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- 16th version
- A101: Owner/Contractor - stipulated sum
- A102: Owner/Contractor - Cost + Fee (with GMP)
- A103: Owner/Contractor - Cost + Fee (without GMP)
- A401: Contractor/Subcontractor
- Making payments to the contractor
- Changes in work
- Written amendment signed by both owner & contractor (addenda)
- Change Order
- Construction Change Directive
- Minor change in work (ASI)
It means everything to complete the project:
* anything the architect produces in the creative act of designing the building
- Who, technically, is considered the Owner, according to A201?
- Does the owner need to own the land or building?
- What is the purpose of designating an owner's representative?
- The entity who contracts with the contractor
- No, they can be a tenant, for example. The owner would be considered the landlord
- Because the owner may not be involved in the day-to-day activities of the project (kind of like Advocate being the owner, but Kalman being the owner's representative)
- When can the GC request proof that the owner can pay for the project?
- What are the 3 exceptions to this (when they can ask again)?
- What are some examples of proof showing ability to finance the project?
- Prior to commencement of the Work
- 1) if the owner fails to make payments, 2) a change in the Work triggers a change to the Contract Sum, 3) the contractor believes, for good reason, that the owner may not be able to finance the project
- a loan commitment letter, government appropriations document, etc
- Contractor: permit and associated fees (but baked into their fees later on, to recoup the money)
- Owner: everything else - AHJ reviews, easements, rights of way,
- After starting the work back up again (after the Owner stops it), what must the contractor do wrong to have the owner take over the work?
- What are the procedures for the owner carrying out the Work?
- What expenses are deducted from the Contract Sum (amount reimbursed to the contractor for the Work)?
- What is this provision not meant to prohibit (from an owner's point of view)?
- Defaults, or neglects to remedy the problem that caused the stop
- Owner gives 10 day notice to tell contractor to proceed --> contractor does not proceed --> owner doesn't need to tell contractor, but can 'take over the work'
- 1) cost of that portion of the Work, 2) expenses for delay, 3) fees paid to architect in relation to problem
- the owner is still allowed to take the contractor through mediation, arbitration or litigation
- Visited the site
- Become generally familiar with local conditions
- Cross-check personal observations with requirements of the Contract Documents, and if there's a problem, bring it to the attention of the architect.
- Studied the documents (but not as a licensed design professional)
- Take existing measurements
- Observe the area where the Work will be taking place
- They may be liable to cover the costs that went into fixing the problem
- Because if they held off, it might take more office labor to fix the problem, which they could then rake in more money in profit (because a portion of all money paid to office labor is profit)
- Review it for safety
- They take responsibility for the safety
- They should let the owner & architect know that they don't find it safe
- The owner would be liable for any damages (who would then probably sue the architect, if it was the architect who said to proceed)
- Construction Equipment
- Yes, both temporary and permanent
- Contractor - must not vary from CDs unless given authorization from the owner with evaluation from the architect
- Architect - must evaluate all contractor related changes
- Owner - must evaluate all contractor related changes AND makes the final decision
- That materials and equipment will be of new and good quality - or - a quality specified in the contract documents. (they must be either new or something else specified by the contract documents).
- Yes, if there are issues with the quality of the materials, that can push back the 10-year warranty.
How do paying taxes work for a contractor when they receive money from the owner (i think this is how it works)?
What tax rate do they need to pay?
- Sub-1 does work ($1m), Sub-2 does work ($2m), Sub-3 does work ($1m) --> Subs bill GC total ($4m), GC also has to pay own staff ($.5m), has overhead ($.25m), needs to make profit ($.25m), has to be repaid for paying taxes - 25% ($.25m) --> GC bills owner ($5.25m) --> Owner pays GC ($5.25m) --> GC gets reimbursed for overhead & labor, pays taxes, makes profit --> GC pays subs total ($4m) --> Subs get reimbursed for overhead & labor, pays taxes, makes profit
- Tax rate that's in effect when contract is signed
- Who prepares for Entitlement Phase?
- Who pays for tests, inspections & fees during design?
- Who prepares docs for building permit?
- Who picks up building permit?
- Who pays for building permit?
- Who coordinates tests, inspections & fees during construction?
- Who pays for tests, inspections & fees during construction?
