LEVEL OF EFFORT & NEGOTIATIONS

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1 LEVEL OF EFFORT & NEGOTIATIONS Phil Howlett, P.E. Richard De La Cruz, P.E. November 3, 2017

2 Table of contents Welcome Pre-Level of Effort (LOE) Level of Effort (LOE): Scopes Level of Effort (LOE): Schedule Level of Effort (LOE): Budget Good Practice Bad Practice Closing Remarks/Questions? 2

3 First Thought Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort. Paul J. Meyer 3

Look at the Big Picture We have different types of contracts Schematic and Environmental (S&E) Plans Specifications & Estimates (PS&E) Utility Engineering Traffic Engineering Survey Value

4 Look at the Big Picture We have different types of contracts Schematic and Environmental (S&E) Plans Specifications & Estimates (PS&E) Utility Engineering Traffic Engineering Survey Value Engineering Planning General Engineering Consultant (GEC) Construction Engineering Inspection (CEI) Intelligent Traffic Systems (ITS) Geotechnical Engineering Other Materials Engineering 4

Indefinite Deliverable (ID) Contracts N/A Work Authorizations SD Contracts Some

5 When do we negotiate Level of Effort? Master Contracts Specific Deliverable (SD) Contracts Negotiation of LOE Indefinite Deliverable (ID) Contracts N/A Work Authorizations SD Contracts Some Negotiation may be required ID Contracts Negotiation of LOE Supplemental Agreements - maybe Supplemental Work Authorizations - maybe 5

6 Level of Effort (LOE) It is absolutely necessary that both parties have a clear understanding of the work to be accomplished and deliverables expected in order to develop a Level of Effort and evaluate the reasonableness of a cost proposal. Level of Effort (LOE) Scope (What do we want accomplished and Deliverables) Schedule (When are things to be accomplished) Budget (How much will it cost and a breakdown of who will do the work?) 6

7 Level of Effort (LOE) Negotiation Challenging Fair and Reasonable Looking for the Win-Win Time Consuming There is no easy button What would it be like to negotiate with a....dentist.. for a Tooth Extraction? 7

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9 First Things First (Pre-Level of Effort) 9

10 Pre-Level of Effort Scoping Meeting Communication Project Information Scopes Invoicing Accountability 10

11 Scoping Meeting Communication Org Charts Points of Contact Best method How often Change of Personnel Escalation Process 11

12 Scoping Meeting Project Information Project Limits Control Section Job (CSJ) Numbers Schedule / Milestones Challenges Project unknowns Stakeholders Drainage, driveway, seasonal work, etc. 12

13 Vision Assumptions 13

14 Scoping Meeting - Scopes Establish the basis of payment. Review both scopes line by line. Document what needs to be added, modified, or removed. Very Important: clearly define all deliverables. 14

15 Scoping Meeting - Invoicing Obtain understanding of what will be allowed. Remember: the basis of payment used must be in the master contract. What ensures good invoicing? Well thought out and documented deliverables. If you need help, ask. (PEPS can help) 15

16 Scoping Meeting - Invoicing Remember: Any direct labor, unit cost, or other direct expense classification not included in the contract is not eligible for use under a work authorization. Any direct labor, unit cost, or other direct expense classification included in the contract, but not in a work authorization, is not eligible for payment under that work authorization. If the rates are not in the work authorization, they cannot be billed. 16

17 Scoping Meeting - Accountability Understanding of Expectations Quality Timeliness Communication Provider Evaluations 17

18 Scope Meeting Tips Have an agenda Ensure the right people attend Everybody reviews the scopes ahead of time Visit/Drive the project ahead of time Bring a list of questions Summarize Review understandings and expectations Delegate action items Document Allow time for this meeting 18

19 Level of Effort (LOE) Scopes (What and deliverables) Schedule (When) Budget (How much and who) 19

20 Level of Effort (LOE) - Scopes Finalize the scopes (clean up comments from the scoping meeting). Ensure the scopes have the level of detail needed based on the basis of payment. Lump Sum Specific Deliverable, Cost Plus Fixed Fee, Unit Cost Be sure to elaborate on specific details where needed. Spell out all acronyms the first time used. List well-defined deliverables. Consider using a phased approach when appropriate. 20

Level of Effort (LOE) - Scopes Remember: If the services

those services cannot be performed and payment cannot be

21 Level of Effort (LOE) - Scopes Remember: If the services are not in the master contract s scope, they cannot be put it in the work authorization s scope. If the services are not in the work authorization s scope, those services cannot be performed and payment cannot be expected. Use the master contract s scope to create your work authorization s scope. 21

22 Level of Effort (LOE) - Schedule Think of it as a management reporting tool as well as an implementation tool to help pace the detailed activities. Establish milestones and submittal dates. Work Breakdown Structure Tasks must follow the scopes of services and the fee schedule. Include sufficient review times (for both the State and consultant). 22

23 Level of Effort (LOE) - Schedule First activity should be Start Date = Date of Execution (Not an actual date) Do NOT use Notice to Proceed in schedule. Activity dates are later than the actual (anticipated) date of execution. Termination Date Indefinite deliverable (ID) contracts are limited to a 5-year maximum. Be sure to include Termination Date = xx/xx/20xx. Should typically be the last calendar day of a month Try not to end a work authorization in August or December. Work authorization termination date cannot go beyond the master contract s termination date 23

24 Level of Effort (LOE) - Budget Ensure tasks identified in the fee schedule align with the scope and the work schedule. Ensure the rates and labor classifications are used in accordance with the contract. ODEs must be assigned a function code. Calculations should be made from numbers rounded to the nearest penny (except mileage). Significantly helps with consistency for summary sheet Allow some flexibility. Not every item needs a quantity (classifications, unit costs, ODE, tasks) Primary control is that maximum amount payable is a not to exceed amount 24

Align the function codes with the scope and fee schedule Ensure each deliverable description is distinguishable from one another.

