exceed the cost of liquidated damages saved by the actions of constructive acceleration. The Department will not make payment for claims for constructive acceleration if the Contractor fails to have an approved progress schedule as specified in 153.03. Before constructively accelerating, provide the RE with a plan detailing the methods and activities of the constructive acceleration. Include how the plan accelerates the Work relative to the current approved progress schedule. Do not deviate from the submitted plan without providing the RE with a revised plan.
c.Inefficiencies. If the source of the loss of productivity cannot be isolated and priced separately, the Department will c onsider making payment for inefficiency costs based on a Measured Mile analysis comparing the productivity of work impacted by a change to the productivity of similar work under unimpacted conditions. If the source of the inefficiency is working out of the scheduled sequence, use the current approved progress schedule to show that the work was performed out-of-sequence.
d.Delays. The Department will modify Contract Time as specified in 108.11. The Department will make payment for delay damages resulting from excusable, compensable delays as specified in 104.03.09.
104.03.04 Contractual Notice
It is the responsibility of all parties to promptly provide written notice to the other party when circumstances are believed to constitute a change to the Contract. Immediately provide written notice to the RE of a circumstance that is believed to be a change to the Contract. If notice is not provided on Contractual Notice (Form DC-161), include the following in the initial written notice:
1.A statement that this is a notice of a change.
2.The date when the circumstances believed to be a change were discovered.
3.A detailed and specific statement describing the nature and circumstances of the change.
4.If the change will or could affect costs to the Department.
5.If the change will or could affect Contract Time as specified in 108.11.01.C. In addition to the hard copy of the notice, email the notice to the RE. It is not necessary to attach listed documents to the email. The Department will not modify the Contract for work performed or for expenses incurred due to a change before the date notification is provided to the RE. The Contractor waives its right to file a claim for costs incurred before providing notice to the RE. Following submission of written notice, diligently continue with the unaffected work to the maximum extent possible. If a Type 1 or Type 2 Differing Site Condition is encountered, do not disturb the existing site condition until directed by the RE. Within 5 days after receipt of each written notice, the RE will respond in writing with one of the following:
1.Reject the notice for providing insufficient information. The Department will not accept general notices. The RE may request resubmission of the notice with additional information. If the Department rejects the written notice for insufficient information, the Department will deem the Contractor to have not provided notice even if the RE issues directions based on the information provided.
2.Reject the notice because th e Contractor failed to submit the notice within the specified time frames of
N.J.S.A 59:13-5, or 104.03.02.
3.Acknowledge that notice has been provided, and state that the Department has determined that the circumstances do not constitute a change.
4.Acknowledge that notice has been provided, and state that the Department has not determined whether the circumstances constitute a change that may be eligible for additional payment or time or both. If necessary, the RE may direct the mode of further performance. The RE may require the Contractor to submit additional information within a specified time period.
5.Acknowledge that notice has been provided, and confirm that the circumstances consti tute a change that may be eligible for additional payment or time or both. If necessary, the RE may direct the mode of further performance. The RE may require the Contractor to submit additional information within a specified time period.
104.03.05 Unrecoverable Costs
For all changes, the Department will not make payment or modify Contract Time for the following: 1 Loss of anticipated profits.
2.Consequential damages.
3.Expense related to claim preparation and submission, including but not limited to attorney’s fees and expenses, consultant’s fees and expenses, and litigation expenses.
4.Interest.
5.Reimbursement for home office overhead in excess of that provided by the Contract.
104.03.06 Unacceptable Cost Calculation Methods
The Contractor has the burden of substantially proving entitlement to and quantifying its costs. The Department will not make payment for costs calculated using the following methods: 1 Total Cost Method. Method based on calculating costs as the difference between the Contractor’s bid for the Work from the Contractor’s calculation of costs for the Work.
2.Modified Total Cost Method. Method based on calculating damages as the difference between th e Contractor’s bid for a portion of the Work and the Contractor’s calculation of cost for that portion of the Work.
