Chapter 5 - Managing the Project During the Construction Phase

During the Construction Phase, outside contractors and/or grantee force account employees construct the fixed facilities, fabricate and install equipment, and integrate the facilities and equipment into a functioning system. The work is done in accordance with the plans and specifications developed during Final Design.

Chapter 3 defined management principles and practices including the following that apply to more than one phase of the project development process:

• Project and Management Organization
• Cost Estimation and Funding
• Scheduling
• Project Control
• Risk Assessment and Management
• Procurement and Contracts
• QA and QC
• Project Communications.

As a supplement to the principles presented in Chapter 3, this chapter contains project management guidelines specifically related to the Construction Phase of a transit capital project.

5.1 Developing a Plan for Managing Construction

5.1.1 Organization and Staffing; Responsibilities and Authorities

5.1.1.1 Organizational Objectives

The report entitled: Better Management of Major Underground Construction Projects [Ref. 37] indicates that the most frequent cause of project disruption for any major transit project is "delayed decisive action." Delays in decisions or actions may be major contributing causes for disputes, claims, cost overruns, and construction delays.

Delays in resolving critical issues can usually be attributed to the way in which the decision-making process flows through the organization controlling the project. For that very reason, it is essential that an organizational structure be developed to ensure clear assignment of responsibilities and authorities and lines of communication from the first line supervisor to the top-most grantee decision-maker. These characteristics, when combined with complete written organizational procedures, become the "organizational objectives" for the project.

5.1.1.2 Grantee's Organization

Prior to beginning construction, the grantee should have decided on a project management organization that will be responsible for moving the project from "concept-to-completion." In larger projects this may also mean the establishment of a key management group that will:

• Be empowered to make decisions and take action
• Be responsive to emergency or rapidly changing conditions
• Perform progress reviews, quality assurance, and related actions
• Track and be responsible for deliverables
• Interface with external agencies
• Function as a single point-of-contact with FTA, and be responsible for project accomplishment.

5.1.1.3 Project Team Functions and Responsibilities

The size, composition, and functional responsibilities of a project team should evolve after careful and detailed consideration of the various activities occurring throughout the project's life cycle. Consideration should be given to making use of existing technical personnel, managers, and professionals familiar with the project environment. Care should be exercised, however, so as not to overburden nor detract from present operations. Additionally, it must be stressed that the "project organization" should not be responsible for routine operations and maintenance of the existing system while trying to manage a complex construction project. Staffing the project organization with qualified professionals is essential.

5.1.1.4 Interface Points

Several interconnected functional relationships exist during the Construction Phase of a major transit project. One of the most difficult and time-consuming aspects of project management is "interface management":

• Of companies involved as partners and under contract
• Between functional elements of the organization
• Between locations
• Between project phases
• Between governmental, state, or local regulatory agencies
• Between private and other public interests.

To enhance and establish interface management, it is necessary to clearly define and enforce:

• Responsibility, authority, and accountability at interfaces
• Inputs and outputs in terms of organization, function, and schedule
• Lines-of-communication.

5.1.1.5 Appropriate Roles: Staff and Consultants

There are a number of scenarios which can be examined, and that would logically describe separate or combined roles for a grantee's staff and those of consultants. In all cases, however, there is recognition of the need for close cooperation between these two groups, and for having their roles and responsibilities clearly defined. In any case, however, the grantee is ultimately responsible for the project.

The staff, for its part, is an extension of the grantee and the project manager's organization. Their roles generally are configured to provide the greatest amount of direct project support and control through delegation of authority. Decentralized project control is encouraged, where practical, and the staff is expected to communicate all manner of project information to the grantee and project manager so as to keep them fully informed. The staff is also expected to take advantage of the expertise provided by consultants and to cooperate in ensuring the successful completion of the project.

Grantee consultants may perform two possible roles in transit projects:

• An extension of the grantees staff by providing technical support and assistance
• A direct representative of the grantee empowered to function in the role of project manager for the entire project.

Either of these roles relies on the grantees staff and that of the consultant to maintain harmonious relations and to have carefully prepared operating procedures.

5.1.1.6 Key Personnel

Individuals in leadership positions and directly involved in the planning and execution of a project can be considered "key personnel." They may range from the grantee's principal representative, down to and including the Resident Engineers' (REs') inspectors. Consultants working for the grantee will also have "key personnel." Key personnel are those who can directly influence the outcome of the project. Grantees must identify key personnel in their organization, including consultants, and assign responsibility and authority as necessary. Grantees must also identify key personnel in the contractor's organization, including the corporate officer-in-charge, which is helpful in managing interfaces, and quickly communicating requirements affecting the project.

5.1.1.7 Relationship to Project Delivery Method Used

Grantee management strategy and, therefore, organization and staffing during the Construction Phase are directly related to the type of contract by which construction is authorized. For a traditional D/B/B contract, the grantee (staff and consultants) team is responsible for procuring and coordinating the activities of one or more construction contractors or equipment suppliers and, therefore, has sole project management responsibility for functions including:

• Construction safety oversight
• Contractor integration and coordination
• Designer interface
• Construction supervision and inspection
• Utilities interfaces
• Systems integration and testing
• Project schedule control
• QA
• Interface with the existing highway system
• Coordination with existing transit operations
• Project cost control
• Community relations
• Public Information.

With alternative project delivery methods, many of the grantee responsibilities are assigned to the contractor, necessitating changes in organization structure and staffing. For methods that combine design and construction for the entire project, the grantee's role may evolve to only oversight of the contractor. In general, the contractor would have a greater role in the functions toward the top of the above list.

Understanding the grantee's role and responsibilities as a management function, rather than an adversarial and dictatorial one, is an important distinction in non-traditional delivery methods. It becomes the grantee's job to clearly articulate to the selected team members the organizational functions and responsibilities, the reporting requirements of the contractor, and the public accountability responsibility of the entire team.

