FEATURE: Thinking Ahead with Forward Pricing

In January 1994, the King County Department of Metropolitan Services (Metro), Seattle, Wash., construction management staff entered into an agreement to implement a forward pricing formula for identifying, documenting, quantifying and calculating impacts on indirect work efforts of owner approved changes on the West Point Secondary Treatment Project in Seattle. The formula and approach consists of key elements that identify consistently applied variables that impact the contract. Recreation and reconstruction of impact and delay after contract completion have taken countless hours of investigation, including an historical review of contract documentation and schedules totaling millions of dollars in consultant and legal fees. Generally, these efforts are undertaken by parties or individuals that do not participate in the contracting effort and are not cognizant of the actual factors involved with delays or schedule impacts. The contractor and owner’s method for determining impact or delays is very often settled upon at the end of the project at which time the owner and engineer agree to a resolution based on the difference between the owner/contractor’s analysis or applied abstract formulas commonly used in the industry today.