Common use of Methods of Computing Equitable Adjustments Clause in Contracts

Methods of Computing Equitable Adjustments. A. Equitable adjustments in the Contract Price shall be determined according to one of the following methods, or a combination thereof, as determined by DCAMM: (1) fixed price basis, provided that the fixed price shall be inclusive of items (a) through (g) below and shall be computed in accordance with those provisions and as detailed in DCAMM’s Instructions and Procedures Regarding Change Orders, Contract Modifications and Equitable Adjustments (Form 13); (2) estimated lump sum basis to be adjusted in accordance with Contract unit prices or other agreed upon unit prices provided that the unit prices shall be inclusive of all costs related to such equitable adjustment; (3) time and materials basis to be subsequently adjusted on the basis of actual costs (but subject to a predetermined "not to exceed limit") calculated as follows: a) the direct cost (or credit) for labor at the minimum wage rates established for this Contract pursuant to M.G.L. c. 149, § 26-27H; FOR DCAMM USE ONLY b) plus (or minus) the cost of Workmen’s Compensation Insurance, Liability Insurance, Federal Social Security and Massachusetts Unemployment Compensation, which are to be calculated using an allowance equal to 40% applied to said rate. The rate of (40) percent is inclusive of all insurances, taxes, general conditions, overhead, superintendence, fee, and profit. No other expenses are allowed, for example, sick time, vacation time, etc. are included in the all-inclusive rate. Documentation must be provided if a higher percentage is requested and will only be accepted for Workmen’s Compensation over 12.5%. For any change that involves a credit of labor a value of 85% of the approved rate is to be credited.

Methods of Computing Equitable Adjustments. A. Equitable adjustments in the Contract Price shall be determined according to one of the following methods, or a combination thereof, as determined by DCAMMthe Awarding Authority: (1) fixed price basis, provided that the fixed price shall be inclusive of items (a) through (g) below and shall be computed in accordance with those provisions and as detailed in DCAMMthe Awarding Authority’s Instructions and Procedures Regarding Change Orders, Contract Modifications and Equitable Adjustments (Form 13); (2) estimated lump sum basis to be adjusted in accordance with Contract unit prices or other agreed upon unit prices provided that the unit prices shall be inclusive of all costs related to such equitable adjustment; (3) time and materials basis to be subsequently adjusted on the basis of actual costs (but subject to a predetermined "not to exceed limit") calculated as follows: (a) the direct cost (or credit) for labor at the minimum wage rates established for this Contract pursuant to M.G.L. c. 149, § 26-27H; FOR DCAMM USE ONLY 27H;‌ (b) plus (or minus) the cost of Workmen’s Compensation Insurance, Liability Insurance, Federal Social Security and Massachusetts Unemployment Compensation, which are to be calculated using an allowance equal to 40% applied to said rate. The rate of (40) percent is inclusive of all insurances, taxes, general conditions, overhead, superintendence, fee, and profit. No other expenses are allowed, for example, sick time, vacation time, etc. are included in the all-inclusive rate. Documentation must be provided if a higher percentage is requested and will only be accepted for Workmen’s Compensation over 12.5%. For any change that involves a credit of labor a value of 85% of the approved rate is to be credited. (c) plus (or minus) the actual direct additional premium costs and expenses incurred as a result of collective bargaining agreements or other agreements between organized labor. No allowance for markups is allowed on these costs. (d) plus the direct cost of materials and use of equipment; an allowance equal to 15% of the amount of materials and equipment for General Conditions, overhead, superintendence, fee, and profit can be applied. (e) certain miscellaneous services provided and approved by DCAMM (e.g. police details, utilities, etc.) may be included and are subject to a 5% markup. (f) plus (or minus) the actual direct premium cost of payment and performance bonds required of the Prime Contractor and certain subcontractors for this Contract. (g) the Prime Contractor shall receive an allowance equal to 5% of the sum of items (a) through (e) above for overhead, superintendence, fee, and profit when the work is performed by Subcontractors. Subcontractors can also apply an allowance equal to 5% of the sum of items (a) through (e) above for overhead, superintendence, fee, and profit when the work is performed by Sub-tier Subcontractors.‌ (4) The Prime Contractor and its subcontractors are required to anticipate annual updated minimum wage schedules in accordance with ▇.▇. ▇. 149, § 27 and shall not be entitled to claim additional compensation for base bid contract work due to updated minimum wage schedules. B. If the net change is an addition to the Contract Price it shall include the Prime Contractor’s overhead, superintendence, fee and profit. On any change that involves a net credit, no allowance for overhead, superintendence and profits shall be included. Charges for small tools known as “tools of the trade” are not to be computed in the amount of any change in the Contract Price. C. Adjustments in Subcontractors made under the provisions of the Procedure for Award of Subcontracts shall not be considered Change Orders and shall not entitle the Prime Contractor to any adjustments for overhead, profit, and superintendence, although the Awarding Authority may require that such Contract adjustments be processed on standard Change Order and equitable adjustment forms. D. Refer to Appendix C (Commonly Used Forms) for Instructions Regarding Change Orders and Contract Modifications (DCAMM Form 13) and Request for Approval of Wages and Rates for Change Order Pricing (DCAMM Form 14) and Format for Submission of Change Order (DCAMM Form 15). Section 2 (Directions for Computing Costs for Changes in the Work) of DCAMM Form 13 contains specific information for computing the cost of changes. DCAMM Form 14 and DCAMM Form 15 are available electronically and will be provided to the Prime Contractor prior to the start of construction.‌ E. The Prime Contractor, all Subcontractors, and sub-tier subcontractors shall utilize DCAMM Form 15 when submitting Change Orders.