QUESTION

If a deleted item is a lump sum unit is the lost overhead and profit still applied to only 85% or does it need to be applied to 100% on lump sum items?

COMMENT

The CA is the interpreter of the contract in the first instance. (GC3.6.1)

The User Guide (Volume 1) Section 4 page 22 of 43 article 5.4.3 discusses contractor costs, saying GC10.1.1 gives general guidance, but that each contractor may have different “payroll burdens”. This User Guide discussion is worth looking at in detail, as well as GC10.1.1. (The User Guide is available as an electronic document from MMCD)

GC1.76 defines the Variance Threshold Percentage and references ‘unit price items”. This suggests that lump sum items are exempt from calculations using a variance threshold. Again, the CA should provide a ruling on this aspect of the contract. GC7.0 Changes contains the procedure for a Change Order. Valuation of the Change is set out in GC9.2.1.

Failing agreement, Force Account is a default calculation.

Question 2

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/

Question 3

What is an allowable mark-up on my subcontractor usage for a project?

Accepted Answer

QUESTION

What is an allowable mark-up on my subcontractor usage for a project? Should I follow the guideline under 10.0 Force Account?

COMMENT

GC 10.1.1 (4 suggest a markup of 10% on actual subcontractor costs to cover all overhead and profit.