Question 1

"Quality Assurance and Quality Control Testing" video - Contract Consideration Series

Accepted Answer

(15m) There is a certain amount of confusion shown in forum and class questions about the difference between Quality Assurance and Quality Control. Brian Weeks brings some clarity to this topic as well as discussing testing and retesting options.

Part of the confusion comes from the difference between how other contracts handle these two types of testing compared to the MMCD. Other contracts often have the Owner engage and pay one or more testing firms to do Q/A. These firms work concurrently with the Contractor, but report directly to the Owner. As Brian will discuss, the MMCD handles testing differently, with the Contract Administrator (or CA for short) receiving Q/A test reports from the Contractor and reporting back to the Owner.

Under the MMCD, the Owner specifies tests to be done for its own reassurance that the work is meeting the contractually required standards. These tests are part of the Contract requirements and the Contractor is obliged to perform them, or arrange for them to be performed during the course of the work.

Watch this and other Contract Consideration videos on MMCD Association's YouTube Channel.

Question 2

Can you please help me understand DELETION of work versus REJECTION of work, and to what the contractor is entitled in either case?

Accepted Answer

QUESTION

I am the CA for an MMCD Contract to which the nature of the work is using trenchless technology under 33 05 24.

The Owner has requested a particular type of treatment work related to the sewer interface at service connections be deleted from the contract in its entirety as the contractor has not been able to demonstrate good workmanship, best practices and meet the specifications to rehabilitate underground infrastructure.

The CA, as well as third-party QA review and testing on work completed to date on a separate item, agrees with the Owner to not peruse this item as work not performed in it entirety.

I have reviewed the document to help determine what the contractor is entitled to, to which my understanding is

Since the entire pay item is rejected in its entirety, the amount the Contractor should be entitled to is the bare cost of materials, plus freight, plus OH&P at 20% on those materials

If I could seek your opinion on how to better understand the deletion of work vs the rejection of work, and if an item is deleted or reject example exists (what is entitled to the contractor), as these examples were mentioned in Volume 1 but later supplemented with none? Also if you have any guidance as to my determination and its value are as per contract documents intentions.

COMMENT

If [we] understand your situation correctly, the contractor has done some work on the item the Owner wishes to delete in its entirety. The Owner’s motivation is a belief that the Contractor is incapable of meeting the project specifications. You wish to know if the deletion of the item is as simple as applying GC9.4.3.1 or if the lack of quality of the work to date means some other method is appropriate.

First let [us] clarify one point. Your comment “Deletion of the work the contractor is entitled to 20% of 85% of Tender value of the deleted item as per 9.4.3(1)” is not correct. Even if one were to use 9.4.3 (1), the Contractor must prove to the CA’s satisfaction the % of the line item bid price that was for overheads and profit. It does not default to 20%. That was simply the number chosen for the example in the User Guide. Similarly your comment about 20% later in your question is also incorrect.

To summarize, if [we] were to do this [we] would:

Again, [we] stress that your lawyer may have a different interpretation of this situation. Nevertheless, [we] would do this calculation to get an “order of magnitude” amount for discussion with the lawyer before finalizing an Initial Decision under either GC.

Question 3

Is there recourse for the Contractor when an Owner Caused Delay affects Substantial Completion?

Accepted Answer

QUESTION

On a regular MMCD utility rehabilitation contract between contractor and municipality, the project is near completion, but not within the strict definition of Substantial Performance. The Owner has told the contractor to not go ahead with the remaining work, as it is at a separate site and the site is not ready. There is no schedule for the site to be made ready. The contractor wants Substantial Performance granted on the work completed to date, as it is at a separate site and is now being used by the Owner. They want the lien holdback clock to start so they can get their 10% back on the work completed. Is there any recourse for the contractor?

COMMENT

"The Contractor wants substantial completion on the work completed to date as it is a separate site and is now being used by the owner. They want the lien holdback clock to start so they can get their 10% back on the work completed."

Reference GC 10.3.2 Delays which are the Owners’ responsibility Section 3 page 45 05 52 User Guide

The User Guide (10.3.2.1, 10.3.2.2) suggests that Owner caused delays (per GC13.1) entitle the Contractor to reimbursement for costs and lost time. In this case, the CA must act impartially and issue a Change Order for the proven impact, even if the CA was the cause of the delay.

The Contract Considerations video “Partial vs Staged Substantial Completion" discusses methods of reducing the work remaining under the contract and processing a request for substantial performance. A new contract for the balance of the work may be required (see video).

Question 4

How does MMCD address issues relating to contaminated material discovered during construction?

