Standard Form of Agreement Between Owner and Contractor
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Standard Form of Agreement Between Owner and Contractor
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AIA Document A111 — 1997
Standard Form of Agreement Between Owner and Contractor
AGREEMENT made as of the 25th day
of August in
the year 2005
BETWEEN the Owner:
Duncan Investments, LLC
and the Contractor:
Morley Construction Company
The Project is:
Skechers Office Building
The Architect is:
David Forbes Hibbert AIA
1544 20 th Street,
The Owner and Contractor agree as follows.
THE CONTRACT DOCUMENTS
THE WORK OF THIS
RELATIONSHIP OF THE
DATE OF COMMENCEMENT AND
If, prior to commencement of the Work, the Owner requires time to file mortgages, mechanic’s liens and other security interests, the Owner’s time requirement shall be as follows:
§ 4.2 The Contract Time shall be measured from the date of commencement. The Date of Commencement shall be five (5) working days after the Owner’s Notice to Proceed.
The Contractor shall achieve
Substantial Completion of the entire Work not later than 462
from the date of commencement, or as follows:
As Shown on Exhibit “F”, the anticipated date of Commencement is September 1, 2005. Based on the date, the calculated date of Substantive Completion is December 6, 2006.
, subject to adjustments of this
Contract Time as provided in the Contract Documents.
§ 4.4 If Contractor achieves Substantial Completion of the Work prior to the Scheduled Completion Date, as adjusted by Change Orders, then Contractor shall be entitled to an early completion bonus equal to $20,000 dollars.
§ 4.5 Owner and Contractor acknowledge and agree that if Contractor fails to achieve Substantial Completion of the Work within the Contract Time, as adjusted by Change Order, Owner will suffer substantial damages which are both extremely difficult and impracticable to ascertain. Therefore, Owner and Contractor agree that in the event Contractor fails to achieve Substantial Completion within thirty (30) days after the final Scheduled Completion Date, Contractor shall pay to Owner as liquidated damages, not as a penalty but as a reasonable estimate of the amount of damages Owner will suffer, $ 1,000 dollars for each day of delay (after the expiration of said thirty (30) day grace period), until the Work is Substantially Complete. If Contractor fails to achieve Substantial Completion within sixty (60) days after the final scheduled completion date, Contractor shall pay to Owner as liquidated damages $2,000 dollars for each day of delay after the sixtieth day. Owner and Contractor acknowledge and agree that this liquidated damages provision shall be the only remedy to Owner for damages caused by Contractor’s failure to achieve Substantial Completion within the Contract Time.
ARTICLE 5 BASIS FOR
The Contractor’s Fee shall be
$ 655,096 dollars.
§ 5.1.3 Changes (Change Order and Construction Change Directives) that affect the Cost of the Work shall be handled as follows:
22.214.171.124 For changes which increase the Cost of the Work, the estimated value shall be the Cost of the work (computed in accordance with Article 7), plus an allowance for jobsite General Conditions of eight percent (8%) and Contractor’s Fixed Fee of three and three-quarters ( 3.75%) percent.
126.96.36.199 For changes which decrease the cost, the estimated value shall be the direct change in the Cost of the Work (computed per Article 7), with a reduction in the Contractor’s Fee of (3.75%) percent.
188.8.131.52 After values have been computed per 184.108.40.206 and 220.127.116.11 above, these estimated values shall be used to establish the adjusted Guaranteed Maximum Price.
18.104.22.168 Billings for the Cost of the Work on changes will be actual costs (per Article 7), and will be incorporated into the billings for the Project as a whole, not reported separately.
22.214.171.124 If the Contractor is asked by the owner to perform “tenant work,” over and above the changes in the base building described above, then such “tenant work” shall be handled under a separate agreement.
§ 5.1.4 After completion of the Project, and after the Guaranteed Maximum Price has been adjusted per Article 5.1.3 above, it shall be compared to the total of the Cost of the Work (defined in Article 7), plus the Contractor’s Fee (Article 5.1.2). If the final Guaranteed Maximum Price exceeds the total of the cost of the Work plus any unused monies from the line item contingency noted in 126.96.36.199 and 188.8.131.52 plus Contractor’s fee, then the difference (“Savings”) shall be divided between the Owner and Contractor. The Owner will be credited with the first $50,000 in Savings, thereafter the Owner will be credited with 75% of the Savings, and will pay the Contractor 25% of the Savings as Additional Fee.
