Attachment #02

Price Validation – CM/GC

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Price Validation – CM/GC

1) Introduction:

The paper outlines the processes the Tollway will use to validate the CM/GC Contractor’s cost estimate on CM/GC projects during Phase One preconstruction at formal pricing milestones where the CM/GC Contractor develops their cost model and negotiates a Guaranteed Maximum Price (GMP) or lump sum with the Tollway for each construction package via a Phase Two Amendment. For the remainder of this document, the term Phase Two Amendment price or bid will be used to signify either a GMP or lump sum price or bid from the CM/GC Contractor.

One of the most critical steps in successfully validating the CM/GC Contractor’s Phase Two Amendment price on a CM/GC contract is to require the CM/GC Contractor to submit their estimate for the cost of the work at logical milestones as design progresses. This allows the Tollway to compare the CM/GC Contractor’s estimate for the work with the costs estimated by the Independent Cost Estimator (ICE). Comparing the CM/GC Contractor’s estimate with the ICE’s estimate at pricing milestones allows the Tollway to review and resolve pricing disagreements early in the CM/GC process, rather than wait until the end when the Phase Two Amendment bid is submitted.

Estimates provided by the CM/GC Contractor during pricing milestones are non-binding and represent their estimate to perform the work as reflected at the respective design milestone.

Although non-binding, the CM/GC Contractor’s estimates are considered a good faith estimate of construction costs and assumes that prices for items of work will not change significantly unless the scope of work changes. The final binding Phase Two Amendment bid is submitted when the design is sufficiently developed to the point where the work can be priced with an acceptable level of certainty and risk. This is usually somewhere between the 90% and 100% design development level.

Each of the tasks in the price validation process are described in detail below.

1.1 Develop Estimating Cost Model (Task 1):

Successful price justification in the CM/GC process relies on thoroughly documenting the basis that is used by the estimators to price the work. Detailed documentation is to be de-veloped and maintained to capture a history of how scope and risk elements evolve over Phase One preconstruction. The CM/GC Contractor will be expected to be open and trans-parent about its approach to pricing the work and its intended means and methods. A suc-cessful CM/GC process also relies upon an “open book” cost estimating process. All Major

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Participants will be required to adhere to the CM/GC Contractor cost estimating process as referenced throughout this document. The CM/GC Contractor will be required to develop an estimating cost model and will be responsible for documenting the basis for its estimating model at each pricing milestone. The Tollway plans on fostering a cooperative Phase Two Amendment price negotiation with intensified effort on risk identification and mitigation dur-ing Phase One preconstruction. With the early involvement of a CM/GC Contractor, the Toll-way expects they will be able to provide detailed and reasonable suggestions to minimize cost and schedule risk for both the Tollway and the CM/GC Contractor.

1.1.1 Develop Schedule and Approach to Estimating

The Tollway Project Manager, Designer, CM/GC Contractor, and ICE will develop a planning schedule to facilitate that most efficient approach to providing a series of cost estimate submissions during Phase One preconstruction of the project. This schedule will consider the number of design packages, their completeness, and the estimating resources expected to prepare the estimate submissions.

1.1.2 Estimate Coordination Meetings (Task 1A)

The Tollway Project Manager, Designer, CM/GC Contractor, and ICE will hold regular estimate coordination meetings to plan relevant aspects of the cost estimate organ-ization and break-down for a specific scope of work. The intent of these meetings is to have the ICE concur, when possible, with the CM/GC Contractor’s estimating model and provide common ground for later negotiations between the Tollway and the CM/GC Contractor. Topics to be discussed during these estimate coordination meetings focus on key assumptions used to price the work and may include labor and equipment rates, estimate work breakdown structure (WBS), construction schedule, subcontractor and material plug prices, risk identification and mitigation, value engi-neering concepts and constructability suggestions, escalation, commodities, suppli-ers and fabricators, long-lead time items, limitations of operations, crew sizes, type of equipment proposed to perform the work, shifts per day, hours per shift, risk as-sumptions, assignment of risks, assumed weather delays, holidays or special events, material costs, the planned method of measurement and basis of payment, and a description of the CM/GC Contractor’s planned “means and methods” for construct-ing the project.

1.1.3 Maintain Integrity of the Independent Cost Estimate and Confidentiality Throughout Phase One preconstruction of the project, including during the estimate coordination meetings, the CM/GC Contractor may share certain information with

3 | P a g e 6 / 3 0 / 2 0 2 6 the ICE to progressively facilitate estimate reconciliation, including the materials out-lined in Section 1.1.2. When sharing estimating information, the Tollway uses the ex-pertise of the ICE to help review the CM/GC Contractor’s estimating assumptions.

The ICE can factor such information into their estimating assumptions but ultimately uses their own independent judgement to estimate the work. To maintain the integrity and independence of the independent cost estimate, the ICE will use discretion when discussing any cost related aspects of their estimate with the CM/GC Contractor throughout Phase One preconstruction. The Tollway Project Manager will confer with the Tollway’s Alternative Delivery Program Manager regarding what information may be shared between estimating parties. To help preserve the ICE’s independence and minimize influence, the CM/GC Contractor and the ICE should not discuss their as-sumed production rates and crew compositions until reconciliation (see Section 1.7).

