RFP Redlined Medford Agreement General Conditions and Exhibit 14 Insurance Requirements.pdf

Final RFP Version January 1016, 2025

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CONSTRUCTION MANAGEMENT AGREEMENT

This CONSTRUCTION MANAGEMENT AGREEMENT (“Agreement”) is entered into this ________ day of ______________, 20__ (“Agreement Date”) by and between the City of Medford, Oregon (“Owner”) and ________________________________________________ (“Contractor”). In consideration of the mutual covenants and obligations contained herein, Owner and Contractor hereby agree as follows:

WITNESSETH:

WHEREAS, Owner intends to upgrade its Regional Wastewater Reclamation Facility

(“Project”);

WHEREAS, Owner has entered into a contract with West Yost Associates (“Engineer”), whereby Engineer was engaged to provide design and construction phase services to Owner on the Project, including the preparation of the Project’s construction documents; and

WHEREAS, Owner has determined that its best interests are served in retaining a construction manager/general contractor (“CM/GC”) to provide both preconstruction and construction services for the Project, as provided for by OAR 137-049-0690; and

WHEREAS, on or about __________________, Owner issued a Request for

Qualifications (“RFQ”) soliciting interested parties to submit a Statement of Qualifications (“SOQ”) to serve as the CM/GC for the Project; and

WHEREAS, on or about __________________, Contractor submitted an SOQ, and on or about January 23, 2024, Owner notified Contractor that it was one of the shortlisted respondents invited to respond to a Request for Proposals (“RFP”); and

WHEREAS, on or about _______________, Contractor submitted its proposal (“Contractor’s Proposal”) in response to the RFP; and

WHEREAS, on or about ___________________, Owner notified Contractor that it was the successful respondent; and

WHEREAS, on or about _________________, Owner, after negotiating the commercial terms for Contractor’s performance of the Preconstruction Services and obtaining approval from Owner’s Board of Directors, notified Contractor that it was awarded this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, Owner and Contractor hereby agree as follows:

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Article 1 Project

1.1 The Project. The Project is generally referred to as the Regional Wastewater

Reclamation Facility Upgrade, and is expected to consist of, among other things:

[INSERT AS APPROPRIATE]

Article 2 Scope of Work

2.1 Scope of Work. Contractor shall execute the Work, as described in the General

Conditions of Contract Documents, except as specifically indicated in the Contract Documents to be the responsibility of others. For ease of reference, the Work is generally categorized as: (a) Preconstruction Services; and (b) Construction Services.

2.2 Preconstruction Services.

2.2.1 General. Contractor shall provide the Preconstruction Services specifically described in Exhibit 2.2.1 (“Scope of Preconstruction Services”), as may be modified under Article 11 of the General Conditions of Contract.

2.2.2 Standard of Care. Contractor’s standard of care in performing the

Preconstruction Services will be the care and skill ordinarily used by construction contractors providing similar services on projects similar to this Project.

2.2.3 No Responsibility for Design. Notwithstanding anything to the contrary in this Agreement, Contractor is not responsible for providing, nor does Contractor control, the Project design and contents of the design documents, including but not limited to the Drawings and Specifications. By performing constructability, value engineering and other reviews of the design as part of the Preconstruction Services, Contractor shall not be deemed to assume responsibility or liability, in whole or in part, for the Project design and contents of the design documents, or for any of the contractual or customary responsibilities or duties of a design professional. For the avoidance of doubt, this Section 2.2.3 shall not be construed to affect Contractor’s responsibilities if the Drawings and Specifications specifically delegate any portion of the design to Contractor.

2.2.4 Construction Activities at the Site. As of the Agreement Date, the

Preconstruction Services do not include the performance by Contractor of any construction activities (e.g., Site clearing, demolition, or construction of permanent Work) at the Site. If Owner and Contractor determine that the best interests of the Project would be served by having Contractor perform one or more Early Work Packages involving construction activities at the Site, they will proceed in accordance with Section 2.4 below. For the avoidance of doubt, Contractor’s Site visits and investigations shall not be construed as being construction activities.

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2.3 Construction Services. The Construction Services include everything required to be performed by Contractor under the Contract Documents other than the Preconstruction Services. Such services are generally set forth in Article 7 of the General Conditions of Contract, and include but are not limited to: (a) procuring Equipment and Materials for the Project; (b) providing labor, supplies, construction equipment and everything else required to construct the Project in accordance with the Contract Documents; and (c) performing start-up, commissioning, and testing required under the Contract Documents.

2.4 Early Work Packages. The Parties anticipate that there may be some elements of the Construction Services that are more appropriately undertaken by Contractor before the GMP Amendment Date (“Early Work Packages”). Owner shall have the sole discretion as to whether to consider and/or authorize an Early Work Package. If Owner authorizes Contractor to prepare a commercial proposal for an Early Work Package, the Parties will work together in good faith to develop the specific process for doing so, with the understanding that the process is intended to generally follow the submittal and negotiation process set forth for the GMP Proposal. Each Early Work Package will be contracted through an amendment to this Agreement (“Early Work Package Amendment”), which amendment shall set forth all commercial terms specific to that Early Work Package. For the avoidance of doubt, Early Work Packages are considered part of the Construction Services.

