Question 1

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 2

In order to comply with GC 10.3.1, how should a Contractor deal with submitting Force Account reports to the CA when there is a delay in gathering billing from suppliers?

Accepted Answer

QUESTION

GC 10.3.1 requires the Contractor to submit FORCE ACCOUNT reports to the CA before the end of the next Day. Sometimes this just isn’t enough time to gather billing from a third party. There are times when we simply can’t get an invoice from larger suppliers for 30 days. We have done extra work by force account and because it was not submitted in time, we weren’t paid. Although the CA acknowledges that the work was done, they can rely on GC 10.3.1. Surely this action isn’t fair.

Do you have any comments on the submission time and consequently the CA not needing to approve payment or should we just decline the work?

COMMENT

GC 10.1.1 (3) sets out the Contractor’s entitlement to material cost and references invoice transportation and haulage costs.

One might suggest to the CA that a reliable estimate of material costs, etc, based on supplier quotations, and later adjusted by final invoice amount, might be adopted to overcome the invoice delay. Or, the supplier might be willing to change their billing practice to issue an invoice on order.

Question 3

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 4

Can the CA rightfully dispute rates after they have been agreed to in writing?

Accepted Answer

QUESTION

Can the CA rightfully dispute rates after they have been agreed to in writing? Additional information:

Is the CA right to not pay for items mentioned above (training, pension, daily travel, and other benefits paid to employees) even though the contract states "including all amounts paid for labour.... and all employee benefits"?

COMMENT

10.1.1 Payment for Force Account Work shall be calculated as follows:

labour at the actual cost to the Contractor, including all amounts paid for labour and all related taxes, assessments payable as required by any statutory scheme such as Workers’ Compensation, unemployment insurance, holiday pay, insurance, and all employee benefits. A markup of 3% on the foregoing shall be allowed for all Small Tools. A markup of 10% on the total of the foregoing shall be allowed for overhead. A further markup of 10% on the total of the foregoing including the markup for overhead shall be allowed for profit.

10.3.1 The Contractor shall keep an accurate, complete and up-to-date record, in a form satisfactory to the Contract Administrator, showing on a shift-by-shift basis all labour, equipment, materials and subcontractor costs of all Work to be paid by Force Account. The Contractor shall submit such Force Account reports to the Contract Administrator daily, before the end of the next Day for certification by the Contract Administrator.

GC 16.3.1 (2) outlines the Contractor’s rights when the Owner fails to pay the Contractor for amounts certified by the CA.

MMCD “Contract Considerations” discusses Force Account work at https://www.mmcd.net/resources/video-resources/