Change Order Estimating
1
Change Order Estimating
Applicable Forms
Overview of General Conditions
Tools & Resources for C/O Cost
Components
COP Document Check
Example and Demonstration
2
Applicable Forms
Change Order Estimating
SECTION 1
3
Applicable Forms
The following forms are listed in Section 01020 of the General Conditions, which are
utilized in the administration of the change order work (OAR may approve the use of
alternate forms. Forms listed in red are included in this presentation):










Allowance Disbursement Authorization (01020-06)
Change Order (2 pages)
Change Order Proposal (01020-15)
Change Order Proposal Detail Sheets (2 pages) (01020-16 &
17)
Change Order Proposal Instructions (2 pages) (01020-19 & 20)
Change Order Proposal – Labor Rate Calculation Form:
Request Rate Higher Than Fully Burdened Labor Rates
(01020-21)
Construction Directive (01020-23)
Daily Time and Material Record (01020-26)
Request for Clarification (01020-39)
Request for Proposal (01020-40)
4
Change Order Proposal
Los Angeles Unified School District
Facilities Services Division
CHANGE ORDER PROPOSAL (COP)
School Name:
0
Date:
Project Name:
0
Project Number:
0
RFP No:
0
0
COP Number:
0
RFC No:
0
0
Contract Number:
0
To:
From (Contractor):
1/0/1900
CD No:
0
Description of Work:
Enter Scope from CD, RFP or as perceived. Include Pricing and Productivity Assumptions.
Cost of Work:
Unit Price
Work
Constr.
Equipment
Owned
Constr.
Equipment
Rented
Material
(B)
(C)
(D)
Field
Labor
Straight Time
Non-Feeable
Labor Cost
Sub-Contract
Amount
TOTAL
(Sum A Thru F
& Overtime
Proposal from:
(A)
0
$0.00
$0.00
$0.00
(E)
$0.00
Plus H)
(F)
$0.00
(H)
$0.00
Enter Name
Enter Name
Enter Name
Sub-Totals
$0.00
$0.00
$0.00
$0.00
$0.00
(I)
$0.00
Prop $ Amt
Prop $ Amt
Prop $ Amt
Prop $ Amt
Prop $ Amt
Prop $ Amt
$0.00
$0.00
$0.00
(J)
CONTRACTOR FEE- OH&P ON
MATERIALS AND FIELD LABOR
(As per section 11.7 of the GCs)
15%
X
(D+E)
(K)
CONTRACTOR FEE OH&P ON RENTED EQUIPMENT
0%
X
(C)
=
$0.00
(L)
GENERAL/PRIME CONTRACTOR FEE
ON SUBCONTRACTOR WORK
5%
X
(H)
=
$0.00
X
(D)
=
Misc. Notes, Comments or Other Information:
If GC 11.7.4 is in
contract, enter
Capital "T"
(M) CONTRACTOR FEE - OH&P FOR
COMPENSABLE DELAY COSTS
(N)
SALES TAX
(O)
TOTAL FEE
$0.00
=
0%
8.25%
$0.00
$0.00
$0.00
(J + K+L+M+N)
$0.00
(P) SUB TOTAL WITH FEE
$0.00
(Q) PREMIUMS FOR ADDITIONAL BONDS (%)
(For Prime Contractor Only)
(R) GRAND TOTAL
0.00%
(P+Q)
The proposal would
Increase
Decrease
the Milestones and/or Contract Time by
Note: Submit detailed schedule analysis demonstrating the impact on the project critical path to substantiate requests for contract time extensions
X
(P)
$0.00
=
=
$0.00
calendar days.
The proposal does NOT affect the Milestones and/or Contract Time.
Contractor Signature
Title
Date
By signing this Change Order Proposal, CONTRACTOR agrees the proposed adjustments to the Contract Amount shall cover any and all costs, delays and damages to CONTRACTOR
