E 733 After Contract Is Awarded

After the City awards a contract or issues a “B” Permit, any changes in the contract documents require a change order. The engineer should give complete information concerning the proposed change in construction and should direct this information to the contractor.

E 733.1 Change Orders

A change order, as the name implies, is an order for the contractor to do something other than that required by the contract documents. This order should not be phrased in language which implies that the contractor must change City plans, nor should the phrasing imply that the work has already been done.  Vague and indefinite statements such as constructed, the plans should be changed, etc., should be avoided. The change order must be complete, since it is used for making as built corrections on the plans. (See Chapter E 900, Construction Plan Preparation, when this Chapter of this Part of the Manual is printed.)¹ The engineer should not attempt to put into words what can more readily and understandably be shown on a simple sketch to accompany the change order. See Subsection E 733.12(3).

The following is a list of samples of typical Board Reports, Change Orders, and sketch:

Figure E 733.1A —Emergency Change Authorization (to authorize the contractor to proceed with change order work costing up to $4,500).

Figure E 783.1B — Board Report (to authorize change order work costing more than $4,500). Sheets 1 and 2.

Figure E 783.1C—Accompanying Change Order (to establish unit cost and approximate total cost).

Figure E 788.1D — Follow-up Change Order(s) (to authorize progress payment(s) or to establish final cost of contract.

Figure E 733.1E — Change Order (showing proper form for additions, deductions, and tonnage items).

Figure E 733.1F — Accompanying Change Order sketch.

Figure E1 733.1G — Board Report Containing supplemental agreement (used when a major item, 10 percent or greater of the original contract cost, exceeds the 25 percent limitation). Sheets 1 and 2.

Figure F 733.1H — Accompanying Change Order. Sheets 1 and 2.

E 731.11 Procedure

As soon as it has been determined that a change order is required for projects under City contract, and that the change order does not conflict with Subsection E 733.14, the originating design office engineer should promptly notify all parties involved of the impending change. This includes the Coordinating Division and any other office or agency involved in cost or work changes. See Section S-3 of the Standard Specifications, 1970 Edition, and Section E 020B. For example, it is the responsibility of the originating office to notify the Utility and Estimating Division when utilities are known to be affected by a change order. The Utility and Estimating Division will then immediately contact any affected utility owners to ensure the proper coordination, relocation, or modification of their facilities.

For Capital Improvement or Assessment Act Projects, the originating office should call the Change Order Section of the Coordinating Division to obtain the change order serial number and the contract number.  The contract number is assigned by the Board for Assessment Projects and by the City Clerk for Cash Projects. All Capital Improvement projects awarded by the City and participating projects which involve payment of cash are considered Cash Projects. See Subsection E 733.12(1). The design office should coordinate such requests to avoid assignment of different serial numbers for the same change order. For all “B” Permit projects, a sequential numbering system should be initiated, and records kept by the originating design office.

Once initiated, a change order should be prepared, submitted, and processed by the City as soon as possible. Processing by the Coordinating Division includes, but is not limited to, negotiating prices with the contractor, making corrections and redistribution of copies, and obtaining all necessary approvals. Upon approval, the Change Order Section will promptly issue the change order to expedite payment to the contractor. A project cannot be accepted, nor final payment made until all change orders have been issued and processed.

E 733.111 Distribution

All copies of the change order prepared by the design office should be conspicuously stamped PRELIMINARY and then distributed prior to the City Engineer’s signature. This stamp shall read:

PRELIMINARY CHANGE ORDER

THIS IS NOT AN AUTHORIZATION TO PERFORM WORK BUT IS A NOTIFICATION TO NOT PERFORM WORK WHICH MAY CONFLICT WITH THE PROPOSED CHANGE.

The distribution of the preliminary change orders is as follows:

1. Coordinating Division — Original and one copy.
2. Originating Office — Retain one copy.
3. Contractor — One copy.
4. Contract Administration — Two copies.
5. Survey Division — One copy.
6. Utility and Estimating Division — One copy (if utilities are affected).
7. Grade Sheet Section of Utility and Estimating Division — One copy (when that Division is to furnish grade sheets).