Accepted Answer

QUESTION

How does MMCD address issues relating to contaminated material discovered during construction? Should it be cost to be borne by contractor or extra pay by owner?

COMMENT

GC12.2 to GC12.5 refer

Question 5

Is there any way under MMCD that the lien clock can start ticking for work that has been completed and is actUally already in use?

Accepted Answer

QUESTION

My understanding is that it's not allowable to release part of the lien holdback during the life of a project. In my particular situation, a project comprised of one major water/sewer scope and another major electrical scope is dragging on. The project itself is 18 months along and the water/sewer work has been done for several months now. What remains is some connection work in the electrical scope (substation replacement, requiring multiple shutdowns, reconnections etc.) that is dependent on BC Hydro reviewing as-built documentations, scheduling time for a shutdown, etc. That could be another 3 to 5 months from today.

Clearly the contractor is getting anxious about the way he is essentially financing the project with the 10% holdback. Is there any way under the MMCD that the lien clock can be set to ticking for the work that has been completed and is actually already in use?

COMMENT

The Contract Considerations Video should provide the answer (which is generally “No”). This is due to the Builders Lien Act, not our document. The video suggests a work around. Check out “Contract Considerations" video, “Partial vs Staged Substantial Performance".

Question 6

What is included in the Overhead portion of a Force Account?

Accepted Answer

QUESTION

The contractor has currently claimed missing overhead associated with approved Changes as well as unavoidable delays. We had agreed at the beginning of the project to include overhead costs associated with Change Orders in a review at the end of the project if those costs materialized. I am now assessing their claim.

Force Account rates include direct costs, overhead and profit but what is typically included in the overhead portion of the Force Account? Does this overhead portion include office overhead?
What is considered applicable in overhead costs when the Contractor is working Force Account and gets 10% markup on materials/subcontractor work?

Generally speaking, where do site overheads typically fall? Items like portable toilets, trailer heating, electricity, street cleaning, fences, etc? Where do staff overheads fall like Quality Coordinators, Project Managers, etc? They are also an overhead project cost.

COMMENT

GC 1.3.8 refers

Question 7

What is a common approach in dealing with Utility caused delays? Is the Contractor entitled to monetary compensation or only a time extension?

Accepted Answer

QUESTION

The contractor is on hold since the BC Hydro design was delayed, which now also delayed the required Telus design. We determined that this is an Owner caused delay since the design work was the responsibility of the Owner, or rather the consultant. On that basis, the contractor is submitting daily delay claims, which are reasonable. Generally, the Owner and consultant did not cause the delay but a 3rd party, in this case BC Hydro. With that, is the contractor entitled to monetary compensation or only eligible for a time extension? Further, what is a common approach in dealing with Utility caused delays?

COMMENTS

GC13.3.1 sets out the approach for unavoidable delays.

Question 8

Whose role is it to prepare payment certificates?

Accepted Answer

QUESTION:

We have entered into a contract with a local municipality using the MMCD. Payment is to follow the MMCD…there are no additional agreements or conditions. The design engineer is the CA. The CA is refusing to prepare Payment Certificates, they maintain that it is the role of the Contractor.

Whose role is it?

If it is the role of the CA, how would you recommend we move forward?

COMMENT

GC3.5.1 says:

Question 9

Is a Change Order required for Force Account?

Accepted Answer

The Contract Administrator is the interpreter of the Contract Documents, and the judge both parties to the Contract (GC 3.6.1)

However, there are references in the General Conditions of the MMCD to Extra Work

The Contractor is invited to perform Extra Work by issuing a Contemplated Change Order or Field Memo.(GC 8.1.1)

Change Orders and Field Memos are covered in GC 9.3

The Contractor may accept or decline the Extra Work (GC 8.1.2) in a timely fashion (GC 8.1.3)

GC 8.2.1 requires a written Change Order or Field Memo to approve Extra Work

GC 9.2.2 says that if the Contractor is authorized by the Contract Administrator to perform Extra Work, absent agreement on valuation and price, then the method of valuation shall be Force Account

“Force Account” in the MMCD General Conditions is covered in GC 10.0

Question 10

What happens when a Contractor breaches the contract?

Accepted Answer

Delay, workmanship, may be covered in General Conditions clauses, such as: GC 4.13 Rejected Work; GC 13.2 Delay by Contractor; GC 15.3 Termination; GC 23.1 Reimbursement for Wrongful Act or Neglect and others.

It is important to document all communications.

This situation may require legal advice...but check the GCs for sections relevant to the alleged breach