2.5 Project Kick-Off Meeting.

2.5.1 Purpose of Meeting. The parties will meet within seven (7) days after the Agreement Date to discuss issues affecting the administration of this Agreement, including potential Subcontractor involvement during the Preconstruction Phase, processes relating to submittals and payment, and other matters that will facilitate the ability of the parties to perform their obligations under this Agreement.

2.5.2 Authorized Representatives. At the meeting Owner and Contractor each shall designate, in writing, a specific individual to act as its authorized representative with respect to the services and responsibilities under the Contract. Such individuals shall have the authority to transmit and receive information, render decisions relative to the Contract, and otherwise act on behalf of each respective party.

2.6 Project Schedule.

2.6.1 Development and Maintenance of Project Schedule. Contractor will develop and maintain a Project schedule (“Project Schedule”) on behalf of the entire Project Team.

The fundamental purpose of the Project Schedule is to identify, coordinate, manage and monitor the tasks and activities to be performed by all Project Team members for all phases of the Project.

Among other things, the Project Schedule will depict: (a) the production of various design phase documents; (b) long-lead procurements; (c) permitting requirements; (d) bid packaging strategy

-4-and awards to Subcontractors and Suppliers; (e) major stages of construction; (f) start-up and commissioning; and (g) substantial completion.

2.6.2 Further Development of Project Schedule. The Project Schedule is intended to become more detailed as the design progresses, evolving from conceptual to detailed. Early Project Schedules will concentrate on milestones for each design phase deliverable (e.g., 30% and 60% design), Equipment lead times and general construction durations. Contractor will expand and update the Project Schedule throughout the Preconstruction Phase such that it will not require significant changes as of the GMP Amendment to incorporate Contractor’s plan for the performance of construction. It is intended that the Baseline Schedule developed by Contractor as part of the GMP Proposal will be derived from the most current Project Schedule.

2.6.3 Updates. Contractor will provide updates and/or revisions to the Project

Schedule for use by the Project Team, whenever required, but no less often than monthly.

Article 3 Contract Times

3.1 Date of Commencement.

3.1.1 Preconstruction Services. Contractor shall commence the Preconstruction Services upon Contractor’s receipt of Owner’s Notice to Proceed with Preconstruction Services (“NTP with Preconstruction”). Owner will issue to Contractor an NTP with Preconstruction no later than seven (7) days after the Agreement Date, unless the Parties mutually agree otherwise in writing.

3.1.2 Construction Services. Contractor shall commence the Construction Services upon Contractor’s receipt of Owner’s Notice to Proceed with Construction Services (“NTP with Construction”). Owner will issue to Contractor an NTP with Construction no later than seven (7) days after the GMP Amendment Date, unless the Parties mutually agree otherwise in writing. Notwithstanding anything to the contrary in the Contract Documents, Owner’s issuance of an NTP with Construction is conditioned upon Contractor furnishing Owner with executed Performance and Payment Bonds, as required by Article 6 of the General Conditions of Contract.

3.2 Schedule for Preconstruction Services.

3.2.1 Performance Time. Specific periods of time and/or dates for Contractor rendering the Preconstruction Services are, as applicable, provided in Exhibit 2.2.1 (“Scope of Preconstruction Services”).

3.2.2 Completion of Preconstruction Services. Contractor shall be deemed to have completed its obligations to perform the Preconstruction Services under this Agreement upon the earlier to occur of: (a) execution by Owner and Contractor of a GMP Amendment; or (b) Owner’s exercise of its right to terminate Contractor for convenience under Sections 5.5(c) and

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11.1.1 below; or (c) Contractor’s exercise of its rights under Section 5.6 below to declare that Owner has constructively terminated Contractor for convenience.

3.3 Schedule for Construction Services.

3.3.1 Scheduled Substantial Completion Date. Contractor shall substantially complete the Work no later than the date set forth in the GMP Amendment (“Scheduled Substantial Completion Date”).

3.3.2 Scheduled Final Completion Date. Contractor shall achieve Final

Completion no later than sixty (60) days from Substantial Completion (“Scheduled Final Completion Date”).

3.3.3 Milestones. If the GMP Amendment identifies any Milestones, Contractor shall complete the Work for the Milestone no later than the date set forth in the GMP Amendment for such Milestone (“Scheduled Milestone Completion Date”).

3.3.4 Contract Time(s). The Scheduled Substantial Completion Date, Scheduled

Final Completion Date, and Scheduled Milestone Completion Dates are deemed to be the Contract Time(s). The Contract Time(s) shall be subject to adjustment in accordance with the General Conditions of Contract.

3.3.5 Time is of the Essence. Owner and Contractor mutually agree that the

Scheduled Substantial Completion Date, Scheduled Final Completion Date, and Scheduled Milestone Completion Date(s), individually and collectively, are of the essence of this Agreement.

3.4 Delay Liquidated Damages. If Contractor does not achieve Substantial

Completion, Final Completion and/or Milestones on or before the applicable Contract Time, Owner will suffer damages which are difficult to determine and accurately specify. To compensate Owner for such damages, Contractor hereby agrees to pay Owner Delay Liquidated Damages as follows:

3.4.1 Substantial Completion. If the Substantial Completion Date has not been achieved by the Scheduled Substantial Completion Date, then Contractor shall pay to Owner Delay Liquidated Damages in the daily amount set forth in the GMP Amendment for each day between the Scheduled Substantial Completion Date and the Substantial Completion Date.