There are certain functions for which the grantee should be responsible such as public funding, government liaison, property acquisition, agency agreements, and assessing environmental impacts. The private sector, e.g., DBOM contractor, can provide a differing set of capabilities and resources, depending on what they are being asked to perform or accomplish. They can offer new ideas and innovative solutions to various aspects of the project, and have the monetary incentive to manage certain risks more effectively than the grantee.

5.1.1.8 Construction Manager Approach

The construction manager (CM) approach to project management during the Construction Phase has been acknowledged as offering a high likelihood of project success. The CM is responsible for project construction and certain equipment and material procurement administration from the date of each contract to the final turnover to the O&M personnel. Where responsibility for related activities are under the control of other jurisdictions, the CM is responsible for integration and coordination of those activities.

Prior to contract award, the CM is responsible for verification that the contract milestones are compatible with the project master schedule, review of special construction requirements, constructability reviews, and participation in VE studies. During construction, the CM is responsible for monitoring contract compliance with the drawings, specifications, and other requirements including construction warrantees, contract documentation and as-built record, affirmative action and EEO, DBE participation, and contract close-out. Additionally, the CM is responsible to oversee contract administration procedures and construction safety. The CM may also administer a consultant contract for the provision of construction management personnel to supplement the grantee's CM organization.

5.1.1.9 Resident Engineer

A qualified RE should be assigned to each construction contract. The RE will assume responsibility for administration of the contract from the project engineer after the design process is complete. The RE is the grantee's primary field representative, and is the contractor's single point of contact. The RE receives all submittals, requests for information (RFI), field memos, and change order requests. The RE ensures that the work is constructed in accordance with the requirements of the drawings and specifications through inspection and testing.

Work to be done under any contract will not be considered complete until it has passed final inspection by the RE. The contractor must carry out the instructions of the RE insofar as they concern the work to be done under the contract. The RE has the authority to direct that unacceptable work be removed at the contractor's expense.

Approval by the RE signifies favorable opinion and qualified consent. It does not carry with it certification, assurance of completeness or quality, or accuracy concerning details, dimensions, or quantities. The RE's approval will not relieve the contractor from responsibilities for error, improper fabrication, and non-compliance to a requirement, or for deficiencies within the contractor's control.

5.1.2 Project Labor Agreements (PLAs)

During construction planning, careful examination of the existing labor situation is essential to determine the impacts of:

• Unions
• DBE participation
• Local labor situation
• Contractor labor practices.

Each of these areas will have impacts on the project if not fully evaluated and considered in the PMP.

Local PLAs are a means of preventing disruptions or disagreements over the way in which the project is managed and staffed. PLAs may extend among the grantee, contractors, and unions. All PLAs should be approached with caution to ensure that the agreed upon actions are enforceable and in compliance with accepted laws and procedures. When allowed, PLAs are usually negotiated by the grantee with the local or international unions. Once negotiated, the PLA is put into the construction contract so that the bidders know that they must enter into a PLA and so they know the terms of the PLA before they decide to submit their bid. PLAs usually involve the following:

• Wages (only if an open shop) and work rules are negotiated between the contractor and the various labor unions.
• Provide union scale wages and benefits and prohibit strikes and lockouts.
• All contractors are bound by the agreement according to the terms of their contracts.
• Historically, PLAs help minimize costs.

PLAs have been disallowed by Executive Order, and though that decision was appealed to the Supreme Court, the Executive Order was upheld. Grantees need to keep abreast of this situation.

5.1.3 Interface with Utilities

The grantee should have established master agreements with all affected utilities during the PE Phase and specific agreements during the Final Design Phase. During construction, contractors must coordinate utility relocation and project service requirements with their overall schedule, and aggressively manage the interfaces to assure that the overall project is not delayed.

There may be instances where relocation of a utility must be accomplished before any other construction work can begin. For its SFO Airport Extension Project, BART advanced a separate D/B/B contract for site preparation, utility relocation and restorations prior to awarding a larger line, trackwork, and systems D/B contract.

5.1.4 Interface with Transit Operations

Capital projects involving modifications or extensions to an existing transit system must be sensitive to the requirement for the continuity of transit O&M activities in a safe and secure manner for all customers, employees and the general public. Construction contracts should include such requirements and define the minimum amount of deviation or delays to normal transit operations by time of day and day of the week. Contractors may be required to submit interface plans for the approval of the transit operating department.

Grantee force account support may be required to complement the construction activities of contractors. Support could include providing flagging operations, work trains, bus bridges when there are outages of the fixed guideway system, and interim facility (e.g., track, signals, traction power, communications, and control center) modifications to support construction activities. Transit operating personnel must be informed of construction activities on or adjacent to the operating system. Such notices may include slow orders to maintain safe operations.

The contractor should be responsible for limiting access to the construction site while maintaining adequate access for the transit riders and the general public. Signage, markings, lighting, walking surfaces, and railings must be designed, installed, and maintained to support the continuity of safe and secure transit operations. Grantee oversight of the contractor's efforts in this regard is important, and they should not hesitate to temporarily halt contractor activities if the construction site is not properly maintained.

Transit operations will be increasingly involved in the project as it gets closer to completion. Chapter 6 addresses the Testing and Start-up Phase, during which transit O&M forces will be actively involved.

5.1.5 Community Relations and Public Information

One of the most essential requirements for managing large, costly, and visible transit projects is to ensure that public perceptions of the various activities are positive and well informed. Major transit construction projects are, by their very nature, highly visible and generally cause for considerable public scrutiny. In addition to the general public, numerous Federal, state, local, and private organizations share common interests in projects of this type, each requiring information regarding various aspects of the project.