associated with the changed Work. CONTRACTOR shall follow all applicable procedures and provide all appropriate documentation as required by General Conditions Sections 10, 11 and/or 12.
5
Change Order Proposal Detail Sheets
CHANGE ORDER PROPOSAL DETAIL SHEET
Contract No:
School Name:
Prime/General Contractor:
CD No:
Project No:
Project Name:
Preparing Contractor:
RFC No:
COP No:
RFP No:
Item No.
Enter
Quantity of Units for:
Description/
Drawing No.
Unit of
Measure
(A)
(B)
(C)
(D)
Unit
Price
Work
Owned
Const.
Equip.
Rented
Const.
Equip.
Installed
Mat'l/
Equip
Field Labor*
(Use Separate Lines for Staight and/or Overtime Work)
Installed*
Material/Equip.
Billable Costs for:
Unit
Price
or
Equip
Rate
-- A --
-- B --
-- C --
Unit
Price
Work
Owned
Const.
Equip.*
Rented
Const.
Equip.
-- D -Mat'l
Unit Price
(Excluding
Taxes)
Cost of
Mat'l Used
Date:
Craft
Ident
Enter
M-H/Unit
If Applicable
Total
Hours
(Straight/
Overtime)
Hourly
Rate
- w/ Full
Burden (Straight/
Overtime)
Total
Labor Cost
(Straight/
Overtime)
Non-Feeable Labor Costs
Labor Hours
- w/ No
Mark-Up
Fee -
Rate/
Hour
- w/ No
Mark-Up
Fee -
Total
Labor Cost
- w/ no
Mark-Up Fee -
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
1.19
1.20
1.21
1.22
1.23
1.24
1.25
1.26
1.27
1.28
1.29
1.30
1.31
1.32
1.33
1.34
1.35
Page 1 Item Total
6
Labor Rate Calculation Form
CHANGES IN THE WORK - LABOR RATE SHEET
REQUEST FOR RATE HIGHER THAN BURDENED PREVAILING WAGE RATE
NOTE: The contractor is required to complete one form for each craft/trade/classification for which they request
a rate higher than the FSD published burdened Prevailing Wage Rate and attach the supporting documents.
PERFORMING CONTRACTOR
DATE
PROJECT
CONTRACT #.
PRIME CONTRACTOR
LOCAL UNION
YES
CONTRACTOR JOB #. _________________
NO
#.
PHONE
CRAFT / TRADE
(
)
CLASSIFICATION
WORKERS COMP. CLASS CODE
P.S.A.
YES
NO
O.C.I.P.
YES
NO
DATE WAGE EXPIRES _____________
STRAIGHT
TIME
Daily
OVERTIME
OVERTIME
Daily or Saturday
Sunday/Holiday
(A) BASIC HOURLY RATE
FRINGES (EMPLOYER PAYMENTS)
Health & Welfare
Pension
Vacation / Holiday
Training
Other Payments
Other (specify):
National Emp. Benefit Board
(B) Total Fringes
(C) TOTAL PREVAILING WAGE (A+B)
(D) PAYROLL TAXES & WORKERS' COMPENSATION
F.I.C.A./Medicare
7.65 %
F.U.T.A.
0.134 %
S.U.T.A.
0.73 %
E.T.T.
0.017 %
Other (specify)
0.469 %
Sub Total
9.00 %
Adder
Workers' Comp. *
(E)
Total
/Hr
/Hr
/Hr
/Hr
/Hr
/Hr
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
0 %
9.00 x (A)
TOTAL - HOURLY LABOR RATE (C+E)
$0.00
$0.00
$0.00
*
This amount will be zero if an Owner-Controlled Insurance Program ("OCIP") is in effect
Note: If the actual numbers for payroll taxes are greater than 9%, please submit proper documents to justify the higher rate.
7
Overview of General Conditions
Change Order Estimating
SECTION 2
8
Overview of General Conditions



Rules of Contract Document
Interpretation (Article 3.14)
Changes in the Work (Article 10)
Change of Contract Amount
(Article 11)
9
Rules of Contract Document Interpretation







