Section 7: Cost-plus not to exceed guaranteed maximum price form of contract
Section 7. (a) Each contract for a building project procured pursuant to sections 1 to 9, inclusive, shall utilize a cost-plus not to exceed guaranteed maximum price form of contract in which the public agency shall be entitled to monitor and audit all project costs. The construction management at risk firm shall not be entitled to share in any savings between the final guaranteed maximum price figure and the final cost of the work including the fee of the construction management at risk firm, except that the public agency may include an incentive clause with the contract for various performance objectives; but, the incentive clause shall not include an incentive that exceeds 1 per cent of the estimated construction cost.
(b) In establishing the schedule and process for determining a guaranteed maximum price, the contract between the public agency and the construction management at risk firm shall comply with the following:
(1) The guaranteed maximum price shall be based on design documents which are no less developed than 60 per cent construction documents;
(2) The guaranteed maximum price shall be agreed to as an amendment to the contract between the public agency and the construction management at risk firm;
(3) The guaranteed maximum price amendment shall be executed before the commencement of any construction work; except that the public agency, before the execution of the guaranteed maximum price amendment, may commence construction, so long as the public agency executes a separate amendment to the contract with the construction manager at risk detailing the scope of work selected to commence before execution of the guaranteed price amendment. The separate amendment shall state the sum for the scope of work, which shall include the cost of the work, the general conditions and additional fee, if any, for the construction manager at risk; but, any class of work included in the scope of work selected to commence before the execution of the guaranteed maximum price amendment shall be subject to the trade contractor selection process set forth in section 8, for the stated scope of work only. In the event that a guaranteed maximum price cannot be successfully negotiated between the public agency and the construction manager at risk, any trade contractor agreement between the construction manager at risk and a trade contractor for work selected to commence before execution of the guaranteed maximum price amendment may be assigned to the public agency or to another construction manager at risk designated by the public agency, without the assent of the trade contractor, and the public agency or the designated construction manager at risk and the trade contractor shall be bound by the terms of the trade contractor agreement; and
(4) The guaranteed maximum price amendment to the contract between the public agency and the construction management at risk firm shall include a detailed line item cost breakdown by trade, including any cost for work selected to commence before the execution of the guaranteed maximum price amendment; dollar amounts for the construction management at risk firm's contingency; dollar amounts for the general conditions and fees, including any amounts related to work selected to commence before the execution of the guaranteed maximum price amendment; a list of all the drawings, specifications and other information on which the guaranteed maximum price is based; a list of allowances and statement of their basis; a list of any assumptions or clarifications on which the guaranteed maximum price is based; the dates for substantial and final completion on which the guaranteed maximum price is based; and a schedule of applicable alternates and unit prices.
Upon establishment of the guaranteed maximum price, the construction management at risk firm shall provide all required performance and payment bonds in the amount of the guaranteed maximum price within 5 business days after the execution of the guaranteed maximum price amendment.
(c) In the event that a guaranteed maximum price cannot be successfully negotiated between the public agency and the construction management at risk firm, the selection committee may commence negotiations with 1 additional proposer starting with the next highest ranked proposer. In the event that a contract and guaranteed maximum price amendment cannot be successfully negotiated between the selection committee and the next highest ranked proposer, the public agency shall terminate the procurement process and shall instead procure the project in accordance with sections 44A to 44J, inclusive, of chapter 149. Upon the termination, the public agency may not re-apply for approval to use the construction management at risk delivery method for the same building project unless the building project has been materially changed in form or function.