1.1.4 Develop Milestone Construction Schedule (Task 1B)

The CM/GC Contractor will prepare / update a CPM construction schedule reflecting the sequencing and staging of the work for the Tollway to review and concur ahead of the estimating efforts. The Tollway and CM/GC Contractor will strive to reach agree-ment on a construction schedule during Phase One preconstruction of the project.

As construction activity durations, schedules, and constraints are integral to the es-timating efforts, the current version of the construction schedule, as agreed upon by the Tollway and CM/GC Contractor, will be shared with the ICE as a supporting docu-ment at each pricing milestone. The ICE will review this construction schedule and use it as the basis for estimates and the Phase Two Amendment bid, including the overall project duration. However, the ICE will use independent judgment when as-suming individual activity durations, productivity rates, or crew compositions, and is not obligated to use the same assumptions used by the CM/GC Contractor in its schedule. The ICE will maintain their independence regarding how individual work operations are estimated. Alternatively, to encourage independence early in the pro-cess, the Tollway’s Alternative Delivery Program Manager may elect to have the ICE develop their own construction schedule in parallel with the CM/GC Contractor’s schedule for the initial pricing milestone. In this case any differences should be dis-cussed as part of the reconciliation process outlined in Section 1.7.

1.2 Prepare Design Milestone Review Package (Task 2):

The Designer will prepare the design milestone review package for each pricing milestone and provide it to the Tollway Project Manager for distribution to the CM/GC Contractor and ICE. Each design milestone review package should include plans, proposed pay items, pro-posed method of measurement/payment definitions, and any specifications appropriate for

4 | P a g e 6 / 3 0 / 2 0 2 6 the level of design. The Tollway may elect to have the plans prepared by the Designer to re-flect customized approaches based on requests from the Contractor to help prepare its es-timate (such as the CM/GC Contractor’s approach to phasing, staging, or maintenance of traffic). As the plans progress between milestones, it may be necessary to redefine the method of measurement/payment definitions. Each design milestone review package will include a summary report, prepared by the Designer, that outlines significant changes to the plans between milestone submissions. Changes to specifications between milestone sub-missions will be identified by tracking changes within the document.

1.3 Design Review Workshop (Task 3):

The Tollway Project Manager will schedule a design review workshop with the Designer, CM/GC Contractor, ICE, technical review staff from the Tollway, and other external oversight reviewers. The design review workshop should take place following the issuance of the de-sign milestone review package. Prior to the workshop, each party must be allowed sufficient time to review the plan package. The objectives of the design review workshop are to: (1) allow all parties to understand the work being estimated; (2) allow all parties to provide feed-back on the constructability of the plans; (3) discuss assumptions on means and methods and construction staging or sequencing of work that affects how the project will be esti-mated and ultimately bid; (4) define and agree upon the scope of work in a bid item; and (5) allow all parties to identify any errors, omissions, ambiguities, or other items that need to be corrected in the plan package.

1.3.1 Incorporation of Comments from the Final Pricing Milestone Review Following the review of the final milestone plans (or the final plans used as the basis of the CM/GC Contractor’s Phase Two Amendment price if earlier than 100%), the Designer will address (and incorporate where appropriate) comments received dur-ing the final Design Review Workshop, repackage the plans and specification, and re-submit to the Tollway. These plans will be used as the basis for the CM/GC Contrac-tor’s Phase Two Amendment bid.

1.4 Risk Workshop (Task 4):

The Tollway Project Manager will schedule a formal risk workshop that includes, as a mini-mum, the following parties: Designer, Contractor, ICE, and Tollway Technical Experts who have insight into project risks. Other key stakeholders, third parties, or subject matter ex-perts are included at the discretion of the Tollway Project Manager. The risk workshop should be scheduled in conjunction with the design review workshop or soon thereafter. During this

5 | P a g e 6 / 3 0 / 2 0 2 6 meeting, the Tollway and CM/GC Contractor will agree on how risks and contingencies are quantified and assigned, and how risk is influencing the estimate. The ICE participates in this discussion to understand risk and contingency assignment. A project Risk Register will be maintained and updated as an output to the risk workshop at each pricing milestone. Ad-justments to the plan package may be needed based on discussion at the risk workshop.

During early risk workshops, a significant amount of time may be spent identifying risks and assigning time and cost impacts for each risk. During later workshops, the focus of the meet-ings will be to identify any new risks that have been encountered and update the Risk Regis-ter for risks that have been retired or where the time and cost impact have changed. The goal is to ensure all estimators have a clear and consistent understanding of how risks are pro-posed to be managed within the contract. At each pricing milestone, the Risk Register should be updated to document which party is responsible for managing and pricing the risk. Risks can be priced and managed in several ways:

Risks that are assigned to the Tollway and covered as part of the owner’s contingency budget.

Risks that are assigned to the CM/GC Contractor and included in the CM/GC Con-tractor’s Phase Two Amendment bid.

Risks that are shared or paid for as provisional bid items or allowances within the Phase Two Amendment bid.

1.4.1 Incorporation of Comments from the Final Pricing Milestone Review Although the project team conducts formal risk workshops at each pricing milestone, risk management should be continuously applied throughout the life of the project.