In the event of conflict between the
various sections of the Contract
Documents, the following order of
priority shall govern:
Bid and Acceptance Form
Addenda
Supplementary General Conditions
General Conditions
Division 01 General Requirements
Divisions 02 – 16 and 25
10
Rules of Contract Document Interpretation
In the event of conflict between the
Drawings and Specifications:




The Specifications generally govern quality
of materials, workmanship, and execution;
The Drawings generally govern dimensions,
elevations, workmanship, and layout of the
Work;
It is the intent of the Contract Documents
that the more stringent, higher quality of
material and/or workmanship, and/or
greater quantities shall be provided by the
Contractor into the Work.
11
Rules of Contract Document Interpretation
In the event of conflict between the
Drawings:






Specific notes govern other notes;
General notes to be applied and
incorporated into other portions of
drawings;
Schedules are complimentary with other
notes and other portions of Drawings;
Larger scale Drawings govern over smaller
scale Drawings;
Calculated, derived, or numerical
dimensions govern over dimensions
obtained by scaling.
12
Changes in the Work




Request for Proposal (RFP) – Article
10.3
Issued by OAR to Contractor
Contractor submits Change Order
Proposal (COP) within 10 days upon
receipt of RFP.
COP contains adjustments to the
Contract Amount, Milestones and/or
Contract Time reflective of RFP.
13
Changes in the Work
Construction Directive (CD) –
Articles 10.4 thru 10.6




CD does not adjust the Contract Amount,
Milestones and/or Contract Time; but may
lead to a COP.
Contractor complies promptly with directives
in a CD.
If Contractor believes the CD establishes a
basis for an adjustment, he shall submit a
COP within 10 days.
14
Changes in the Work
Change Order Proposal (COP) –

Articles 10.7 thru 10.17





COP includes all estimates, breakdowns, costs,
data, and/or information required for validation
Contractor is not entitled to any adjustment for
preparing a COP whether ultimately accepted or
not.
If Contractor and OAR agree to all the proposed
adjustments, OAR issues a CO for mutual
execution.
If Contractor and OAR agree partially on the
proposed adjustments, OAR issues a (expedited)
CO for mutual execution setting forth those
undisputed adjustments. Contractor has 10 days
(upon issuance of the CO) to give written notice
if Contractor intends to seek further relief under
Article 16.
Contractor required to submit a time impact
evaluation with a COP.
15
Changes in the Work

Change Order Proposal (COP) – cont’d




If OAR rejects a COP in its entirety, Contractor
has 10 days (upon issuance of the written
rejection) to give written notice if Contractor
intends to seek further relief under Article 16.
If Contractor proposes no adjustments or
insufficient adjustments, OAR shall give a written
notice if Owner intends to seek further relief
under Article 16.
Contractor shall use and submit COP forms in
Section 01020 with all supporting documents and
data.
Contractors shall verify all tiers of Subcontractor
costs and time have been accounted for prior to
any COP submission.
16
Changes in the Work

Change Order Proposal (COP) – cont’d



Contractors can not use the Schedule of Values
by itself to determine proposed adjustment.
The proposed adjustments shall cover any and
all costs including impact costs for delay and
disruption, etc.
The OAR has the right to require Contractor to
revise and resubmit a non-compliance COP;
Contractor has 10 days to resubmit the COP
and is responsible for all costs, delays and/or
damages resulting from the re-submittal of the
COP.
Copy of Exh C 14.17 Change Order Proposal WEB.xls
17
Changes in the Work
Change Order





A CO can not have any reservation of rights
and/or qualifying language placed on it by
the Contractor.
OAR and Contractor shall execute
appropriate COs.
If Contractor fails or refuses to execute a CO
within 10 days of OAR issuance, Contractor
shall give written notice in accordance with
Article 16 and proceed with the work as set
forth in Article 6.54.
Owner reserves the right to process the CO
without Contractor’s signature.
18
Change of Contract Amount
The contract amount can only be changed
by change order
COP and CO value to be determined as
follows:





