Project Management View from Rail Transit Programs and Projects

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A collection of articles sharing project processes, design and construction experience, best practices, and lessons learned along with operational knowledge related to executing programs and projects in the rail transit industry.

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Part 7 - Do You Know the Entire Contract

Part 6 - Do You Know the Entire Contract

Part 5 - Do You Know the Entire Contract

Part 4 - Do You Know the Entire Contract

Part 3 - Do You Know the Entire Contract

Part 7 - Do You Know the Entire Contract

Critical Components in General Conditions   -  Progress and Milestone Payments

This is the 7th in a series of discussions that is intended to prompt Project Teams to be aware of the entire contract document, including Information For Bidders (IFB), General Conditions/Terms and Conditions (GCs) and the Technical Requirements [Specifications and Drawings.] 

It is important the Buyer’s Project Manager, Contracting Officer, technical representatives and PM support services (scheduler and estimator) verify content or provide input that ensures the contract is complete and executable within the Buyer’s organizational assets and business processes.   

GC - Payments:   The type of payment requirements in the contract are determined by the Buyer during the contract development process.   The payment requirements are a function of the location where the work is performed and the availability for the Buyer or Construction Manager (CM) to monitor the work.

Progress payments are based on the Seller’s actual progress [on the Buyer’s property] against the contract schedule approved by the Buyer.   Each billing period, the Seller submits an invoice for payment based on the earned value, which is a calculated on physical progress on scheduled activities.   Payment processing consists of the Buyer and its CM validating progress and mutually agreeing with the Seller on the payment amount.  

While progress payments may be the norm for contracts, certain project execution plans might be better suited to milestone payments.    Milestone payments are appropriate for contract where a significant portion of the work occur on the Seller’s property.  In addition to difficulties in monitoring the Seller’s progress, the Buyer realizes no value until the product of the Seller’s labor, materials and equipment is in the Buyer’s possession or on the Buyer’s property.    In these cases, the Buyer defines the milestone/deliverable, schedule date and payment value as a percentage of the contract amount.

The milestone values should be based on the project/contract estimate.  As necessary, the Buyer’s estimate should be reviewed by the Engineer-Of-Record to validate the metrics and assumptions for industry cost data, and to evaluate current actual and forecast trends over the contracts period, including costs for labor, material, and equipment, as well as premiums for availability.  

For construction in the rail transit domain, milestones payments are commonly used for contracts involving locomotive and passenger car purchases, specialized work equipment vehicle/shop equipment procurement, and infrastructure systems for signals, supervisory controls, train movement controls, power substations, and signal power. 

TIP:   Milestone payments should be consistent with the milestones in the performance schedule requirements, and be correlated with the pricing format and content in the bid requirements.   

TIP:   Milestone payment value should be correlated with the Buyer’s contract estimate. 

TIP:   Milestones payment value is a contract requirement.    The only way to change the values is for Buyer to negotiate different amounts during pre-award conference with lowest responsive and responsible Seller, or for the Seller request a post award change in accordance with the contract.   

Posted on: October 18, 2018 05:53 PM | Permalink | Comments (4)

Part 6 - Do You Know the Entire Contract

Critical Components in General Conditions  -  Performance Schedule

This is the 6th in a series of discussions that is intended to prompt Project Teams to be aware of the entire contract document, including Information For Bidders (IFB), General Conditions/Terms and Conditions (GCs) and the Technical Requirements [Specifications and Drawings.] 

It is important the Buyer’s Project Manager, Contracting Officer, technical representatives and PM support services (scheduler and estimator)  verify content or provide input that ensures the contract is complete and executable within the Buyer’s organizational assets and business processes.   

General Conditions (GCs) contain the contains legal and contractual requirements, including section relating schedule, payments, damages/incentives, insurance, changes, and sometimes forgotten  legal and fiduciary reports.    The GCs are equally important to the Buyer’s/Seller’s Project Managers, Contracting Officer, Financial Administrators and Legal representative. 

GC – Performance Schedule:    Expressed in calendar days, the performance schedule in a list of Milestones and Calendar Days After Award (CDAA).    The milestones typically include:  A)  Notice To Proceed.   B) Substantial Completion.  C) Contract Completion.   However, due to phasing of work and other project interfaces, the Buyer may specify other milestones and CDAA critical form maintaining specific progress in relations to other project contracts or interdependencies.