Proactive risk management is central to successful CM/GC contracting. The CM/GC environment provides the unique opportunity for the Tollway to leverage the Contrac-tor’s experience and knowledge of construction risks during Phase One preconstruc-tion of the project to identify potential risks, develop mitigation strategies, and agree upon an approach to manage and price the risk that results in the best possible out-come for the project. The Tollway Project Manager is responsible for leading the pro-ject team in this effort. Discussion on risk management, mitigation, and pricing strat-egies should be built into every meeting. Although the Risk Register is formally up-dated during pricing milestones, the Tollway Project Manager should verify that the project team refers to it regularly, encourage the team to follow up on risk mitigation strategies, and confirm that the Designer is incorporating feedback from the CM/GC Contractor in the project plans and specifications.

1.5 Prepare Milestone Estimate (Task 5):

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The following subtasks are performed with each pricing milestone estimate submission.

1.5.1 Quantity Reconciliation Workshop (Task 5A)

A quantity reconciliation workshop should take place after the design and risk work-shops but prior to submitting estimates. The goal of the quantity reconciliation work-shop is to compare quantity take-offs between the estimating parties, and when pos-sible, reconcile differences and agree upon common quantities to be used as the ba-sis for the estimate. The CM/GC Contractor and the ICE each independently compile quantities into a spreadsheet that is shared with all estimating parties. The Tollway, CM/GC Contractor, ICE, and Designer attend the workshop. Agreed-upon quantities are documented in the spreadsheet and distributed to all estimating parties following the meeting. Multiple meetings may be required to accomplish quantity reconcilia-tion depending on the size and complexity of the design package.

1.5.2 Estimate Workshop (Task 5B)

The Tollway Project Manager will schedule an estimate workshop at each milestone.

This workshop is scheduled after the design review, risk, and quantity reconciliation workshops but prior to estimate submission. The purpose of this meeting is to allow the estimating parties to discuss final assumptions related to the means, methods, risks and key assumptions that will be used to price the work.

1.5.3 Subcontracted Vendor Pricing

Pricing subcontracted work is a critical part of verifying a fair and reasonable price in the CM/GC process because in many cases, subcontracted work (which includes both subcontractors and vendors) can make up 50% (or more) of the Phase Two Amendment bid. This process includes verifying that the CM/GC Contractor has pro-vided adequate subcontractor and vendor outreach to obtain competitive quotes for all subcontracted work. During early stages of the estimating process, it is necessary to use “plug” prices or a combination of plug prices and quotes to estimate the cost for subcontracted work. Plug prices are estimated costs provided by the CM/GC Con-tactor based on relevant past experience or preliminary estimates based on non-binding discussions they have with subcontractors or vendors.

Ultimately, all plug pricing will be replaced with actual quotes. This replacement is done either at the final pricing milestone or after award during the buyout process, depending on the approach the Tollway allows. When using plug pricing for

7 | P a g e 6 / 3 0 / 2 0 2 6 subcontracted work, the ICE will validate the CM/GC Contractor’s suggested plug pricing and may ask the CM/GC Contractor for additional justification if they feel the prices do not reflect fair market value for the work. “Buyout” occurs when the Contractor issues purchase orders and signs a subcontract with subs for a particular trade package (e.g., paving, signing, rebar purchase). Buyout can occur shortly after the execution of the Phase Two Amendment but also can occur during the construction phase closer to the timeframe when the sub or vendor is scheduled to perform the work.

To ensure competitive pricing, the CM/GC Contractor is expected to make a good faith effort to solicit a minimum of three quotes for all subcontracted work and for all material suppliers, except for specialty items. If obtaining three quotes for any sub-contracted work is not feasible, the CM/GC Contractor will be required to use a trans-parent and collaborative process that explains to the Tollway why three quotes are not obtainable. The Tollway may also request that the CM/GC Contractor look at self-performing the work, if possible, to help ensure competitive pricing. The CM/GC Con-tractor may use a system of its choosing to receive and collect quotes from subcon-tractors and vendors. However, all quotes received by the CM/GC Contractor will be shared with and made available to the Tollway and ICE. When preparing subcontrac-tor bid packages, the CM/GC Contractor will discuss with the Tollway where it may be beneficial to engage the Tollway in reviewing the scope and division of work outlined in the subcontractor bid packages. Is this way, the Tollway has the opportunity to pro-vide input and concur with scope that is defined in the bid packages, and the CM/GC Contractor and Tollway can work together to verify that the subcontracted work re-flects a correct understanding of the work.

If the CM/GC Contractor has subcontractors working on their team during Phase One that will be submitting quotes for any of the Phase Two work, the CM/GC Contractor shall ensure all subcontractors quoting have the same information shared with their Phase One subcontractor.

1.5.3.1 Subcontractor Selection

In general, the CM/GC Contractor is expected to select the lowest quote to per-form the work. However, there are justifiable exceptions. The CM/GC Contractor

8 | P a g e 6 / 3 0 / 2 0 2 6 will discuss all exceptions with the Tollway. The following are some common ex-amples of situations where the CM/GC Contractor may decide to select a sub-contractor or vendor that is not the lowest quote:

Accounting for or adjusting a quote for exclusions. It is common for subcon-tractors to include various exclusions in their quotes. The prime Contractor must then account for the cost to cure these exclusions in its price, which can change the result of the bid analysis. For example, one subcontractor may in-dicate the prime Contractor is responsible for hauling off spoils, where an-other subcontractor may include it in their scope and fee.