3.4.2 Final Completion. If the Final Completion Date has not been achieved by the Scheduled Final Completion Date, Contractor shall pay to Owner Delay Liquidated Damages in the daily amount set forth in the GMP Amendment for each day between the Scheduled Final Completion Date and the Final Completion Date.

3.4.3 Milestones. If a Milestone Completion Date has not been achieved by the

Scheduled Milestone Completion Date, Contractor shall pay to Owner Delay Liquidated Damages

-6-in the daily amount set forth in the GMP Amendment for each day between the Scheduled Milestone Completion Date and the Milestone Completion Date.

3.5 Delay Liquidated Damages Not Penalty. The Parties acknowledge, recognize, and agree on the following:

(a) that because of the unique nature of the Project, it is difficult or impossible to determine with precision the amount of damages that would or might be incurred by Owner as a result of Contractor’s failure to complete the Work on or before the applicable Contract Times;

(b) that any sums which would be payable under this Agreement as Delay Liquidated Damages are in the nature of liquidated damages, and not a penalty, and are fair and reasonable, and such payment represents a reasonable estimate of fair compensation for the losses that may reasonably be anticipated from such failure;

(c) that any sums which would be payable under this Agreement as Delay Liquidated Damages shall be in lieu of all liability for any and all extra costs, losses, expenses, claims, penalties and any other damages, whether direct, indirect, special or consequential, and of whatsoever nature incurred by Owner which are occasioned by any delay in achieving the applicable Contract Time(s); and

(d) that, in recognition of the acknowledgments above, Contractor is expressly estopped from arguing, and waives any rights it may have to argue, that Delay Liquidated Damages are a penalty and that they are not enforceable.

For the avoidance of doubt, and notwithstanding anything to the contrary in Paragraph (c) above, Delay Liquidated Damages are not intended to excuse Contractor from liability for any other breach of its obligations under the Contract Documents.

3.6 Owner’s Rights to Offset. In addition to any of its other rights under the Contract

Documents or as a matter of law, Owner shall have the right to: (a) deduct the Delay Liquidated Damages established under Section 3.4 above from any monies unpaid, otherwise due, or to become due, to Contractor; (b) to demand and receive prompt payment from Contractor of such Delay Liquidated Damages; and (c) initiate applicable dispute resolution procedures under the General Conditions of Contract to recover such Delay Liquidated Damages. The deductions of such Delay Liquidated Damages from any monies unpaid, otherwise due, or to become due shall be in addition to retainage under the Contract Documents. Owner also has the discretion to allow Delay Liquidated Damages to accrue without collecting and by doing so does not waive any rights to collect them at a later time.

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Article 4

Contract Price and GMP

4.1 Contract Price.

4.1.1 Contract Price Defined. Owner shall pay Contractor in accordance with

Article 15 of the General Conditions of Contract a contract price (“Contract Price”) equal to the sum of the following:

(a) The Preconstruction Services Compensation, as established by Exhibit 7.1

(“Preconstruction Services Compensation”);

(b) The Cost of the Work, as defined in Section 6.1 below;

(c) Contractor’s General Conditions, as defined in Section 6.2 below; and

(d) Contractor’s Fee, as defined in Section 4.3 below.

4.1.2 Conditions Applicable to Contract Price. For the avoidance of doubt, the

Parties agree that the following conditions are applicable to Owner’s payment of the Contract Price.

(a) Sections 4.1.1(b) through 4.1.1(d) above do not apply to the Preconstruction

Services and only apply to the Construction Services;

(b) Until such time as the GMP Amendment has been executed and an NTP with Construction has been issued by Owner, the only financial obligation of Owner to Contractor shall be the Preconstruction Services Compensation, provided, however, that if an Early Work Package Amendment has been executed and Owner has issued a notice to proceed with such Early Work Package, the financial obligation of Owner to Contractor shall be the Preconstruction Services Compensation and the applicable amount of the Early Work Package Amendment; and

(c) Once the GMP Amendment has been executed and an NTP with

Construction has been issued by Owner, Owner’s obligation to pay the Contract Price is subject to the GMP.

4.2 Guaranteed Maximum Price. The Guaranteed Maximum Price (“GMP”) is the monetary value designated as the “Guaranteed Maximum Price” and/or “GMP” in the GMP Amendment, as such value may be adjusted in accordance with Article 11 of the General Conditions of Contract. Contractor guarantees that it shall not exceed the GMP, and that it will be responsible for paying all costs of completing the Work which exceed the GMP. The GMP is deemed to include all sales, use, consumer and other taxes mandated by applicable Legal

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Requirements. Contractor does not guarantee any specific line item provided as part of the GMP.

4.3 Contractor’s Fee.

4.3.1 Amount and Basis of Fee. Contractor’s Fee is ______ percent (___%), which is that percentage fee proposed in Contractor’s Proposal. Contractor’s Fee will be used in the negotiation of the GMP Proposal and, if applicable, Early Work Package proposals.

Contractor’s Fee represents Contractor’s compensation for profit and Non-Reimbursable Costs.

4.3.2 Application of Contractor’s Fee. In determining the GMP under Article 5 below, Contractor’s Fee shall be calculated by applying Contractor’s Fee to the sum of: (a) the estimated Cost of the Work; and (b) the estimated Contractor’s General Conditions, provided, however, that for the purpose of determining the GMP, there shall be no Contractor’s Fee applied to: (i) Contractor’s premiums for the Performance and Payment Bonds, Builder’s Risk Insurance or Contractor’s subcontractor default insurance; (ii) Contractor Contingency; (iii) any Allowance Payment Item; and (iv) those Costs of the Work identified in Section 6.1 below that are identified as having no Contractor’s Fee. Once the Contractor’s Fee has been established, it shall then be treated as a fixed price, subject to adjustment as set forth in Section 4.3.3 below.