Managing the relationships with these diverse groups is tremendously important and absolutely essential to ensure that correct perceptions of the project are factual and are continuously made available. Key project personnel and staff members, particularly in the public relations area, play a major role in presenting correct perceptions to external organizations and the public. As part of the PMP, there should be a public involvement program, including the following, as appropriate:

• A public relations strategy
• Community relations programs
• Guidelines for the release of project information
• Workforce information programs and grievance procedures
• Internal lines-of-communication for project issues
• Procedures for quickly responding to external information needs
• Routine scheduled meetings and forums for the workforce, external organizations, and groups to establish effective two-way communications throughout the life of the project.

See Section 3.8 for additional guidance related to project communications. During the previous development phases of the project, the various groups and agencies affected by the project should have been identified. A comprehensive communications program should be established to effectively deal with their concerns during construction.

As the project progresses and reaches the Construction Phase, public concerns will rise, and it is important to have frequent and factual open dialogue on the details of the construction activities. These sessions should be conducted as close to the actual construction site as possible. The intent is to present an open forum for discussion and public involvement in the decision-making process.

The PMP should have a separate section devoted to communication. The grantee should decide how communications will occur and what authority levels are required for release of project specific information. If the contractor has a separate public information office in addition to the grantee, oversight and approval should be required by the grantee prior to any release. The types of information the contractor may release without prior approval should be defined by the grantee, and may include:

• Routine non-controversial project information
• Awards and recognition
• Information not related to the project or the grantee.

5.1.6 Quality Assurance/Quality Control

In the Construction Phase, the Quality Program objectives should be to verify that equipment and materials installed, as well as the work performed, comply in all respects with the contract specifications. As such, the Quality Program must provide an effective means to ensure that:

• Selected equipment is tested throughout development, manufacture, and installation to verify that it functions as specified. Test equipment should be properly calibrated.
• Work processes are controlled to ensure that work is done in the appropriate sequence, that the production and installation processes that directly affect quality are performed under controlled conditions, and that special processes, the results of which cannot be verified by subsequent inspection and testing of the product, are appropriately monitored.
• Early detection of nonconforming conditions is accomplished, and positive corrective action is performed in a timely manner.
• Control over the configuration is maintained at all times to ensure the acceptability of equipment as established by design reviews, drawing approvals, design verification testing, and during retrofits and modification work.

The Quality Program should provide the documentation so that the work can be accepted. It should also require the contractor to have an effective QC program as well as provide for the oversight of that program through the grantee's QA activities. For non-traditional contracts, the contractor may be given both QC and QA responsibilities, with the grantee providing oversight of the contractor's quality activities. See Section 3.7 and the following FTA report for additional guidance:

 Quality Assurance and Quality Control Guidelines [Ref. 47].

In addition to construction work, the grantee must also assure the quality of rolling stock. This work is required by FTA in response to Section 12(j) of the Federal Transit Act. Specifically, the FTA requires pre-award and post-delivery audits for buses and rail vehicles. To meet the FTA's requirements, the grantee must perform work-in-process and first article inspections because rolling stock are expensive, complex, and have long lead times. Guidance for meeting this FTA requirement can be found in:

 Conducting Pre-Award and Post-Delivery Audits for Bus Procurement and Conducting Pre-Award and Post-Delivery Audits for Rail Vehicle Procurement [Ref. 48 and Ref. 49].

To meet these requirements a grantee must:

• Complete visual inspections and testing to demonstrate that the vehicles meet the contract specifications.
• For procurement of rail vehicles or more than ten buses, send a resident inspector to the manufacturer's production facility during the final assembly period. The inspector must monitor the final assembly process and complete a final report describing the construction activities and explaining how the construction and operation of the vehicles fulfill the contract specifications.

The grantee's records should include copies of QC measurements, road and performance test sheets, and visual inspection sheets. They should also include an analysis of manufacturing capability, and an explanation of how the transit vehicles fulfill the contract specifications.

5.1.7 Change Control and Management

Changes during the Construction Phase could be the result of the following:

• Differing site conditions, including:
  • Subsurface conditions different from contract representations (Type I)
  • Unknown or unusual conditions not reasonably anticipated (Type II)
  • Conditions created by previous contractors
• Errors or omissions in plans and specifications. The grantee should have an "errors and omissions (E&O) clause" in the designer's contract. The grantee may obtain compensation through the designer's E&O insurance when a change required by an error or omission has a substantial monetary impact.
• Value Engineering. In addition to Design Phase VE studies (see Section 4.6.6), construction contract language should also permit contractors to recommend changes that could save capital costs or life cycle costs for the grantee). Acceptable changes due to a VE recommendation are typically shared 50-50 between the grantee and the contractor, but could be shared 60-contractor/40-grantee to encourage VE. The contractor is responsible for the engineering to support the change, and there should be a minimum value (to at least compensate for the cost of processing and evaluation) established for any VE change that can be proposed to the grantee.
• Grantee action, including:
  • Changing portions of the plans and specifications
  • Altering the time allowed to perform the work
  • Changing the contractor's method of work
  • Stop orders
  • Regulatory changes, such as environmental, security, and safety

Diligence during the Planning and Design Phases of a project can reduce the risk of changes during construction. When they do occur, it is necessary to give notice of the proposed change including all facts and costs in writing as quickly as possible to permit a cost-effective decision to be made. The grantee should have a Change Control Form wherein the source of the change is identified. Most oversight staff are reticent to say that the source of the change was E&O and the form helps to encourage them saying E&O. The contractor should be given official notice either through a change order or by direction of the grantee or its agent, the RE. Documentation should provide back up to the directed change.

No matter how small the change is, its impact should be assessed in terms of time and cost (estimated or actual). FTA's Best Practices Procurement Manual [Ref. 55], Chapter 9, provides guidance in this regard. The construction contract should address the process of pricing changes consistent with FTA requirements (see Circular 4220.1D [Ref. 42], Section 10) and address issues such as equipment rates, overhead, and profit.