§ 5.2 GUARANTEED MAXIMUM
184.108.40.206 There is only one Guaranteed Maximum Price provided by this Contract. Although the Contractor has furnished the Owner with the Budget Line Item Breakdown (Exhibit “C”), the amounts of the individual line items in these exhibits are not guaranteed. The final cost of any particular line item may be more or less than the estimate, except for the structural concrete work which will be performed on a Lump Sum basis, as per Paragraph 7.3.2 of this Agreement. The Contractor does, however, guarantee that it will perform the work required by the Contract Documents within the Guaranteed Maximum Price.
220.127.116.11 The Guaranteed Maximum Price has been determined by computing an estimated cost, then adding a contingency factor to the estimated cost, and increasing the figure thus obtained by the Contractor’s Fee.
18.104.22.168 The Contingency is intended for the Contractor’s use to cover unanticipated overrun of any costs, additional cost caused by failure of any subcontractor, and any other unforeseen events. The contingency factor is not to be used by the Owner to cover the cost of changes to the Contract Documents required by the Owner, Architect or governing authority, nor for any other purpose.
The Guaranteed Maximum Price is
based on the following alternates, if any, which are described in
the Contract Documents and are hereby accepted by the Owner:
§ 5.2.3 Unit prices, if any, are as follows:
Allowances, if any, are as
§ 5.2.5 Assumptions, if any, on which the Guaranteed Maximum Price is based are as follows:
§ 5.2.6 To the extent that the Drawings and Specifications are anticipated to require further development by the Architect, the Contractor has provided in the Guaranteed Maximum Price for such further development consistent with the Contract Documents and reasonably inferable therefrom. Such further development does not include such things as changes in scope, systems, kinds and quality of materials, finishes or equipment, all of which, if required, shall be incorporated by Change Order.
§ 5.2.7 The Contractor represents and warrants to Owner that (i) it has substantial experience and expertise in building projects such as the Project, and it acknowledges that such experience and expertise were substantial and material factors in Owner’s decisions to retain Contractor to build the Project, and (ii) it has carefully reviewed the Contract Documents, and has determined that they are sufficiently comprehensive and complete as to permit Contractor to build the Project within the Project Budget and the guaranteed Maximum Price and within the Contract time. Therefore Contractor acknowledges and agrees that Contractor shall not seek, and Owner shall have no obligation to agree to, any increase in the Guaranteed Maximum Price, or any extension of the Contract Time, based upon normal coordination needs of the plans and specifications.
ARTICLE 6 CHANGES IN THE
§ 6.2 In calculating adjustments to subcontracts (except those awarded with the Owner’s prior consent on the basis of cost plus a fee), the terms “cost” and “fee” as used in Section 22.214.171.124 of AIA Document A201-1997 and the terms “costs” and “a reasonable allowance for overhead and profit” as used in Section 7.3.6 of AIA Document A201-1997 shall have the meanings assigned to them in AIA Document A201-1997 and shall not be modified by Articles 5, 7 and 8 of this Agreement. Adjustments to subcontracts awarded with the Owner’s prior consent on the basis of cost plus a fee shall be calculated in accordance with the terms of those subcontracts.
§ 6.3 In calculating adjustments to the Guaranteed Maximum Price, the terms “cost” and “costs” as used in the above-referenced provisions of AIA Document A201-1997 shall mean the Cost of the Work as defined in Article 7 of this Agreement and the terms “fee” and “a reasonable allowance for overhead and profit” shall mean the Contractor’s Fee as defined in Section 5.1.2 of this Agreement.
§ 6.4 If no specific provision is made in Section 5.1 for adjustment of the Contractor’s Fee in the case of changes in the Work, or if the extent of such changes is such, in the aggregate, that application of the adjustment provisions of Section 5.1 will cause substantial inequity to the Owner or Contractor, the Contractor’s Fee shall be equitably adjusted on the basis of the Fee established for the original Work, and the Guaranteed Maximum Price shall be adjusted accordingly.
ARTICLE 7 COSTS TO BE
§ 7.2 LABOR
Wages or salaries of the
Contractor’s supervisory and administrative personnel when
stationed at the site with the Owner’s approval.
