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Policies and Procedures

Finance & Administration

4-OP-B-11-D2 Administration of Construction Manager Agreements

Responsible Executive:

Vice President for Finance and Administration

Approving Official:

Vice President for Finance and Administration

Effective Date:

April 8, 2019

Last Revision Date:

01/01/2014

 

 

I. INTRODUCTION

This policy establishes procedures for the administration of Construction Manager agreements, including negotiation, contracting, and payments.

II. POLICY

This document describes contract administration procedures for Construction Manager agreements, including negotiations for preconstruction services and for the Guaranteed Maximum Price; Amendments and Change Orders; approval of Pay Requests; subcontractor pre-qualification; and, bidding.

A. SCHEDULING THE NEGOTIATION MEETING

Upon approval of the Construction Manager selection as described in Florida State University Policy OP-B-11-C2, Construction Manager Selection Process, the Facilities Design and Construction Office (FDC) schedules the negotiation meeting with representatives of the Construction Manager. The FDC provides the Construction Manager copies of the standard Agreement between Owner and Construction Manager, the Project Manual, and a copy of this procedure document. FDC directs the Construction Manager to prepare a proposal for preconstruction services in accordance with the “Guidelines for Construction Managers for the Preparation of Proposals for Preconstruction Services” (Forms section).

B. NEGOTIATION FOR PRE-CONSTRUCTION SERVICES

FDC representatives meet with the Construction Manager to negotiate the pre-construction portion of the contract. If negotiations with the first ranked firm are unsuccessful, negotiations with that firm may be terminated and negotiations may be commenced with the second ranked firm. If negotiations with the second ranked firm are unsuccessful, the negotiations with that firm may be terminated and begun with the third ranked firm. If negotiations with the third ranked firm are unsuccessful, negotiations with the third ranked firm may be terminated, and additional firms from the original pool may be selected or the project may be re-advertised. At any time during the negotiation process, negotiations may be terminated entirely and the use of construction management for the project may be reconsidered.

  1. Preparation of Agreement
    Upon completion of successful negotiations, FDC prepares the Agreement between Owner and Construction Manager. After approval by the University General Counsel, FDC transmits the agreement to the Construction Manager for execution.
     
  2. Distribution of executed Agreement
    Upon receipt of attested rates and final execution of the Agreement by the University President, copies of the Agreement are distributed electronically to all parties.
     
  3. Preconstruction Agreement file
    FDC maintains an electronic Preconstruction Agreement file containing: the Preconstruction Agreement, the preconstruction fee proposal, a copy of the Construction Manager’s contractor’s license, copies of the attested rates, and any additional information related to the preconstruction negotiation.
     

C. NEGOTIATION OF GUARANTEED MAXIMUM PRICE

(GMP) When it is time for the Construction Manager to develop the GMP proposal, the Project Manager directs the Construction Manager to prepare it in accordance with the “Guidelines for Construction Managers for the Preparation of Guaranteed Maximum Price Proposals” (Forms section).

After the Construction Manager develops the GMP, the FDC reviews the proposal. The Project Manager ensures that the Architect/Engineer receives a copy for review, and obtains a written recommendation from the Architect/Engineer that the GMP be accepted. When all parties have reviewed the GMP proposal, the Project Manager schedules the negotiation meeting.

If negotiations regarding the terms of the GMP proposal are unsuccessful, the FDC may terminate negotiations with that firm and begin negotiations with the second ranked firm from the original selection. If negotiations with the second ranked firm are unsuccessful, the FDC may terminate negotiations with that firm and begin negotiations with the third ranked firm from the original selection. If negotiations with the third ranked firm are unsuccessful, the FDC may terminate negotiations with the third ranked firm, and may select additional firms from the original pool or re-advertise the Project. At any time during the negotiation process, the FDC may terminate negotiations entirely and reconsider the use of construction management for the Project.

D. PREPARATION OF THE GMP AMENDMENT

Upon successful negotiation of the GMP, FDC prepares the GMP Amendment to the Agreement between Owner and Construction Manager. The Amendment shall establish the GMP amount, the number of calendar days for completion and the liquidated damages amount (see Florida State University Policy 4-OP-B-11-E, Establishment of Construction Contract Time and Liquidated Damages), and shall reference any applicable supplements to the Project Manual. FDC also provides information concerning the Performance Bond and the Labor and Materials Payment Bond.