5.1.8 Configuration Management

In the Construction Phase, the objective is to implement the project in accordance with the plans and specifications of the contract documents. Specific considerations during the Construction Phase should include:

• Based on identification and design conducted earlier, existing utilities should be protected or relocated, as required.
• Construction contractors should be required to verify existing site conditions and dimensions.
• Construction should be sensitive to potential impacts from air, nose and water pollution, drainage concerns (surface and sewers), archeological concerns and habitat destruction as identified in the EIS.

In the Construction Phase, the technical baseline established during Final Design will be used to monitor construction and fabrication processes. The baseline must be closely adhered to in order to ensure quality, safety, performance, and cost compliance. There may be occasions, however, when changes are required. All changes to the baseline must be technically reviewed and approved by the responsible individuals as set forth in the PMP for the Construction Phase.

During the Construction Phase, special emphasis should be placed on recording and documenting any changes that are approved and completed. Changes become a matter of official record and must be approved and requested in writing. The grantee must establish in writing those individuals authorized to approve construction changes and the dollar thresholds of their authority. At the completion of construction "as-built" drawings must be prepared.

Configuration management is especially important where an existing operating transit system is being modified. The configuration of the existing system would be the baseline; any modifications should be carefully designed to maintain or achieve the desired functionality; the proposed changes would have to be approved by the appropriate grantee managers including engineering, operations, maintenance and system safety; and the implemented changes documented to aid in future training, inspection and maintenance activities.

5.1.9 Delays

A delay is defined as a measure of the lack of progress against how the work was scheduled to be completed. Project delays can only occur if critical path activities are delayed. Delays on other paths consume float and do not result in a project delay. Once a path consumes all float, it becomes critical. Delays to the critical path provide float to other, non-critical paths. Typical causes of delays include additional work, disrupted work, suspended work, or slow progress.

Delays are categorized as excusable or non-excusable. An excusable delay is unforeseeable and not within the contractor's control (e.g., a natural disaster). It can be either non-compensable (the contractor receives a time extension but no compensation for the delay) or compensable (the contractor receives both a time extension and compensation for the delay). A non-excusable delay is considered to be either foreseeable by the contractor or within its control. For a non-excusable delay, the contractor receives no time and no compensation, and could be liable for actual or liquidated damages.

The contract should define appropriate examples of all of these terms. There could also be concurrent delays due to the actions of both the grantee and the contractor, or by one contractor that affects another contractor. A CPM schedule is invaluable in evaluating the impact of an actual delay or a potential change.

Many grantees take the position that there should be no damages for delay. This means that the grantee is willing to give a time extension, but no financial compensation. The disadvantage with a no-damage-for-delay clause in a contract is that it causes contractors to offset the loss of compensation in their bid prices.

5.1.10 Claims Avoidance and Management

The general discussion of claims management in Section 3.6.5 has strong relevance to the Construction Phase. Claims avoidance involves the process necessary to reduce the incidence of claims on construction projects. The techniques described in the following two sub-sections can be applied to act both independently and collectively to reduce claims. The most important tool, however, is to maintain communications between the grantee and contractor to address problems as they arise.

5.1.10.1 Dispute Resolution

A dispute occurs when the parties to a contract cannot agree on the interpretation of contractual conditions. A claim may be submitted by either party when the dispute cannot be resolved. The goal of the project organization should be to avoid disputes and claims through a process of planning and development that results in effective contract documents and procedures. The responsibility for understanding and instituting procedures for minimizing disputes rests at all levels within the project management hierarchy. Examples of actions by grantees that may lead to disputes include:

• Lack of full disclosure of geotechnical information
• Changing plans or specifications during construction
• Inadequacy of bidding information
• Inadequate time in procurement process for bid preparation
• Vague or misleading requirements
• Improper denial of a time extension

Construction contracts should include procedures for responding to disputes that arise between contractors and the grantee. There must also be procedures that permit construction operations to proceed, if prudent, while disputes are reviewed and settled. The legal staff must also ensure contractual documents are well written, and include specific provisions for resolving disputes in a timely manner and at the lowest administrative level possible.

Procedures for dispute resolution should be clearly defined in the contract. The selection of formal dispute resolution procedures should be a function of project size and the grantee's resources. A brief description of the various dispute resolution procedures and their advantages and disadvantages is provided below:

• Negotiation - This is how the majority of claims are settled. It is the least expensive and quickest method of resolution.
• Mediation - A mediator generally is selected by the involved parties after a dispute has arisen. The mediator's function is to provide an atmosphere in which the parties themselves can resolve the dispute. A mediator may make recommendations for settlement, but recommendations are not binding. Mediation offers informality and the good offices of an independent third party. This method lacks finality and may prolong the time required for ultimate resolution because the mediator's recommendations are not binding.
• Arbitration - Arbitrators generally are appointed after a dispute has arisen. Procedures for their appointment and the conduct of hearings are governed by contract, which may incorporate the rules of the American Arbitration Association, and by applicable statutes. The decision of the arbitrators is final and binding on the parties, and not subject to appeal. The advantages of arbitration are the independent expertise and impartiality of the arbitrators. Under the law in most states, there is no right of pretrial disclosure and arbitrators are not bound by rules of law. Also, there is no right of appeal on the merits, only for substantial procedural deficiencies.
• Dispute Review Board (DRB) - This is a relatively new method. The board is selected by the parties when entering into the contract. As the work proceeds, it meets periodically to review progress and incipient problems. The board is intended to have a deterrent effect. The board may serve as an arbitrator or only a mediator, as set forth in the contract documents. Establishing the DRB with ongoing responsibility through the life of a project is an innovative means of dispute avoidance and resolution. Cost considerations may make it practical for use only for very large projects.
• Litigation - Litigation in the local courts is the traditional method of dispute resolution. In some cases a jury may be demanded as a matter of right. Judges generally are not specialists since construction cases are relatively few in number as compared with civil law cases. Litigation in the local courts deprives the parties of the opportunity to have the facts evaluated by an individual with independent expertise. It offers procedural safeguards, however, such as pretrial disclosure and the right of appeal, generally not available in other dispute resolution procedures. Generally, this procedure is the most time-consuming and expensive, and is the least desirable approach.