- AE team
- AE team
- Contractor give notice to O&A before disturbing
- Allow at least 21 days for architect to come, inspect & make judgement
- Architect to decide if conditions require change in cost or time
- Contractor to stop work in that area
- Contractor to notify owner
- Owner to notify government
- Contractor cannot work in that area until given approval
- Contract sum or time may be changed
- What is an allowance?
- How is it different than the budget for that item (concrete, for example)?
- Are allowance items usually bid out during bid?
- Does GC pick subs during bidding normally?
- Does GC pick subs for allowances later on?
- Can they object if someone is picked they don't like?
- If something isn't figured out yet for a certain material (leave money in the bucket for it later)
- It can be the same ($1m for concrete in budget, $1m allowance)
- What costs does an allowance cover?
- What does it not cover?
- Where does this stuff get covered (paid back to contractor from owner)?
- Cost of materials or equipment
- Labor, Loading/Unloading, Overhead, Profit
- It gets picked up elsewhere in the contractors bid (not in the allowance)
- If the architect or owner make a reasonable objection to the superintendent, can the contractor keep them?
- Is the contractor allowed to change superintendent's w/o the owner's approval? Why is this rule put into place?
- Generally, no
- No, because the contractor may want to move the super off the project to serve its interest elsewhere, thus hurting the project.
- Does the contractor need to provide a construction schedule to the owner and architect for information only, or for their approval?
- Why this answer?
- Can the contractor exceed the overall construction timeline laid out in the contract documents?
- For their information only
- Because the owner and architect aren't supposed to control means and methods
- What is the purpose of submittals?
- Why do they not carry as much weight as the contract documents?
- What should the contractor check/approve for? What should the architect check/approve for?
- They are to illustrate to the architect how the contractor intends to building the project according to the contract documents.
- The owner doesn't see them, so they don't have the same level of mutual agreement as the contract documents
- Contractor: dimensions, quantities, more detailed things / Architect: design intent
- Checked for coordination and dimensions w/ contract documents
- Checked field measurements, or will do.
- Reviewed and approved them.
- It means that the contractor says they're correct, and is thus liable if they're not
- Is the contractor completely liable for deviations in the work as a result of incorrect submittals?
- The architect is not liable - why?
- What is the only way that the contractor can deviate from the contract documents?
- Because the submittals are part of the contractors Instruments of Service, and the architect is only checking for design intent.
- ASI, CCD or Change Order (i.e. something that is documented)
- Notify the architect, otherwise the architect isn't liable for the changes
- Describe the steps for a contractor to follow a performance or reference spec
- Why would a contractor or owner want to use a performance spec?
- Is this 'design delegation' by the architect?
- A&E staff make performance or reference spec --> contractor picks system that complies with spec, or retains another design professional to pick system --> contractor installs system
- Because they can achieve substantial savings by allowing the contractor to pick the system (since they're more knowledgable). The contractor can thus maybe make more profit
- No, it is design allocation to help the owner
1) Work happening on site
2) Work happening off-site
- If the copyright or license infringement takes place in the contract documents
To sum up the very long Section 3.18 'Indemnification':
- If the C is responsible for something bad happening in the execution of the work, do they have to hold harmless the A & O?
- If the C is 80% responsible, and someone under their care is 20% responsible (like a sub), how much is the contractor required to pay?
- If the state the project is in has their own separate indemnification laws, does that void this clause?
- No, and vice versa (this clause doesn't void the state rule)
- As many times as the architect deems reasonable, based on the status of construction
- Yes, they can
- To notify the owner of the general progress (looking out for the owner)
- Contractor wants to talk to owner, who should they go through
- Contractor wants to talk to architect's consultants, who should they go through
- Owner or architect wants to talk with other GC's (if applicable), subs or suppliers, who should they go through?
- Architect (if C talks to O w/o architect present, C may take advantage of O)
- Architect (if C talks to consultant w/o architect present, C may take advantage of consultant)
- It is still the architect's responsibility to prepare the docs
- It can trigger a change order
After signing the construction contract, how long does the contractor have to submit names of subs & suppliers to the owner & architect?
How long does the architect have to make an objection on behalf of either themselves or the owner?
- As soon as is practicable
- 14 days
- If a sub-contractor is rejected by owner or architect who is reasonably capable of completing the work, what happens?
- If they were not reasonably capable of completing the work, what happens?
- If a sub-contractor is rejected by owner or architect, but no timely list of subs was made available early on (so this issue would happen later), what would happen?