E. TRANSMITTAL OF AMENDMENT TO CONSTRUCTION MANAGER

After approval by the University General Counsel, FDC electronically transmits copies of the Amendment to the Construction Manager for execution.

F. REVIEW OF INSURANCE AND BOND CERTIFICATES

Upon receipt of the signed Amendment, insurance certificates and bonds from the Construction Manager, FDC will provide the Insurance Consultant (if such services are being provided on the Project) with insurance documents for review. If an Insurance Consultant is not providing service on the Project, FDC reviews the bonds and insurance for compliance with the specifications.

G. DISTRIBUTION OF EXECUTED GMP AMENDMENT

Upon final execution of the GMP Amendment by the University President, the Amendment is distributed electronically to all parties including the A/E.

H. GMP FILE

FDC maintains a GMP file containing: the executed GMP Amendment, the executed and recorded Performance and Payment Bonds, the insurance certificate(s), the approved GMP proposal, a recommendation letter from the Architect/Engineer, documentation of the calculation for liquidated damages, and any correspondence related to the GMP.

I. 100% CONSTRUCTION DOCUMENTS

If the GMP was based on documents prior to the final 100% Construction Documents, the Construction Manager shall be required to execute a Change Order which accepts the 100% Construction Documents as the basis for construction. If there are scope increases between the 100% Construction Documents and the documents on which the GMP was based, those shall be addressed in the Change Order. Increases in Project scope after 100% CDs resulting from building inspection review may be eligible for a Change Order.

J. BIDDING SCHEDULE

The Project Manager discusses the bidding schedule with the Construction Manager.

K. PRE-QUALIFICATIONS OF SUBCONTRACTORS

The Construction Manager develops procedures for prequalification of trade contractors, and coordinates with FDC to ensure that the procedures are acceptable.

L. TRADE BID AWARDS

The Construction Manager publicly advertises each bid package. FDC requires bid openings to be public, and a University representative, generally the Project Manager, must be present when they are opened and read aloud by the Construction Manager.

After receipt of bids, a scope review with the apparent low bidder may indicate the need to negotiate the bid amount. The Construction Manager may conduct such negotiations upon approval of the Project Manager.

The Construction Manager must provide a letter of recommendation for award of each bid package, including the recommendation from the Architect/Engineer, a copy of the bid tabulation form and a copy of each bid proposal. The Trade Contractor Recommendation/Approval form is included in the Forms section.

Bids which differ from the GMP line item budget must include a deductive/additive Contingency Modification, if funds are available. Bids which exceed the overall budget should be reviewed with the Project Manager for a potential Change Order.
v Subcontracts should not be executed with the subcontractor prior to subcontract acceptance by the University Project Manager.

M. CONSTRUCTION MANAGER INVOICES AND PAY APPLICATIONS

During the pre-construction and construction phases, the Construction Manager is paid as provided in “Invoicing Procedures” (Forms section).

N. REQUEST FOR SELF-PERFORMANCE

If the Construction Manager makes a request to self-perform any portion of the work, the request is handled as described in "Procedures for Self-Performance of Work" (Forms section).

O. CONSTRUCTION MANAGER’S CONTINGENCY MODIFICATION

The GMP includes a contingency amount for the Construction Manager’s use as described in the Agreement between Owner and Construction Manager. The Project Manager must approve a CM Contingency Authorization for all expenditures of this contingency or any changes to the Schedule of Values. These expenditures are to be supported by detailed breakdowns, including labor and material costs. Work performed utilizing contingency funds is not due additional mark-up by the Construction Manager.

P. CHANGE ORDERS

Prior to approval, Change Orders must be supported by bids or by the unit prices established in the original bid. The CM markup on the Change Order will be limited to the percentage of profit approved in the original GMP.

III. LEGAL SUPPORT, JUSTIFICATION, AND REVIEW OF THIS POLICY

Sections 1013.45, F.S., 1013.46, F. S., 1013.47, F.S., 1013.48, F. S.