Reference no: EM133383540

Question: You are the Construction Manager on $20,000,000 Hospital Addition. You will be asked to prepare a combined change order complete with the following documents:

A letter to the Owner which will be the instructor of the Course describing the change order in accordance with the Lecture notes. Your letter should include the reason for the change order, the scope of the change order and if the change order is value added or the result of unforeseen conditions.

The Form of the Change Order
Time and Material Spreadsheet

Part 1
The Owner of the Project has requested that additional sidewalks, storm drainage, traffic striping, paving and landscaping be performed to an older parking lot that is in need of some improvements. The Owner has directed the Construction Manager to perform the work as Change Oder to the Original Contract. The General Contractor (GC) has to subcontract the paving, traffic striping and landscaping to other subcontractors. As the Construction Manger you prepared the scope of work for this additional work. The CM and GC negotiated the following raw unit prices including labor, materials and equipment (profit and overhead have not been applied, but the Contractor is eligible for profit and overhead as specified on page 3) to perform the work.

DESCRIPTION	PERFORMED BY	QUANTITY	UNIT	UNIT PRICE
15" Reinforced Pipe	General Contractor	310	Liner Foot	$85
Storm Inlets	General Contractor	6	Each	$2,750
Concrete Sidewalks	General Contractor	200	Square Yards	$60
Paving	Subcontractor	16,000	Square Feet	$3.50
Traffic Stripping	Subcontractor	1	Lump Sum	$5,000
Landscaping	Subcontractor	1	Lump Sum	$25,000

Calculate the total cost of the change order based upon the negotiated unit prices and apply the overhead and profit factors described later in this document.

Part 2
While the Contractor was excavating to install the storm drainage related to the parking lot paving, they encountered soil that has a gasoline odor and appears to have an oily sheen. At this point work is stopped and the Contractor has to send his crew home due to safety concerns. After reviewing some records and consulting with the Owner it is discovered that an abandoned gasoline storage tank is buried beneath the older parking lot. Current State regulations require that the underground fuel storage tank has to be removed and disposed of. Furthermore, all of the contaminated soil has to be excavated and disposed at a licensed disposal facility. All of the excavated material has to be replaced with Dense Graded Aggregate at a material cost of $25 per cubic yard including delivery. This work has to be performed immediately on a time and material basis (T&M).

The scope of work of the T&M work will include the following:

The Contractor has to be compensated for the delay in the work, because he had to pay his crew for two days while the research into the cause of the contaminated soil was determined.
The crew consisted of the following:

Two Class B Equipment Operators
One Labourer Foreman
Three Labourers
The Contractor hired an environmental consultant to perform soil sampling. A total of 25 samples were taken at cost of $400 per sample.
The Contractor also has to purchase 30 rolls of plastic sheeting at $10 per roll to cover the stockpiled soil. He also has to purchase 125 hay bales for soil erosion at $5.00 per bale and 300 linear feet of silt fence at $2.00 per foot.
The area of contaminated soil measures 40-feet by 50-feet by 15-feet deep. The disposal facility charges a tipping fee of $125 per ton to dispose of the contaminated soil. A cubic yard of soil is 1.5 tons per cubic yard. Additionally, the Contractor has to rent dump trucks at a monthly rental cost of $15,000 and operating cost of $12 per hour to transport the soil to the disposal facility. Each truck holds 25 tons and can make to two trips per day. The Contractor hires two trucks per day and the trucks drivers are paid a wage of $35.25 per hour with fringe benefits of $17.10 per hour.
The Contractor hired a subcontractor to remove the underground storage tank at a lump sum of $15,000.
The General Contractor used the following crew to excavate the contaminated soil and place the clean fill.
Three Class B Equipment Operators
One Labourer Foreman
Four Labourers
The Labourers and Foreman worked for a total of 80 hours (400 Total man hours) this was agreed upon by the CM and the Contractor's Superintendent. The Equipment Operators man-hours will be based upon the hours that the heavy equipment was operated.

The following company owned heavy equipment was utilized:

Kobelco SK295LC Track Mounted Excavator - 80Hrs
Deere 724K Front End Loader - 80Hrs
Roller Compactor - 56Hrs (Monthly Rental $12,000 and Operating Cost $12.50 per hour)
You will need to calculate the volume of contaminated soil, clean fill, cost of subcontractors, equipment rental, tipping fees (considered a subcontractor), materials and labor associated with this change order.

By Contract the Contractor is permitted to charge 10% overhead and 15% profit on all Materials and Labor of his own forces. 10% profit on all equipment and all subcontractors, no overhead can be applied.

You can use the labour rates listed in the spreadsheet presented in Lecture 5 with a labour burden of 1.32, the equipment rates can be found in the attached copies of the Blue Book unless described herein. Operating costs can be charged and use the 176 factor to determine the hourly rental rates.

This additional work is to be applied to an original $20,000,000 contract that has already had two change orders in the amount of $605,500. It is important in your summary to advise the Owner if this additional change order will approach the 20% threshold.

Also, the Contract has a 360 day duration and the Contractor has requested a 90-day extension to the Contract for this additional work, be sure to document this request in the change order documents.

It is best to calculate the cost of each part of the change order separately and combine the totals into one change order.