Mutually agreed-upon sum based on the cost of the
work plus fee per Article 11.7, if unit price
provisions not contained within the contract
documents
Unit price, if contained within the contract
documents (fee is included in unit price).
T&M per Article 11.8 plus fee per Article 11.7, if
unit price is not specified in the contract documents
and no agreement is reached for mutual sum.
19
Change of Contract Amount
Cost of the Work – Articles 11.5 thru 11.6

Actual payroll costs;
Cost of all materials and equipment;
Payments made by Contractor to Subcontractor;
Supplemental costs (note: No markups for
supplemental costs):




1.
2.
3.
4.
5.
6.
7.

Transportation, delivery and storage, and hand tools
not owned by the workers.
Contractor owned equipment and machinery.
Sales, consumer, use and/or similar taxes.
Permits and licenses.
Utilities, fuel and sanitary facilities.
Premiums due to additional bonds for c/o work.
Consultants such as surveyors, testing agencies and
engineers.
Rental $ for equipment and machinery shall be
based on actual use.
20
Change of Contract Amount
Cost of the Work – (cont’d)


The following are part of Contractor’s overhead
and profit and are not allowed in the cost of
the work:
1.
2.
3.
4.
Contractor’s project manager, superintendents, project
engineers, officers, executives, principals, owners,
general managers, engineers, architects, estimators,
attorneys, auditors, accountants, purchasing and
contracting agents, expediters, timekeepers, clerks and
other personnel employed whether at the Project site or
in Contractor office for general administration of the
work.
Contractor off-site and on-site offices.
Contractor capital expenses;
All bonds and insurance except for the premiums due to
additional bonds required because of c/o work;
21
Change of Contract Amount
Cost of the Work – (cont’d)


The following are part of Contractor’s overhead
and profit and are not allowed in the cost of
the work: (cont’d)
5.
6.
7.
8.
•
Costs due to negligence, act or failure to act of
Contractor and contractors;
Consumable materials, such as drill bits, abrasive discs,
gloves, rags, rope, welding tips, etc;
Tools and equipment with original costs of less than
$1,000.00;
Other overhead or general expense costs of any kind
and the costs not set forth in Article 11.5.
Applying a % of labor to cover these costs is
not allowed.
22
Change of Contract Amount
Contractor Overhead and Profit -- Article
11.7

15% for work performed directly by Contractor.
When multiple tiers of Subcontractors are included
in the change:






15% for Subcontractor who performs or furnishes the
work
5% for any higher subcontractor and contractor;
No fee for Supplemental Costs and costs deemed to
be part of overhead and profit ;
5% for rented equipment (no fee for owned
equipment);
23
Change of Contract Amount

Contractor Overhead and Profit – cont’d

Deduct 5% from General Contractor and
subcontractors not actually performing the work for
only the portion of the net decrease in costs exceeding
$100,000.00;
Example: For a c/o with a net decrease in costs of $90,000,
the credit amount would be $90,000 (no overhead
and profit deduction)
For a c/o with a net decrease in costs of $110,000,
the credit amount would be $110,500
($110,000 + ($110,000 - $100,000)*5%)

Deduct 5% from Subcontractor actually performing the
work for the net decrease in costs;
Example: For a c/o with a net decrease in costs of $10,000,
the credit amount would be $10,500
($10,000 + $10,000*5% = $10,500)
24
Change of Contract Amount
Time and Material – Article 11.8 (Procedural
note: T&M is primarily intended for single
trade work that can be completed in less
than 10 days)



At the close of each work day, Contractor shall
submit a daily T&M record together with applicable
delivery tickets, listing all labor, employee names,
hours worked, wage classifications, materials,
quantities, equipment size, type and ID number,
and supplies involved for said work day, the
location of the affected portion of the work, for
services and expenditures.
Contractor and OAR* shall sign daily T&M record.
(*Daily T&M Record Form designates IOR as the signatory
however the OAR is required by Article 11.8 to sign the
form, not the IOR.)
25
Change of Contract Amount
Unit Prices – Articles 11.9 thru 11.11