126.96.36.199 Prorated salaries and expenses of the following personnel for that portion of their time spent working on this Project (regardless of work place); Project Executive, Project Manager, Project Engineer, Safety Director, Project Accountant and General Superintendent, including automobile allowances where applicable.
§ 7.2.3 Wages and salaries of the Contractor’s supervisory or administrative personnel engaged, at factories, workshops or on the road, in expediting the production or transportation of materials or equipment required for the Work, but only for that portion of their time required for the Work.
§ 7.2.4 Costs paid or incurred by the Contractor for taxes, insurance, contributions, assessments and benefits required by law or collective bargaining agreements and, for personnel not covered by such agreements, customary benefits such as sick leave, medical and health benefits, holidays, vacations and pensions, provided such costs are based on wages and salaries included in the Cost of the Work under Sections 7.2.1 through 7.2.3.
188.8.131.52 The Contractor has computed the cost of Workers’ Compensation and other expenses measured by payroll for all employees, reimbursable under Article 7.2. It is agreed that the surcharges for these items, to be applied to the base wages for personnel described in Article 7, shall be 61.53%. It is recognized that minor changes and variation in this figure can occur, which are difficult or impossible to compute accurately. Therefore, the surcharges agreed on above shall be used for the duration of the Project.
§ 7.3 SUBCONTRACT
§ 7.3.2 Self-Performed Work – The Contractor will self-perform the structural concrete work for a Guaranteed lump-sum amount of $4,392,146 . The Contractor has submitted documentation supporting the Lump Sum amount to allow review by the Owner. The Owner will notify the Contractor if additional documentation is required.
§ 7.4 COSTS OF MATERIALS
AND EQUIPMENT INCORPORATED IN THE COMPLETED CONSTRUCTION
§ 7.4.2 Costs of materials described in the preceding Section 7.4.1 in excess of those actually installed to allow for reasonable waste and spoilage. Unused excess materials, if any, shall become the Owner’s property at the completion of the Work or, at the Owner’s option, shall be sold by the Contractor. Any amounts realized from such sales shall be credited to the Owner as a deduction from the Cost of the Work.
§ 7.5 COSTS OF OTHER
MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED
§ 7.5.2 Rental charges for temporary facilities, machinery, equipment, and hand tools not customarily owned by construction workers that are provided by the Contractor at the site, whether rented from the Contractor or others, and costs of transportation, installation, minor repairs and replacements, dismantling and removal thereof. Rates and quantities of equipment rented shall be subject to the Owner’s prior approval.
§ 7.5.3 Costs of removal of debris from the site.
§ 7.5.4 Costs of document reproductions, facsimile transmissions and long-distance telephone calls, postage and parcel delivery charges, telephone service at the site and reasonable petty cash expenses of the site office.
§ 7.5.5 That portion of the reasonable expenses of the Contractor’s personnel incurred while traveling in discharge of duties connected with the Work.
§ 7.5.6 Costs of materials and equipment suitably stored off the site at a mutually acceptable location, if approved in advance by the Owner.
§ 7.6 MISCELLANEOUS
§ 7.6.2 Sales, use or similar taxes imposed by a governmental authority that are related to the Work.
184.108.40.206 Local business or gross receipts taxes or fees related to the Work.
§ 7.6.3 Fees and assessments for the building permit and for other permits, licenses and inspections for which the Contractor is required by the Contract Documents to pay.
§ 7.6.4 Fees of laboratories for tests required by the Contract Documents, except those related to defective or nonconforming Work for which reimbursement is excluded by Section 13.5.3 of AIA Document A201-1997 or other provisions of the Contract Documents, and which do not fall within the scope of Section 7.7.3.
§ 7.6.5 Royalties and license fees paid for the use of a particular design, process or product required by the Contract Documents; the cost of defending suits or claims for infringement of patent rights arising from such requirement of the Contract Documents; and payments made in accordance with legal judgments against the Contractor resulting from such suits or claims and payments of settlements made with the Owner’s consent. However, such costs of legal defenses, judgments and settlements shall not be included in the calculation of the Contractor’s Fee or subject to the Guaranteed Maximum Price. If such royalties, fees and costs are excluded by the last sentence of Section 3.17.1 of AIA Document A201-1997 or other provisions of the Contract Documents, then they shall not be included in the Cost of the Work.
§ 7.6.6 Computers, Data processing supplies and rental rates for computers used by Contractor’s personnel and related software licensing fees.