Disputes can be avoided if commonly expected problems are dealt with in the framework of contract documents. The recognition and elimination of contract elements that are vulnerable to change and misinterpretation can help stem disagreements. Clauses dealing clearly with changed conditions and quantity variations should be included in the contract document. In general, disclaimers and language that avoids responsibility should be omitted.

The PMP should stress that the sections on inspections, scheduling, QA and others are intended as preventative procedures for early identification of potential disputes. It should also define actions to be taken to document contractor performance.

Two documents developed by professional organizations that address construction disputes can provide additional guidance to grantees:

Avoiding and Resolving Disputes in Underground Construction, Successful Practices and Guidelines [Ref. 43]

Alternate Dispute Resolution for the Construction Industry [Ref. 56]

In addition to contract language to mitigate disputes, there should also be provisions to attempt to avoid disputes. An example is the requirement for Escrowed Bid Documents from construction bidders. This allows a grantee to have detailed pricing backup by contractors should a dispute arise. This can provide the grantee with the assumptions and calculations supporting the contractor's bid that could be used to negotiate a change order or claim, if there is disagreement. It can often work to the advantage of a contractor if there is an error or discrepancy in their bid calculations.

5.1.10.2 Partnering

Partnering was addressed in Section 3.5.6.4 as a general risk management tool. During the Construction Phase, partnering is encouraged to help avoid and resolve as many disputes as possible. The grantee should have partnering workshops at the beginning of each major contract for the project. Participation should involve primary project stakeholders including representatives of the grantee, contractor, subcontractors, suppliers, government agencies, designers, local police, business organizations, and others as necessary. The workshop sessions should focus on goal setting, and identify cross-functional requirements and expectations for a successful contract completion.

5.1.11 Documentation (Progress Reporting, Maintenance of Records)

Internal reporting of information is established in the PMP and special management plans. The Construction Management Plan should contain considerable detail for communications and include reporting procedures and requirements for the following:

• Daily work schedules and progress reports
• Construction and fabrication status
• Materials status reporting/materials shortages
• Accident reporting and emergencies
• Delays
• Stoppages
• Daily costs and expenditures
• Grievance procedures
• Project manager, REs, inspector reporting procedures
• Quality assurance and quality control
• Equipment and resource status
• External factors affecting the project

The areas listed above, and many more, constitute the daily and periodic communications responsibilities of the project team. They, in turn, must communicate information to the grantee or representative of the grantee. Each grantee must decide how much information is enough to keep the organization fully informed without overburdening the project team. This balance must be carefully decided before the start of construction and changes kept to a minimum, exceptions handled on a case-by-case basis.

A number of the communications types listed in the preceding paragraph are systems within themselves and are routinely used during all construction projects to report progress and status of various aspects of the project. The majority of these will have already been established by the contractor and are necessary for controlling construction. The grantee should first determine the reporting system(s) to be used by contractors (to be specified in the contract), then determine what additional information is needed to be informed of project progress and keep external groups fully informed. Two of the more important reports the grantee will want to receive frequently will be the summary of project costs and construction (project) progress.

External reporting requirements generated by outside agencies should be factored into the overall reporting system and used to develop a comprehensive listing of information that is used by the grantee's organization, the contractor, and other organizations assisting the grantee.

5.1.12 Contractor Payments

The basis for contractor payments must be clearly defined in the contract documents. It should be closely related to the contractor's pricing as reflected in the bid documents. Where unit pricing predominates, payment based on the number of units accomplished is appropriate, but most transit projects are much more complex.

A method that has been used with increasing popularity is the cost-loaded CPM. An early deliverable requirement of the contractor is a detailed CPM schedule, for which costs are assigned to each activity. The grantee must review and approve the cost-loaded schedule, based on the bid received from the successful contractor. It behooves the grantee to structure the bid sheets to obtain cost breakdowns that can later be compared to the contractor's cost-loaded CPM. Thus payment can be directly tied to the accomplishment of construction activity. For short-duration activities, a single payment might be appropriate. For longer-term activities, progress payments might be appropriate. These should be based on easily measured criteria.

The contractor may be required to maintain an approved job cost account system to adequately capture the costs necessary to demonstrate entitlement under various remedy-granting clauses of the contract, including costs for claims.

The grantee's organization must have a clearly established process for reviewing and approving contractor invoices to permit prompt contractor payment or the identification and resolution of any anomalies.

5.1.13 Project Closeout

The process for project closeout needs to be established in the construction contract documents. Obviously, all contractor requirements must be accomplished in compliance with the contract specifications including items such as:

• Operating and maintenance documentation (manuals) and training
• Completion of punch list items
• Final inspection by the grantee
• Warrantees and guarantees
• Record plans or as-built drawings

An interim step is "beneficial occupancy" when the grantee accepts only part of the total project facilities, systems, or equipment. This often occurs prior to project completion to give the grantee the opportunity to do force account work and to initiate pre-revenue service. It is important to clearly define who has responsibility for O&M, safety, and security at this stage. "Substantial completion" refers to the entire project being accepted for use.