4.3.3 Adjustment of Contractor’s Fee. Contractor’s Fee will be adjusted as follows:

(a) For additive Change Orders, including additive Change Orders arising from both additive and deductive items, Contractor shall receive a Fee not to exceed [Note, this is same number as Section 4.3.1] ____% of the additional Costs of the Work incurred for that Change Order.

(b) For Costs of the Work that are drawn from the Contractor Contingency or incurred for an Allowance Payment Item (including the Owner’s Allowance), Contractor shall receive a Contractor’s Fee not to exceed [Note, this is same number as Section 4.3.1] ____% of such Costs of the Work.

(c) For deductive Change Orders, including deductive Change Orders arising from both additive and deductive items, an amount equal to [Note, this is same number as Section 4.3.1] ____%, which shall be applied to the net reduction in the Costs of the Work for such Change Orders and which amount will account for a reduction associated with Contractor’s Fee.

4.4 Allowance Payment Items and Allowance Payment Values.

4.4.1 Generally. Any and all Allowance Payment Items, as well as their corresponding Allowance Payment Values, will be set forth in the GMP Amendment. Contractor and Owner will work together during Contractor’s development of a GMP Proposal to review potential Allowance Payment Items based on information then available, and then to determine

-9-that reasonable Allowance Payment Values for such Allowance Payment Items.

4.4.2 Owner’s Authorization. No work shall be performed on any Allowance

Payment Item without Contractor first obtaining in writing advanced authorization to proceed from Owner. Owner agrees not to unreasonably withhold or delay its consent to any Allowance Payment Item which would impact Contractor’s progress on the Work.

4.4.3 Potential Adjustment of GMP. If the actual costs for an Allowance Payment

Item differ from the stated Allowance Payment Value, such difference shall be reflected in a Change Order that adjusts the GMP by such difference, provided however, that the preceding shall not preclude Owner from administering the Allowance Payment Items by reallocating overruns and underruns among the Allowance Payment Values when Owner determines that it is appropriate. The Allowance Payment Value for an Allowance Payment Item includes the direct Cost of the Work for labor, Equipment and Materials, materials, equipment, transportation, taxes and insurance associated with the applicable Allowance Payment Item. All other costs, including Contractor’s General Conditions and Contractor’s Fee, are deemed to be included in other components of the GMP and are not subject to adjustment, regardless of the actual amount of the Allowance Item.

Article 5

GMP Proposal

5.1 Submission of GMP Proposal.

5.1.1 Format and Documentation. Upon written authorization by Owner, Contractor shall submit to Owner a GMP Proposal for the Construction Services. The format of the GMP Proposal, including the format of supporting documentation and line items of the Work, shall be initially developed by Contractor and provided to Owner for its review and approval. At a minimum, the supporting documentation will include a complete line item cost estimate indicating the itemized costs that comprise the GMP. The format of the GMP Proposal shall be agreed upon at least sixty (60) days prior to the submittal of such proposal.

5.1.2 GMP Proposal Design Documents. The Parties acknowledge that the GMP

Proposal Design Documents to be included in the GMP Proposal are not fully completed Drawings and Specifications, and that such documents will be further developed after the GMP Amendment Date. The GMP Proposal, including the GMP itself, represents Contractor’s offer to fully complete the Project, including, without limitation, its offer to provide and construct, at no increase in the GMP, items in the Drawings and Specifications that are not shown on the GMP Proposal Design Documents but which are a logical development of the design intent reflected in the GMP Proposal Design Documents. The GMP Proposal (including the GMP itself) represents Contractor’s offer to construct the Project in accordance with the Drawings and Specifications, at no increase in the GMP, with the understanding that the Contractor Contingency accounts for clarifications, assumptions, and further development of the GMP Proposal Design Documents into the Drawings

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5.2 Contents of GMP Proposal. The GMP Proposal shall include the following, unless the Parties mutually agree otherwise:

(a) A proposed GMP, which shall be the sum of:

(1) The Preconstruction Services Compensation;

(2) The GMP or lump sum price for any Early Work Package

Amendments;

(3) The estimated Cost of the Work (other than Work covered by Early

Work Package Amendments), inclusive of Allowance Payment Items and the Contractor Contingency;

(4) Contractor’s General Conditions; and

(5) Contractor’s Fee.

The proposed GMP shall be supported by a detailed cost estimate organized by trade categories, including a detailed breakdown of Contractor’s General Conditions and any Allowance Payment Items and Contractor Contingency.