Notice To Proceed is commonly related to the Buyer granting Seller permission to enter the property after certain requirements are satisfied such as insurance, quality plan, safety plan, key personnel, and mobilization plan.   At this time, the Seller will establish a secure work zone that is under their control and include the actual construction area, material storage area, temporary project office and employee facilities, and parking areas for employees, visitors and construction vehicles.

Buyer’s may also list intermediate milestones for defined and distinct elements of the work.   This is intended to assure the Seller schedules, executes and completes work in a specified order and relative timeframes.   Depending on the contract type, Buyer’s industry, and as recommended by the Engineer-Of-Record, intermediate milestones may include:   A) Complete design submittals.  B) Complete product/construction submittals.  C) Complete prototype testing.  D) Complete Work Element 1.  E)  Complete Work Element 2.  

TIP:   Milestones on the performance schedule should be correlated with the payment requirements.   If Milestone payments are specified, the Milestones in the schedule should be consistent. 

TIP:    Milestones should be correlated with the staging and phasing requirements in the contract specifications and drawings.

TIP:    Milestones should be reasonable with a high confidence for realization.  If not, the Buyer will risk delays in the process to contract award and in work progress after contract award. 

TIP:   Milestone list should be complemented with a definition so the Buyer and Seller equally understand the requirement and criteria for completion.

TIP:   Amount of Milestones should be balanced and avoid limiting the Seller’s flexibility in scheduling, managing and performing the work.

Posted on: October 11, 2018 05:55 PM | Permalink | Comments (9)

Part 5 - Do You Know the Entire Contract

Critical Components in General Conditions  -  Buyer Contacts

This is the 5th in a series of discussions that is intended to prompt Project Teams to be aware of the entire contract document, including Information For Bidders (IFB), General Conditions/Terms and Conditions (GCs) and the Technical Requirements [Specifications and Drawings.] 

It is important the Buyer’s Project Manager and Contracting Officer verify content or provide input that ensures the contract is complete and executable within the Buyer’s organizational assets and business processes.   

GC – Buyer Contacts:   Typically, the main contacts provided by the Buyer are the names and mailing addresses for the Project Manager and Contracting Officer.   Other important contacts should include mailing addresses for submitting invoices – accounts payable.   These need to be verified and as the contract proceeds, updated as changes in personnel or office locations occur.

While the main contacts are conspicuous, there may be other contacts, addresses and reporting forms buried throughout the contract.    Some include statutory requirements that are needed for government regulations as well as conditions for project funding.   

For construction in the rail transit domain, some of the less conspicuous contacts and topics may include Equal Employee Opportunity, Dept of Labor, Minority/Disadvantaged Businesses, and Owner Controlled Insurance.     These requirements are binding, and it is important that the project team monitor and verify compliance.  

TIP:   Buyer PM and Seller PM should compile a list of personnel assigned to the contract along with contact information, including Email and mailing addresses.  

TIP:   At the Contract Kick Off Meeting, PM should present and review a Table containing all contacts and deliverable/reporting requirements, frequency and due dates.

TIP:   All Seller’s submission of certificates and forms to entities outside the Buyer’s contacts should be reported and appended to the Seller’s Monthly Progress Report. 

Posted on: October 03, 2018 05:41 PM | Permalink | Comments (13)

Part 4 - Do You Know the Entire Contract

Critical Components in Information For Bidders  -  Bid Requirements

This is the 4th in a series of discussions that is intended to prompt Project Teams to be aware of the entire contract document, including Information For Bidders (IFB), General Conditions/Terms and Conditions (GCs) and the Technical Requirements [Specifications and Drawings.] 

Even with a standard form contract, it is important the Buyer’s Project Manager, Contracting Officer, technical representatives and PM support services (scheduler and estimator) verify content or provide input that ensure the contract is complete and executable within the Buyer’s organizational assets and business processes.   

In order to assure an expeditious and fair review of bids, the Buyer will identify the expectations for the bid documents submitted from potential bidders.    While some contracts may simply identify a single price sheet signed by the bidder, the complexity of the contracts may require more information to assure the Buyer is confident the bidder understands the scope of work.

IFB – Bid Requirements:    Requirements, instructions and Schedules (forms) are contained in the Information for Bidders section of the standard form contract document.     This section identifies the content, format, and forms required in the Seller’s bid documents.    This typically includes bid cost breakdown, schedule of values, corporate brochures, corporate licenses and certifications, resumes of key personnel, recent project list, and questionnaires and affidavits regarding contract defaults or litigation.