E 733.112 Distribution Exceptions

Preliminary distribution shall be withheld until proper approvals have been obtained only for the following cases:

1. Those which are controversial.
2. Those which, due to the type of change being ordered, need approval of the Deputy City Engineer.
3. Those where the Coordinating Division’s bargaining position may be affected.
4. Those where change orders are to follow up emergency change authorizations. See Subsection E 733.16.

E 733.12 Preparation Check Points

The change order shall include, among other things, four items as separately numbered paragraphs, with subparagraphs being used when multiple items are needed. Check points for the proper preparation of a change order are listed below:

1. Title Block — Give the correct title and plan reference. The job number is the proper Work Order (W.O.), Assessment Act (A’11), or "B” Permit number. See Section E 721, Bid Proposal. On those projects in which the City is involved with payment of non-reimbursed funds, the contract number (if required) is obtained from the Coordinating Division along with the change order number. See Subsection E 733.11. The serial number is the change order sequential number for the project. The order number is an engineering document number (not required to be filled in by the engineer) and is a sequential filing number assigned by the Administration Division at the time of issuance of the change order.
2. Item 1 — Reason for Change — Make a brief, clear, and definite statement of the reason for the change. Do not duplicate this statement in Item 2 below. The reason given shall be factual.
3. Item 2 — Description of Change — Make a clear and complete statement of the description of the change. It should be easily understood and should not lend itself to misinterpretation. Stations and dimensions must be complete enough to check quantities in Item 3 below. If a sketch is required, state:

Construct . . . (item) . . . in accordance with Change Order Sketch Serial No. . . .

The sketch serial number is the same as the change order serial number. Do not state “attached”, as copies of the change order distributed do not all require sketches. The sketch title must contain the exact job title, the work order or “B” permit number, the change order serial number, the plan reference, and the number of sketch sheets used. This numbering should show the Sketch sheet number under “SHEET” and the total number of sketch sheets under “OF”, thus:

SHEET OF

1      /    2

Change order sketches shall be drawn on the standard engineering forms (Eng. 3.155A and B)— not shown in this Part of the Manual — whenever possible. Vellum profile or vellum paper may be used only when it is impractical to use the standard forms.

4. Item 3 — Change in Contract Cost — For each item noted in Item 2 above, show the change in contract cost in the following order:
   1. Quantity — Rounded off to bid units.
   2. Unit.
   3. Item description.
   4. Unit price.
   5. Type of price — In parentheses.
   6. Extension.

The type of price shall be the contract unit price, stipulated unit price, or extra work price. Do not consolidate unit prices or bid items.

The design engineers are not to negotiate prices with the contractor, but they should have some indication as to whether the bid or extra work prices will be acceptable when deciding what changes will be ordered. Possible extra costs should be discussed with the Change Order Section of the Coordinating Division, since the format of writing the change order may be affected. All changes in contract cost prior to the work being done where unit prices are not included in the contract or in the schedule of extra work prices shall be negotiated by the Coordinating Division. Extensions of additions and deductions should be kept in separate columns to facilitate checking. When there is more than one item, summarize to show the total net addition or total net deduction. Do not use "Net” unless you show both additions and deductions.

If an agreement has been made for the property owner to pay the contractor directly, state this on the change order and attach the letter of agreement to the original order. If there is no letter of agreement, be certain that the contractor is assured of such payment. Also, where applicable, copies of the “Emergency Change Authorization” (Form Eng. 3.154, Figure E 733.1A),” Right of Entry” (Figure E 05422A), “Consent to Enter Private Property and Assess Same for Work Performed Thereon” (Form Eng. 3.628, Figure E 54.22B), or written requests from other Bureaus must be attached to the change order. See Subsections E 054.22, Right of Entry, and E 733.16.