(b) The GMP Proposal Design Documents, with such documents to be listed and attached to the GMP Proposal;

(c) A list of the assumptions and clarifications made by Contractor in the preparation of the GMP Proposal, which list is intended to supplement the information contained in the GMP Proposal Design Documents;

(d) The Scheduled Substantial Completion Date upon which the proposed GMP is based, and a proposed Baseline Schedule upon which the Scheduled Substantial Completion Date is based, which schedule shall provide an orderly progression of the Work to completion within the Contract Times and shall be compliant with Paragraph 4.04 of the General Conditions of Contract;

(e) A schedule of Submittals listing each required Submittal and the times for submitting, reviewing and processing each Submittal;

(f) A Schedule of Values for all of the Work, which will include quantities and prices of items which when added together equal the GMP and subdivides the Work into component parts in sufficient detail to serve as the basis for progress payments during performance of the Work;

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(g) A cash flow projection estimating that portion of the GMP to be due during each month of performance;

(h) If applicable, a list of Allowance Payment Items, Allowance Payment

Values, and a statement of their basis;

(i) If applicable, a schedule of alternate prices;

(j) If applicable, a schedule of unit prices;

(k) If applicable, a statement of Additional Services which may be performed but which are not included in the GMP and which, if performed, shall be the basis for an adjustment to the GMP and/or Scheduled Substantial Completion Date;

(l) A subcontracting plan for the Construction Services which will, among other things, set forth a list of Subcontractors and Suppliers whose bids/proposals have been accepted by Owner;

(m) An updated letter from its surety or sureties verifying that Contractor has bonding capacity for the Performance and Payment Bonds in the amount of the GMP;

(n) An updated list of Key Personnel and Contractor’s Project Organizational Chart;

(o) A specimen Builder’s Risk Insurance policy with all appropriate attachments, sub-limits that has been approved by Owner, and a letter of certification from Contractor or Contractor’s insurance broker confirming that Builder’s Risk Insurance in the form of such specimen policy will be placed prior to the commencement of construction;

(p) Such other information and materials as Owner may reasonably request; and

(q) Confirmation that the GMP Proposal will remain valid during the GMP

Proposal Acceptance Period.

5.3 Review and Negotiation of GMP Proposal.

5.3.1 Review Process. After submission of a GMP Proposal under Section 5.2 above, Contractor and Owner shall meet to discuss and review such proposal, with the understanding that: (a) all information shall be provided by Contractor on an Open-Book Basis;

(b) Contractor shall provide such information as Owner may reasonably request relative to such proposal, including but not limited to support for proposed rates (e.g., hourly, unit, and productivity), multipliers and markups; and (c) Contractor shall identify and justify any costs that

-12-are significantly different than Contractor’s latest cost model. If Owner has any comments regarding the proposal, or finds any inconsistencies or inaccuracies in the information presented, it shall promptly notify Contractor of such comments or findings. If appropriate, Contractor shall, upon receipt of Owner’s notice, make appropriate adjustments to the proposal. Contractor is also on notice that Owner may, at any time, submit the proposal to an independent third party for review and verification.

5.3.2 Negotiation. If Owner determines that there is merit in considering the

GMP Proposal, it shall so notify Contractor, whereupon the Parties shall negotiate in good faith and attempt to reach agreement on the terms of the proposal.

5.4 Agreement on GMP Proposal and Execution of GMP Amendment. If the Parties reach agreement on the GMP Proposal, as such proposal may be amended by Contractor to reflect discussions between the Parties, the GMP Proposal shall be incorporated into a GMP Amendment to the Agreement.

5.5 Failure to Agree upon GMP Proposal. If the Parties are unable to reach an agreement on the GMP Proposal within the GMP Proposal Acceptance Period, as such period may be extended by mutual agreement of the Parties, the GMP Proposal shall be deemed withdrawn and null and void. In such event, Owner and Contractor shall meet and confer as to how the Project will proceed, with Owner having the following options:

(a) Owner may suggest modifications to the proposal, whereupon, if such modifications are accepted in writing by Contractor, the GMP Proposal shall be deemed acceptable and the Parties shall proceed in accordance with Section 5.4 above;

(b) Owner may authorize Contractor to continue to provide services under this

Agreement and/or have Contractor provide another proposal at a later point in time, which proposal shall comply with this Article 5; or

(c) Owner may exercise its rights to terminate this Agreement for convenience pursuant to Section 11.1.1 below.

5.6 Contractor’s Rights if Owner Fails to Act. If Owner fails to exercise any of its options under Section 5.5 within the GMP Proposal Acceptance Period, as such period may be extended by mutual agreement of the Parties, Contractor may, after giving Owner thirty (30) days written notice of its intention to do so, declare the GMP Proposal withdrawn and null and void.

Additionally, Contractor may declare that Owner has constructively terminated the Agreement under Section 11.1.1 below, in which case Contractor’s sole rights and remedies shall be as stated in Section 11.1.2 below.

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5.7 Owner’s Allowance.

5.7.1 General. The GMP includes an Owner’s Allowance that is intended to cover, among other things, the funding of events that would typically be the subject of a Change Order. If Contractor is entitled to a Change Order for such an event, then: (a) payment to Contractor will be made through such Owner’s Allowance as long as there are funds remaining within such Owner’s Allowance; and (b) no Change Order will be issued to reflect the value of the event, notwithstanding conflicting provisions of Article 11 of the General Conditions of Contract.

If the Owner’s Allowance is totally depleted, Owner will fund these items, or replenish the Owner’s Allowance, by increasing the GMP by Change Order in accordance with Article 11 of the General Conditions of Contract. Neither Owner’s nor Contractor’s rights or obligations under the Contract Documents shall be affected by the Owner’s Allowance.

5.7.2 Compliance with Change Order Requirements. For the avoidance of doubt, for all items covered by the Owner’s Allowance, Contractor shall be obligated to comply with all of the requirements set forth in Article 11 of the General Conditions of Contract, as well as any other requirements that are set forth in the General Conditions of Contract with respect to the item that forms the basis for the Change Order.