In publicly bid contracts, the requirements also include the bid evaluation criteria used by the Buyer to review and assess the Sellers’ bids:

  • Invitation For Bid (IFB)/Request For Quotation (RFQ) procurement is a solicitation for firm fixed prices from the Sellers.   It is used when the Buyer determines the contract will deliver the exact product expected within the defined schedule.  The bid requirements include total lump sum prices for the items in the pricing sheet.  The award is based on the lowest price by a responsive responsible bidder.   
  • Request For Proposal (RFP) procurement is a solicitation that consists of a technical volume and a cost volume.   It is used when the Buyer determined the IFB/RFQ solicitation will not obtain the best value from the market domain regarding the latest advances in materials, means and methods, systems, and computer hardware and software.    The award is based on defined criteria that is summarized in the contract in order from most important to least important.   The criteria is the framework for the Buyer’s evaluation of the technical volume, selection of the best proposal from Seller, review and negotiation of cost with the selected Seller.  The process to contract award  typically includes a combination of technical response and understanding of work; project experience, qualifications, and management team; and reasonableness of cost relative to the Buyer’s estimate, analysis of market conditions and recent awards for similar contracts within region.  

For construction in the rail transit domain, the bid requirements may include a management plan, quality plan, descriptions and product data for major equipment and systems, and summary level bar chart schedule. 

TIP:   Bid cost breakdown and schedule of values should be aligned with the Buyer’s contract cost estimate.  This will ensure expeditious due diligent review of bids for completeness and reasonableness.

TIP:    Seller’s must submit all information in bid requirements to be evaluated as responsive.   This ensures that their bid will enter the next phase for evaluating responsibility for the work. 

TIP:   Buyer’s responsibility checks on Sellers’ bids includes reference checks on recently completed contracts as well as a review of Buyer’s internal performance reviews of the Sellers’ previous contracts, and expert review of corporate financial reports, litigation or legal actions. 

TIP:    Certifications in the technical specifications should be verified by Buyers prior to award to the Seller [prime contractor] or prior to post-award approval of Seller’s subcontractors. 

Posted on: September 23, 2018 03:57 PM | Permalink | Comments (10)

Part 3 - Do You Know the Entire Contract

Critical Components in Information For Bidders   -  Key Personnel

This is the 3rd in a series of discussions that is intended to prompt Project Teams to be aware of the entire contract document, including Information For Bidders (IFB), General Conditions/Terms and Conditions (GCs) and the Technical Requirements [Specifications and Drawings.] 

Even with a standard form contract, it is important the Buyer’s Project Manager, Contracting Officer, and technical representatives verify content and ensure the contract is complete and executable within the Buyer’s organizational assets and business processes.   

Similar to specifying the company qualifications, the Buyer may also expect the bidders/Seller to provide Key Personnel for managing the work.     In addition to the level of effort – full time/part time, the bidders/Seller need to be aware of the Buyer’s expectations.    

IFB - Key Personnel:    A list of personnel is typically included in the Information for Bidders section of the standard form contract document.   This section identifies the key personnel required by the Buyer for the Seller.   For each key person, a description of experience, education, specialized training/certifications, licenses, and project experience.    The personnel may include Project Manager, Deputy Project Manager, Superintendent, Scheduler, Quality Manager and Safety Manager.   Under certain contract scopes, there may be requirements for Logistics Specialists, Training Specialists and Critical Crane Lift Specialist.    The requirements should be consistent with the Buyer’s expectations, the Engineer-Of-Record recommendations for Seller’s staff, and the requirements in the Division 1 Specifications, which the biggest tool in the contract for the Buyer’s project management team. 

For construction in the rail transit domain, the key persons may also include technical specialists for Track, Signal, Communications, Power, System Integration, Rolling Stock and Operations.

TIP:   The qualitative and quantitative requirements should be balanced with the qualified Seller pool but not be overly restrictive so as to reduce the submission of responsive bids.   

TIP:   Once the metrics are established in the contract, they can not be waived.    In order to avoid any type of protest during the bid evaluation, provide some flexibility in requirements for Buyer discretion using an equivalent combination of years experience, education and project assignments.

TIP:   Requirements for key personnel can also be stated in the technical specifications, which are prepared by the EOR.     During the final review of the completed contract documents, key personnel in the IFB and specification sections should be aligned.   As needed, the  IFB can identify technical personnel as key persons and reference the specification section for requirements.    

 

Posted on: September 16, 2018 06:13 PM | Permalink | Comments (10)
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