Prices should be extended for tonnage items as shown on the sample change order, Figure E 733.1E. As indicated on this figure, the following statement should be included:

Final payment will be made under the respective bid item based on actual tonnage laid.

5. Item 4 — Change in Contract time — When the change order work does not affect the contract time, the design engineer shall complete Item 4 as follows:

No change in contract time.

If the contract time is affected, the design engineer shall leave Item 4 blank. The Change Order Section of the Coordinating Division will determine the extension of time required to complete the work indicated by the change order.

Any information of value to the Change Order Section in negotiating construction prices or checking calculations may be briefly stated in an accompanying office memorandum.

E 733.13 Approvals

Change orders are subject to various limitations and approvals as listed below and in Subsections E 733.14 and E 733.15.

For Capital Improvement projects and 1911 Assessment Act projects, a change order on which the net estimated deduction or addition in contract cost exceeds $4,500 requires approval by the Board of Public Works before it can be issued. A Board Report shall be prepared by the originating office and forwarded with the change order and sketches (if any) to the Coordinating Division for Processing. The following note should appear near the bottom of such change orders:

Approved by the Board of Public Works on (date)

For 1911 Assessment Act projects, the Streets and Highways Code provides that changes exceeding certain limitations require a modification of the proceedings.

For 1941 Assessment Act projects, changes beyond the limitation of the Municipal Code require City Council approval. If negotiation is required and extra work prices are used, the change order must contain the following note:

Approved by (signature) on (date) (Typed contractor’s firm name)

The Engineer of Design must approve change orders and sketches (if any) that reflect a deviation from normal design criteria or standard practices, or that require a Board Report. The Board Report must be signed by the Deputy City Engineer. Routine construction changes do not require the approval of the Engineer of Design. However, in eases where the wording on a change order may affect the City’s legal position or interest, or the Coordinating Division’s bargaining position, approval must be obtained from either the Coordinating Division or the Engineer of Design before preliminary copies are distributed.

The District or Division Engineer signs all change orders and sketches, and initials the required Board Reports, before forwarding them to the Coordinating Division for processing. The remaining signatures shall be obtained by the Change Order Section of the Coordinating Division. For most change orders, the District or Division Engineers’ approval is sufficient to allow the distribution of preliminary copies of the change order.

On change orders of more than one sheet, signatures shall be made only on the last sheet. The following notation shall be inserted above the signature block at the bottom of all sheets:

Page __ of ___

Leaving sufficient space for the contractor’s signature, all approval notations shall be placed directly above the page notation or above the signature block for one-sheet change orders. Initials of the person writing the change order, along with the typist’s initials, shall be shown in the lower left comer above the signature block. For change orders of more than one sheet, these initials need be shown only on the last sheet.

E 733.14 Financial Limitations

There are limits to the dollar amount for which a change order can be issued. These limits vary with the project financing.

For Capital Improvement (or Cash Contract) projects, a change order on which the net estimated deduction or addition in contract cost exceeds $4,500 requires approval by the Board of Public Works. The Board may approve changes in work up to 25 percent of the original total contract amount, which includes all change orders issued. Additional work which is clearly outside the scope of the original contract, and which is not exempted by Section 386 of the City Charter is limited to $5,000.

For assessment act projects under the 1911 Act, the State Streets and Highways Code specifies the following limitations:

1. For a contract not exceeding $100,000 the change order is limited to $1,000.
2. For a contract more than $100,000, the change order is limited to one percent of the contract amount.

Such limitations do not apply if a change is requested by a property owner who will be assessed for the work.

Changes exceeding these amounts must be made through the modification procedures (Chapter 8.5 of the Code), which require a resolution of modification, public hearings, and other procedures. The total amount of all changes, through either change orders or the modification procedures, cannot exceed 20 percent of the original contract amount.

