MANAGEMENT AGREEMENT FOR THE CONSTRUCTION
This agreement is made on this day of ___________, between The Trustees of the ___________ Foundation (hereinafter called Employer), and the Center for Environmental Structure (hereinafter called CES) acting as Management Contractor and General Contractor of record, for the purpose of building the ___________ at ___________ (hereafter called Project), according to the plans and Sub-Contract arrangements prepared by the Center for Environmental Structure.
This Agreement is incomplete at the time of signing and is therefore subject to the overriding conditions given at Appendix 3 - Start-Up Arrangements.
ARTICLE 1. DEFINITION OF PROJECT
The work is shown on the drawings that are attached to this agreement at Appendix 1, and specified in the cost plan of proposed Sub-Contract construction operations attached to this agreement at Appendix 2.
The following aspects of the work will be built as specified in the drawings:
a. Siting of the building as shown on the site plan - Drawing No AL-1-F---
b. Configurations and dimensions of the building and rooms as shown on the floor plan - Drawing No AL-2-F---
It is understood that drawings depicting the Project have been prepared for statutory planning and building regulation approval purposes, and are not to be construed as binding architectural plans and specifications. Construction details will change as Sub-Contracts are settled.
The intent of this agreement is to build the building according to the volumetric envelope given in planning permission documents, and with the visitor flow and room layout defined in documents referred to in this Article. These features shall be considered as the major aspects of the design, and all other features of the building shall be held as lesser aspects of the design.
ARTICLE 2. BASE PRICE FOR PROJECT
The base price of the Project will be subject to Sub-Contract base prices, contingency and management fees. The total price of the project including these items is £___________ plus any change orders.
The cost plan proposals attached at Appendix 2 define the relative specification of work under each Sub-Contract heading, and base price for each. Based on these documents, and the major Sub-Contract proposals given at the Addendum to Appendix 2, the base price of the Project (excl VAT) will be £___________, together with the price for any changes agreed to by the Employer in writing.
It is agreed that while detailed specifications of work in different categories may change during construction, the cost plan is understood as a baseline for all specifications. This means that the sum allocated to any specific item is to be interpreted as a specification which provides that what is built may be expected to be of that standard which can reasonably be built, at prevailing market rates for the sum specified, at the time of construction.
ARTICLE 3. CES AND EMPLOYER RESPONSIBILITY
The general intention of this agreement is to create conditions where the major aspects of the design remain fixed (except when modified through mutual agreement by both Employer and CES), while giving CES full scope to develop the lesser aspects of the design, within the prescribed budget, in such a way as to maximise the harmony and feeling of the whole, in relation to use and appearance.
CES shall provide management services and supervision necessary to execute and complete construction of the Project.
CES as Management Contractor will;
1. Enter into binding Sub Contracts with Sub-Contractors,
2. Organise and manage the Sub-Contractors,
3. Make changes to the lesser aspects of the design in accord with the general intent noted above,
4. Determine how to spend the budget allowances within the agreed base price of the Project,
5. Administer construction and interpret such work in relation to applicable codes of practice and statutory requirements.
6. Inspect finished work,
7. Keep full and detailed financial accounts as may be necessary for the construction of the Project on behalf of the Employer, reporting monthly to the employer and making records available to the Employer at any time.
The Employer will in all matters of Sub-Contractor dealings, in all matters of lesser design changes, and in all matters of money management within the base price of the Project, grant to CES complete authority to exercise its judgement on behalf of the Employer.
ARTICLE 4. CES GENERAL PHILOSOPHY
It is believed that the approach to construction laid out in this agreement and based on the fundamental responsibilities above will secure for the Employer the highest quality Project possible for the agreed base price.
