Estimate of probable construction cost at the various phases


You are a Project Manager in the Facilities Department at Eastern Michigan University, your alma mater.

You have just received word that the Joint Capital Outlay Committee of the State Legislature has approved "planning money" sufficient to allow the University to retain an architect to design the new School of Technology Building. It is anticipated that the Building will be about 120,000 square feet, and will cost about $300/sqft, - $36,000,000. The architectural fee is expected to be about 8% of the construction cost, $2,880,000.

The University intends to construct a one of a kind, "signature," state-of-the-art facility, capable of obtaining LEEDS Gold certification, to be named after Robert J. Wackinsmack, a builder extraordinaire, an alum of the University, and a large donor to the University's Foundation.

As with all University projects, funds are limited and budget control is critical.

Prior to JCOC's announcement this morning, the University had issued an RFP for architectural services; received and evaluated proposals; conducted interviews of the top three finalists; and, selected Never, Make, Mistakes & Associates, PC (NMMA), nationally recognized architects, to design the building.

Now that the University has received the money to pay for the design services, you have been assigned the responsibility to negotiate the contract for professional services with NMMA.

A few days ago, NMMA sent you a proposed contract for your review, consisting of AIA Form Document, B101, the Agreement between Owner and Architect for professional services.

NMMA has filled in the blanks on the form document and has added a few special provisions. Included in the changes made by NMMA are:

1. Elimination of the requirement to provide an estimate of probable construction cost at the various phases of design;

2. Quotation in the amount of an additional $500,000 for LEEDS Silver design as an additional service, without a guarantee of actually obtaining the certification;

3. Elimination of the requirement for providing the architect's certificates regarding the contractor's pay applications;

4. Addition of a Limitations on Liability clause, limiting NMMA's liability for errors and omissions to be no greater than $50,000;

5. Providing for the Architect's compensation to be allocated as 85% ($2,448,000) for design services (schematics, design development, construction documents); 15% ($432,000) for construction administration services; and, $500,000 for LEEDS design.

At the meeting you held to discuss contract terms, NMMA was insistent that the University agree to using Form B101 as the form for the contract, and that the University agree to the above conditions. NMMA also mentioned that it was unwilling to provide the University with ownership of the copyright on NMMA's professional work product.

After the meeting, you are feeling depressed since NMMA refused to negotiate or otherwise compromise its bargaining position on the contract terms.

Please draft a memo to your boss, I. M. Smart, Director of Facilities, which sets forth your comments and concerns about going forward under the conditions proposed by NMMA.

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Project Management: Estimate of probable construction cost at the various phases
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