5.7.3 Impact on Savings. Any unused amounts of the Owner’s Allowance shall be reflected in a Change Order that decreases the GMP by such amounts, with the understanding that Contractor shall not be entitled to share in any savings on this allowance.

5.8 Contractor Contingency.

5.8.1 General. The GMP Proposal and GMP Amendment will include a contingency line item (“Contractor Contingency”) as part of the estimated Cost of the Work. The Contractor Contingency is available for Contractor’s exclusive use for unanticipated Costs of the Work that it has incurred that are not the basis for a Change Order under the Contract Documents.

By way of example, and not as a limitation, such costs may include: (a) trade buy-out differentials;

(b) overtime or acceleration; (c) escalation of materials; (d) correction of defective, damaged or nonconforming Work; (e) Subcontractor defaults; (f) coordination/scope gaps; and (g) deductibles incurred by Contractor under the insurance required under Exhibit 14.1 (“Insurance Requirements”), but not to exceed $25,000 per occurrence. The Contractor Contingency is not available to Owner for any reason, including, but not limited to changes in scope or any other item which would enable Contractor to increase the GMP under the Contract Documents.

5.8.2 Draws. Contractor may draw upon the Contractor Contingency by making a written request to Owner, identifying the reason and amount of the draw, and by obtaining Owner’s written approval, which shall not be unreasonably withheld. If Owner approves a draw against the Contractor Contingency, Contractor shall, in its Payment Applications, show an increase in the relevant line item by the amount drawn and a decrease in the line item for the Contractor Contingency. The amount of the draw shall be the Costs of the Work incurred by Contractor plus Contractor’s Fee applied to such Costs of the Work (as set forth in Section 4.3.3(b)

-14-above), unless any Cost of the Work is not subject to Contractor’s Fee by the terms of Section 6.1 below.

5.8.3 Draws for Subcontractor Default or Insurable Event. Contractor agrees that with respect to any expenditure from the Contractor Contingency relating to a Subcontractor default or an event for which insurance or bond may provide reimbursement, Contractor will in good faith exercise reasonable steps to obtain performance from the Subcontractor and/or recovery from any surety or insurance company. Contractor agrees that if Contractor is subsequently reimbursed for said costs, then said recovery will be credited back to the Contractor Contingency, net of any costs and expenses incurred by Contractor in pursuing such recovery.

5.9 Savings.

5.9.1 Definition. If upon Final Completion the sum of: (a) the Preconstruction

Services Compensation; (b) the monies paid Contractor for Early Work Package Amendments; (c) the actual Cost of the Work incurred by Contractor (e.g., not including any unused portions of the Contractor Contingency or Allowance Payment Values); (d) Contractor’s General Conditions; and

(e) Contractor’s Fee is less than the GMP, as such GMP may have been adjusted over the course of the Project, then the difference (“Savings”) shall be treated as set forth in the GMP Amendment.

5.9.2 Payment. Savings shall be calculated and paid as part of Final Payment, with the understanding that to the extent Contractor incurs costs after Final Completion which would have been payable to Contractor as a Cost of the Work, the Parties shall recalculate the Savings in light of the costs so incurred.

5.10 Effect and Administration of the GMP. By executing a GMP Amendment, Contractor guarantees that Owner’s payment obligations shall not exceed the amount of the GMP, and that Contractor shall be responsible for paying all costs of completing the Work which exceed the GMP, as the GMP may be adjusted in accordance with the Contract Documents.

5.11 Exhibits to the GMP Amendment. It is intended that the GMP Amendment will have a number of exhibits that will derive from the GMP Proposal and the negotiations between the Parties. Among these exhibits will be: (a) the agreed-upon GMP Proposal; (b) Allowance Payment Items; (c) the Schedule of Values; (d) the Baseline Schedule; and (e) an updated list of Key Personnel and Contractor’s Project Organizational Chart.

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Article 6 Cost of the Work

6.1 Cost of the Work. The term “Cost of the Work” shall mean costs reasonably and actually incurred by Contractor in the proper performance of the Work. The Cost of the Work shall include only the following:

.1 Wages of construction workers directly employed by Contractor to perform the Work at the Site or, with Owner’s agreement, at locations off the Site.

.2 A multiplier applied to the wages of the employees of Contractor covered under Section 6.1.1 above as compensation for the costs incurred or customarily paid by Contractor for employee benefits (e.g., sick leave, medical and health benefits, holidays, vacations, and project-related bonuses), social security contributions, unemployment, excise, and payroll taxes, and workers’ compensation premiums, and, in the case of employees covered by collective bargaining agreements, taxes, insurance, contributions, assessments and benefits required under such agreements. The multiplier for craft/field, hourly-based on-site personnel shall be _____%. The multiplier for all off-site personnel shall be _____%.

.3 Payments properly made by Contractor to Subcontractors for performance of portions of the Work, including any bond premiums incurred by Subcontractors.

.4 Costs incurred by Contractor in repairing or correcting defective, damaged or nonconforming Work (including any warranty or corrective Work performed after Substantial Completion), provided however, that: (a) such Work was beyond the reasonable control of Contractor, or caused by the ordinary mistakes or inadvertence, and not the negligence, of Contractor or any Contractor-Related Entities; and (b) no Contractor’s Fee shall apply to such costs. If the costs associated with such Work are recoverable from insurance or Subcontractors, Contractor shall exercise reasonable commercial efforts to obtain recovery from the appropriate source and provide a credit to Owner if recovery is obtained, net of any costs and expenses reasonably incurred by Contractor in pursuing and obtaining such recovery.

