Opinion: Errors in $9.4 million contract with Granite Construction
MEMORANDUM
TO: Board of Trustees
CC: Brad Underwood and Mike Bandelin
June 14, 2023
Re: Effluent Pipeline – CMAR Contract with Granite Construction – Construction Manager Fee Percentage
It is with dismay, that the Staff of IVGID, the Board of Trustees and the attorney Josh Nelson cannot review and insure that important items in a contract are clearly stated and appropriate.
The contract for the Effluent Pipeline phase 1 to install 5,500 LF is for a maximum price of $9.4 million. It should clearly indicate the Construction Manager’s Fee Percentage (7.3) . Within the Bid Schedule the amount of Contractor Overhead and Profit is $1.15 million which equates to 14% of the Cost of Work and displayed in an exhibit to the contract. No Percentage is provided and the description does not indicate that it is the Construction Manager’s Fee.
A closer review of the Article 7 section 7.3.1 to 7.3.4 no percentage is indicated; in addition, the percentage, which is not provided, would include
1) Salaries for incidental employees except for employees in general conditions.
2) General and administrative expenses for the Construction Manager’s principal and branch offices
3) The construction Manager’s capital expenses, including interest on any of the Construction Manager’s capital that is employed
4) The Construction Manager’s profit.
As a result certain items are included, and no percentage is provided. THIS SECTON OF THE CONTRACT SHOULD BE A FLAT PERCENTAGE WHICH WOULD INCLUDE THE FOUR ITEMS ABOVE.
A review of the Federal Transit Authority indicates that a CMAR Fee is 2.5% to 4%. The April, 2021 CMAR contract with Core Construction for the Burnt Cedar Pool indicates a CMAR FEE of 3.95% was in the contract.