CONTACTS 
0201 - Chips & Technologies, Inc                                                                                                                                          O-00000039 0101
020101 - Mr. Morris E. Jones; Sr. Vice President

SUBJECTS
Morris home construction

0403 -
0403 -    ..
0404 - Summary/Objective
0405 -
040501 - Follow up ref SDS 3 0000, ref SDS 2 0000.
040502 -
040503 - Pulled an AIA contract short form to aid Morris in organizing his home
040504 - expansion project.  Assembled memo of prior discussions, and submitted
040505 - to Morris for consideration. ref DCT 1 0001  Also, submitted this
040506 - record with further review of contract considerations to assist
040507 - Morris. ref DCT 2.
040508 -
040509 -
040510 -
040512 -  ..
0406 -
0407 -
0408 - General
0409 -
040901 - Even small construction projects like a $450K home expansion can
040902 - become very complex, and overwhelm everyone, if not carefully managed
040903 - day-to-day.  On a project of this size, typically a home owner has the
040904 - best chance of a successful project by hiring an architect to manage
040905 - the contractor in accomplishing objectives and requirements in the
040906 - plans and specifications.  Morris' experience managing complex
040907 - engineering projects at Chips and Technologies provides background and
040908 - expertise to save the cost of a professional, by managing the work
040909 - himself, as he plans in this case.  Morris expects that Teri can
040910 - handle daily communications, while he is at work.
040912 -  ..
040913 - As with all projects, best practice for complex construction with
040914 - complex contracting arrangements requires a record (like this one) on
040915 - planning and performing daily work.  Capturing the record of
040916 - communication in meetings, calls, and documents and tracking alignment
040917 - with contract plans and specifictions strengthens command and control
040918 - of the work to realize cost and le objectives.  Some feel this is
040919 - unnecessary overkill, but it has proven effective, reported last year
040920 - on 880815. ref SDS 1 0770
040921 -
040922 -
040924 -  ..
0410 -
0411 -
0412 - Photographs
0413 -
041301 - Take a good set of photographs of the site prior to any work being
041302 - done.  Take progress pictures once a week.  Date all photographs.
041303 - Take particular pictures of actual construction you believe may
041304 - deviate from the requirements of the contract.
041305 -
041306 -
041308 -  ..
0414 -
0415 -
0416 - Retention
0417 -
041701 - Industry standards are 10% withheld from monthly progress payments to
041702 - satisfy potential leins.
041703 -
041704 -
041706 -  ..
0418 -
0419 - Schedule of payments
0420 -
042001 - If you perform under a T&M arrangement, this is less of a concern.
042002 - If you enter a lump sum contract, a procedure is needed to establish
042003 - the value of completed work.  Ordinarily the architect performs this
042004 - service by reviewing and certifying the appropriateness of monthly
042005 - billings.
042007 -  ..
042008 - The procedure is one in which prior to commencement of the work the
042009 - contractor submits a propossed schedule of values (similar but
042010 - usually in less detail than the estimate the contractor has appar-
042011 - ently given to you).  The parties may agree or negotiate about the
042012 - distribution of the contract price among the items in the schedule.
042013 - But this is why you need to establish the contract scope, so a
042014 - particular price can be agreed upon in order to create the schedule
042015 - of values for progress payments.
042017 -  ..
042018 - In the interim you can perform the demolition on T&M not to exceed $x
042019 - amount.   Hopefully the amount is clear from the contractor's esti-
042020 - mate on demolition so this much of the work can get going.
042021 -
042022 -
042024 -  ..
0421 -
0422 - Liquidated damages
0423 -
042301 - There should be a nominal amount or such other amount as Morris and
042302 - counsel determine reflect the actual damages that may arise from late
042303 - completion.
042304 -
042306 -  ..
042307 - Architect
042308 - AIA contract Article 10
042309 -
042310 - The AIA short form defines responsibilities for an architect.  You
042311 - need to work out which of those responsibilities (as listed in the
042312 - contract form) you will perform and which you will have performed by a
042313 - professional.
042314 -
042315 -            [On 890807 Morris followed up; contractor proposed using
042316 -            AIA, and Morris got good advice from counsel. ref SDS 4
042317 -            9O6I
042319 -  ..
042320 - Counsel should formulate language to modify and make clear in the
042321 - agreement the extent to which you will administer the contract, as
042322 - discussed under Article 10.
042323 -
042324 -            [On 890807 Morris has consulted counsel; the contractor
042325 -            agreed (proposed) using the AIA short form contract.
042326 -            ref SDS 4 9O6I
042328 -  ..
042329 - One of the most important issues, especially on remodels, is change
042330 - orders.  Another is identification of defective work.  The value of
042331 - an architect is that they come with insurance also.  They have to
042332 - decide when the work conforms with the contract and when it is
042333 - defective.  This insulates you from the role of being heavy handed
042334 - and gives you some protection against error.  Without an architect
042335 - you have considerably less protection.
042336 -
042338 -  ..
042339 - Submittal Requirements
042340 -
042341 - Shop drawings, how do you know when such drawings are or are not
042342 - needed?  The entire issue of submittals which we discussed briefly the
042343 - other day needs some thought.  Perhpas you can satisfy yourself this
042344 - is a non-issue through discusisons with your designer.  In that case,
042345 - I would request a letter from the designer that in his opinion no
042346 - submittals are needed and why.
042347 -
042348 -
042350 -  ..
042351 - Disputes
042352 - Articles 10.5 - 10.8
042353 -
042354 - Recommend that Morris discuss with counsel the elimination of the
042355 - disputes clause, article 10.8, or modify it to permit arbitration upon
042356 - mutual concurrance of the parties.  This gives Morris greater
042357 - leverage, particularly since you are paying cash for the thing.
042359 -  ..
042360 - If the contractor insists upon an arbitration clause  then require
042361 - that findings of facts and conclusions of law be included in the
042362 - decision, and that same may be appealed by either party.  This also
042363 - gives you greater leverage.
042365 -  ..
042366 - Counsel needs to formulate alternate language that triggers the
042367 - disputes provisions, since Morris will not have an architect.
042368 -
042369 -
042371 -  ..
042372 - Insurance Requirements
042373 -
042374 - Review with counsel the various types of coverage and the limits
042375 - needed by the contractor and by you.
042377 -  ..
042378 - Recommend the contractor provide a pay and performance bond.  This
042379 - might be tricky if the contract is T&M.
042381 -  ..
042382 - Contractor should furnish certificates showing proof of this coverage
042383 - before commencing any work.  There should also be a written agreement
042384 - in force between Morris and the contractor before work starts, even if
042385 - it is only a partial agreement to perform demolition.
042387 -  ..
042388 - That agreement should clearly establish surity covereage.
042389 -
042390 -
042391 -
042392 -
042393 -
042394 -
042395 -
042396 -
0424 -