The terms guaranty (guarantee) and warranty are commonly used interchangeably to describe the responsibility of a manufacturer after delivery of a product and to describe the responsibility of a contractor after completion of construction. Though frequently misused in business, the law has assigned slightly different meanings to the two terms. Legally, a guaranty is a separate contract by a third party (analogous to a surety bond), that assumes responsibility in case the principal fails to perform. On the other hand, a warranty is assurance by the principal that it will assume stipulated responsibilities for completed portions of the project. Thus, a manufacturer warrants its material, while the construction contractor provides a third part guaranty for those materials and a warranty for its own workmanship in installing them.

5.2 Contractor Requirements

Project implementation contracts impose many responsibilities on the firms selected to perform the work defined by the plans and specifications. While the specific requirements are delineated in the contract provisions, the grantee's organization must assure that those provisions are consistent with the overall management approach devised for the given project, which allocated roles and responsibilities between the grantee's organization and outside consultants and contractors. Care must be exercised in defining the roles and responsibilities based on the implementation approach, recognizing the inherent differences between traditional, D/B/B, and alternative project delivery methods such as D/B or DBOM.

5.2.1 Permits

During the Design Phase, the grantee is responsible for obtaining master and detailed agreements with all relevant governmental jurisdictions, agencies, and utilities. The contractor should be responsible for obtaining all permits related to the actual construction for which it is responsible. The cost and schedule impacts of this requirement should be the full responsibility of the contractor.

5.2.2 Safety Plan

The contractor should develop a safety plan for the contractor's project responsibilities in accordance with the specification requirements (possibly including the grantee's or project's System Safety Program Plan and/or Construction Safety Manual) for the grantee's review and approval. This may include appropriate revisions of the draft version, if required, to meet the grantee's requirements. An important aspect of the contractor's safety organization is its independence from the organization responsible for accomplishing the actual work. See Section 5.3.

5.2.3 Quality Plan

The grantee should require the contractor to develop a quality plan for the contractor's project responsibilities in accordance with the specification requirements (possibly including the grantee's or project's Quality Program) for the grantee's review and approval. Appropriate revisions of the draft version should be made, if required, to meet the grantee's requirements. An important aspect of the contractor's quality organization is its independence from the organization responsible for accomplishing the actual work. See Section 5.1.6.

5.2.4 Submission of Shop Drawings

Shop drawings, manufacturers' standard schematic drawings, manufacturers' calculations and standard data, product literature and installation instructions should be submitted by the contractor, as specified in the contract specifications, to the grantee's representative for review. Final shop drawings and all manufacturers' product information should become permanent project records.

5.2.5 Submission of Requests for Information

RFIs are a formal means for a contractor to obtain an interpretation of the grantee's design documentation that is not apparent. Omissions, conflicts, or other inconsistencies in the drawings or specifications should be rectified by issuing a change notice to the contractor. Clarifications that do not require a change in the contract specifications should be made by a written response to the RFI.

5.2.6 Schedule

See Section 3.4.4 for a discussion and guidance relating to the construction schedule.

5.2.7 Progress Reporting and Invoices

The contractor should submit periodic progress reports and invoices in accordance with the specification requirements. To encourage early compliance, the grantee should promptly reject all submittals that do not adhere to the contract requirements.

Progress reports should be submitted monthly by the CM and generally include the following:

• Milestone summary schedule and cash flow payment curve
• Current approved submittal schedule
• Fiscal summary for contract and major subcontracts (award amount, executed change orders, current commitment, paid as of ____, % expended, & actual expenditures versus baseline cashflow, % executed change orders)
• A one-month look ahead narrative
• Systems design status by major milestone
• Facilities construction status by major milestone
• Procurement status
• Systems procurement/installation status by major milestone
• Integrated testing status by major milestone
• Submittals/deliverables status by major milestone
• Quality assurance/quality control status including test schedule/status, non-conformance status and actions taken, and audits scheduled/completed and significant findings
• Environmental mitigation status including compliance/non-compliance reports, completed mitigation efforts, public complaints, non-compliance issues raised by regulatory/oversight agencies, and hazardous material status
• Construction safety status
• Photos showing recent progress
• Disadvantaged business enterprise status by subcontractor including last payment time and amount, amount paid to date, original subcontract value, and change orders
• Permit application report including the status of those obtained by the grantee and those obtained by the contractor, and permit modifications
• Coordination with other contracts including meetings and writing communications
• Utility work status by major utility
• Extra work
• Change orders
• Claims status
• Status of other activities including significant events, public affairs and insurance.

5.2.8 Record Drawings and Documentation

The contractor should submit all record drawings and documentation in accordance with the specification requirements.

5.2.9 O&M Manuals and Training

The contractor should prepare and submit all O&M manuals and training program documentation and conduct actual training programs for the grantee's (or operator's) staff in accordance with the specification requirements. The specifications should address the systems and subsystems for which manuals and training are required, the media for the materials, quantity and schedule, formatting standards, and other detailed requirements.

When the capital project is associated with the extension of an existing fixed guideway system, the new O&M manuals and training must be consistent with existing documentation. The operating managers should be closely involved in any proposed revisions to these manuals.

5.2.10 Testing and Inspection

The contractor should conduct testing and inspection in accordance with the specification requirements. The specifications should address the systems and subsystems for which testing is required, the functionality requirements, factory testing, field testing, integration testing, documentation, test planning, scheduling, procedures, reporting, and staff support requirements.

Inspection requirements should be directly related to the contractor's QA/QC responsibilities as documented in their Quality Plan. See Sections 5.1.6 and 5.2.3.