Applicable where the work involved is covered by
unit prices contained within the contract
documents;
The estimated quantities of items of unit price work
are not guaranteed and solely for the purpose of
comparison of bids and determining an initial
contract amount.
Each unit price covers all overhead and profit
Unit costs can be adjusted if quantity and scope
differ materially and significantly from the
estimated quantity and intended scope of such item
indicated in the contract.
26
Tools & Resources for C/O
Cost Components
Change Order Estimating
SECTION 3
27
Tools & Resources for C/O
Cost Components

Labor







Fully Burdened Prevailing Wages
Workers’ Compensation Insurance
Man Hours Determination
Materials
Equipment
Bond
Insurance
28
Labor – Fully Burdened Prevailing
Wages
Fully burdened prevailing wages consist of:
 Basic hourly rate
 Fringe benefits
 Payroll taxes




FICA
SUTA
FUTA
ETT
29
Labor – Fully Burdened Prevailing
Wages
(If Contractor requests labor rate higher than the fully burdened prevailing
wages, a Labor Rate Calculation Form: Request Rate Higher than Fully
Burdened Labor Rates (01020-21) must be submitted for approval).
Prevailing wages (note: rates effective at the time of work shall be paid;
fully burdened prevailing wage table can be viewed on

http://www.laschools.org/contractor/cc/contractor-project-forms )
Basic hourly rate: Determined by Director of Industrial Relations using
established union wages in accordance with craft classifications for journeyman
& apprentice.




Journeyman rates are listed in fully burdened prevailing wage table.
Apprentice rates are a percentage of the Journeyman rates, which are
based on periodic wage percentage progressions of individual craft
classification. These rates can be viewed on DIR website.
http://www.dir.ca.gov/dlsr/PWD/Apprentice.htm
Foreman rates are not determined by DIR. Foreman rates vary among
craft classifications; they are typically up to $4.00 higher than journeyman
rates.
30
Labor - Prevailing Wages
(cont’d)


Fringe benefits: Determined using established union benefit for each craft
classification, which typically includes Health and Welfare, Pension,
Vacation/Holiday, Training and/or Other, etc.
Payroll Taxes:

FICA (Federal Insurance Contributions Act): FICA tax is a combination of
a 6.2% social security tax and a 1.45% Medicare tax.

FUTA (Federal Unemployment Tax Act): The net effective FUTA rate for
most employers is 0.8% on the first $7,000 of wages paid to each employee
in a calendar year. Contractors will stop paying FUTA for each employee
once his or her wages exceed $7,000 for the year.

SUTA (State Unemployment Tax Act): Generally, SUTA tax rate is based on
the amount of unemployment claims that are filed by employees terminated
by the company. When the business is new, the SUTA tax rate starts at the
maximum and declines once the company builds a history of few claims. The
rate varies from 1.5% to 6.2%. The taxable wage limit remains at $7,000 per
employee. For new employers the tax rate is 3.4% for up to three years.

ETT (Employment Training Tax): The ETT rate is 0.1%. The taxable wage
limit remains at $7,000 per employee.
Prevailing Wage TABLE 06-2008.pdf
Payroll Taxes Explanation sheet.pdf
31
Labor – Workers’
Compensation Insurance
Workers’ Compensation Insurance: Applicable

to non-OCIP projects (demolition and hazardous
abatement projects are typically not covered under
OCIP)
Base premium x Experience Modification Rate =
Effective Rate





Base Premium (aka Interim Rate) = Pure premium
established for each class code by the Insurance
Commissioner plus the approved factor and multiplier
Experience Mod varies based on history of claims
Effective Rate is the rate paid
For verification of workers’ compensation rate, ask
contractor to provide the Workers’ Compensation
Insurance Payroll Report, which contains the Interim
Rates and Experience Modification rate.
workers comp ins.pdf
32
Man Hours Determination

Actual
Historical data and experience
NECA (for electrical trade)
MCAA (for HVAC trade)

R.S. Means



NECA.pdf
RS Means 2008.pdf
http://ncws01.lausd.net/Citrix/MetaFrame/auth/login.aspx
33
Materials
Invoices / quotations
Suppliers
Via telephone
Via website (Google names of suppliers, i.e.