Electing to use a non-low quoting subcontractor to mitigate the threat of per-formance risk based on history of past performance with that particular sub-contractor. The CM/GC Contractor should provide documentation and justifi-cation to the Tollway to support any such claims.

Selecting a non-low quoting subcontractor to meet the project’s DBE commit-ment, if any.

The ICE should participate in discussions about final subcontractor selection, but as noted earlier, the ICE is not required to use the same quotes as the CM/GC Contractor based on independent judgement.

630 ILCS 10/50 Section 50 Construction Manager / General Contractor Contracts in (b)(2), requires that during the first phase of the contract, the Construction Man-ager/General Contractor shall use a competitive bidding process to procure sub-contracts for at least the minimum percentage of construction work specified in the Request for Proposals, provided that compliance with this requirement shall be based on an estimated cost for the construction work approved by the Trans-portation Agency before the start of the competitive bidding process; and the Construction Manager/General Contractor may not use subcontracts with its wholly or partially owned subsidiaries, parent companies, or affiliates to satisfy this obligation.

For the portion of the work subject to competitive bidding, the CM/GC Contractor shall conduct the competitive bidding via a process approved by the Tollway and the lowest bidder shall be selected. If the CM/GC Contractor has subcontractors working on their team during Phase One that will be submitting bids for any of the

9 | P a g e 6 / 3 0 / 2 0 2 6 work associated with the competitive bidding, the CM/GC Contractor shall en-sure all bidders have the same information shared with their Phase One subcon-tractor. In addition, in Phase Two, the CM/GC Contractor will not be allowed to change a subcontractor selected with the lowest bid in the Phase One competi-tive bidding process without approval from the Tollway.

1.5.3.2 Subcontractor Plan

The CM/GC Contractor is responsible for preparing a subcontracting plan and managing its Subcontractors and vendors to complete the work in accordance with the Contract Documents, within budget and on-time. The CM/GC Contractor will provide a subcontracting plan at each pricing milestone, which is progres-sively elaborated throughout the project. The Tollway reviews and approves the subcontracting plan. At a minimum, the CM/GC Contractor will provide the fol-lowing as part of the subcontracting plan at each milestone:

A description of the subcontracting process and selection criteria, including how the subcontractor and vendor selection process is fair and transparent to all potential bidders and provides an environment that fosters open competi-tion.

A description of the CM/GC Contractor competitive bidding process, including when it will occur, how the advertising will occur, the distribution of the adver-tisement, how bids will be rejected and any unique aspects of the approach.

A description of the work that will be self-performed and what items of work will be subcontracted.

A solicitation log demonstrating satisfactory solicitation coverage, including a summary of which subcontractors/vendors were contacted, which subcon-tractors/vendors did/did not submit a price, and which subcontractor/vendor was selected.

Bonding approach for Subcontractors.

Summary of the risks, exclusions, support services, and other adjustments

(e.g., bond) required for the selected quote.

Outline of how quotes are distributed into the various bid items.

Best-value documentation and justification where the low bidder was not the one selected.

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Summary of outreach efforts to engage DBE/VOSB providers in the solicitation process, what items of work are currently planned to be subcontracted to a DBE, and the overall plan to achieve the DBE/VOSB goal.

Tracking progression of subcontractor/vendor quotes between pricing mile-stones and explanation about upward or downward movement between mile-stones submissions (such as changes in scope or changing to a DBE/VOSB subcontractor/vendor) when quotes are used as the basis for estimating the Phase Two Amendment price.

During project execution when the CM/GC Contractor is actively soliciting quotes, the Tollway should review the CM/GC Contractor’s subcontract-ing plan to verify that the CM/GC Contractor is in compliance.

1.5.3.3 Minority / DBE / VOSB Goals:

As previously discussed, the Tollway Project Manager and Alternative Delivery Program Manager should work with the Tollway’s Department of Diversity and Strategic Development (DOD&SD) to establish the DBE/VOSB goals that applies to Phase Two construction of the project so that all estimating parties understand the expectation and have accounted for the goal in their estimate. If the Tollway progresses the work using multiple pricing packages, a DBE/VOSB goal or goals may be established for each pricing package based on the individual characteris-tics of the work included with that package. The final Phase Two amendment should include the DBE/VOSB goal that is used as the basis for the Phase Two Amendment bid. The Projects DBE/VOSB goal(s) should be identified by the Toll-way well before final plans are developed and should be a topic of discussion with the CM/GC Contractor throughout the price development process and during each pricing milestone to confirm the CM/GC Contractor’s ability and commit-ment to meet the goal.

1.5.3.4 Approaches to Estimating Subcontractor Contingency

When the Phase Two Amendment bid is negotiated based on actual quotes, there is a lag between the time when the quote (used as the basis for negotiating) is received and when the work is performed. Although some subcontractors and vendors may include the risk of escalation in their quotes, most put exclusions on their quotes, such as putting limits on escalation or only honoring their quoted

11 | P a g e 6 / 3 0 / 2 0 2 6 prices for a limited period of time. As a result, the CM/GC Contractor must ac-count for this risk in its Phase Two Amendment bid. Accounting for this risk could include adding escalation to subcontractor and vendor prices, adding contin-gency in the Phase Two Amendment bid, or a combination of both. The ICE and CM/GC Contractor should openly discuss this risk, including discussing an ap-proach to carrying escalation on subcontractor and vendor prices. However, ulti-mately, the CM/GC Contractor and ICE each use their own independent assump-tions in their respective estimates.

