Common use of DIRECT CONSTRUCTION COST Clause in Contracts

DIRECT CONSTRUCTION COST. Direct Construction Cost means the sum of the amounts that the Design/Build Contractor actually and necessarily incurs constructing the Work in strict compliance with the Construction Documents. Direct Construction Cost includes only the cost categories set forth in this Article and does not include the Pre-Construction Phase Fees or the Construction Phase Fees unless specifically noted. References in the Uniform General Conditions for University of Texas System Building Construction Contracts to adjustments in “cost” or “costs” mean the Direct Construction Cost. General Conditions Costs Design/Build Contractor is entitled to receive payment for the actual cost of the allowable General Conditions items incurred after receipt of a Notice to Proceed with Construction from the Owner through Substantial Completion of the Project plus thirty (30) calendar days. Design/Build Contractor is not entitled to reimbursement for General Conditions Costs incurred before receipt of the Notice to Proceed. General Conditions Costs incurred after Substantial Completion must be approved in advance by the Owner. Allowable General Conditions items are identified below and further detailed in the attached Exhibit. These items shall be included in the General Conditions cost amount shown as a line item in the Guaranteed Maximum Price Proposal and as detailed on the schedule of values. Items not specifically included below or in the exhibit will not be allowed as a General Condition costs. Personnel Costs. The actual Worker Wage Rate for Design/Build Contractor’s hourly employees and the Monthly Salary Rate of Design/Build Contractor’s salaried personnel who are identified to the Owner in advance and in writing but only for the time actually stationed at the Project site with the Owner’s prior consent. The Project Manager’s Monthly Salary Rate may be included in the General Conditions Costs only when the Project Manager is directly managing the Project. All personnel costs are subject to audit to determine the actual cost of the wages, salaries and allowable employer contributions incurred by the Design/Build Contractor for services performed for the Project. Costs of long-distance telephone calls, telegrams, postage, package delivery and courier service, hardwired telephone service, and reasonable expenses of Design/Build Contractor’s jobsite office if incurred at the Project site and directly and solely in support of the Work. Costs of materials, supplies, temporary facilities, equipment, and hand tools (except those customarily owned by construction workers), supplied to the Project site by Design/Build Contractor, if such items are fully consumed in the construction of the Work and are included in the list of allowable General Condition Line Items. Cost for used items shall be based on fair market value and may include transportation, installation, and minor maintenance costs, and removal costs. If an item is not fully consumed in the construction of the Work, its cost shall be based on actual cost of the item less its fair market salvage value. Rental charges for temporary facilities, equipment, and hand tools (except those customarily owned by construction workers), supplied to the Project site by Design/Build Contractor, provided they are included in the list of allowable General Condition Line Items and Owner has approved the rentals and the rental rates in advance and in writing. Rental rates may include transportation, installation, and minor maintenance costs, and removal costs. For tools, machinery or construction equipment rented directly from the Design/Build Contractor, the rental rate, including freight and delivery costs and all operating expenses except labor, shall be approved in advance by the Owner and shall be in accordance with the “Rental Rate Blue Book for Construction Mobilization Costs” published by Primedia, latest edition, but no higher than the prevailing competitive rates for rental of similar equipment in the Project vicinity. The aggregate rental cost of any item charged to Owner shall not exceed ninety percent (90%) of the purchase price and maintenance cost of the item. If the anticipated aggregate rental cost for an item of equipment exceeds ninety percent (90%) of the purchase and maintenance price, Design/Build Contractor shall purchase the equipment and turn it over to Owner upon final completion of the Work or, at Owner’s option, credit the Owner with the fair market resale value of the item. Permit and inspection fees that are not subject to exemption. Premiums for insurance and bonds to the extent directly attributable to this Project. Premiums for subcontractor bonds and/or subcontractor default insurance purchased for subcontractor work are excluded from General Conditions costs. Governmental sales and use taxes directly attributable to the General Conditions Items that are not subject to exemption. Taxes paid on materials or services that were entitled to tax exemption will not be reimbursed by Owner as Direct Construction Costs. Cost of the Work Design/Build Contractor is entitled to receive payment for the actual cost of the allowable Cost of the Work items incurred after receipt of Owner’s written authorization to commence the Construction Phase Work through Final Completion of the Project. Design/Build Contractor is not entitled to reimbursement for Cost of the Work costs incurred before receipt of Owner’s written authorization. Cost of the Work includes the following: Costs of materials and equipment purchased directly by the Design/Build Contractor and incorporated into or consumed in the performance of the Work, including