Measurement and PaymentModule #5

Prepared by

Dr. Randy R. RappJuly 2005

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Contractual Payment

• Lump-sum or fixed-price

• Unit-price

• Fixed-price with cost incentives

• Time and materials (T&M)

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Progress Payments

• Typically monthly• Contractor request maybe 10 days prior• Lump-sum vs. unit-price verification• Inspector role

– Measure quantity and type of work– Claims for extra work and change orders– Calculate payment due, minus retention– Prepare and forward recommendation

• Lump-sum vs. unit-price payment basis

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Conflicting Bases of Payments?

• Specification writer misunderstands?

• Lump-sum contract– Schedule of values OR– Cost-loaded critical path method (CPM)

network

• Unit-price– Neither schedule of values NOR– Cost-loaded CPM

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Payment Request Evaluation

• Lump-sum: completed work package– Discernable fraction thereof is usually OK– Consider change orders, if any

• Unit-price: quantity x unit-price– Measurement accuracy absolutely essential– Renegotiate unit-price, if quantity exceeds allowable

variation (15% to 25%)• Equipment and materials delivered but not yet

installed– Maybe pay actual cost for long-lead, high-cost items– Only if contract specifically stipulates

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Force Account

Day work• Measurement and Payment section OR• Changes and Extra Work section• “Reasonable” allowance for overhead and profit?• Categories

– Labor– Materials– Equipment

• Payment is full compensation for the work

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Force Account (Cont’d)

• Labor– Trade classification wage rate and numbers– Foremen included, not general supervisors– Any allowances?

• Materials: cost and freight• Equipment

– DOT rates or Rental Rate Book– Active and standby times

• Markups (p.85)

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Payment for Extra Work

• Often detailed in Supplementary General Conditions

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Payment for Mobilization

• Lump-sum contracts– Not included as a bid item: likely inflated– Include as a calculated allowance in separate

technical section, per contract requirements– Not a matter of Measurement and Payment

• Unit-price contracts– Properly in Measurement and Payment– Lump-sum amount stipulated in extended

column

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Partial Payments

• Partial waivers of lien (subs’ waivers maybe one payment behind prime contractor’s)

• Total cost pricing of change orders

• Forward pricing of change orders

• Retainage

• Liquidated damages

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Field Measurement for Payment

• Pipeline lengths– Beware delivered vs. plan or in-place– If in-place, measure centerline on top

• Earth and rock volume– Bank vs. compacted– Weight vs. volume (survey profile prior to work)

• Curbs: top edge toward street• Sewers: do not include manholes• Fence: plan or top rail in-place

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Field Measurement for Payment (Cont’d)

• Pavement– Areas or weights– Unit-prices for handwork vs. equipment

• Retaining walls– Inside vs. outside surface measurement– Calculate non-overlapping prism volumes

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Final Payment

• Additional requirements1. Pay all project debts2. Submit receipts, releases, waivers of lien3. Obtain consent of surety

• Besides retainage1. Liquidated damages2. Punch list work (1.5 to 2 times value)3. Liens already filed

• Upon filing Notice of Completion or Substantial Completion

– Sometimes time limitation to announce intent to file lien– Time limitation to actually file