​E2. Construction Changes

Change Orders

Description: Certified Payroll Records (CPR), Hourly Labor Rate Worksheets, Form 703.33 

Prior to the first change order, the campus shall request and receive the first two weeks of certified payroll records (CPR) and the Hourly Labor Rate Worksheets for all trades from the Contractor and all subcontractors.

The Hourly Labor Rate Worksheets must be checked for accuracy against the CPR. Additional CPRs may be requested as necessary. This information is required to document the Construction Manager's (CM) and subcontractors’ trades billable rates. Also note Section H for Certified Payroll Information.

Subcontractor Directory: The Construction Administrator (CA) shall require the Construction Manager to submit a Subcontractor Directory with each pay request. This will assist in identifying whether a listed subcontractor is a subsidiary of the CM or whether the subcontractor is owned or partially owned by the CM to help safeguard against abuse of change order mark-ups; assure that all contractors are registered with the Department of Industrial Relations; and guard against improper subcontractor substitutions.

Change Order, Form 703.04: The CM shall use the Contractor Change Order Request Summary Worksheet and require its subcontractors to use the Subcontractor Change Order Request Summary for all change order requests. 

When the proposed need for a change is first known by the design professional, s/he shall prepare a change proposal, which is the conceptual approval form for the scope and cost, including architecture and engineering (A/E) fees, and should be prepared for each change as early as possible in order to reserve funds for the proposed change.

The CA shall determine whether or not to proceed with the proposed change. No extra services are to be incurred by the design professional prior to approval. The change proposal helps eliminate unnecessary cost proposal requests to the CM and to control additional construction and design costs. All change proposals submitted by the CM shall be: 

• reviewed and processed in a timely way
• checked for scope
  
• checked for associated costs against approved labor rate worksheets
• checked for conformance to the mark-ups as specified in the General Conditions
  

CM payments are the highest project priority.

References:

• SUAM Sections 9820 - 9820.03
  
• Construction Management Procedures Manual - Section 22: Allowance Procedures/Change Order Procedures
  
• Contract General Conditions for Construction Manager at Risk with Guaranteed Maximum Price Projects

Forms & Templates:

• Request for Information (Form 702.29)
  
• Field Instruction (Form 702.22)
  
• Hourly Labor Rate Worksheet (Form 703.33)
  
• Contractor Change Order Request Summary (Form 703.34)
  
• Subcontractor Change Order Request Summary (Form 703.34S)
  
• Cost Request Bulletin (Form 702.20)
  
• Change Proposal (Form 703.24)
  
• Change Order (Form 703.04)
  
• Change Order Cost Summary Worksheet (Form 703.04W)
  
• Contingency Status Report (Form 703.04C)
  
• Change Order Log (Form 703.04L)
  

Allowance Procedures

Description: Bid allowances are typically included in base bids or GMP proposals as estimates for work that will be completed under the base construction contract, but the exact costs or scope are indeterminate at the time of bid, or the scope has not yet been competitively bid at the time of the GMP proposal. These amounts are later adjusted to actual costs, once the work is bid to trade contractors or completed. The Trustees shall approve the scope and value for each allowance.

Allowances should be specifically included and separately listed on the bid / GMP proposal form, on the schedule of values, and referenced and defined in Division One specifications (in section 01 21 00).

References:

• SUAM Section 9721.08
  
• Construction Manager Procedures Manual - Section 22
• Contract General Conditions for CMR w/GMP Projects
  
• Request for Proposals

Forms & Templates:

• Schedule of Values (702.21)
  
• Change Order (703.04)
  

Subcontractor Substitutions

Description: A contractor may request a substitution of a subcontractor under the Subletting and Subcontracting Fair Practices Act, Public Contract Code 4100 et seq. 

There are nine types of subcontractor substitutions that a contractor may request under the act. Upon receipt of the Contractor's written request for substitution, citing one or more reasons listed in 4107(a), the Construction Administrator (CA) shall adhere to the following procedure:

1. read and become familiar with the Section 4107(a) statute requirement
   
2. notify the affected subcontractor of the prime contractor's request by sending her/him a letter by certified mail and require a response within five days (refer to sample letter). The CA shall act in a timely way by issuing within five working days written notice to the listed subcontractor and tracking the five-day response period. The five-day period equates to the response time for the subcontractor to mail its response. Therefore, the CA shall wait three more days beyond the expiration of the five-day period to receive any such mail. The postmark on the subcontractor's letter is the date the response is deemed to be received. If the subcontractor does not respond in a timely way, or responds that they do not object to the substitution, the CA shall send a letter to all parties approving the substitution.
   