For Assessment projects under the 1941 Ordinance of the Municipal Code, the total cost of the project that can be assessed to property owners, including the cost for change orders, cannot exceed 10 percent or the engineer’s cost estimate or of the bid price, whichever is lower. For change orders more than the above 10 percent, other funds must be provided by the City Council.

For limitations on “B” Permits and Emergency Change Orders, see Subsections E 733.15 and E 733.16.

E 733.15 "B" Permits

A project under a “B” Permit is privately owned construction which, if found to meet City criteria and standards, will be accepted by the City as a public facility upon completion. Although the City checks “B” Permit plans, the private engineer, representing the owner, is responsible for the proper design and construction of the project to completion. During construction, the City provides such services as inspection and the processing of change orders in cooperation with the private engineer.

Change orders for “B” Permit projects may be initiated by a City design engineer or the private engineer but must be approved by both parties. The City design office having jurisdiction over the project must be sure that the estimated cost of the additional work is covered by bond. “B” Permit change orders are prepared in the manner previously described except for the following differences:

1. The City design office shall originate and insert the sequential change order serial number.
2. If the City is not participating in the cost of the project, Item 3 (Change in Contract Cost) should state as follows:

This change does (or these changes do) not exceed the 10 percent limitation of the Municipal Code, Section 62.116.

3. If the City is participating in the financing of the project and the change order involves the City’s portion, Item 3 (Change in Contract Cost) shall be completed in the same manner as for a cash project, and the following note shall be inserted above the signature block:

The City’s share of this cost addition (or reduction) is_____% of $____ (cost of change, Item 3) or $______ in accordance with City Contract No. between the permittee and the City.

4. There shall be no Item 4 on any "B” Permit change order.

E 733.151 Distribution

The distribution of ”B” Permit change orders is as follows:

1. Originating Office — Retain one copy.
2. Coordinating Division — Original.
3. Contract Administration — Two copies.
4. Contractor — One copy.
5. Private Engineer — Three copies.

All copies of the change order shall be conspicuously stamped as the PRELIMINARY CHANGE ORDER when distributed prior to City Engineer approval. See Figure E 733.111 for copy of the “Preliminary Change Order” stamp wording.

E 733.152 Informal Method

This method is the Interim Change Authorization. It is, in most instances, prepared and submitted by the private engineer and must be approved by the Division or District engineer. In the event of a minor revision, the concurrence of the private engineer may be obtained over the telephone and the form prepared and approved by the Division or District office. Distribution and preparation are like those stated in Subsection E 733.111 and E 733.112. See Figure E 733.152, Form Eng. 3.156, for more precise explanations.  An accompanying sketch prepared by the private engineer may occasionally be necessary to accompany this form.

Where a major change is involved, a plan revision may be required and processed prior to construction at the option of the Division or District office. Plan revisions are required for changes in a project involving City financial participation. The Division or District office shall make sure that the estimated cost of the additional work is covered by bond.

E 733.16 Emergency Change Authorization

In the event that a change in construction is required and it is not practical to delay construction of that portion affected by the change until such time as a regular change order can be issued, an Emergency Change Authorization will be issued in writing in the field. Authorizations to issue such Emergency Change Authorization is limited to personnel at the level of Civil Engineer or higher or such other individual as may be designated in writing by the Division or District Engineer to the Coordinating Division. The estimated increase or decrease in cost ordered by an Emergency Change Authorization is limited to a maximum of $4,500. It is imperative that the Change Order Section of the Coordinating Division negotiate any changes in contract cost of work not included in the bid items before the work is started. Also, the forms shall be completely signed by all parties before starting the work specified therein. The parties necessary to sign this are:

1. Division or District office.
2. Contractor.
3. Coordinating Division.
4. Field Inspector.

An Emergency Change Authorization should be issued only when requested by the contractor or at the discretion of the engineer for emergency situations and shall be confirmed by a regular change order as some as possible.

Footnote

1. The text in parenthesis is from the legacy Street Design Manual text and is no longer in use.