.5 Costs, including transportation, inspection, testing, storage and handling, of materials, equipment and supplies incorporated or reasonably used in completing the Work.

.6 Costs (less salvage value) of Equipment and Materials, supplies, temporary facilities, machinery, equipment and hand tools not customarily owned by the workers that are not fully consumed in the performance of the Work and which remain the property of Contractor, including the costs of transporting, inspecting, testing, handling, installing, maintaining, dismantling and removing such items.

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.7 Rental charges and the costs of transportation, installation, minor repairs and replacements, dismantling and removal of temporary facilities, machinery, equipment and hand tools not customarily owned by the workers, which are provided by Contractor at the Site, whether rented from Contractor or others, and incurred in the performance of the Work.

.8 Fuel and utility costs incurred in the performance of the Work.

.9 Costs for Governmental Approvals, permits, royalties, licenses, tests, and inspections incurred by Contractor in the performance of the Work.

.10 The cost of defending suits or claims for infringement of patent rights arising from the use of a particular design, process, or product required by Owner, paying legal judgments against Contractor resulting from such suits or claims, and paying settlements with Owner’s consent, provided however, that no Contractor’s Fee shall apply to such costs.

.11 Costs incurred in preventing damage, injury or loss in case of an emergency affecting the safety of persons and property.

.12 Premiums for the Performance and Payment Bonds, and Builder’s Risk insurance, provided, however, that no Contractor’s Fee shall apply to such costs.

.13 If applicable, the cost of Contractor’s Subcontractor default insurance, in an amount to be approved by Owner, provided, however, that no Contractor’s Fee shall apply to such costs.

.14 Sales, use or similar taxes, tariffs, or duties incurred in the performance of the Work.

.15 Other costs reasonably and properly incurred in the performance of the

Work to the extent approved in writing by Owner.

6.2 Contractor’s General Conditions. The term “Contractor’s General Conditions” shall mean Contractor’s costs reasonably and actually incurred by Contractor for supervisory, construction management and overhead-related items in connection with the proper performance of the Work and which are not covered by the Cost of the Work. Contractor’s General Conditions shall include only the following, unless specifically agreed upon otherwise by Owner and Contractor during the development of the GMP Proposal and execution of the GMP Amendment:

.1 Base wages or salaries of Contractor’s supervisory and administrative personnel engaged in the performance of the Work and who are located at the Site or, with Owner’s agreement, working at locations off the Site.

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.2 A multiplier applied to the wages of the employees of Contractor covered under Section 6.2.1 above as compensation for the costs incurred or customarily paid by Contractor for employee benefits (e.g., sick leave, medical and health benefits, holidays, vacations, and project-related bonuses), social security contributions, unemployment, excise, and payroll taxes, and worker’s compensation premiums, and, in the case of employees covered by collective bargaining agreements, taxes, insurance, contributions, assessments and benefits required under such agreements. The multiplier for professional, salary-based on-site personnel shall be ______%. The multiplier for craft/field, hourly-based on-site personnel shall be _____%. The multiplier for all off-site personnel shall be

.3 Costs of removal of debris and waste from the Site not performed or required to be performed by Subcontractors.

.4 The reasonable costs and expenses incurred in establishing, operating and demobilizing the Site office, including the cost of facsimile transmissions, long distance telephone calls, postage and express delivery charges, telephone service, photocopying, reasonable petty cash expenses.

.5 Vehicles for the transport of persons, such as passenger cars and pick-up trucks, to the extent used by any of Contractor’s personnel while performing their Project-related responsibilities.

.6 Accounting and data processing costs related to the Work where previously identified and approved by Owner.

6.3 Non-Reimbursable Costs. The Cost of the Work and Contractor’s General Conditions shall not include the following:

.1 Salaries and other compensation for Contractor personnel stationed at Contractor’s principal or branch offices, except as expressly provided for in Sections 6.1.1 and 6.2.1 above.

.2 Expenses of Contractor’s principal office and offices other than the Site office.

.3 Overhead and general expenses, except as expressly provided for in Sections 6.1 and 6.2 above.

.4 Bonuses, profit sharing, thrift or similar plans paid to employees of Contractor, whether or not such employee worked on the Project, except as expressly provided for in Sections 6.1.2 and 6.2.2 above.

.5 The cost of Contractor’s capital used in the performance of the Work.

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.6 Insurance premiums incurred or paid by Contractor, other than the Builder’s Risk insurance and, if approved by Owner, Contractor’s Subcontractor default insurance.

.7 Corporate and non-Project specific accounting and data processing costs.

.8 Costs and expenses incurred to obtain any Governmental Approval, permit, license, registration, or other approval, or fee or charge incurred, in connection with the general operations of Contractor and not required specifically and exclusively for the performance of the Work.

.9 Any federal, state or local income or gross receipts tax.

.10 Delay Liquidated Damages paid by Contractor or withheld by Owner under this Agreement.

.11 Any costs not specifically set forth in Sections 6.1 and 6.2 above.

.12 Costs that would cause the GMP to be exceeded.

