Improvements in PBC Contract Documents

January 26, 2007

Dear General Contractor,

I wanted to advise you of several improvements we have made in the PBC construction contract for 2007. This letter highlights the changes that were made in response to outreach meetings with general contractors who have previously been awarded PBC projects as well as those who have not worked for the PBC in the past. These changes are direct responses to requests and suggestions by general contractors as well as subcontractors.

The PBC recognizes that, to successfully build projects, a team effort of the General Contractor, the Architect and the PBC is needed. I believe you will agree that the revisions to our construction contract show the PBC understands it must work cooperatively with the Contractor.

The four categories of changes to the PBC construction contract concern: 1) payments, 2) prompt resolution of changes, 3) prompt resolution of claims, and 4) the 2% local business preference. The PBC 2007 General Conditions are on the PBC website (http://www.pbcchicago.com/subhtml/standards.asp). I have indicated the sections of the General Conditions (G.C.s) and page numbers of the sections that are referred to in the letter.

1. Payments
   The PBC is committed to make progress payments within 30 days of receipt of the agreed upon and complete payment estimate. Summaries of the improvements to the construction contract, regarding payment, are listed below.
   
   1. Returning more retainage sooner. G.C.’s Sections 16.06 and 16.08, pp. 56-58.
      
      As in the current contract, retain 10% of the first 50% of the project (5% retainage)
      Reduce from 5% to 3% at 75% completion
      Reduce from 3% to 1% at Project Substantial Completion
      Reduce from 1% to 0% at Project Final Acceptance
      

   2. Pay 100% for material stored off site (current amount is 50%).
      G.C.s Section 16.02, pp. 52-3.
      

   3. Subcontractors Payments from General Contractor.
      G.C.s Section 16.09, pp. 58-9.
      

   Subcontractors are to be paid within 14 days of General Receipt of check from the PBC. Subcontractors must be paid in full for their work by the General Contractor, including retainage, when Subcontractors have “satisfactorily” completed their work and provided all deliverables due under the contract.
   

   Note: Some variation of this “prompt payment to Subcontractors” provision is required in all federally funded projects. In that regard, it is not a “new” provision, although it is new to the PBC contract.
   

2. Provisions for Prompt Resolution and Payment For Changed Work
   The PBC is committed to making timely payment for changed work.
   

   The contract has time frames and procedures for the Contractor and Commission to communicate regarding the changed work. These procedures are written so there will be agreement and payment for changed work in a timely way. G.C.s Article 17 Changes, pp. 62-3 and Article 18 Claims and Disputes, pp. 64-6.
   

   The Commission will have its own weekly “round table” meetings to approve payment for changed work. Once there is agreement on the price and time for changed work, the change will be part of the next payment estimate.
   

3. Prompt Resolution of Claims
   The PBC is committed to pay Contractors an appropriate amount for claims when the PBC has determined there is entitlement to additional payment. The PBC will have a Claim Committee which meets weekly to analyze claims and settle those that are determined to have entitlement.
   

   The heart of these contract provisions are prompt notice from the Contractor when claim related work is occurring and a prompt proposal for the work when it is completed.
   

   If there is no agreement on the payment for the changed work, the Contractor must make a request for payment within 15 days of completion of the work.
   

   There are two levels of administrative review if no agreement can be reached on the cost of the changed work. The first level of review is in the field and must be completed within 60 days. The second level of review, which must be completed in 90 days, is to the Executive Director. The Contractor also has the right to appeal the ruling of the Executive Director to court. G.C.s Article 18, Claims and Disputes, pp. 64-6.
   

4. The 2% Local Business Preference
   The PBC is committed to allow all pre-qualified contractors to bid its larger projects on an equal footing, in order to promote competition.
   

   The Commission has, by resolution, made the following change to the PBC’s use of the Local Business Preference. The 2% award criteria for local businesses will apply to all projects with an estimated cost of less than $5 million. For all PBC projects with an estimated cost that exceeds $5 million, the Executive Director has been granted authority to determine whether to apply the 2% award criteria or not. It is expected that on most projects that have an estimated cost exceeding $5 million, the local business preference will not be applied.
   

Sincerely,

John Plezbert
1st Deputy Director