This is the standard approach for estimating subcontractor and vendor costs on Illinois Tollway CM/GC projects.

Alternatively, to avoid having the CM/GC Contractor add risk contingency to its Phase Two Amendment bid to account for speculation on subcontractor and ven-dor price escalation, the Tollway may elect to include contract terms that allow the Phase Two Amendment bid to be negotiated using plug prices for subcontrac-tor trade packages (or a combination of plugs supplemented by some quotes to provide a basis for the plugs). The CM/GC Contractor is then allowed to draw funds from the bid contingency if quotes exceed the estimated plug prices during the buyout process. Procedures for this approach are covered in more detail in the next subsection.

The Tollway Project Manager will consult with the Tollway’s Alternative Delivery Program Manager to evaluate which approach to use.

1.5.3.5 Subcontractor Cost Estimating Using a Buyout Approach with Bid Contingency:

For CM/GC projects (as directed by the Tollway Alternative Delivery Program Man-ager), where the CM/GC Phase Two Amendment caps the cost of construction at a maximum (not-to-exceed) value and payment is based on actual costs during construction, subcontractor, and vendor costs in the Phase Two Amendment bid can be based on plug prices (or estimated value). The CM/GC Contractor may in-formally solicit some quotes to help establish a basis for any subcontractor and vendor plug prices used in the Phase Two Amendment bid, but in general, trade packages are based on estimates established by the CM/GC Contractor. Subcon-tractor and vendor plug prices should be validated by ICE. Later during the “buy-out process”, the CM/GC Contractor solicits quotes from subcontractors and

12 | P a g e 6 / 3 0 / 2 0 2 6 vendors, and the quotes are compared to the plugs used to estimate the Phase Two Amendment bid. Buyout occurs during the construction phase after the Phase Two Amendment has been executed and typically closer to the timeframe when the subcontractor or vendor is to perform their work.

The CM/GC Phase Two Amendment should include provisions for a Bid Contin-gency Pool from which the CM/GC Contractor can draw funds when actual buyout quotes exceed the estimated plug. Conversely, when quotes are less than the plugs used to estimate the Phase Two Amendment price, the savings accrue back into the Bid Contingency Pool. At the end of the project, savings in the Bid Contin-gency Pool accrue to the Tollway. This approach puts additional administrative re-sponsibilities on the Tollway because it requires that the Tollway use buyout con-tingency accounting during construction of the project to track quotes received during buyout and compare them with plug values to estimate the Phase Two Amendment bid and periodically reconcile differences. When a Bid Contingency Pool is used, the same recommendations and guidelines presented earlier in this section regarding expectations for solicitation coverage and selection process should be followed at the time when the CM/GC Contractor solicits quotes after award during the buyout process. The CM/GC Phase Two Amendment should contain provisions related to buyout contingency accounting.

1.5.4 Subcontractor and Vendor Selection Meeting (Task 5C)

Prior to submitting estimates, the CM/GC Contractor will facilitate a subcontractor and vendor selection meeting with the Tollway and the ICE. The CM/GC Contractor will use this meeting to discuss the quotes, explain how the quotes are distributed to the bid items, clarify any support services required for each subcontractor, and re-view any relevant pricing exclusions from the quotes. During this meeting, the CM/GC Contractor will review solicitation efforts and demonstrate to the Tollway that it has solicited the minimum number of quotes from subcontractors/vendors, where feasi-ble. When pricing subcontracted work, the ICE is encouraged to coordinate with the CM/GC Contractor with the goal of agreeing on common subcontracting and vendor assumptions. However, the ICE is not required to use the same quotes as the CM/GC Contractor and may elect to use their own approach to estimating subcontracted pricing, which may include the following options:

1. Use a Different Quote: The ICE may use a different quote from what is used by the CM/GC Contractor. If the ICE uses a different quote, they should be prepared to dis-

13 | P a g e 6 / 3 0 / 2 0 2 6 cuss and justify their choice openly with the CM/GC Contractor during reconcilia-tion. Although the ICE will be expected to use the lowest quote for the work, the es-timating teams will have open discussion during the subcontractor/vendor selection meeting about best value selection, weighing factors such as risks (including sub-contractor performance or schedule risk), exclusions, DBE/VOSB participation, and support services required for individual quotes.

2. Estimate the Work as Self-Performed: The ICE may price the subcontracted work as self-performed. In general, the ICE will not generate independent cost estimates for the work that is to be competitively bid within the subcontracted scope. However, they will not be precluded from pricing the work as self-performed if they believe that a lower price for the work can be achieved by self-performing the work. The Tollway Project Manager will need to make sure any competitive bidding requirements con-tained in the Request for Proposals (RFP) is adhered to.

3. Use Independent Judgement: The ICE may use subcontractor and vendor pricing based on their experience and independent judgement. In this case, they should be prepared to discuss and justify their price with the CM/GC Contractor during recon-ciliation and must demonstrate that their price is based on market conditions for the project area, rather than basing their pricing on historic values or average unit bid prices.

