T&M Work-Commercial K-12 School

BobCat52

What is reasonable?
When work is completed on an T&M basis, it is assumed by an owner/CMa that the work charged was effort specific to the agreed scope. Daily tickets signed by a CM rep confirming the crew on site. When the smoke cleared, work completed and the tickets tallied, the efforts equal twice that of any reasonable high estimate for the same work. Is it reasonable for the Contractor to assume he will be paid whatever the tally, or should there be some kind of accountablility to the final cost?
What is reasonable to the School district?

precisionbuild

There are 2 types of these kinds of projects.

Cost+
Cost+ w/GMP (Guaranteed Maximum Price)

Which kind are you doing?

precisionbuild

With Cost+:

First, a definition of what constitutes cost is often a point of contention between owner and contractor, and this needs to be clearly spelled out. A cost plus-fee contract is, as the name implies, one in which the contractor will perform a certain scope of work identified by contract documents or a narrative description. The associated costs will be reimbursed by the owner inclusive of the contractor's fee, generally calculated as a percentage of the work. Cost-plus contracts are used infrequently, but when employed, they require a high level of communication between contractor and owner to avoid misunderstandings and potential disputes.

This form of contract is often used when severe time restraints are imposed on the owner and it becomes necessary to begin construction as quickly as possible---often without the benefit of well-defined plans and specs.

There are 2 items that require a detailed explanation and mutual understanding by all parties, when using a cost-plus contract---what coasts are to be reimbursed and what costs are NOT reimbursable. Even the cost of hourly labor may become a point of disagreement unless the owner is advised of base labor rates and the upcharge or "burden" applied to the base rate, incorporating such costs as unemployment compensation, social security taxes, worker's comp, as well as employee fringe benefits or union dues. The addition of more than 70% to labor base-pay rates may come as a shock unless explained beforehand.

Reviewing the American Institute of Architects Doument A111, will establish guidelines for reimbursable and nonreimbursable costs.

precisionbuild

1. Labor costs
2. Wages, salaries of contractor's supervisory and administrative personnel when stationed at the site with the owner's approval
3. Taxes, insurance, contributions, assessments, benefits required by unions
4. Subcontract costs
5. Costs of materials and equipment incorporated in the completed project
6. Cost of other materials and equipment, temporary facilities, and related items fully consumed in the performance of the work
7. Rental costs for temporary facilities, machinery, equipment, and hand tools not customarily owned by construction workers, whether rented from the contractor or others
8. Cost of removal of debris from site
9. Cost of document reproduction, fax and telephone calls, postage, parcel post, and reasonable petty cash disbursements
10. Travel expenses by contractor while discharging duties connected with the work
11. Cost of materials and equipment suitably stored off-site, if approved in advance by the owner
12. Portion of insurance and bond premiums
13. Sales and use taxes
14. Fees and assessments for building permits and other related permits
15. Fees for laboratory tests
16. Royalties and license fees for use of a particular design, process, or product
17. Data processing costs related to the work
18. Deposits lost for causes other than the contractor's negligence
19. Legal, mediation, and arbitration costs, including attorney's fees arising out of disputes with owner with the owner's prior written approval
20. Expenses incurred by contractor for temporary living allowances
21. Cost to correct or repair damaged work provided that such work was not damaged due to negligence or was not nonconforming

precisionbuild

1. Salaries and other compensation of contractor's personnel stationed at contractor's principal office or offices, except as specifically provided for in the contract
2. Expenses of the contractor's principal office
3. Overhead and general expenses, except as provided in the contract
4. Contractor's capital expenses
5. Rental cost of machinery and equipment, except as specifically spelled out
6. Costs due to negligence of the contractor
7. Any costs not specifically included in costs to be reimbursed (This transfers the responsibility onto the contractor to include a comprehensive list. The contractor cannot claim later that he or she "forgot" to include some miscellaneous costs.)
8. Costs, other than approved change orders, that would cause the GMP price to be exceeded

Changes to these standard costs, both additions and subtractions, need to be clearly delineated in the agreement. It becomes important for the project superintendent to clearly identify all applicable costs generated in the field, by project number and by the proper cost code. Segregation of these costs in the field and in the home office is essential when requisitions are prepared and documentation of all reimbursable costs is to be attached to that request for payment.

precisionbuild

I am beginning to hate answering these questions. They never come back...