3.Productivity Factors. Costs for inefficiency based on industry productivity factors such as those provided by the Mechanical Contractors Association of America (MCAA) Factors Affecting Labor Productivity.
4.Eichleay Formula. Eichleay and other formulas or approaches to calculating home office overhead costs due to delay other than as specified in 104.03.09.
104.03.07 Tracking Costs
For all work directed to be paid for by force account, and for all costs for which the Contractor will pursue reimbursement through a claim, track and maintain complete records to provide a clear distinction between the costs for that work and the costs of other operations. On a daily basis, submit for review by the RE a daily work report for the work involved in the force account or claim, signed by the Contractor’s authorized representative. For days with multiple shifts of work, submit a separate report at the completion of each shift to the RE. Provide the following in the daily or shift work report:
1.For labor, provide the name, classification, date, daily hours, and whether the hours are straight time or overtime for each worker and foreperson.
2.For equipment, provide the description, dates, daily hours worked, daily hours idle, and whether each unit of equipment or component thereof is rented or Contractor-owned.
3.For materials, provide the description, quantities delivered and pla ced, and whether the materials were for temporary use or permanent construction.
4.Indicate the description of work associated with the force account or claim performed for that day or shift. If there are separate instances of work being tracked, provide separate daily or shift reports for each instance to the RE. Submit in writing to the RE for review before using special equipment, materials, or labor. The Department will not make payment for costs that the Contractor fails to document as required in the daily work report.
104.03.08 Force Account
Payment made for the work directed to be performed by force account represents full payment for that work. Submit to the RE a detailed cost of the work to be paid by force account using the electronic format provided by the Department. Submit daily or shift reports for force account costs as specified in 104.03.07. For work directed to be paid for by force account, and when approved by the RE in the daily or shift reports, the Department will make payment for the following:
1.Direct Labor. The Department will make payment for all necessary direct labor and the supervising foreperson of the specific operation, whether the employer is the Contractor, or subcontractor, based on the gross rate of wage paid to the employee as shown in its certified payrolls for each and every hour that said labor and foreperson are actively engaged in such work. For specific extraordinary operations, th e Department may allow supervising or other special types of employees, which would usually be considered as overhead, to be considered direct labor, but only for that time allowed by the RE. Submit justification in writing for the RE’s approval before using such employees.
2.Labor Fringe Benefits. The Department will make payment for the cost of benefits paid by the Contractor on direct labor costs allowed under 104.03.08.1, to or on behalf of, workers when required by collective bargaining agreements or other employment contracts generally applicable to the classes of labor employed on the work.
3.Indirect Labor Costs. The Department will make payment for the cost of FICA, W orkers Compensation Insurance, Federal and State unemployment insurance and other payroll taxes paid by the Contractor on direct labor costs allowed under 104.03.08.1.
4.Insurance. The Department will make payment for the actual increased cost of insurance, necessarily and directly resulting from the force account work, as evidenced by certified documentation of insurance rates and premiums.
5.Materials. The Department will make payment for the cost of materials and shipping charges as evidenced by paid invoices, except as follows:
a.If a cash or trade discount is offered by the actual supplier or available to the purchaser, credit the Department notwithstanding the fact that such discount may not have been taken.
b.If materials are procured by the purchaser by a ny method that is not a direct purchase from and a direct billing by the actual supplier to such purchaser, the cost of such materials is the price paid to the actual supplier as determined by the RE, plus the costs, if any, incurred in the handling of such materials.
c.If in the opinion of the RE the cost of such materials is excessive, then the Department will limit the cost of such materials to the prevailing market price for such materials as are available in the quantities concerned, delivered to the Project Limits, and deducting any discounts as specified in 104.03.08.5.a.
d.For materials not incorporated into the permanent construction, the Department will deduct the reasonable salvage value of the material after the performance of the work. The Department will only allow sales tax on materials that are not permanent and do not qualify for an exemption under the Sales and Use Tax Act. The Department reserves the right to furnish materials, and the Department will not make payment for costs and markup on such materials.
