RECOMMENDATIONS
Revised June 19, 2000

Joint recommendations of the ACE Committee representing the NH Chapter American Institute of Architects, the Associated General Contractors of NH, the Associated Builders and Contractors of NH/VT, & the NH Section American Society of Civil Engineers.

The ACE Committee, consisting of Architects, Contractors, and Engineers from various design and construction-related groups and associations, meets on a scheduled basis to discuss, educate, evaluate and formulate a consensus of agreement on issues that affect our industry. The topics included in this document have been identified as common concerns among design and construction professionals. The identified topics are often cited as the source of conflict and controversy. The recommendations provide an overview of agreed upon industry practices, which, if managed effectively, may make the difference between a successful project and a disturbing experience.

All owners, designers and construction professionals are encouraged to use this document as a guideline and to distribute it to anyone who may benefit from the recommendations.

First Printing: November, 1983
Latest revision: June 19, 2000

1. Deposit on Plans
2. Issuance of Addenda
3. Listing of Subcontractors
4. Time and Date for Receipt of Bids
5. Change Orders
6. Alternates
7. Allowances
8. Retainage
9. Bonuses and Liquidated Damages
10. Punch Lists and Final Acceptance
11. Insurance and Bond Forms
12. Specification Arrangements
13. Scale & Arrangement of Drawings
14. Release of Liens
15. Negotiating with Low Bidders

1. DEPOSIT ON PLANS

When a deposit is required on plans and specifications;

1. General Contractors should be issued one set of plans and specifications, 100% refundable if returned in good condition. The plans and specifications should be refundable up to two weeks after the award of contract.
2. Major subcontractors should be issued one set of plans and specifications, 100% refundable if returned in good condition. The plans and specifications should be refundable up to two weeks after the award of contract. The owner of the project or the awarding agency will define who are the major subcontractors.
3. All plan takers shall pay shipping costs for plans and specifications, if not picked up in person.
4. Individual sheets of plans and sections of specifications should not be reproduced. Any person who reproduces individual sheets will take on additional liability for the completeness of information contained therein, including all addenda.
5. All deposits should be closely related to the actual cost of producing a copy of plans and specifications.
6. All the information referred to in this guideline should be defined in the Invitation to Bid.
7. The General Contractor will be entitled to a specified number of drawings without charge once the contract has been awarded. If requested, additional sets will be charged at cost.

2. ISSUANCE OF ADDENDA

During the bidding period the issuance of addenda should be minimized to the extent necessary to clarify bidding documents. If addenda are necessary they should be issued promptly. All parties who purchase a complete set of documents should be issued addenda. Questions to the architect/engineer should be in his hands at least seven working days before the bid is due. The last addendum should be in the contractor's hands four working days prior to the day on which bids are due. If this is not possible, an appropriate extension of the bidding period should be granted.

Faxing or e-mailing addenda shall be permissible, as long as a record is kept, verifying that faxes and/or e-mails were delivered to recipients.

3. LISTING OF SUBCONTRACTORS

At the discretion of the Owner, the Architect, or Engineer, the naming of the major Subcontractors on the bid form may be required. Major Subcontractors may be defined as performing at least 10% of the construction dollar volume of the project. The listing of major subcontractors’ prices on the bid form should not be required, but could be submitted upon a reasonable timeframe after receipt of bids, perhaps 24-48 hours.

4. TIME AND DATE FOR RECEIPT OF BIDS

In establishing the time and date for receipt of bids, it is recommended that Tuesday, Wednesday or Thursday afternoon be selected. Days before or after a holiday and during the Christmas/New Years week should be avoided. In selecting a date, if similar sized projects are being bid on that same date, another date should be selected to give contractors and subcontractors the opportunity to complete the bid proposal. All bid openings should be open to the public and read aloud. If the bid opening is not open to the public, the bid results should be provided to all bidders as soon as possible.

5. CHANGE ORDERS

1. Acceptable mark-ups for additional work should be defined in the Supplementary Conditions or the Contractor should have the option of proposing their own allowance for overhead & profit in a space on the bid form. The AIA Guide for Supplementary Conditions; Changes In The Work, is appropriate language for allowance for overhead and profit.
2. Generally, time and expense in the home office should be attributed to the mark-up for overhead and profit. Time and expense in the field, including bonds and all general conditions, should be attributed to direct cost.
3. All change orders should be processed in a timely manner, considering changes in scheduling and rework. Time guidelines for all parties to submit and process a change order should be included in the Supplementary Conditions. Also, whoever is authorized to sign change orders for the owner should be included in the supplementary conditions.
4. Whenever possible, change orders should be consolidated to minimize extra paperwork and time expense.
5. Change of time required as a result of changes in the work should be considered and processed with each individual change order.

6. ALTERNATES

1. Consideration of the contractors' estimating and bidding process should be of major importance when contemplating alternates.
2. Alternates should be minimized. Ideally, they should not be complex. The scope of work required by the alternate should be clearly defined.
3. The bidding documents should clearly state whether or not alternates will be considered in the awarding of the contract. If alternates are accepted in a contract, they should be based on the alternates the owner wants. The goal of selecting alternates should never be used to choose a specific contractor.

7. ALLOWANCES

1. Allowance items are included in contracts for two basic purposes:

1. to exert control over the selection of finish materials; and
2. to include items whose specifications may not be defined when the project goes out to bid.

