ACA Applauds Alberta Infrastructure response to industry concerns regarding change orders and mark-ups

As noted in our invited article from Alberta Infrastructure Minister Bhullar, Alberta Infrastructure has numerous project opportunities in the short and long term.   ACA applauds the Minister and Department for their commitment to work with industry to re-engineer contracting policies and procedures and modernize government’s procurement process.  As part of this process, ACA Chairman Scott Matheson is leading a significant industry effort to review contracts with Alberta Infrastructure.

While this work will be underway for some time, ACA applauds Infrastructure for moving forward this Fall to address some longstanding ACA recommendations.  Changes adopted by Infrastructure align with industry standard practices and are a model for owners that strive to remain preferred clients.

In particular, ACA acknowledges key changes:

 Section 01_26_63B Change Order Procedures:

Additions to Direct Costs (under Definition 2.3 page 1):

• Operation and maintenance of site offices as a Direct Cost
• Administration at a site office as a Direct Cost
• additional bonding and insurance cost as a Direct Cost

Increase to Labour Burden 3.6.2.2 (page 3) to 45% of Direct Labour Cost

Section 00_72_00B General Conditions of Contract

Increases in percent mark-ups in 2.5 Valuation of Changes (page 9 of 22):

.4 On extra work authorized by the Province, and to be paid for under method 2.5.1.1, the allowance for overhead and profit shall be based on the following schedule:

.1 For work performed by Contractor’s own forces, including work performed to accommodate work performed by Subcontractors, the Contractor shall be entitled to a mark-up of 15% on its actual Direct Costs related to the change in the work for overhead costs and profit.

.2 For work performed by Subcontractors, including work performed to accommodate work performed by Sub-subcontractor:

.1 Each Subcontractor shall be entitled to a mark-up of 15% on actual Direct Costs related to the change in the work for overhead and profit.

.2 Contractor shall be entitled to 10% on the Subcontractors’ total price to cover their Administrative Fee and profit.

.3 For work performed by Sub-subcontractors:

.1 Each Sub-subcontractor shall be entitled to a mark-up of 15% on actual Direct Costs related to the change in the work for overhead and profit.

.2 Subcontractor shall be entitled to 10 % on the Sub-subcontractors’ total price to cover their Administrative Fee and profit.

.3 Contractor shall be entitled to 10 % on the Subcontractor’s above total price to cover their Administrative Fee and profit.