25 Level of Effort (LOE) - Budget Ensure HUB goal or DBE goal will be met. Include a summary sheet broken out by firm, function code, and CSJ. Include a table of deliverables if using lump sum. Use the latest table of deliverable template. Align the function codes with the scope and fee schedule Ensure each deliverable description is distinguishable from one another. Rates, labor classifications and other direct expenses can only be invoiced if they are included in both the contract and the work authorization. Perform a thorough quality review of spreadsheet calculations. 25

26 Remember Clearly define deliverables. Ensure consistency between scopes, budget, and work schedule. Activities Task titles Function codes Formatting Use the available checklists to help QC contracts and work authorizations. 26

Work Authorization Review Checklist (Example) EXHIBITS A & B Check Headers and Footers Legacy Contract No. & WA/SWA No. (Upper Right) Contract PS No. & PS PO No.

27 Work Authorization Review Checklist (Example) EXHIBITS A & B Check Headers and Footers Legacy Contract No. & WA/SWA No. (Upper Right) Contract PS No. & PS PO No. (Upper Right) Page Numbers and Exhibit A/B in Footer Ensure WA scope MUST match master contract scope Ensure Acronyms are spelled out at least once Find and Replace TxDOT to the State the State shall to the State will the Engineer will to Engineer shall the Surveyor to the Engineer s Surveyor (exception Survey Contracts) Do not use "you" or "we" this Contract to this Work Authorization Check General Formatting (Margins, excess spacing between paragraphs, justifications, etc.) Exhibit B should have CSJ, HWY, project limits, county, and district. 27

Work Authorization Review Checklist (Example) EXHIBIT C Check Headers and Footers Legacy Contract No. & WA/SWA No. (Upper left) Contract PS No. & PS PO No.

28 Work Authorization Review Checklist (Example) EXHIBIT C Check Headers and Footers Legacy Contract No. & WA/SWA No. (Upper left) Contract PS No. & PS PO No. (Upper Right) Page Number(s) and Exhibit C in Footer Dates do not begin prior to WA Execution Tasks follow Exhibit B and Exhibit D Ensure it has "Work Authorization No. XX termination date: xx/xx/20xx" Ensure it has "Prime Provider Name: xxxxxxxxxxx" (exact name) Change "Notice to Proceed" or "NTP to "Start Date = Date of Execution Termination Date must not go beyond Contract Termination Date Ensure the termination date is the last working day of the month Avoid termination dates at the end of the fiscal year and the end of the calendar year 28

Work Authorization Review Checklist (Example) EXHIBIT D Total amount is covered in the contract (Check PS-CAMS) and correct WA number Fee Schedule is split out by CSJ Ensure the correct Method of

Numbers and Exhibit D in Footer Ensure "Prime Provider Name: xxxxxxxxxxx" or "Sub-Provider Name: xxxxxxxxx" is on each page General Formatting (Margins, excess spacing between paragraphs,

29 Work Authorization Review Checklist (Example) EXHIBIT D Total amount is covered in the contract (Check PS-CAMS) and correct WA number Fee Schedule is split out by CSJ Ensure the correct Method of Payment is being used and is in master contract Check Headers and Footers Legacy Contract # & WA/SWA # (Upper left) Contract PS # & PS PO # (Upper Right) Method of Payment (Center Header) Page Numbers and Exhibit D in Footer Ensure "Prime Provider Name: xxxxxxxxxxx" or "Sub-Provider Name: xxxxxxxxx" is on each page General Formatting (Margins, excess spacing between paragraphs, justifications, etc.) Staffing Classification Names and Rates MUST match contract Formulas add up Tasks follow Exhibit B and Exhibit C Other Direct Expenses Function Code assigned Names and rates match contract Include columns: Description, Unit, Cost, Quantity Summarization by Provider (Prime and Subs), Function Code and CSJ Lump Sum WA's have a Table of Deliverables and $ amounts match 29

30 If you have any questions, PEPS is here to help. 30

31 An effective Level of Effort Productivity is never an accident. It is always the result of a commitment to excellence, intelligent planning, and focused effort. Paul J. Meyer Philip Howlett 31

32 Thank you! Questions? 32

33 Contact Information Phil Howlett, P.E. TxDOT PEPS San Antonio (210) Richard De La Cruz, P.E. TxDOT San Antonio (210)

INVOICE DEVELOPMENT AND SUBMITTAL PROCESS

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