6.Extraordinary Expenses. The Department will make payment for permit and disposal fees, if approved before incurring the cost and evidenced by paid invoices. If the cost is, in the opinion of the RE, excessive, then the Department will limit the payment for such expenses to reasonable costs as available in the prevailing market.
7.Equipment. The Department will make payment for Contractor-owned or rented equipment required for the force account work. The Department will not provide payment for equipment that is determined to be unsuitable by the RE for the force account work or that is inoperable due to breakdown or during periods of repair. In the event the Contractor proposes to use equipment of a higher cost than that suitable for the work, the Department will make payment at the rate applicable t o the suitable equipment. The Department will make payment for Contractor-owned or rented equipment as follows:
a.Contractor-Owned Equipment. For equipment owned directly by the Contractor or by entities that are divisions, affiliates, subsidiaries, or in any other way related to the Contractor or its parent company, submit in writing to the RE for approval the type of equipment and proposed cost before starting the work. The Department will m ake payment for equipment rental, operating, and idle time costs based on the calculated cost. The Department will determine the calculated cost using the Rental Rate Blue Book (Blue Book), published by Equipment Watch, as follows: 1 The Department will calculate the “rental” hourly rates by dividing the monthly rate by 176. The Department will not use weekly, daily, or hourly rates. The Department will apply rental hourly rates for every hour the equipment is in active use, except that for any 30 day period, the Department will limit the total amount paid for each piece of equipment to a maximum of the monthly rate.
2.The Department will apply the operating cost rate for every hour the equipment is active.
3.The Department will apply the rental and ope rating rates that are current on the first day that the equipment is in use for the force account work throughout the next 6 months that the force account is in progress. The Department will apply updated rates for every following 6 month period the force account is in progress. Submit to the RE documentation establishing the Blue Book rates for the equipment proposed and the age of the equipment. The Department will adjust rates for each 6 month period thereafter.
4.The Department will not permit area adjustments. The Department will adjust rental rates for equipment age adjustments according to the rate adjustment tables.
5.The Department will not make payment for idle time for equipment required for only portions of the force account work, except where the equipment has been held on the work site on a standby basis at the request of the RE and, but for this request, would have left the work site. Portions of the work include hours when the equipment is inactive within a working day. For the idle time for each piece of equipment, the Department will make payment at one -half the rate established as specified in
104.03.08 7.a.1. Idle time is limited to the Contractor’s normal working hours. Idle time is further
limited to a maximum of eight hours a day and a maximum of 176 hours in a 30 day period.
6.The Department will make payment for costs for transporting equipment to and from the work site, if said costs are solely required as a direct result of the Force Account activity. The payment established is full payment for all equipment costs, including the cost of fuel, repairs, maintenance, depreciation, storage and incidentals. If a rate is not established in the Blue Book for a particular piece of equipment, the RE will establish a rate for that piece of equipment that is consistent with its cost and use in the industry.
b.Rented Equipment. In the event that the Contractor does not own a specific type of equipment and must obtain it by rental, submit in writing to the RE for approval the need to rent the equipment and the rental rate for that equipment before using it on the work. The Department will make payment for the rental of the equipment as specified in the rental agreements and as evidenced by paid invoices for the time that the equipment is used to accomplish the work, plus the cost of moving the equipment to, on, and away from the work site.
8.Profit. The Department will make payment for profit at the rate of 10 percent applied on the following:
1.Total direct labor cost as specified in 104.03.08.1.
2.Total labor fringe benefit costs as specified in 104.03.08.2.
3.Total material cost as specified in 104.03.08.5 excluding transportation, shipping, handling, and taxes.
9.Overhead. The Department will make payment for overhead at the rate of 15 percent applied on the following:
1.Total direct labor cost as specified in 104.03.08.1, except for the direct labor cost of any extraordinary supervisory or special employees.