5.2.11 Closeout Activities

Project closeout activities are required (see Circular 5010.1C, Grant Management Guidelines [Ref. 8]) by FTA to determine that all responsibilities and work required of the grantee have been accomplished. These include the following milestones and activities:

• O&M training is conducted by the contractor and/or the grantee, as appropriate.
• Substantial completion when the grantee can take beneficial occupancy of the facility. A Certificate of Beneficial Occupancy is issued by the contractor and the grantee prepares a punch list of open item for the contractor to complete.
• Record plans or as-builts are prepared by the contractor.
• Guaranty and warranty provisions are initiated by the contractor.
• Final Inspection is performed by the grantee.
• Final payment is made by the grantee to the contractor.
• A final report is prepared by the contractor and the grantee that includes the final cost, as-built schedule, and lessons learned.
• Final cost report by the grantee.

5.3 Construction Safety

Both FTA and the grantees have a vested interest in the establishment of policies and programs addressing safety, risk management, and insurance. Careful consideration of these elements will help guard against construction delays, serious injury, extensive costs, and liability considerations that frequently arise in fixed guideway and other transit projects of the size and complexity usually encountered.

The prevention of accidents during execution of a major transit capital project should be a primary concern of all participants and the responsibility of all levels of management and supervision. Accidents cause suffering to those involved, and result in project delay and additional expense to grantees and contractors. A low accident rate is a direct result of a carefully planned safety program that is conscientiously carried out by management and supervisors. Overall responsibility for assuring the development and implementation of a safety program rests with the grantee's project management, and the following discussion is offered as general guidance.

5.3.1 Program Management

The safety program for managing any transit construction project should be formulated on the following basic assumptions:

• Management and supervision are charged with the responsibility of preventing the occurrence of incidents or conditions that could lead to occupational injuries or illnesses.
• Safety should never be sacrificed for production and should be considered to be an integral part of risk management, quality control, cost reduction, and job efficiency.
• A good safety record reflects the quality of management, supervision, and the work force.
• The established policy should be to accomplish the work in the safest possible manner consistent with good work practices. Management at every level should be charged with the task of translating this policy into positive actions.
• Contractors with a good safety record on prior projects tend to maintain a good record and run a safe and efficient job on new work. Consequently, a contractor's safety performance track record on prior work could be a factor in qualifying bidders.

The following general provisions should apply:

• The safety program should outline management safety policies and procedures and be in compliance with and be supplemented by all applicable Federal, state, and local safety and health regulations and standards.
• Specific contract and grantee requirements should be stated.
• In case of a conflict between standards or regulations, the stricter requirement should apply.

The grantee's project manager should have full responsibility for executing and implementing a program of employee protection and accident prevention on the project. A responsible safety manager should be designated to administer and supervise the overall project safety program.

• Safety Manager - The grantee's designated safety manager should have the authority and ability to enforce established safety requirements and should report directly to the project manager. While the contractors are primarily responsible for safety, the grantee's safety manager provides overall safety surveillance and guidance to the contractors and monitors their safety program and safety performance.
• Project Contractors - Each contractor should have full responsibility for executing and implementing a program of employee protection and accident prevention, which is consistent with the requirements of the overall project safety program. Therefore, contractors may also have a safety manager in addition to the overall safety manager provided by the grantee.

The safety manager or other competent safety personnel and project supervisors should conduct daily inspections of work operations, equipment, storage areas, and facilities. Unsafe acts or unhealthy conditions should be noted and pointed out to the supervisor in charge. Serious or repetitive violations should be documented and transmitted to the contractor representative for corrective action.

When a condition or practice exists that could reasonably be expected to cause serious physical harm, extensive damage to property or death, it should be the policy of the project manager to cease operation on the portion of the work affected until the hazardous conditions are corrected. Carelessness or disregard for accepted and mandatory safety and health standards should not be tolerated. Contractors should be expected to discipline or terminate employees who violate established rules and regulations.

Each contractor should be held responsible for its own safety program; however, the project manager should provide overall safety surveillance to ensure compliance with established safety and health policies and procedures.

5.3.2 Pre-Construction Survey to Identify Potential Hazards

As an element of sound system safety program planning approach, a pre-construction survey should be conducted by experts in construction risk management to identify potential hazards that are unique to the specific project under consideration. The approximate frequency and severity of the hazards can provide guidance to the priority for their resolution or mitigation.

5.3.3 Construction Hazard Control

The following safety tools are recommended for consideration during all phases of construction:

• Certification - Approval for projects could be contingent on the grantee and other responsible parties providing written documentation, as part of their PMP, defining the scope and application of a safety management strategy.
• Responsibilities - In general, the RE for the project will be the individual most closely related to the activities of contractors and other participating organizations. The RE is, therefore, the most logical individual for ensuring compliance with all aspects of the contract including applicable safety orders. Designation of a responsible individual may vary from situation to situation, however each project must have a person or directive body in place to manage and monitor safety activities.
• Documentation - Grantees should be responsible for preparing a Safety Management Plan. It is normal practice for contracts to include safety specifications and procedures patterned after Federal and state occupational safety and health standards. Employers are required by law to provide a safe place of employment. Appendix E outlines a table of contents for a safety and security manual which may also be referred to as a Safety Management Plan.
• Procedures and Controls - Contract specifications should describe procedures to be followed in effecting the control and monitoring of a project safety program. As a minimum, the following considerations are recommended:
  • Mandatory safety orientations
  • Weekly safety meetings
  • Site access control procedures
  • Mandatory contractor safety program
  • Preconstruction safety reviews
  • Inspection of unsafe working conditions
  • Inspection of tools
  • Housekeeping
  • Safety awareness reinforcement
  • First aid and medical facilities
  • Fire prevention and protection
  • Emergency response
  • Enforcement of subcontractor programs
  • Sanitation
  • Public protection
  • Protective clothing/equipment
  • Tool box/lunch box meetings
  • Construction equipment operation
  • Employee skill certification.
• Accidents and Emergencies - Procedures are needed to quickly respond to accidents and emergencies to ensure the safety of personnel and property. The RE, control groups, and contractors must move rapidly following an accident or unsafe incident to isolate the cause and prevent recurrence. In a similar manner, the RE and the contractor should agree on procedures to be followed in the event of an emergency, to include persons to be notified, operational procedures, coordination with public agencies, protection of project and private property, and persons against further harm.