Protest of substitution: If a protest is received from the subcontractor to be substituted, the Construction Administrator shall expeditiously call and schedule a substitution hearing. If either or both the prime contractor and subcontractor give notice that they intend to bring their attorney, then University Counsel must also attend. 

It is the CSU's obligation to schedule a timely hearing. If the only time when all parties are available is unreasonable or too far in the future, then the CA will issue a hearing notice by certified mail. In this notice the CA shall give the two principal participants five working days' notice (plus mailing time) of the hearing at the time and place specified; failure to attend will waive their rights. 

Please contact CPDC Construction Services or University Counsel for more information on the substitution hearing, as this is a formal process to which CSU staff must adhere.

Inadvertent clerical error: Under Public Contract Code Section 4107(a)5 and 4107.5, if the prime contractor made an inadvertent clerical error in the subcontractor list submitted with his bid, s/he has two working days after the time of the bid opening to give written notice to the CSU, the listed subcontractor and the intended subcontractor. 

The listed subcontractor has six working days from the time of the bid opening to submit to the awarding authority and the prime contractor its written objection. If a protest is received, the CA shall call in a timely way and hold a substitution hearing.

Other basis for substitution: Public Contract Code Section 4107: failing or refusing to meet the prime contractor's bond requirements or refusal to execute a contract 

This statute requires the prime contractor to advertise its subcontractor bond requirements. Failure to do so shall preclude the prime contractor from substituting for not meeting bond requirements. Note: Contract General Conditions, Article 4.04.

Subcontractor Directory: The Construction Administrator is required to police the use of subcontractors using the Subcontractor Directory. The CGC requires the Contractor to submit the Subcontractor Directory with the contract award package to the Trustees and with each payment request that follows. 

The CA shall compare the Subcontractor Directory with the original Expanded List of Subcontractors. If any listed firms have been substituted without approval in accordance with Public Contract Code (PCC) Section 4107(a), penalties are applicable per PCC Section 4110 and SUAM Sections 9821 and 9823. 

The listed subcontractor must perform the scope of work for which it was listed. The contractor may use another subcontractor for a new scope added via change order. For Guaranteed Maximum Price proposals when all trades may not have been bid at time of award, subcontractors are subject to PCC 4100 rights once they have been bid and listed on the subcontractor directory.

Penalty: The penalty for violating the provisions of the Subletting and Subcontracting Fair Practices Act is identified in PCC Section 4110. If a 10 percent penalty is assessed, the monies remain in the project funds. If the violation is egregious, this may be used as a basis of disqualification in future prequalification.

Notes:

1. A subcontractor who was not listed in the original subcontractor listing has no rights under the Subletting and Subcontracting Fair Practices Act, even though the subcontractor was legally substituted for the listed subcontractor.
2. PCC 4106 identifies that if the general contractor does not list a subcontractor, or if it lists more than one subcontractor for the same portion of work (in excess of one-half of one percent of the general contractor’s total bid), the general contractor must perform the work itself. No subcontractor shall be employed by the contractor to perform work valued at more than one half of one percent if the original subcontractor listing indicated that the prime contractor was going to perform the work. If the general contractor subcontracts that portion of work, it will be subject to penalty provided in PCC 4110 and 4111. Failure to list a subcontractor is not a basis for rejecting the bid as nonresponsive.
3. After award of a contract based in part on the application of the small business preference, the Non-Small Business Contractor (NSB) shall use the small business subcontractors and suppliers listed in its proposal, unless the NSB requests a substitution in writing to the Trustees and the Trustees approve the substitution in writing. Please refer to Contract General Conditions for DBB Major Cap Projects, Article 4.04-b, Substitution of a Small Business Subcontractor, and to the California Code of Regulations, Title 2, Section 1896.10 for further information.
4. The Contractor shall use the Disabled Veteran Business Enterprise (DVBE) companies listed in its bid proposal unless a substitution is requested in writing to the Trustees and the Trustees and the Department of General Services (DGS) approve the substitution in writing before the commencement of any work. Please reference Contract General Conditions for DBB Major Cap Projects, Article 4.04-c, Substitution of a Disabled Veteran Business Enterprise, and the California Code of Regulations, Title 2, Section 1896.73, Substitution of a DVBE, for further information.

References:

• SUAM Sections 9821 to 9823
  
• Construction Management Procedures Manual - Section 19
• Contract General Conditions for CMR with Guaranteed Maximum Price Projects - Article 4.04: Substitution of Trade Contractors
• Law of D&C, May 2019 - Section XIII: Substitution of Subcontractors
  
• Public Contract Code Sction 4100 et seq., - The Subletting and Subcontracting Fair Practices Act

Forms & Templates:

None

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