2.Total labor fringe benefit costs as specified in 104.03.08.2.
3.Total material cost as specified in 104.03.08.5 excluding transportation, shipping, handling, and taxes. The above 15 percent allowance is full compensation f or the Contractor’s field and home office overhead including, but not limited to, the following:
1.Salaries and expenses of executive officers, supervising officers, or supervising employees, except as provided for specific extraordinary operations under 104.03.08.1.
2.Salaries and expenses of clerical and administrative employees.
3.Charges for minor equipment, such as small tools, including shovels, picks, axes, saws, bars, sledges, lanterns, jacks, cables, pails, wrenches, and other miscellaneous supplies and services; and equipment consumed during operations, such as saw blades, drill bits, and milling teeth.
4.Costs for preparing documents and records, including reproduction and mailing costs.
10.Subcontractors. The Department will make payment for work performed by subcontractors in the same manner as for the Contractor as specified in 104.03.08, except the Department will not make payment for markup on subsequent tier subcontracts. The Department will make payment for markup on subcontracted work at the rate of 5 percent applied on the total amount of all costs for subcontracted force account work up to $500,000 and 2 percent applied on the total amount of all costs for subcontracted force account work over $500,000.
104.03.09 Delay Damages
If the Department grants an extension of Contract Time for excusable, compensable delays, as specified in 108.11.01, beyond the completion time requirements specified in 108.10, the Department will make payment for the following:
1.Non-Productive Activity. The Department will make payment for the following non-productive activities:
a.Direct Labor. For all necessary non-productive labor and supervising forepersons of specific operations who must remain on the Project during such periods of delay due to collec tive bargaining contracts or other reasons approved by the RE and cannot be assigned to other work not affected, the Department will make payment at the prevailing rate of wage as shown in its certified payrolls. This includes the necessary labor required for maintenance within the Project Limits, maintenance of traffic control devices, maintenance of SESC measures, and similar activities resulting from the delay and approved by the RE. This rate is inclusive of all employee contributions to taxes, insurance, and other benefits.
b.Labor Fringe Benefits. The Department will make payment for the costs for benefits paid by the Contractor on direct labor costs allowed under 104.03.09.1.a to or on behalf of, workers when required by collective bargaining agreements or other employment contracts generally applicable to the classes of labor employed on the work.
c.Indirect Labor. The Department will make payment for the costs for FICA, W orkers Compensation Insurance, Federal and State Unemployment Insurance and other payroll taxes paid by the Contractor on direct labor costs allowed under 104.03.09.1.a.
d.Insurance. The Department will make payment for the actual increased cost for insurance, necessarily and directly resulting from the delay, as evidenced by certified insurance rates and premiums.
e.Equipment. If as the result of the delay, equipment cannot be used for any active work, and is directed by the RE to remain on the work site during the delay, the Department will make payment as specified in
104.03.08 7.a.5. If as the result of the delay, equipment cannot be used for any active work, and the RE
determines that it is not necessary for the equipment to remain on the work site, the Department will make payment for labor and equipment costs to remove the equipment and to return it to the work site at the end of the delay period. If equipment is required for additional maintenance within the Project Limits, maintenance of traffic control devices, maintenance of SESC measures , and similar activities resulting from the delay and approved by the RE, the Department will make payment as specified in 104.03.08.7.
f.Contractor’s Field Office. If the Contractor has a field office dedicated for the P roject, and if the extension of time is for more than one month, the Department will make payment for the costs to maintain the Contractor’s field office, as evidenced by paid invoices. These costs may include property rent or leases, trailer rentals, utility and sanitation services, and fixed monthly telephone services required for a field office directly established for the Project.
g.Profit. The Department will not make payment for profit.
h.Overhead. The Department will make payment for overhead at a rate of 15 percent of the sum o f labor and labor fringe benefits. This is full payment for all field and home office overhead and general superintendence.