- A change order will be issued to increase or decrease project cost and/or time (which the contractor would want)
- A change order will not happen (which the contractor would not want)
- A change order will not happen (which the contractor would not want)
- By what terms are the subcontractors bound to the contractor?
- Is the contractor allowed to modify A401 and include language that would prejudice (create ill-will or ill-acts) towards owner or architect?
- Should sub-contractors be encourage to create a similar agreement with similar terms to their sub-sub-contractors?
- By the same terms that the contractor is bound to the owner
- If a contractor defaults, is the owner entitled to keep the sub-contractors as well as their original bid prices?
- What is the only way that these bid prices can be changed (reduced)?
- If contractor defaults, is owner required to still fully compensate subs for work done?
- If work is terminated for more than 30 days, the contractor will deduct payment to the sub to compensate for losses from suspension
- If a GC defaults, will an owner typically take on the GC role?
- If not, what will they do?
- Are they still obligated to pay the (old) subs the same for past work and future work on the project?
- Hire another GC
- Yes, they need to pay them the same amount
- What issues can the owner take care of if they perform some of the construction services themselves? (what 2 issues other than acting as GC? - both have to do with insurance)
- Can the GC complain about the owner slowing down their progress by doing this?
- Construct the project, or portions of it, as the GC
- Deal with insurance issues
- Deal with waivers of subrogation (insurance company suing the one at fault to recoup money)
- If there are multiple contractors, and one contractor has to build on top of the work of another, what are they required to do (if they find any defects in the work)?
- What is assumed if they don't report anything?
- What is the exception to this?
- Notify the architect before beginning about said defects
- That the work is okay
- If the work is not discoverable
- If one contractor cannot perform their work because of delays or improper scheduling of another contractor, what can they ask for from the owner?
- If one contractor is slowing down the work of another contractor, what will that contractor have to give to the owner?
- In this situation, does the owner ever end up paying any money?
- Why go through the owner?
- Reimbursements for money spent because of delays (which owner would then get from other contractor)
- Money, which the owner will then give to the contractor
- No, they always get the money from the responsible contractor
- Because the contractors don't have contracts with each other
- In a multi-contractor situation, if there is a disagreement regarding who is responsible for clean-up in different areas, what does the owner have the right to do?
- Who decides who pays for the cleanup?
- Clean the site
- The architect allocates who is responsible
- Who prepares a change order?
- What are the 3 things that must be agreed to by OAC?
- If there is no change to the contract sum or contract time, what should be marked down? Why?
- The architect prepares a change order (since it's a change to the contract documents)
- The change itself, any change in the contract sum if applicable, or any change in the contract time if applicable
- A $0 change or a 0 day change in time should be marked down. It prevents disagreements later to do this - like if the contractor directed change order that would actually decrease time or sum (which the contractor would not want)
- Can a CCD change things within the general scope of the project?
- Can a CCD change things outside of the general scope of the project? Who would need to be contacted if this work was to go through?
- No, the contractor doesn't have to perform that work.
- The surety would need to be contacted to make sure they will still be covering the contractor for this change.
- What does a CCD give the owner a unilateral right to do?
- Make changes to the work, regardless of who else agrees
- 1) If time is a factor and they don't have time to do a change order, 2) If they don't agree on time to do the change
- Itemized increase in lump sum cost (if lump sum contract)
- Cost for change + fees (if cost + fee contract). Note this 'cost' is not the same as 'cost of the work'
- Unit prices that were used in CDs. Like cost per bed, hotel room, etc
- It becomes a change order
- Who comes up with the cost for how much a contractor would get paid for a CCD?
- Who jumps in if the contractor doesn't agree?
- How do they do this?
- Owner, using the 3 methods related to different fee structures
- Trade journals, other work the contractor has done, etc
- If there is a disagreement on the cost of a CCD, who makes an initial decision?
- What if either of the parties disagree?
- What is the purpose of having an initial cost (as determined by the architect) written down?
- The Architect
- They can appeal
- The owner's lender needs to approve the CCD cost increase
- At substantial completion
- Yes, the time may be extended or shortened, which would shorten the contract time.
- In A101
- Doesn't change anything. Contract time still begins then.
- If the effective date on the insurance has not happened yet, can the contractor begin Work?
- What is the exception to this?