1. There are two types of allowance items:

1. provides for furnishing materials only installation included in the base bid.
2. provides for furnishing and installation of materials.

1. Allowances to furnish materials only should be used if the installation and/or assembly of the item can be well defined. If the cost installation and/or assembly of an Allowance item is subject to change based on the material ultimately selected, then it should be included as part of the Allowance item.
2. The description of all Allowance items is important and adequate information should be provided in consideration of the contractor's bidding and performance of the project.
3. The use of Allowances in the contract should be minimized and reserved for those items that cannot be specified.

8. RETAINAGE

1. Generally, retainage in some form may be necessary for the protection of the owner and contractor.
2. Generally, if the owner does not require retainage, the General Contractor should not retain from subcontractors.
3. Bonding does not satisfy the purpose of retainage. Bonds will only take effect in the case of default of a contract. Retainage will help police the performance and timely completion.
4. The form and amount of retainage should be considered on an individual basis for each job and should be identified in the bidding documents.
5. Three suggested forms of retainage are:

1. 5% retainage for the entire project.
2. 10% retainage until 50% of the project is satisfactorily complete. At that point, all retainage is reduced to 5%, including the retainage for all previously processed requisitions.
3. 10% retainage until 50% completion, for each line item or work section. After 50% completion no additional retainage is withheld.

1. Upon substantial completion of the project the retainage should be reduced to 150% of the monetary value of the incomplete work.

9. BONUSES AND LIQUIDATED DAMAGES

1. Bonuses and liquidated damages should only be specified in response to particular owner’s needs. Determined amounts should reflect real savings or costs to the owner as a result of early completion or delays in the project.
2. The bidding documents should specify the amounts of proposed bonuses and damages. The specification should stipulate whether calendar days or workdays will be used in assessing bonuses and damages.
3. All delays or changes should be accurately documented, and extensions or reductions of time should be addressed in a change order.

10. PUNCH LISTS AND FINAL ACCEPTANCE

1. Punch Lists should be prepared in a timely fashion with owner, architect/engineer and contractor all in attendance.
2. Punch List items should be completed as promptly as possible and completed items should be acknowledged in writing.
3. Whenever possible, buildings or portions thereof should not be occupied until Punch List items have been completed or accepted.
4. Once the Punch List is reduced to a few items, the cost and time required to complete each item should be determined. Any long-term items and costs related thereto should be isolated. The remainder of the contract, including retainage, should be paid in full.
5. Deficiencies that occur in work previously found acceptable should be promptly corrected as warranty items, without causing a delay in the issuance of final payment.

11. INSURANCE AND BOND FORMS

It is generally recognized that the AIA documents, "Owners Instructions Regarding the Construction Contract, Insurance and Bonds, and Bidding Procedures " "Bid Bond," and "Performance Bond and Payment Bond," are accepted as forms which will adequately serve the needs of all parties involved.

12. SPECIFICATION ARRANGEMENT

It is strongly recommended that all building construction specifications be written in the Construction Specification Institute format. In addition it is noted that CSI and AIA each produce master specifications which are useful as a guide in specification preparation.

Consistency in format and preparation of specifications is a great assistance to all parties involved.

13. SCALE AND ARRANGEMENT OF DRAWINGS

The Scale and Arrangement of Drawings should be thoughtfully considered. Scales should be appropriate for clearly and accurately representing the scope of work required and producing drawings suitable for both bidding and construction purposes.

14. RELEASE OF LIENS

1. Requirements for release of lien should be addressed within the contract, and, when applicable, bid documents. They should include:

1. Who they are required from
2. When they are required
3. The form of release(s) required

2. Progress lien releases from the general contractor should typically be provided with each of the general contractor’s requisitions.
3. Progress and lien releases from subcontractors and vendors should not typically be required for subcontractors and vendors who are providing less than some agreed upon value of the contract. Final lien releases from subcontractors and vendors should not typically be required or subcontractors and vendors who are providing less than some agreed upon total value of the contract.
4. If the general contractor is required to provide progress lien releases from subcontractors and vendors, then sufficient time must be allowed to provide them. Specifically, when subcontractor and vendor releases are required to be submitted in conjunction with the general contractor’s requisition, such releases shall cover work performed two monthly requisition periods prior. Alternatively, releases covering the prior requisition period may be submitted not concurrently with the general contractor’s requisition, but immediately prior to actual payment by the owner.
5. Final lien releases from the general contractor are typically required upon completion of the project. Final releases from subcontractors and vendors may also be required upon completion of the project. In contracts where retainage is withheld, final releases of lien from the general contractor as well as subcontractors and vendors may be conditional upon receipt of retainage; in this case, the owner may elect to make final payment to the subcontractors and vendors by two-party check.

15. NEGOTIATING WITH THE LOW BIDDER

In a competitively bid procurement process (open or select list), unless specified otherwise in the bid documents, the award should go to the lowest responsible bidder. If bids received are higher than the budget, the owner and architect should:

1. Negotiate with the low bidder to see if the reduction needed to get to the budget can be obtained.
2. If after negotiations and price deductions they are unable to arrive at an acceptable budget and the low bidder feels he can do no more, the negotiations should stop and the owner and architect may talk with the second low bidder.
3. If the owner and architect are not successful with the second low bidder then they should redesign and re-bid the project.