transportation charges, and a reasonable and customary allowance for waste and spoilage. Payment for stored materials is subject to the Uniform General Conditions for University of Texas System Building Construction Contracts. Costs of site debris removal and disposal in accordance with all applicable laws and regulations if not otherwise included in General Conditions. Payments made to Subcontractors and their vendors or suppliers by Design/Build Contractor for the subcontract work in accordance with the Construction Documents and the requirements of the subcontracts with the Subcontractors, vendors or suppliers, however, the cost of subcontractor payment and performance bonds, if any, are specifically excluded from the Cost of the Work. Payments earned by Design/Build Contractor for self-performed subcontract work, other than General Conditions work, in accordance with the Construction Documents and the terms of this Agreement and approved by the Owner. Testing fees pursuant to the Uniform General Conditions for University of Texas System Building Construction Contracts. Intellectual property royalties and licenses for items specifically required by the Construction Documents which are, or will be, incorporated into the Work. Costs associated with any subcontractor default insurance program ( sometimes referred to as SUBGUARD) provided or required by the Design/Build Contractor ARE EXPLICITLY EXCLUDED from the Cost of the Work. Design/Build Contractor’s Contingency The Guaranteed Maximum Price Proposal may include a Design/Build Contractor’s Contingency amount to be used to fund increases in the Direct Construction Cost of the Project identified through the refinement, development and completion of the Construction Documents or procurement of the Work. Any re-allocation of funds from the Design/Build Contractor’s Contingency to cover increases in the Direct Construction Cost must be approved by the Owner in advance and in writing, such approval not to be unreasonably withheld. In written requests to use the Design/Build Contractor’s Contingency, the Design/Build Contractor shall provide detailed documentation of the scope of work affected and the bases for any increases in costs. The Design/Build Contractor’s Contingency is specifically not to be used for Contractor rework, unforeseen conditions, cost increases caused by lack of coordination or communication with the Project Architect or trade Subcontractors, or to correct errors or omissions in the Construction Documents. As the Construction Documents are finalized and the Buyout of the Work progresses the Design/Build Contractor’s Contingency amount shall be reduced by mutual agreement of Owner and Contractor. Any balance in the Design/Build Contractor’s Contingency fund remaining at the end of the Project shall be returned to the Owner as savings.

DIRECT CONSTRUCTION COST. Direct Construction Cost means the sum of the amounts that the Design/Build Contractor actually and necessarily incurs constructing the Work in strict compliance with the Construction Documents. Direct Construction Cost includes only the cost categories set forth in this Article and does not include the Pre-Construction Phase Fees or the Construction Phase Fees unless specifically noted. References in the Uniform General and Supplementary Conditions for University of Texas System Building Construction Contracts to adjustments in “cost” or “costs” mean the Direct Construction Cost. General Conditions Costs Design/Build Contractor is entitled to receive payment for the actual cost of the allowable General Conditions items incurred after receipt of a Notice to Proceed with Construction from the Owner through Substantial Completion of the Project plus thirty (30) calendar daysProject. Design/Build Contractor is not entitled to reimbursement for General Conditions Costs incurred before receipt of the Notice to Proceed. General Conditions Costs incurred after Substantial Completion must be approved in advance by the Owner. Allowable General Conditions items are identified below and further detailed in the attached Exhibit. These items shall be included in the General Conditions cost amount shown as a line item in the Guaranteed Maximum Price Proposal and as detailed on the schedule of values. Items not specifically included below or in the exhibit will not be allowed as a General Condition costs. Personnel Costs. The actual Worker Wage Rate for Design/Build Contractor’s hourly employees and the Monthly Salary Rate of Design/Build Contractor’s salaried personnel who are identified to the Owner in advance and in writing but only for the time actually stationed at the Project site with the Owner’s prior consent. The Project Manager’s Monthly Salary Rate may be included in the General Conditions Costs only when the Project Manager is directly managing the Project. All personnel costs are subject to audit to determine the actual cost of the wages, salaries and allowable employer contributions incurred by the Design/Build Contractor for services performed for the Project. Costs of long-distance telephone calls, telegrams, postage, package delivery and courier service, hardwired telephone service, and reasonable expenses of Design/Build Contractor’s jobsite office if incurred at the Project site and directly and solely in support of the Work. Costs of materials, supplies, temporary facilities, equipment, and hand tools (except those customarily owned by construction workers), supplied to the Project site by Design/Build Contractor, if such items are fully consumed in the construction of the Work and are included in the list of allowable General Condition Line Items. Cost for used items shall be based on fair market