Specifically, this approach is designed to eliminate the profit motive of the general contractor which takes value, meaning and quality away from the building. By setting a fee for the management of the Project and maintaining open records of all transactions, the typical overbidding by the contractor to protect against unforeseen overruns, risks and provide markups on materials and subcontracted work are eliminated. In more typical Contractor-Employer arrangements any unused overbid money becomes windfall and additional profit for the contractor and does not benefit the building or the Employer. In the model laid out in this contract all available money is spent for the betterment of the building.
This method also provides the framework for efficiently dealing with changes which are a crucial and fundamental part of making a good building. In typical Employer-Contractor conditions of contract changes lead to an exorbitant surcharge disproportionate to the direct costs of the changes in addition, and prolongation and disruption costs all of which effectively provides the contractor a windfall profit. Even changes which reduce costs are typically charged as extras. In the method laid out here, design changes are not subject to additional surcharges and are charged at their actual costs within the agreed base price for the Project, except for Employer additions as Article 6.
CES encourages the Employer to review all Sub-Contracts, and to propose alternative lower priced subcontractors. CES will evaluate the Sub-Contractor proposals and award Sub-Contracts if CES determines that it is in the best interest of the project, and provided that these proposals are consistent with the construction schedule.
ARTICLE 5. DESIGN DECISIONS AND CHANGES INITIATED BY CES
A further and essential part of the CES philosophy is that there are no precisely defined plans and specifications and that construction is a continuum of design. CES has the responsibility to interpret the emerging building and will have authority to make decisions and changes that impact on lesser aspects of design as it determines necessary, without written confirmation
from the Employer, as long as these decisions do not increase the base price of the Project or affect major aspects of design. Notwithstanding this, whenever possible CES will confer with the Employer, but CES is held in trust with the building and is not obliged to do so on lesser aspects of design. Design decisions and changes may arise for a number of reasons. CES-initiated design changes may be generated in response to the emerging building, for example as the building and rooms begin to take shape, doorway sizes and locations, window sizes and locations, wall locations and wall lengths, cabinets, finishes, may have to be altered. These decisions can only be made on site, during construction, as the building is taking shape.
CES-initiated design changes will also be required to contain costs within the agreed base price for the Project. For example as a result of some unforeseeable problem, or as a result of a potential increase in price due to a previous design change, it will become necessary to make changes in the building to offset the increase. This is not something that might happen, it is something that will happen. Although often seen as negative, these types of changes are more often than not positive changes which ultimately result in producing the best building.
CES will confer with the Employer in those design decisions which the Employer has identified as important ahead of time, and before making any major design changes, Nevertheless, in lesser matters, CES has the main commitment and responsibility to "listen" to the emerging building, and to do what is in the best interests of the building.
ARTICLE 6. CHANGES NOT COVERED BY ARTICLE 5.
Changes not covered by article 5, and which will result in an increase of the agreed base price will be approved in writing by the Employer. In cases where an increase of price is anticipated, the Employer must approve the change in writing before CES can begin the work. If the Employer does not approve the change, the work will not be done.
The cost plan also includes a supplement containing certain optional extras, which the Employer may or may not elect to include in the project. If the Employer does choose to include any of these optional items, he must so signify by initialling the chosen items in the cost plan supplement. Decisions about optional extras may be made during construction provided they are consistent with the construction schedule.
ARTICLE 7. CES SPECIAL CONSTRUCTION METHODS AND PHILOSOPHY.
The Employer recognises that the methods and philosophy of CES include unusual use of materials, and unusual combinations of high and low levels of quality and finish. The building will not necessarily be designed to the usual industry standards for residential or public buildings, and the Employer's desire to break with these prevailing standards is explicitly part of the intent of this agreement; except in so far that the building design does not conflict with normally accepted statutory regulations and requirements.
The Employer approves the form and content of the CES Sub-Contract forms attached to this agreement as an addendum to Appendix 2, and recognises the right of CES to make substitutions as provided in the Sub-Contract agreements. The Employer expects specifically for CES to exercise independent judgement in carrying out the above-described construction methods and philosophy.