§ 7.6.7 Deposits lost for causes other than the Contractor’s negligence or failure to fulfill a specific responsibility to the Owner as set forth in the Contract Documents.
§ 7.6.8 Legal, mediation and arbitration costs, including attorneys’ fees, other than those arising from disputes between the Owner and Contractor, reasonably incurred by the Contractor in the performance of the Work and with the Owner’s prior written approval; which approval shall not be unreasonably withheld.
§ 7.6.9 Expenses incurred in accordance with the Contractor’s standard personnel policy for relocation and temporary living allowances of personnel required for the Work, if approved by the Owner.
§ 7.7 OTHER COSTS AND
§ 7.7.2 Costs due to emergencies incurred in taking action to prevent threatened damage, injury or loss in case of an emergency affecting the safety of persons and property, as provided in Section 10.6 of AIA Document A201-1997.
§ 7.7.3 Costs of repairing or correcting damaged or nonconforming Work executed by the Contractor, Subcontractors or suppliers, provided that such damaged or nonconforming Work was not caused by negligence or failure to fulfill a specific responsibility of the Contractor and only to the extent that the cost of repair or correction is not recoverable by the Contractor from insurance, sureties, Subcontractors or suppliers.
ARTICLE 8 COSTS NOT TO BE
§ 8.1.1 Salaries and other compensation of the Contractor’s personnel stationed at the Contractor’s principal office or offices other than the site office, except as specifically provided in Sections 7.2.2 and 7.2.3 or as may be provided in Article 14.
§ 8.1.2 Expenses of the Contractor’s principal office and offices other than the site office.
§ 8.1.3 Overhead and general expenses, except as may be expressly included in Article 7.
§ 8.1.4 The Contractor’s capital expenses, including interest on the Contractor’s capital employed for the Work.
§ 8.1.5 Rental costs of machinery and equipment, except as specifically provided in Section 7.5.2 and 7.6.6..
§ 8.1.6 Except as provided in Section 7.7.3 of this Agreement, costs due to the negligence or failure to fulfill a specific responsibility of the Contractor, Subcontractors and suppliers or anyone directly or indirectly employed by any of them or for whose acts any of them may be liable.
§ 8.1.7 Any cost not specifically and expressly described in Article 7.
§ 8.1.8 Costs, other than costs included in Change Orders approved by the Owner, that would cause the Guaranteed Maximum Price to be exceeded.
§ 8.1.9 The following items are not included in the Cost of the Work and shall be paid directly by the Owner:
Architectural and engineering fees
ARTICLE 9 DISCOUNTS, REBATES
§ 9.2 Amounts that accrue to the Owner in accordance with the provisions of Section 9.1 shall be credited to the Owner as a deduction from the Cost of the Work.
ARTICLE 10 SUBCONTRACTS AND
§ 10.2 If a specific bidder (1) is recommended to the Owner by the Contractor; (2) is qualified to perform that portion of the Work; and (3) has submitted a bid that conforms to the requirements of the Contract Documents without reservations or exceptions, but the Owner requires that another bid be accepted, then the Contractor may require that a Change Order be issued to adjust the Guaranteed Maximum Price by the difference between the bid of the person or entity recommended to the Owner by the Contractor and the amount of the subcontract or other agreement actually signed with the person or entity designated by the Owner.
§ 10.3 Subcontracts or other agreements shall conform to the applicable payment provisions of this Agreement, and shall not be awarded on the basis of cost plus a fee without the prior consent of the Owner.
ARTICLE 11 ACCOUNTING
ARTICLE 12 PAYMENTS
§ 12.1.2 The period covered by each Application for Payment shall be one calendar month ending on the last day of the month, or as follows:
§ 12.1.3 Provided that an Application for Payment is received by the Architect and Owner not later than the thirtieth (30 th ) day of a month, the Owner shall make payment to the Contractor not later than the twentieth (20 th ) day of the following month. If an Application for Payment is received by the Architect and Owner after the application date fixed above, payment shall be made by the Owner not later than twenty ( 20 ) days after the Architect and Owner receives the Application for Payment.
§ 12.1.4 With each Application for Payment, the Contractor shall make available at Contractor’s office submit payrolls, petty cash accounts, receipted invoices or invoices with check vouchers attached, and any other evidence required by the Owner or Architect to demonstrate that cash disbursements already made by the Contractor on account of the Cost of the Work equal or exceed (1) progress payments already received by the Contractor; less (2) that portion of those payments attributable to the Contractor’s Fee; plus (3) payrolls for the period covered by the present Application for Payment.