value and may include transportation, installation, and minor maintenance costs, and removal costs. If an item is not fully consumed in the construction of the Work, its cost shall be based on actual cost of the item less its fair market salvage value. Rental charges for temporary facilities, equipment, and hand tools (except those customarily owned by construction workers), supplied to the Project site by Design/Build Contractor, provided they are included in the list of allowable General Condition Line Items and Owner has approved the rentals and the rental rates in advance and in writing. Rental rates may include transportation, installation, and minor maintenance costs, and removal costs. For tools, machinery or construction equipment rented directly from the Design/Build Contractor, the rental rate, including freight and delivery costs and all operating expenses except labor, shall be approved in advance by the Owner and shall be in accordance with the “Rental Rate Blue Book for Construction Mobilization Costs” published by Primedia, latest edition, but no higher than the prevailing competitive rates for rental of similar equipment in the Project vicinity. The aggregate rental cost of any item charged to Owner shall not exceed ninety percent (90%) of the purchase price and maintenance cost of the item. If the anticipated aggregate rental cost for an item of equipment exceeds ninety percent (90%) of the purchase and maintenance price, Design/Build Contractor shall purchase the equipment and turn it over to Owner upon final completion of the Work or, at Owner’s option, credit the Owner with the fair market resale value of the item. Permit and inspection fees that are not subject to exemption. Premiums for insurance and bonds to the extent directly attributable to this Project. Premiums for subcontractor bonds and/or subcontractor default insurance purchased for subcontractor work are excluded from General Conditions costs. Governmental sales and use taxes directly attributable to the General Conditions Items that are not subject to exemption. Taxes paid on materials or services that were entitled to tax exemption will not be reimbursed by Owner as Direct Construction Costs. Cost of the Work Design/Build Contractor is entitled to receive payment for the actual cost of the allowable Cost of the Work items incurred after receipt of Owner’s written authorization to commence the Construction Phase Work through Final Completion of the Project. Design/Build Contractor is not entitled to reimbursement for Cost of the Work costs incurred before receipt of Owner’s written authorization. Cost of the Work includes the following: Costs of materials and equipment purchased directly by the Design/Build Contractor and incorporated into or consumed in the performance of the Work, including transportation charges, and a reasonable and customary allowance for waste and spoilage. Payment for stored materials is subject to the Uniform General Conditions for University of Texas System Building Construction Contractsand Supplementary Conditions. Costs of site debris removal and disposal in accordance with all applicable laws and regulations if not otherwise included in General Conditions. Payments made to Subcontractors and their vendors or suppliers by Design/Build Contractor for the subcontract work in accordance with the Construction Documents and the requirements of the subcontracts with the Subcontractors, vendors or suppliers, however, the cost of subcontractor payment and performance bonds, if any, are specifically excluded from the Cost of the Work. Payments earned by Design/Build Contractor for self-performed subcontract work, other than General Conditions work, in accordance with the Construction Documents and the terms of this Agreement and approved by the Owner. Testing fees pursuant to the Uniform General Conditions for University of Texas System Building Construction Contractsand Supplementary Conditions. Intellectual property royalties and licenses for items specifically required by the Construction Documents which are, or will be, incorporated into the Work. Costs associated with any subcontractor default insurance program ( sometimes referred to as SUBGUARD) provided or required by the Design/Build Contractor ARE EXPLICITLY EXCLUDED from the Cost of the Work. Design/Build Contractor’s Contingency The Guaranteed Maximum Price Proposal may include a Design/Build Contractor’s Contingency amount to be used to fund increases in the Direct Construction Cost of the Project identified through the refinement, development and completion of the Construction Documents or procurement of the Work. Any re-allocation of funds from the Design/Build Contractor’s Contingency to cover increases in the Direct Construction Cost must be approved by the Owner in advance and in writing, such approval not to be unreasonably withheld. In written requests to use the Design/Build Contractor’s Contingency, the Design/Build Contractor shall provide detailed documentation of the scope of work affected and the bases for any increases in costs. The Design/Build Contractor’s Contingency is specifically not to be used for Contractor rework, unforeseen conditions, cost increases caused by lack of coordination or communication with the Project Architect or trade Subcontractors, or to correct errors or omissions in the Construction Documents. As the Construction Documents are finalized and the Buyout of the Work progresses the Design/Build Contractor’s Contingency amount shall be reduced by mutual agreement of Owner and Contractor. Any balance in the Design/Build Contractor’s Contingency fund remaining at the end of the Project shall be returned to the Owner as savings.