ARTICLE 8. SUMMARY OF CONSTRUCTION OPERATIONS
The construction will be organized under the following broad Sub-Contract operations, with the following sums allocated to them. A detailed breakdown, showing the base price of the elements in each operation, 15% contingency, and CES management fee is given at Appendix 2.
SUBCONTRACT TOTAL PRICE
1. DEMOLITION £ ________
2. EXCAVATION £ ________
3. FOUNDATIONS £ ________
4. EXTERIOR WALLS £ ________
5. INTERIOR WALLS £ ________
6. ROOF STRUCTURE £ ________
7. FLOOR AND FINISHES £ ________
8. BUILT-INS £ ________
9. WINDOWS AND DOORS £ ________
10. ELECTRICAL £ ________
11. PLUMBING £ ________
12. HEATING SYSTEM £ ________
13. SITE SERVICES £ ________
14. EXTERIOR LANDSCAPE £ ________
15. TERRACES £ ________
TOTAL COST OF PROJECT £ __________
The total sum of money assigned as base price plus extras, and the total sum of money under contingency will be used by CES to build the Project. The use of this money is under the sole discretion of CES acting as manager for the Employer, and may be directed to offset a base price increase, or for any items required by CES to improve the Project.
ARTICLE 9. CONTINGENCY
To protect the Employer and the Project against unforeseeable fluctuations of price, unforeseen site conditions, and other changes, each of the budgeted amounts in article 8 contains a contingency of 15%. The contingency money is to be used entirely at CES discretion, for the benefit of the Project as judged by CES. CES shall have the right to distribute and redistribute this contingency money as it sees fit, in order to meet difficulties and changes which arise in the Project, and whenever possible, to make improvements and extras which CES believes will increase the harmony of the emerging building.
CES's intention is to maintain as much of the 15% contingency money as possible, and use this money to pay craftsmen who will make various finishing touches throughout the Project.
ARTICLE 10. MANAGEMENT FEE
The Management Fee will be paid directly to CES as outlined under Article 12. The management fee will be used by CES to manage the project and will pay for CES management labour and overheads.
The total management fee due to CES is £ ________ which represents 20% of the total base price and contingency allowance of construction. This sum, together with any additional management fee due under Article 6 will be paid to CES according to the arrangement described in Article 12.
ARTICLE 11. PAYMENT PROCEDURE
CES will open a dedicated Project chequing bank account at its own bank in the name of the Employer who shall make deposits to the account according to the schedule below. CES will be a sole signatory on this account, and will hold the Project cheque book. The type of Project chequing account shall be agreed by CES and specified by the Employer.
The basis for payment will be the list of construction operations; summarised in Article 8 and detailed at Appendix 2. The Employer will make deposits to the Project chequing account according to the following schedule for each operation - which shall include contingency, management fees, Article 6 additions and Employer allowances.
50% of the price of the operation will be deposited to the account upon notification of the commencement of that operation, either on or off site.
35% of the price of the operation, on demand, when a reasonable portion of the work is completed.
10% of the price of the operation when notified by CES that the operation is at least 85% complete.
The remaining 5% on substantial completion as Article 15. (or on earlier agreed substantial completion by a Sub Contractor).
As each cheque is deposited to the account, CES will withdraw the appropriate amount from the management category (as shown at Appendix 2) to make payment for construction management fees, and regulate interim payments to Sub-Contractors based on progress.
All records from the project account and all invoices for materials and labour, and all subcontractor's billings will be available for the Employer's review. CES will provide to the Employer monthly financial statements showing Project chequing account credits and debits; Project expenditure against progress and expenditure commitment and forecasts.