2.Labor Escalation. If, as the result of the delay, an activity , which had a planned late-finish date occurring before a labor rate increase date, is required to start after the labor rate increase date, the Department will make payment for the following:
a.Increased Direct Labor. For all necessary non-salaried labor and supervising forepersons of the specific activity, the Department will make payment for the difference between the gross rate of wage paid to the employee as shown in its certified payrolls and the gross rate of wage for the planned period of performance, for each and every hour that the employee was actively engaged in such work.
b.Increased Labor Fringe Benefits. The Department will make payment for the increased costs for benefits paid by the Contractor on direct labor costs allowed in 104.03.09.2.a, to, or on behalf of, workers when required by collective bargaining agreements or other employment contracts generally applicable to the classes of labor employed on the work.
c.Increased Indirect Labor Costs. The Department will make payment for the costs for FICA, Workers Compensation Insurance, Federal and State Unemployment Insurance, and other payroll taxes paid by the Contractor on increased direct labor costs allowed under 104.03.09.2.a.
d.Profit. The Department will make payment for profit at the rate of 10 percent applied on the following:
1.Total direct labor cost as specified in 104.03.09.2.a.
2.Total labor fringe benefit costs as specified in 104.03.09.2.b.
e.Overhead. The Department will not make payment for overhead for labor escalation costs. Provide the RE with the following documentation for all labor escalation costs:
1.A breakdown of costs by Item, activity, and date detailing the labor classification and hours for each.
2.For each activity, an analysis demonstrating that the entire activity was forced to be performed when labor costs were higher than the labor rates in effect on the planned late-finish date.
3.Collective bargaining agreement information detailing the increase in direct wages and fringe benefits.
3.Material Escalation and Storage. If the delay forces the Contractor to purchase material when material costs are higher than the cost of material would have been for the planned late -finish dates of an activity using the material, or if the Contra ctor incurs additional storage costs as a result of the delay, provide the RE with the following documentation:
1.A breakdown of costs by Item, activity, and date the material cost was incurred.
2.Cost basis for the material at the time of an activity’s late start date as evidenced from documented vendor quotes.
3.The cost of materials and transportation charges as evidenced by paid invoices.
4.An analysis demonstrating that the activity or portions of the activity were forced to be performed when material costs were higher than those that were in effect on the planned late-finish date. For such material escalation and storage, the Department will make payment as follows:
a.Increased Material Costs. The Department will make payment for the difference between the costs of materials, as specified in 104.03.08.5, and the cost of such materials that were available for the planned late-start to late-finish dates of an activity using the material. However, the cost of unacceptable material, and cost increases for fuel and asphalt are not eligible for payment. Furthermore, the Department will not make payment for quantit ies in excess of the amount necessary for construction, except where lesser quantities cannot be economically purchased and the excess has no significant reuse value. If the cost basis of materials is , in the opinion of the RE, excessive, the Department w ill establish the cost of the materials from market prices.
b.Increased Storage Costs. Obtain the RE’s approval before storing materials. The Department will make payment for a dditional storage costs as evidenced by certified vendor quotes detailing the terms of the storage agreement, and paid invoices.
c.Profit. The Department will make payment for profit at the rate of 10 percent applied on the following:
1.Total increased material costs as specified in 104.03.09.3.a.
2.Total increased storage costs as specified in 104.03.09.3.b.
d.Overhead. The Department will make payment for overhead at the rate of 15 percent applied on the following:
1.Total increased material costs as specified in 104.03.09.3.a.
2.Total increased storage costs as specified in 104.03.09.3.b. From the total value of delay damages, when the Total Adjusted Contract Price cost is great er than the Total Contract Price, the Department will deduct the amount of 10 percent applied to the difference between the Total Adjusted Contract Price and the Total Contract Price. If this deduction is greater than the total value of delay damages, the Department will not deduct the difference from the Contractor.
Referenced in this section
Scope of Work in other states
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Source: Standard Specifications for Road and Bridge Construction, 2019 (rev. 2022-12-21) Edition. Pages 54–65 of 651. View official source ↗