Construction Issues Associated With Environmental Projects

1
Construction Issues Associated With
Environmental Projects
Barbara L. Kimler, PE Central Area Engineer Rock
Island District
2
Why Are These Environmental Projects So Expensive?
3
1. Environmental work is technically challenging

• Embankment materials are hard to work with,
  foundations are soft, and access is difficult.
• Work requires specialized, expensive construction
  equipment and methods.
• This results in higher production costs and lower
  productivity rates than traditional civil works
  construction.

4
Example Specialized Equipment Methods

• Specialized dredges
• Staging from barges
• Floating excavators and swamp buggies
• Timber mats
• Cofferdams and dewatering
• Winter work

5
Articulated Dredge
6
Barge Staging
7
Floating Excavator
8
Swamp Buggy
9
Timber Mats(or lack thereof)
10
Cofferdams and Dewatering
11
Winter Work
12
2. Environmental project work objectives and
requirements are unusual

• To bidders, the contract packages appear like
  typical civil works projects such as channel
  dredging and flood protection. However, the
  actual construction requirements are
  non-traditional

13
Examples

• Dredgers constructing islands rather than
  focusing on excavating channels
• Fine grained cover requirements on island
  disposal sites
• Levees and dikes constructed for impounding water
  rather than for flood protection.
• .

14
Polander Lake Islands
15
Fine-Grained Sediment Cap
16
Upper Lake Chautauqua Levee
17
Result

• Bidders underbid our projects not fully
  understanding the requirements
• Bidders bid higher than standard construction as
  needed to successfully meet our requirements

18
3. Environmental Contracts Have Time and
Scheduling Restrictions and/ or Limitations

• Working in the floodplain requires scheduling
  work around natural riverine cycles
• Endangered species and refuge operating
  requirements often further restrict scheduling of
  work

19
Chautauqua Hydrograph
20
Milan Bottoms Section 1135 Endangered Species
Requirements
21
Impacts to a Contractor

• Additional mobilization and demobilization costs
• Contractor loses some of the best construction
  season
• Contractor cant continuously schedule work
  crews, losing equipment and skilled labor to
  other jobs.
• Field office overhead costs still have to be
  covered
• Long duration impacts the Contractors ability to
  bid other work - ties up resources and bonding
  capacity

22
So, What Can Be Done?
23
During Contract Development Phase

• Work with resource agencies regarding endangered
  species restrictions and refuge management
  requirements
• Communicate/define actual construction
  requirements clearing, work limits, equipment
  access with resource agencies early in the design
  development
• Utilize contracting methods that do not require
  selection of the lowest bidder. For example, use
  negotiated Best Value procurement methods rather
  than sealed bids

24
During Contract Development Phase, contd

• Communicate the risks in the contract bid
  documents to the greatest extent possible
• Include information on ground water levels,
  flooding frequencies, foundation conditions, and
  site access conditions, including photographs as
  needed
• Include required sequence of work and provide up
  front coordination to the greatest extent
  possible
• Ensure that the overall goals of the project are
  included
• Hold a pre-bid conferences on site and document
  the proceedings

25
During the Construction Phase

• Communicate and reinforce the overall goals of
  the project
• Utilize partnering as a tool to foster
  communication and joint ownership
• Keep open communications, without sacrificing the
  integrity of the Contractor/Government
  contractual relationship. Each party needs to
  understand and respect each others role
• Document lessons learned
• Share successes!

26
Why Are Contract Changes So Difficult and
Expensive?
27
Contracting BasicsBased on FAR, DFAR, EFAR
and Corps Policy
28
A contract is a legal agreement between the
Government and the Contractor which

• Binds the Contractor to fulfill the requirements
  of the contract as prescribed in the contract
• Binds the Government to pay a firm, fixed price
  for successful completion of the contract
  requirements in accordance with the terms and
  conditions of the contract
• Can only be changed by the Contracting Officer
  (CO) or the Administrative Contracting Officer
  (ACO) via contract modification

29
Definitions

• Change An alteration in the terms or conditions
  of the contract that materially impacts cost,
  quality, or time of delivery
• Modification Any written alteration in the
  terms of the contract