ARTICLE 12. SUBCONTRACTORS
Sub-Contract proposals will be attached as an addendum to Appendix 2. These proposals, signed by the various subcontractor's are a part of this Management Agreement, and serve as the basis for the project specifications and the base price for the Project. At the appropriate time CES will obtain Sub-Contract proposals from Sub-Contractors for remaining items. In performance of this task, CES will seek out and hire subcontractors which in CES's opinion are most appropriate for the particular element of construction. The criteria may be price in one instance, timeliness in another, and quality of work in another. CES is under no obligation to find the "lowest" priced Sub-Contractor, nor the "best" Sub-Contractor.
Should a subcontractor default on their Sub-Contract, for any reason, this shall be dealt with equitably between Employer and CES. CES will endeavour to re-negotiate or find another Sub-Contractor to perform the work. CES will act in the best interests of the Employer and the Project with respect to time, quality, flexibility, and price, but CES cannot guarantee to provide replacement Sub-Contracts or Sub-Contractors at the same price.
The relationship between CES and the Sub-Contractors shall be a Contractor-Sub-Contractor relationship. Within the confines of such a relationship, CES will include its best efforts to provide appropriate guidance of the subcontractors in the performance of their work. CES is the sole agent on behalf of the Employer. The Employer, or any agents of the Employer aside from CES, are explicitly forbidden from giving any directions to, or making any requests directly to any of the subcontractors. The Employer may of course make requests through CES as provided in Article 6.
ARTICLE 13. TIME
The work to be performed under this agreement shall commence within 28 days of the signing of this contract. The work shall be completed in accordance with a construction programme subject to:
Both the Employer and CES desire to complete the project in 9 months starting from the date of commencement.
CES will provide the Employer with an estimated construction schedule for the project. This schedule shall indicate the dates for the starting and completion of the various stages of the construction and shall contain the necessary information to allow the Employer to monitor the progress of the work. It shall be revised as required by the conditions of the work and those conditions and events which are beyond the control of CES.
The Employer agrees that if the building process is slowed down, by any act or neglect of the Employer, by any separate contractor employed by the Employer, by any unreasonably slow process of decision making or design negotiation from the Employer, CES will then be entitled to an appropriate increase of management fee, to make up for the extra time.
If the building process is slowed down for any reason not caused by CES negligence, CES and the Employer will negotiate fair compensation if any additional management fee is required.
Adherence to time conditions is of vital importance to the proper running of the Project on site, and is of material importance to the successful completion of this agreement. It is implicit therefore that CES will make its best endeavours to complete the Project to programme and will not seek additional management fee for extra time due to a CES default. Time control of the Project shall be exercised by CES through the regulation and deferment of interim payments to Sub-Contractors.
ARTICLE 14. SUBSTANTIAL COMPLETION
The date of substantial completion of the project or a designated portion thereof is the date when construction is sufficiently complete in accordance with the drawings and specifications so the Employer can occupy or utilize or, in fact, does occupy or utilize, the project or designated portion thereof for the use for which it is intended.
The date of substantial completion shall be established in writing, signed by the Employer and CES. At that time a list of defect and deficiency items to be completed or corrected (if any) shall be prepared by the Employer and CES along with a time schedule for their completion or correction, and any remaining unpaid balance of the contract, including the 5% Sub-Contract and management fee retentions will be deposited by the Employer to the Project cheque account.
ARTICLE 15. FINAL COMPLETION AND FINAL PAYMENT
Following full completion of the work as defined by the defect and deficiency list (Article 15), final inspection and acceptance of the work in writing by the Employer, CES shall have authority to make final payments to Sub-Contractors, and to withdraw final payment of the management fee. To protect the Employer CES agrees that they will not use these funds to make final payments until the subcontractor has satisfactorily completed all work and rectified defects. When all payments have been made, CES will issue a final completion certificate to the Sub-Contractors.
ARTICLE 16. CES OBLIGATION AND MAINTENANCE PERIOD
CES will maintain 5% of the total of all contingency sums, in the Project account, for a period of 6 months after substantial completion. The money will be spent for repairs and maintenance items which occur after substantial completion and are not provided for through the defect and deficiency list and retentions held on Sub-Contractors. CES will use the money to fix items that are unsatisfactory to the Employer.