Article 7 Payment Procedures

7.1 Preconstruction Services Compensation. The Preconstruction Services

Compensation is set forth in Exhibit 7.1 (“Preconstruction Services Compensation”), which exhibit includes, among other things, hourly rates, not-to-exceed amounts, and other information associated with the compensation and pricing associated with the Preconstruction Services. For purposes of any modifications to the Preconstruction Services, whenever provisions in the General Conditions of Contract refer to an adjustment or increase in the GMP, such provisions shall be deemed to include adjustments or increases in the Preconstruction Services Compensation. All modifications to the Preconstruction Services shall be based upon the hourly rates and other information set forth in Exhibit 7.1 (“Preconstruction Services Compensation”).

7.2 Preconstruction Services Payment.

7.2.1 Preparation and Submittal of Invoices. Contractor will prepare and submit invoices for Preconstruction Services to Owner on a monthly basis in a format acceptable to Owner. Contractor will provide documentation acceptable to Owner to allow Owner to verify Contractor’s charges included in invoices.

7.2.2 Owner Action on Invoices. Owner will, within fifteen (15) days after receipt of each invoice, including each resubmittal, either notify Contractor in writing that the invoice has been approved or the reasons it has not been approved. In the latter case, Contractor shall make the necessary corrections and resubmit the invoice. Owner reserves the right, instead

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(15) days of Owner’s approval.

7.2.3 Retainage. No retainage will be withheld by Owner for payments made to

Contractor for Preconstruction Services. If Owner and Contractor execute an amendment to this Agreement authorizing Contractor to perform an Early Work Package, such amendment will address what, if any, retainage will be withheld on such Early Work Package, given that Early Work Packages are Construction Services and not Preconstruction Services.

7.3 Progress Payments for Construction Services. Contractor shall submit Applications for Payment for Construction Services, and such applications will be processed by Owner, in accordance with Article 15 of the General Conditions of Contract.

7.4 Retainage for Payments on Construction Services. In accordance with OAR 137-

049-0820 and ORS 279C.570, the following provisions are applicable relative to retainage withheld on progress payments for Construction Services.

7.4.1 Withholding of Retainage. Progress payments will be subject to retainage in the amount of five percent (5%). Owner shall place amounts deducted as retainage into an interest-bearing escrow account. Interest on the retainage amount accrues from the date the payment request is approved until the date the retainage is paid to Contractor.

7.4.2 Reduction of Retainage. If Contractor has performed at least fifty percent

(50%) of the Work and is progressing satisfactorily, upon Contractor’s submission of a written application containing the Contractor’s surety’s written approval, Owner may, in its discretion, reduce or eliminate retainage on any remaining progress payments. Owner shall respond in writing to all such applications within a reasonable time. When the Work is ninety-seven and one/half percent (97.5%) completed, Owner may, at its discretion and without application by Contractor, reduce the retained amount to one hundred percent (100%) of the value of the remaining unperformed Work. Owner may at any time reinstate retainage. Retainage held Owner shall be included in and paid to Contractor as part of the Final Payment.

7.4.3 Alternatives in Lieu of Cash Retainage. In accordance with OAR 137-049-

0820(4), unless Owner finds in writing that the alternatives to cash retainage set forth in OAR 137- 049-0820(4) pose an extraordinary risk that is not typically associated with such alternatives, Owner, in lieu of withholding moneys from payment, shall accept from Contractor one of the alternatives set forth in the above-referenced OAR offered by Contractor. The Parties agree that if Owner has not disapproved of the use of alternatives to cash retainage, Contractor shall identify in writing the alternative it chooses in the GMP Proposal (or, if applicable, the first Early Work Package proposal), and that such alternative shall be binding throughout the term of the Contract.

7.5 Final Payment. Contractor shall submit Applications for Final Payment, and such applications will be processed by Owner, in accordance with Article 15 of the General Conditions

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7.6 Interest. Notwithstanding anything to the contrary in the Contract Documents, Owner is subject to the requirements of ORS 279C.570 (Prompt Payment Policy), and shall pay Contractor interest in accordance with such statute as applicable.

Article 8

Self-Perform Work and Subcontracts

8.1 Self-Perform Work.

8.1.1 General. Self-Perform Work will be performed as part of the

Preconstruction Services and Construction Services, with the understanding that the specific scope of Self-Perform Work will be determined by mutual agreement of the Parties. Self-Perform Work packages shall either be negotiated or subject to competition, as determined by Owner in its sole and absolute judgment.

8.1.2 Self-Perform Work Subject to Negotiations. If Owner determines that the

Self-Perform Work package will be subject to negotiation, Contractor shall submit a detailed proposal for such package based upon: (a) the estimated Cost of the Work for such Self-Perform Work, with the entity performing Self-Perform Work pricing its labor on actual wages plus the appropriate multiplier on such wages; and (b) Contractor’s Fee being applied to such Cost of the Work. For the avoidance of doubt, the entity performing Self-Perform Work shall provide such information as Owner may reasonably request, with the understanding that all information that formed the basis for the applicable estimate will be provided to Owner on an Open-Book Basis.

Owner shall have the right to obtain at least one independent cost estimate prior to accepting such proposal. If the Parties are unable to reach an agreement on the proposal, Owner may, in its sole and absolute judgment: (x) withdraw its permission that the applicable Work be deemed Self- Perform Work; or (y) give Contractor permission to submit a competitive proposal in accordance with Section 8.1.3 below.

8.1.3 Self-Perform Work Subject to Competition.