220.127.116.11 The Contractor will provide Conditional Lien Releases, both its own and those of subcontractors, with each Payment Request submittal and will provide unconditional lien releases for payments received.
§ 12.1.5 Each Application for Payment shall be based on the most recent schedule of values, as approved by the Owner submitted by the Contractor in accordance with the Contract Documents. The schedule of values shall allocate the entire Guaranteed Maximum Price among the various portions of the Work, except that the Contractor’s Fee shall be shown as a single separate item. The schedule of values shall be prepared in such form and supported by such data to substantiate its accuracy as the Architect may require. This schedule, unless objected to by the Architect, shall be used as a basis for reviewing the Contractor’s Applications for Payment.
§ 12.1.6 Applications for Payment shall show the percentage of completion of each portion of the Work as of the end of the period covered by the Application for Payment. The percentage of completion shall be the lesser of (1) the percentage of that portion of the Work which has actually been completed; or (2) the percentage obtained by dividing (a) the expense that has actually been incurred by the Contractor on account of that portion of the Work for which the Contractor has made or intends to make actual payment prior to the next Application for Payment by (b) the share of the Guaranteed Maximum Price allocated to that portion of the Work in the schedule of values.
§ 12.1.7 Subject to other provisions of the Contract Documents, the amount of each progress payment shall be computed as follows:
§ 12.1.8 Except with the Owner’s prior approval, payments to Subcontractors shall be subject to retainage of not less than ten percent ( 10% ). The Owner and the Contractor shall agree upon a mutually acceptable procedure for review and approval of payments and retention for Subcontractors.
18.104.22.168 A retention value of ten percent (10%) will be calculated at each line item in the billing and only the net amount of each line item will be billed and have the Contractor’s Fee applied. Line items that contain the Contractor’s direct costs, such as General Conditions, will not have retention withheld. Some, may have retention paid out prior to final Project completion, and others may have retention percentages less than ten percent (10%) as approved by the Owner pursuant to Article 10 of this Agreement.
§ 12.1.9 In taking action on the Contractor’s Applications for Payment, the Architect shall be entitled to rely on the accuracy and completeness of the information furnished by the Contractor and shall not be deemed to represent that the Architect has made a detailed examination, audit or arithmetic verification of the documentation submitted in accordance with Section 12.1.4 or other supporting data; that the Architect has made exhaustive or continuous on-site inspections or that the Architect has made examinations to ascertain how or for what purposes the Contractor has used amounts previously paid on account of the Contract. Such examinations, audits and verifications, if required by the Owner, will be performed by the Owner’s accountants acting in the sole interest of the Owner.
§ 12.2 FINAL
§ 12.2.2 The Owner’s final payment to the Contractor shall be made no later than 30 days after the issuance of the Certificate of Occupancy, or as follows:
22.214.171.124 If the contractor’s work is complete, but a Certificate of Occupancy is not issued, because of administrative delay on the part of the appropriate building authority not in Contractor’s control, or because of the work of separate contractors at the Project site in the employ of the Owner or any other reason beyond the control of the Contractor, then final payment will be made to the Contractor as if there was a Certificate of Occupancy.
§ 12.2.3 The Owner’s accountants will review and report in writing on the Contractor’s final accounting within thirty (30) days after delivery of the final Payment Request to the Owner by the Contractor. Based upon such Cost of the Work as the Owner’s accountants report to be substantiated by the Contractor’s final accounting, and provided the other conditions of Paragraph 12.2.1 have been met, the Owner will, within seven (7) days after receipt of the written report of the Owner’s accountants, either pay the Contractor, or notify the Contractor in writing of the Owner’s reasons for withholding payment as provided in Subparagraph 9.5.1 of the General Conditions. The Owner’s accountants will meet with Contractor prior to the start of said 30-day period to agree on the level of detail to be provided at the Contractor’s main office for the accountant’s review of the Project’s Costs.
§ 12.2.4 If the Owner’s accountants report the Cost of the Work as substantiated by the Contractor’s final accounting to be less than claimed by the Contractor, the Contractor shall be entitled to demand arbitration of the disputed amo