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Policies and Procedures

Finance & Administration

4-OP-B-11-E Establishment of Construction Contract Time and Liquidated Damages

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

These guidelines provide procedures for establishment of a reasonable construction contract time, liquidated damages for failure to complete a construction project on time, and administration of Construction Change Orders and Construction Change Directives.

II. POLICY

This document describes the establishment of contract duration, determination of liquidated damages, and issues which must be addressed in approving change orders and change directives which affect scope and completion times.

A. ESTABLISHMENT OF CONSTRUCTION CONTRACT TIME

The Project Manager, after consulting with the project Architect/Engineer, shall evaluate such factors as the user’s needs, project complexity, site considerations and quality requirements to determine a reasonable construction time. The contract duration, as total consecutive calendar days from Notice to Proceed through Substantial Completion, will be included in the bid documents. For Construction Management or Design-Build projects, the contract time will be negotiated with the Construction Manager or Design-Builder and included in the Guaranteed Maximum Price.

B. DETERMINATION OF LIQUIDATED DAMAGES

Due to the importance of completing University projects on time, provisions for liquidated damages will ordinarily be assessed should a project not be completed on schedule.

The Project Manager and the user of the building shall evaluate the implications of a delay in the Project, considering interest costs, loss of use, loss of income, costs of equipment storage, costs to rent alternative space, additional Architect/Engineer fees and any other costs that are projected to be incurred as a result of the delay.

The daily assessment = (construction amount x .03)/365

Other costs related to delayed completion are added to the amount generated by the formula, for a total daily liquidated damages amount. The Project Manager sends a note to the file which explains how the liquidated damages amount was developed.

For projects competitively bid by the University, the Project Manager notifies the Project Architect of the construction contract time and daily liquidated damages amount for inclusion in the bidding documents. For Construction Management or Design-Build projects, the Project Manager advises the Construction Manager of the contract time and liquidated damages prior to negotiation and inclusion in the Guaranteed Maximum Price.

C. APPROVALS

All changes to overall Project costs and time durations must be approved via an executed Change Order or a Construction Change Directive.

D. FUNDING OF CHANGE ORDERS

No Change Order can be approved prior to verification of available budget. If a Change Order is requested which requires the use of non-project funds, those funds must be received by University Accounting and made available to the Project prior to Change Order execution.

E. CONSTRUCTION CHANGE DIRECTIVES

Only changes for which the Contractor is in absolute agreement with the terms on the face of the Change Order and for which the backup documentation to the Change Order contains qualifying language from the Contractor, may be issued as Change Orders. Changes for which the terms are unresolved must be issued as Construction Change Directives. Prior to execution of a Construction Change Directive, Facilities Design & Construction must set aside adequate budget to cover the entire Contractor’s request. CCDs are numbered separately from Change Orders. When a CCD is agreed upon, a Change Order should be issued.

F. FACILITIES PROGRAM COMPLIANCE

The work required by the Change Order or CCD must be within the scope of the approved Facilities Program. If not, the Facilities Design and Construction Office shall amend the Program and submit for approval in the same manner as the original Program.

G. CHANGES TO CONTRACT TIME

All Change Orders must address required time extensions or reductions. If no increase or decrease in time is necessitated by the change, the Change Order must contain a statement to that effect.

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

Sections 1013.03