5.3.4 Employee Orientation and Training

Employee orientation and training should be accomplished to achieve the objectives of the safety awareness and accident reduction by managing risks and minimizing hazards. It should be directed by the grantee's safety department or the project's risk manager or insurance consultant. Two specific groups of employees need to be addressed - the constructors (probably, but not necessarily, a private contractor) and the transit O&M personnel. When the capital project involves a modification to, or expansion of, an existing transit system or facility, the transit O&M employees will be exposed to the project from the outset. For completely new capital projects, the O&M employees will become involved towards the completion of the project as it approaches integration testing and start-up.

Safety orientation and training should focus on initial awareness and procedure compliance, with periodic updates throughout the project. A continuous process of hazard identification and resolutions should be established as well as a lessons learned/best practices program. Contractors not familiar with fixed guideway transit facilities and their inherent hazards should receive intensive training, and perhaps certification, prior to having access to certain parts of the transit system, such as the trackway.

5.3.5 Safety Inspections and Audits

A systematic construction safety program should include periodic safety inspections and audits by a group that is independent of the people actually doing the construction. Inspection and audit findings should be documented and corrective actions promptly implemented to maintain a high degree of jobsite safety.

5.3.6 Accident Reporting and Investigations

Accident reporting and investigations should be accomplished in accordance with Federal (OSHA), state and local requirements and the project's construction safety program procedures. These should be documented and analyzed, and corrective actions implemented to address inherent hazards.

5.3.7 Use of Contract Incentives

Several grantees and capital projects have used safety incentives in contracts whereby the contractor can benefit financially by having a good construction safety record. These incentives are usually directly related to the savings in insurance premium that results from a good accident performance rate. The potential for monetary reward provides the incentive for contractors to have a proactive and effective safety program.

5.4 Insurance

The concept of insurance protection should be considered carefully and established early in the project's planning and development stage. This area of management requires expert knowledge, and unless a staff of such a caliber is already employed, outside consultants should be hired to design and implement a program and be employed until staff is hired and experienced enough to assume such responsibilities. Although cost-effectiveness should be the paramount goal of any program, the means of achieving this goal require careful analysis.

The grantee has two primary alternatives for insurance protection -- conventional and coordinated, or wrap-up. The latter approach has been gaining popularity for larger projects, but has been criticized for not providing strong incentives for contractor safety performance. The Safety Awareness Program associated with Washington, DC's Metrorail construction, overcomes this limitation by sharing reduced grantee insurance cost with contractors, based on their safety performance. Thus, contractors have a monetary incentive to maintain an effective safety program.

5.4.1 Conventional Contractor Controlled

With the conventional insurance approach, each contractor and subcontractor arranges a separate program of insurance in accordance with grantee specifications. Such an approach may not be cost-effective for any of the following reasons:

• Lack of economy in volume purchase.
• Lack of financial security (stability) of marginal contractors.
• Specifications that are the minimum necessary to protect the grantee.
• The difficulty of administering many individual policies with varying limits of liability subject to different terms and expiration dates.
• Redundant charges by contractors (e.g., general and administrative overhead and profit).
• Project delay from cross litigation by various insurance companies over claim payments.
• Contractor delay or failure to collect claims from substandard insurance companies (the grantee may be required to make dollar advances to keep contractors solvent).

5.4.2 Coordinated (Owner Controlled or Wrap Up) Insurance Program

An alternative to conventional insurance is an owner (grantee)-designed and owner-controlled program known as a coordinated insurance program (CIP) or "wrap-up" insurance. While CIP is controversial and subject to debate, it can be cost-effective. The advantages of an owner-controlled program are that:

• The owner, not the contractor, negotiates policy terms and costs, eliminating redundant charges for expense and profit items.
• The administrative burden of maintaining records on contractor compliance with contract specifications for insurance is eliminated. (All contractors have the same coverage, limits, and expiration dates of polices.)
• The safety and loss control programs are uniform.
• Cross litigation is eliminated.
• Claim handling is uniform.
• Small and minority contractor participation in the project is not excluded because insurance is available.
• Insurance costs are confined solely to the project through self-rating.
• Cash flow advantages become available to the owner.

Its disadvantages are:

• Insurance costs are highlighted in one large package.
• The owner's staff may not be adequately trained or available to handle a program.
• The contractor should be fully responsible for all costs related to its own performance.
• The contractor may be better able to manage its own insurance and safety programs (it takes the consequences if it is wrong and relieves the owner of this burden).
• Management of the risk management program is costly.
• Insurance costs are not subject to as many competitive forces.

The types of insurance usually placed in an owner-controlled program are workers' compensation; comprehensive general liability, including products and completed operations; railroad protective liability; and builder's risk. This coverage applies to the owner and all contractors involved in the project, with the exception of hauling contractors (unless activities are exclusive to the project) and supply contractors. Surety bonds are the responsibility of each contractor. However, when an owner-controlled program exists, it is possible to develop a small and minority-contractor surety bond program with insurance companies to enhance the probability of participation by these contractors. The following is a source of information on wrap-up insurance and comparison to conventional:

"Wrap-Ups: How to Consolidate Construction Insurance and Gain Control, Cost Savings and Improved Community Relations" [Ref. 57].

5.4.3 Partner Controlled Insurance

As an alternative approach to owner-controlled insurance, partner controlled insurance is designed to provide project related insurance to all project participants. The insurance, however, is controlled by a consortium representing both the grantee and the contractors, with appropriate incentive for safe construction by all project participants.