4. Make Recommendations on Alternative Subcontractors/Vendors for Considera-tion: The ICE may make recommendations to the CM/GC Contractor on the use of alternate subcontractors and vendors not considered by them. This option should be used on a limited basis. If the ICE has concerns that the CM/GC Contractor’s solici-tation outreach effort was not satisfactory, they will discuss this openly with the CM/GC Contractor and Tollway prior to estimate submission and have open discus-sion with the CM/GC Contractor where they suggest alternative choices for subcon-tractors/vendors that the CM/GC Contractor had not considered. The CM/GC Con-tractor will be under no obligation to use any recommendations provided by the ICE, and ultimately, the CM/GC Contractor is responsible for selecting the subcontractors they use to perform the subcontracted work. During the subcontractor and vendor selection meeting, the CM/GC Contractor will provide a list of subcontractors/ ven-dors contacted during the meeting to document the solicitation outreach efforts for the ICE and help them understand any subcontractors/vendors that were contacted but unresponsive. The ICE will not contact these subcontractors and vendors directly to try to solicit pricing on their own unless otherwise directed by the Tollway Project Manager after consulting with the Tollway Alternative Delivery Program Manager.

1.5.5 Submit Milestone Baseline Schedule (Task 5D)

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Prior to estimating, the CM/GC Contractor will share a copy of the proposed con-struction schedule with the ICE and Tollway. All estimating parties will use this sched-ule as the basis for the milestone estimate / Phase Two Amendment bid. More detail on the process to be followed for reviewing and concurring with the CM/GC Contrac-tor’s proposed construction schedule is outlined in Section 1.1.3. It may be neces-sary for the CM/GC Contractor to update its schedule after estimate submission to sync up with the durations and assumptions used in its estimate.

1.5.6 Finalize and Submit Estimates (Task 5E)

Following the milestone estimate workshop and subcontractor/vendor selection meeting, the following estimates are finalized:

• CM/GC Contractor Estimate: For pricing milestone estimates, the CM/GC Contractor prepares its “good faith” estimate at each pricing milestone. For the final pricing milestone, the CM/GC Contractor prepares the Phase Two Amendment bid, which represents its contractual price, or bid, to construct the work. After submission, the CM/GC Contractor’s detailed estimate for their Phase Two Amendment bid is to be shared with the Tollway.

Independent Cost Estimate: The ICE prepares its estimate for the work at each pricing milestone. The ICE is transmitted exclusively to the Tollway and is held “in the blind” to all other parties ― until only the Tollway releases it. The ICE will be used in comparison to the CM/GC Contractor’s estimate as part of the finalization of the Phase Two Amendment bid process.

The ICE and CM/GC Contractor will each submit their estimates for the work directly to the Tollway Project Manager. When the CM/GC Contractor submits its estimate, it also submits its open book cost model that documents the basis for the estimate and the construction schedule (used as the basis for the estimate).

The Designer prepares an estimate for CM/GC projects at pricing milestones, how-ever the Tollway does not intend to share the Designer estimate with the CM/GC Con-tractor or ICE.

1.5.6.1 Guidelines for Accepting Price Before Final Design is Complete:

If the Tollway and CM/GC Contractor agree that the project plans and specifica-tions are sufficiently defined to construct the project before final design is com-plete, and both parties are comfortable proceeding with a Phase Two Amendment given the remaining risks and uncertainties, the Tollway may elect to proceed with

15 | P a g e 6 / 3 0 / 2 0 2 6 negotiating the Phase Two Amendment bid based on plans and specifications that are not 100% complete. In this case the Tollway may still require the plans and specifications be completed to a 100% level and any changes from the ver-sion used to negotiate the Phase Two Amendment bid that the Tollway wants in-corporated in the project would need to be negotiated with the CM/GC Contrac-tor.

1.6 Preparation of Variance Report (Task 6):

The Tollway’s Alternative Delivery Manager will prepare a summary variance report compar-ing the CM/GC Contractor’s estimate to the ICE. To preserve the integrity and independence of the ICE estimate, the variance report shared with the CM/GC Contractor will not reveal the ICE’s pricing (otherwise known as a “blinded variance report”), but will note whether the CM/GC Contractor’s estimate for each line item is “within acceptable range” or “outside ac-ceptable range” of the ICE. The Tollway Project Manager, with assistance from the ICE, will direct and oversee the estimate reconciliation process. The blinded variance report will be shared with the CM/GC Contractor in advance of reconciliation meetings.

1.7 Review Milestone Estimate and Reconcile (Task 7A and 7B):

After the variance report has been finalized, the Tollway will review the CM/GC Contractor’s estimate or Phase Two Amendment bid, the variance report, and the CM/GC Contractor’s open book cost model. The Tollway involves the ICE to assist with this process or other spe-cialized experts based on the scope of work being estimated. Early review efforts may in-clude discussions with the CM/GC Contractor regarding focus areas of concern by the Toll-way.

The Tollway Project Manager will schedule and facilitate an estimate reconciliation meeting with the CM/GC Contractor and the ICE. During the reconciliation meetings, the ICE and the CM/GC Contractor will attempt to reconcile pricing differences. The reconciliation process gives the CM/GC Contractor, Tollway, and ICE opportunities to understand each other’s per-spectives about pricing assumptions, risk assignment, and construction means and meth-ods. The goal is to reconcile pricing differences so that the Phase Two Amendment bid is determined to be fair and reasonable, and the Tollway can execute a Phase Two Amendment.