30
Changes Clause Allows the CO to make changes,
by written order, in the work within the
contract, including changes

• In the specifications, drawings, and designs
• In the method or manner of work performance
• In Govt furnished facilities, equipment,
  materials, services, or site
• Directing acceleration in the performance of the
  work

31
Other Clauses From Which Modifications Arise

• Differing Site Conditions
• Default Clause
• Suspension of Work Clause
• Government Property Clause
• Value Engineering Incentive
• Variations in Estimated Quantities
• Special Clause Damage to Work

32
Common Reasons for Changes Issued Within the
Standard Contract Clauses
33
User Originated Changes

• User mission or site operations plan change
• Site availability
• Funding change
• Additional needs

The user MUST approach the Corps to initiate
these changes. The change must be within the
scope of the contract
34
Field Originated Changes

• Differing site conditions
• Ambiguities in plans and/or specs that result in
  a design change
• Government caused delays
• Unusually severe weather (time only)

These changes are initiated by the Corps
35
Changes To Avoid
36
Constructive Change An oral or written act or
omission by the CO or ACO which is construed or
inferred to have the same effect as a formal
written change order

• Danger - Actions by unauthorized person can
  result in constructive changes due to the concept
  of Apparent Authority , i.e., the Contractor
  has some reasonable basis for assumption that the
  unauthorized person has authority to act on
  behalf of the CO.

37
Cardinal Change A change outside the scope of
the contract.

• Cardinal changes are NOT authorized by any clause
  in the contract. They are executed only by
  exception and require specific Justification and
  Approval for sole source procurement of the work.
  
• The apparent probability that the additional work
  may be done more conveniently, or at a lower cost
  by the original contractor, is NOT a controlling
  factor for justifying sole source work.

38
Factors Considered in the Within Scope
Determination

• What is reasonably within mind-set of the parties
  at the time the contract was entered into, as
  evidenced by contract documentation
• Function of the end item
• Nature and purpose of the contract
• Often a judgment call, must be supported by the
  CO

39
The Cost of Changes

• If, due to a contract change, a contractor
  experiences an increase or decrease in cost or
  performance time, he may be due an equitable
  adjustment.

40
Equitable Adjustment

• The basic purpose of an equitable adjustment is
  to keep the contractor whole when the Government
  modifies a contract. Neither party is to be left
  better or worse off than it was without the
  modification.

41
When negotiating an adjustment, the Government is
tasked with reaching a fair and reasonable price,
(not the lowest possible price), taking into
account factors such as

• Cost
• Risk
• Ingenuity and efficiency
• Other advantages gained by the Govt and the
  Contractor

42
The following are negotiated and may be included
in the settlement of an equitable adjustment

• Labor
• Equipment
• Materials
• Overhead (field and home office, including bond)
• Profit
• Extension of time
• Impact costs on the overall project

43
Contract modifications are relatively costly due
to

• Lack of price competition
• Assumption of contractor risk for forward priced
  modifications
• Lack of cost incentive for two-part
  modifications (time and material)
• Lost efficiencies due to unplanned nature of the
  work
• Adverse impacts to other contract work
• Disruption of schedule due to added work and
  interface with ongoing work
• Increased overhead associated with time extensions

44
So, What Can Be Done ?
45
Minimize The Need For Modifications

• Ensure that plans and specifications capture all
  technical requirements, site conditions, and site
  operations requirements
• Avoid ambiguities and conflicts between drawings
  and specifications
• Increase field explorations to reduce risks and
  frequency of differing site condition changes
• Detailed condition assessments
• Borings
• Surveys
• Site Visits

46
Minimize The Need For Modifications, contd

• Ensure only authorized contracting
  representatives give direction to contractors
• Consider new procurements vs. modification
• Maintain open communications between Corps
  construction staff, designers, and sponsors

47
When Modification is Inevitable

• Respect contractual authorities and the role of
  the Govt negotiator
• Provide information to the negotiator
• Do not enter into discussions with the contractor

48
For further assistance

• Contact your respective Corps Districts
  Construction Division staff
• Contact me
• Barbara L. Kimler, PE
• Area Engineer, Central Area Office
• 5235 Grand Avenue
• Davenport, Iowa 52807
• [phone]
• Barbara L. Kimler _at_ usace.army.mil