. The exception is if the owner gives instructions to do so in writing
- If the contractor is delayed for reasons outside their control (owner, architect, force majeur, change orders, fire, labor disputes, mediation/arbitration) are they allowed an increase in the contract time?
- Who determines how many days?
. Yes, it would be a change order
. The architect (in collaboration with the owner), because they are the ones that set the initial timeline
- From an architect or engineer point of view, what is the difference between lump sum (stipulated sum) and cost + fee with GMP?
- Which one is better from AE point of view and why?
. Lump sum = you will be paid the amount in the contract, no matter what
. Cost + fee (with GMP) = you will only be paid for what you've done, with a markup, not to exceed a certain price
. Lump sum is better from AE point of view because you know you're getting a certain amount of money --> if you can reduce your cost, you'll make more profit
- What does a schedule of values determine (date wise)?
- How much time does the contractor have before each scheduled date for application for payment, to turn in an application for payment?
. It determines when they will submit applications for payment
. The contractor needs to submit the application for payment at least 10 days before the schedule of values date
- Are change orders & CCDs capture in a application for payment?
- Describe how it would be added in?
. Normally, contractor purchases $500 (concrete) + $500 (steel) --> There was a change order or CCD for another $200 (concrete) --> The pay app would now be $700 (concrete) = $500 (steel)
- Upon receiving an application for payment, what are the 3 options the architect has?
- What is their timeline for doing this?
. Accept amount and send to owner
. Certify different amount and forward to owner
. Reject application
. Within 7 days of receipt of application
. That, in general, the work has progressed to the point it should be
. That, in general, the work is of a quality called for in the contract documents
- Think about difference graphically between:
-Floor single outlet
-Floor duplex outlet
-Wall-mounted duplex outlet
-Wall-mounted quadruplex outlet
- What is Boiler and Machinery Insurance (describe scenario where it would be used)?
- What is another name for it?
- Who is required to purchase this insurance?
- Who's materials & property does it protect?
- Who get's insured?
. Boiler explodes or other equipment breaks down --> equipment needs to be replaced and business operations and profit can be hurt during this time and food or other things can spoil --> all of these things cost money --> this insurance can protect against this
. Equipment breakdown insurance
. Owner, Contractor, Sub, Sub-Sub
. Own. & Cont. are protected from giving $ to above
- What is Loss of Use insurance?
- What does it cover that normal property insurance doesn't cover?
- Is the owner required to purchase it?
- Is the owner required to not take action against the contractor for recovering Loss of Use expenses?
. If owner loses ability to use property (due to fire or something else), loss of use insurance will pay for extra expenses associated with not being able to use property.
. Property insurance = cost to replace property, Loss of Use insurance = replaces extra costs associated with losing property (lease cost for using another facility temporarily, for example)
. Through a change order
- Is the owner required to provide a copy of all property insurance policies to the contractor?
- If policy is set to expire, how much notice does owner need to give contractor?
- If it expires, and something bad happens that is contractors fault, who will pay for bad thing?
. 30 days
. Contractor, which they cannot let happen
- What exactly is subrogation?
- What does it mean then when it says Waiver of Subrogation?
. The right to "stand in the shoes" of another and assume their risks or rewards (like contractor paying money back to insurance company for screwing up)
. Waiver of subrogation means they waive the "right" to subrogate - to pay money back to insurance company (if insurance company sues)
1) Terminate contract, pay out $ due if any to contractor, and then keep proceeds to replace property
2) Don't terminate contract, issue change order where money is given to contractor to replace materials, extra proceeds are used to replace property
. Any bond requirements need to be presented to the contractor before signing of the construction contract (during bidding or on the CDs)
* Reason being that the contractor has to figure this into their costs
- If the contract documents say not to cover work, and the contractor covers it, who pays for it to be uncovered so it can be inspected by the architect?
. If the contract documents have no restrictions about covering work, and architect wants work to be uncovered and inspected, who pays if work is correct? If work is incorrect?
1) If work is discovered to not conform to contract documents before substantial completion, will it need to be corrected?
2) After substantial completion?
3) If it is only in process, but known before being finished that it will not comply?
4) If it does not comply, but notice of that doesn't come from architect - does it still need to be corrected?
5) Who needs to pay for cost of correction?