It is the responsibility of the Tollway Project Manager to help ensure the ICE remains inde-pendent during reconciliation meetings.

The Tollway is encouraged to involve representation from the Designer in the reconciliation meetings. Bringing the Designer into the discussions can help provide input and clarification to assist the Tollway Project Manager in resolving differences that relate to the interpretation

16 | P a g e 6 / 3 0 / 2 0 2 6 of the plans and specifications or the scope of work. It also allows the Designer to hear dis-cussions on what may need to be changed in the plans and specifications to clarify scope or address risk assignment (such as moving work from the lump sum to a provisional bid item).

Open Book Process: As part of the CM/GC open book estimating environment during the reconciliation process, the Tollway asks the CM/GC Contractor to share or review with them certain materials containing information that clarifies how the proposed pricing was derived to help reconcile differences between the ICE’s and CM/GC Contractor’s estimates. All ma-terials of this nature should be held in confidence by the Tollway or other parties that the Tollway allows to participate in the discussion. Price reconciliation should be limited to key Tollway project management and estimating staff that are directly reconciling differences between the ICE’s and CM/GC Contractor’s estimate. All parties participating in reconcilia-tion efforts or reviewing estimate information should be required to sign confidentiality agreements.

The Tollway and CM/GC Contractor may not be able to resolve all differences in pricing dur-ing reconciliation meetings. Should this occur, the Tollway Project Manager and CM/GC Contractor will decide to (a) acknowledge differences, move forward with design, and at-tempt to continue reconciling differences during later pricing milestones, or (b) agree that reconciliation is not possible and terminate the contract to allow the Tollway to procure the construction of the project through some other method. If there are Phase Two Amendments that have been previously executed, the CM/GC Contractor is allowed to continue that work, but the Tollway may procure the construction of future pricing packages through some other method.

1.8 Adjust Estimating Model, Schedule & Pricing (Task 8):

The CM/GC Contractor may agree upon changes to their bidding assumptions that affect pricing based on reconciliation discussions. In this case, the CM/GC Contractor adjusts its costs model, narrative, and schedule to reflect any changes and resubmit them to the Toll-way. Any pricing changes will be carried forth to the next estimating pricing milestone or Phase Two Amendment bid. During the reconciliation process, the ICE may adjust their bid-ding assumptions and estimate.

1.9 Document Estimate, Estimating Basis, and Schedule (Task 9):

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The Tollway retains a copy of the CM/GC Contractor’s and the ICE’s estimate, variance re-port, estimating assumptions (including the narrative), and the CPM schedule for each pric-ing milestone. A brief report for each pricing milestone should be prepared to document the results of the pricing milestone.

1.10 Acceptance of Phase Two Amendment bid (Task 10):

1.10.1 Threshold for Accepting a Phase Two Amendment bid

The Tollway’s expectation is to get a fair market price for the work. The estimate pre-pared by the ICE establishes fair market price. The CM/GC Contractor’s Phase Two Amendment bid is considered acceptable if it does not exceed the ICE by more than 10%. If the Phase Two Amendment bid exceeds the ICE’s estimate by more than 10%, the Tollway Project Manager and the Tollway’s Alternative Delivery Program Manager enter into the process of reconciliation or proceed with rejecting the Phase Two Amendment bid. In most cases, the Tollway will not recommend to the Tollway Board of Directors acceptance of a CM/GC Contractor’s Phase Two Amendment bid that is more than 10% higher than the ICE estimate.

1.10.2 Phase Two Amendment bid within Acceptable Range (Taks 10A) If the CM/GC Contractor’s Phase Two Amendment bid is within the allowable range for acceptance (as defined in 1.10.1) and is within the Tollway’s budget, the ICE pre-pares a memo to the Tollway Project Manager describing their analysis of the CM/GC Contractor’s Phase Two Amendment bid, and the Tollway audits the following as-pects:

Review for unbalancing or other irregularities.

Confirm that the CM/GC Contractor open book cost model backup is com-plete and that it matches the Phase Two Amendment bid.

Review the CM/GC Contractor’s baseline construction schedule and con-firm it matches the assumptions used to develop the Phase Two Amend-ment bid.

Any deficiencies to the requirements above must be remediated before presenting the Phase Two Amendment bid to the Tollway Board of Directors for their approval.

1.10.3 Phase Two Amendment bid Outside Acceptable Range (Task 10B) If the Phase Two Amendment bid exceeds the ICE by more than the allowable range, or contains irregularities, the ICE will prepare a memo describing their findings for the Tollway. The Tollway will review the details and proceed with reconciliation ef-forts in an attempt to negotiate a fair and reasonable price for the work. If the Phase

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Two Amendment bid is not acceptable due to irregularities, the Tollway Project Man-ager will focus the reconciliation meeting on bringing the irregularities to the CM/GC Contractor’s attention so that it may resubmit its Phase Two Amendment bid to ad-dress the irregularities. If reconciliation is not possible, the Tollway will present the results to the Tollway Executive Director and proceed as directed. If the Tollway Ex-ecutive Director rejects the CM/GC Contractor’s Phase Two Amendment bid, the Tollway Project Manager proceeds with the process outlined in Section 1.12 to pack-age the project for procurement using other means.