If 6 months after substantial completion, this money or any part of it remains unspent, CES will use the balance in consultation with the Employer, to make some nice small improvements to the buildings. CES shall have no further obligation, beyond that covered by this money, for making repairs or improvements on items considered unsatisfactory by the Employer but CES will make its best efforts to help the Employer enforce the warranties provided by Sub-Contractors.
ARTICLE 17. UNKNOWN CONDITIONS
The Project includes modification or connection to existing structures and below ground construction where it is not possible to anticipate all problems which may arise with such work. If conditions are encountered on site which vary from those indicated by the agreement documents, and are such that the performance of work is affected, the base price of Project and schedule shall be equitably adjusted in writing between CES and the Employer upon claim made by CES.
ARTICLE 18. INSURANCE
CES will maintain the following insurance to cover CES's operations under this agreement:
1. Employer's Liability insurance for any employees CES engages directly, together with Public Liability insurance in the sum of £1,000,000 for those associated with CES's management team.
2. CES will, in addition, request that all Sub-Contractors provide Employer's insurances as appropriate and Public Liability insurance in the sum of £1,000,000.
The Employer shall take out and maintain a Joint Names Policy for All Risks insurance of the project during construction to cover all risks of physical loss or damage.
ARTICLE 19. HEALTH AND SAFETY
CES shall take necessary precautions for the safety of CES employees on the job, and shall comply with applicable provisions of Health and Safety legislation. CES shall have no responsibility for the abatement of safety hazards resulting from work at the job site carried on by other persons, or by subcontractors. Sub-Contractors will be responsible for their own safety, but CES and CES employees will encourage safety on the site.
ARTICLE 20. WARRANTIES
Warranties and guarantees obtained by CES from any manufacturer, shall be deemed to have been obtained for the benefit of Employer. CES will collect all equipment manuals and deliver them to the Employer together with all written warranties from equipment manufacturers, and CES will have no further obligation with respect to them.
ARTICLE 21. ATTACHMENTS
The subcontracts and documents hereto at Appendices 1 and 2 are expressly incorporated into this agreement To the extent the attachments are inconsistent with this Management Agreement, the terms of the Management Agreement shall govern.
ARTICLE 22. ARBITRATION
Claims, disputes and other matters in question between the parties to this agreement arising out of or relating to the agreement, and which cannot be resolved between the parties, shall be decided by arbitration in accordance with the construction industry arbitration rules prescribed by the Chartered Institute of Arbitrators, unless the parties agree otherwise. This provision shall be specifically enforceable in any court of competent jurisdiction.
Notice of demand for arbitration shall be filed in writing with the other party to this agreement and with the Chartered Institute of Arbitrators. The demand shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date when the applicable statue of limitations would bar institution of a legal or equitable proceeding based on such claim, dispute or other matter in question.
The award rendered by arbitrators shall be final, and judgement may be entered upon it in accordance with applicable law in any court having jurisdiction.
Unless otherwise agreed in writing, CES shall carry on the work and maintain its progress during any arbitration proceedings, and the Employer shall continue to make payments to CES in accordance with the agreement documents. This article shall survive completion or termination of this agreement.
ARTICLE 23. LEGAL FEES
In the event that either party files suit to enforce the provisions of this agreement, the prevailing party shall be entitled to reasonable legal fees as cost of suit, to be fixed by the Court.
ARTICLE 24. MANAGEMENT EXPENSES
The Employer undertakes to make available and to place where most convenient an existing sectional shed, hooked to electricity and telephone with use of the existing toilet in the gardens area, and to provide simple fencing to delineate the building site from the public way on the Estate grounds.
Telephone, fax, electronic transmissions, copying and mailing expenses will not duplicate those agreed inthe first contract for the entire process of design and construction and shall be reimbursed at cost directly to CES.
For the Employer date
For CES date