6) Even for cost of architect's services? (if applicable)
3. Yes, it will need to be corrected
1. General warranty by contractor: starts after substantial, ends at statute of repose or limitations, contractor will not have to fix work, contractor can get sued for cost to fix work
- 1-yr. warranty by contractor: starts after substantial, ends after 1 year, contractor will have to fix work and will have to pay to fix work
- Warranty by manufacturer or supplier: is just what it says
1) If the contractor performs corrective work within the 1-year timeframe, and then that work is found to be defective sometime later after the initial 1-yr timeframe, is the contractor obligated to fix it?
2) Can the owner sue the contractor though for the cost to fix it?
2. Yes, the contractor just doesn't have to come out and fix it
1) What instrument would be used to carry out an owner-acceptance of non-conforming work?
2) What would this do to the contract sum?
3) Is this outcome something the contractor would generally want? Why?
1. Change order
2. Likely reduce it
3. No, because with each dollar paid to the contractor, part of it is profit theoretically (because of contractor markup)
1) What is the only exception to the assign contract rule - who is the only party that the owner can transfer the contract to (w/o gaining the contractor's consent)?
2) Does this waive any of the rights of the contractor (meaning, does the contractor lose any of it's rights if someone else now owns the contract instead of the owner)?
1. If the construction lender will not lend money to the owner w/o being assigned (transferred) the contract, the owner may do this w/o the contractors permission.
1. The actual individual, a member of the firm, or an officer of the firm.
* It also counts if it is sent through certified mail.
1) Who bears the cost of coordinating and carrying out tests, inspections & approvals during construction?
2) What if the tests, inspections & approvals only become known after bidding?
3) Who bears the cost if a test, inspection or approval becomes necessary for a part of the construction not called out in the Contract Documents?
2. Owner shall bear the cost
1) Who secures certificates of testing, inspection or approval?
2) Who is it delivered to?
2. Delivered to architect, who then delivers to owner
1) 1) Describe process (given by Schiff Harden) for how an owner pays a sub through a GC (not an escrow account) to waive all possible liens? (see below, cont'd on other side)
1. Sub takes out lien before signing contract to do work --> Sub says I want to be paid --> Owner takes money out of construction loan account --> Gives it to general to pay subs -->
1) Describe process for why an owner would want a CCD if they & contractor cannot agree (based on Schiff Harden description). (see below & cont'd on other side)
1.Architect left something out, or owner wants to change something --> O & A think it will cost $1000 to make change -->
1) When must a claim, by O-->C, or C-->O, be filed (in relation to when the 'event' took place)?
2) Do all the details need to be known when initiating the claim (sending it to the other party)?
3) Does the architect and/or IDM need to be copied on transmittal of claim?
1. Within 21 days after event occurred or when the event was noticed to have occurred
3. Yes, to both
1) Does work generally need to continue as normal by OAC, during an ongoing claim dispute?
2) What situations are an exemption to this?
2. If the claim involves issues justifying suspension or termination
1) What are the basic similarities between liquidated and consequential damages?
2) What is the basic difference?
3) Why do contracts try and avoid the allowance of consequential damages?
1. They both involve indirect loss because of failure to fulfill a contract by the other party (can be revenue lost, expenses gained, reputation lost, etc)
2. Liquidated damages are basically stated at contract signing, while consequential damages are not stated from the beginning
3. Because they can unreasonably lengthen a dispute, and can end up costing both parties a ton
1) Is there a time limit on how long either party has to file for mediation after an Initial Decision has been made?
1) Does the IDM usually try and resolve most conflicts first?
2) If that doesn't work, then what are the parties required to file for?
3) What can the parties also file for at the same time as the previous answer?
4) Why are they allowed to file for both at the same time?
3. Binding dispute resolution (using either arbitration or litigation)
4. The parties want to avoid statute of limitations issues (not filing for arbitration fast enough), but the AIA wants the parties to try mediation first. This lets both the parties and the AIA to get what they want.
1) Where does mediation usually take place?
2) Who pays for it?
1. At the jobsite
2. Both parties split the cost evenly
In simple terms:
1) What is consolidating arbitrations?
2) What is joinding arbitrations?
1. Combining multiple arbitrations with the same underlying issues together
2. Bring in a third party person to 'testify' at the arbitration
Contractor shall provide and pay for labor, materials, equipment, tools, construction equipment and machinery. Water, heat, and utilities.
The contractor shall not permit employment to a unfit person or person or a unskilled worker.
The contractor warrants to the owner
-Free from defects caused by abuse
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