Home Depot, Lowes, McMaster, Grainger, etc).
Historical data from previous change
orders


Tra-Ser Premier (for MEP work)
34
Equipment
CalTrans: Labor Surcharge and Equipment Rental Rates

cost of equipment ownership Book_2008.pdf






which list hourly rates that consist of:
Cost of owning and operating the equipment (likely to be lower than
rented equipment);
15% markups;
Rental Rate Blue Book, the industry guide for determining equipment
‘reimbursement rates’, which consist of:
Ownership costs
Hourly operating costs
Online access: www.equipmentwatch.com
User name: luther.luu@lausd.net
Password: 123estimating
(Note: Only one person can be logged in at a time – log off when finished.)
Rental Rate Blue Book.pdf
35
Bond

Premium % can be established upfront:
premium of the Faithful Performance
Bond of the contract divide by the contract
amount.
Bond premium.pdf
ex. $319,811 ÷ $33,373,000 = 0.96%

Premium for open bid projects can
generally be found on:
http://www.laschools.org/employee/contract/cd-link-db/
36
Insurance


All insurance are deemed to be part of
Contractor’s overhead and profit. (see
Article 11.6.4)
Insurance is not allowed in the cost of the
work and should never be paid as part of a
change order.
37
COP Document Check
Change Order Estimating
SECTION 4
38
COP Document Check


Is the COP valid, e. g. is the
contractor entitled to be paid by
the contract
Is the COP complete and
reviewable?
39
Is the COP valid?
Who caused the change?






__ Contractor defective work correction
__ Architect change; RFC, ASI, etc
__ DSA required change
__ LAUSD desired change
Use the spreadsheet template provided in
the Justification for Change Orders
presentation to assist in this determination
40
Is the COP valid? (cont’d)
Is it part of the original contract?





__ Order of precedence in the contract: the more stringent
prevails and controls.
__ Intent of contract documents: all aspect of the work shall be
provided by contractor whether or not such aspects of the work are
expressly covered in the drawings or specifications.
__ Conflict between drawings and specifications: Specifications
generally govern as to quality of materials, workmanship, and
execution whereas drawings generally govern dimensions, elevations,
and layout of work.
__ Conflict between drawings: specific notes govern over all other
notes; general notes shall be incorporated into other portions of
drawings; schedules are complementary with other notes and other
portions of drawings including those identified as general notes; larger
scale drawing govern over smaller scale drawings, calculated, derived,
or numerical dimensions govern over scaled dimensions.
41
Is the COP complete and
Reviewable?





Sufficient backup for quantities and
costs to be added and/or credited?
__ Revised drawings, sketches, etc. showing
the changes.
__ Verifiable material quotes, invoices,
receipts, etc. from supplier.
__ Equipment Model, Type, Capacity, Rating,
etc.
__ Changes outlined in COP are reflective of
RFC, RFP, CD, COP, etc.
42
Is the COP complete and Reviewable?
(cont’d)





How does it change? (Any positive
impact to the work?)
__ Change in material type.
__ Change in quantity.
__ Change in method of construction.
__ Others.
43
Is the COP complete and Reviewable?
(cont’d)






Still need additional information to
understand the scope?
__ Get input from OAR and Field Engineers.
__ Get input from A/E.
__ Get input from IOR
__ Get input from contractor
__ Do your homework
44
Example and Demonstration
Change Order Estimating
SECTION 5
45
Example and Demonstration
 COP cost exceeds $25,000
 Forward to Project Estimator / Estimating
Unit for independent estimate and
analysis
 Example
COP example over 25k.pdf
46
Example and Demonstration
COP cost under $25,000



Can be performed by OAR and his
appointee
Example
COP sample under 25000.pdf
47