1.11 Approval to Authorize/Reject a Pricing Package Amendment (Task 11) Formal acceptance or rejection of the CM/GC Contractor’s Phase Two Amendment bid and authorization to execute a Phase Two Amendment requires approval from the Tollway Board of Directors. When a final recommendation on the CM/GC Contractor’s Phase Two Amend-ment bid at the project level (as outlined in Section 1.10.2) is prepared and the required backup materials that document the basis for the Phase Two Amendment bid have been provided to the Tollway to their satisfaction, the Tollway’s Alternative Delivery Program Man-ager will coordinate with the Tollway Board of Directors to schedule a meeting to obtain their concurrence to accept or reject the Phase Two Amendment bid and, if accepted, execute a Phase Two Amendment.

The Tollway Project Manager prepares the following documentation package for the meeting with the Tollway Board of Directors:

A) Memo from the Tollway Alternative Delivery Program Manager and Tollway Project Manager recommending acceptance/rejection of the CM/GC Contractor’s Phase Two Amendment bid.

B) Phase Two Amendment bid analysis memo(s) from the ICE.

C) Phase Two Amendment bid abstract.

D) A summary of the CM/GC Contractor’s open book estimate backup, as applicable.

E) Baseline construction schedule.

The Tollway’s Alternative Delivery Program Manager and the Tollway Project Manager attend the meeting with the Tollway Board. During this meeting, the Tollway’s Alternative Delivery Program Manager will:

A) Present the results of the pricing validation process, including demonstrating that the Phase Two Amendment bid has been validated by the ICE and is within the re-quired thresholds for acceptance.

B) Demonstrate that the CM/GC Contractor’s Phase Two Amendment bid meets the requirements for executing a Phase Two Amendment.

C) If recommending a Phase Two Amendment for an early pricing package:

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a. Demonstrate that progressing the work covered by the early pricing package is in the best interest of the project and the Tollway.

b. Demonstrate that the work constructed under early pricing package does not affect/impact adjacent areas that do not have required clearances (e.g., envi-ronmental permits, utility clearances, etc.).

c. Demonstrate that the early pricing package saves time, reduces inconven-ience to the traveling public, and/or reduces construction costs.

d. Demonstrate that the work defined in the early pricing package is stand-alone and severable.

The Tollway Board may ask questions as needed to make a determination whether or not to accept the CM/GC Contractor’s Phase Two Amendment bid. If the Board concurs with the recommendation to accept, the Tollway moves forward with executing a Phase Two Amend-ment. If the Tollway Board decides that the Phase Two Amendment bid is not acceptable, the Tollway Project Manager will notify the CM/GC Contractor, and proceed with the reconcilia-tion efforts in order to attempt to negotiate a fair and reasonable price for the work the Toll-way Board will accept.

1.12 Rejection of the Phase Two Amendment bid (Task 12)

If reconciliation negotiations do not result in an acceptable price for the work and/or the Toll-way Board rejects the CM/GC Contractor’s Phase Two Amendment bid, the Tollway will pro-cure the project/pricing package through any other lawful method. If there are early pricing packages, the CM/GC Contractor will be allowed to continue work on any Phase Two Amend-ments previously awarded. The Tollway Alternative Delivery Director will notify the CM/GC Contractor in writing regarding its decision to terminate and reprocure the work. The CM/GC Contractor’s right to appeal the decision, if any, is outlined in the RFP. The CM/GC Contrac-tor and any Major Participants of their team will be precluded from bidding on the new pro-curement.

1.15 Notice to Proceed (Task 13)

The CM/GC Contract outlines the documents and plans that must be submitted to the Toll-way prior to receiving formal notice to proceed with construction of the work authorized by the Phase Two Package Amendment. Once these plans and documents have been received and in accordance with the requirement of the CM/GC Contract, the Tollway issues notice to proceed to authorize the CM/GC Contractor to proceed with construction.

1.16 Time Frame to Reach Agreement on Price (Task 14)

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The process to reach agreement on the price for construction, from submitting the Phase Two Amendment bid to determining the acceptability, can take considerable time, depend-ing on the extent of the differences between the CM/GC Contractor’s Phase Two Amendment bid and the ICE.

The pricing milestone submittals during Phase One preconstruction are implemented so that the process to reach price agreement is streamlined. However, sufficient time should be allowed for all parties to become familiar with any changes to the design plan package since the last pricing milestone. For the Phase Two Amendment bid submission, the Tollway Project Manager and Tollway Alternative Delivery Program Manager should discuss the amount of time anticipated to reach price agreement and inform the parties involved in the Phase Two Amendment bid validation and approval process so they can commit to the timeframes and meetings required. Whenever possible, it is best to be conservative regard-ing the timeframes needed. Too little time may ultimately undermine the Tollway’s ability to ensure a fair/reasonable price is reached.

1.17 Expected Time Frame to Execute a Pricing Package Amendment

The process and timeframe to award and approve a CM/GC Phase Two Amendment is simi-lar to that for a Design-Bid-Build project – typically ranging from eight to 12 weeks from the time the Phase Two Amendment bid is submitted to the Tollway until the Phase Two Amend-ment is executed. This timeframe includes the time required for the Tollway Project Manager and the Tollway’s Alternative Delivery Program Manager obtain concurrence from the Tollway Board of Directors.

The price validation processes are shown in the figures…