Coordination changes and MEP clashes: which fund they belong to
Above every finished ceiling there is a negotiation that happened in the field. Ducts, sprinkler mains, cable tray, domestic water, sanitary, conduit and structure all wanted the same few inches. Some of it was resolved in a coordination model. Some of it was resolved by a foreman with a sawzall and a PCO.
Those PCOs arrive labeled in many ways. Sometimes as a design issue. Sometimes as an owner change. The owner's job is to ask one question about each: was this the contractor's coordination to do? If it was, the cost belongs in contractor contingency, inside the GMP, and not on the owner.
What the contractor usually agreed to
Under most AIA A133 based CM at risk agreements, the construction manager takes on coordination of the work, including coordination among trades. Many agreements go further and require the construction manager to review the design documents for constructability and conflicts before establishing the GMP. Some require a BIM coordination process with a signed off model before installation begins.
The design team's obligation is different. The architect and engineers design systems that can fit, at a level of detail that is typical for the profession. They do not route every conduit. The space between a design that can fit and a field installation that does fit is the coordination scope, and that scope is the contractor's.
Three ways a clash turns into a PCO
Not every clash is coordination. The label depends on why the clash existed.
The systems could fit, and nobody worked it out
The duct and the beam were both on the drawings, there was room to route the duct around the beam, and the installer ran it straight because no one looked. This is coordination. The contractor absorbs it. It should not appear as a GMP increase, and if it appears as a contractor contingency draw, the owner should see it labeled as coordination.
The systems could not fit as designed
The ceiling cavity was twelve inches and the design needed sixteen. No amount of coordination would have solved it. This is a design gap, and the owner records it as such, pays the contractor, and keeps the record for a conversation with the design team. The contractor may still carry some share if the contract required a constructability review and the problem was obvious.
The owner changed something above the ceiling
The owner added equipment, moved a wall, or asked for a higher ceiling. The clash is a consequence of the change. This is owner scope and belongs in the owner's change order, usually from owner contingency.
A fictional example from a lab building
Picture a fictional $42 million lab fit out in an existing shell. The GMP was set at ninety percent construction documents and the contractor ran a full BIM coordination process for the lab floors. During installation the contractor submitted fourteen PCOs totalling $310,000 for reroutes around structure and around each other's work.
The owner's representative reviewed the coordination sign off model. Nine of the fourteen clashes were present in the signed off model and had been missed. Those nine, about $190,000, were recorded as coordination and the owner declined to approve them as GMP increases. The contractor drew them from its contingency. Three were caused by an owner request to add a second fume hood line, recorded as owner scope and paid. Two involved a shaft that was undersized on the architectural drawings, recorded as design gap. The total the owner paid fell from $310,000 to $120,000, and the register explains why.
Why the fund matters beyond this month
Coordination cost that is wrongly pushed into a GMP increase raises the GMP, which under many shared savings clauses raises the base against which savings are measured. It also depletes the owner's contingency instead of the contractor's. Over a long project those two effects can move the shared savings pool by more than any single change order.
An owner's ledger that keeps contractor contingency and owner contingency as separate funds, and requires a cause on every draw and every change order, makes this visible month by month. Costwitness flags coordination changes that have been proposed against the owner's funds so the owner can push back while the facts are still on the table.
What to do this month
- Find the coordination and constructability review language in your agreement and note whether a BIM sign off was required.
- Ask the contractor for the coordination sign off model or drawings and keep a dated copy on the owner's side.
- Review every PCO involving a reroute or a conflict above the ceiling, and test each against the three causes above.
Questions on this
If the contractor's contingency runs out, does the owner then pay for coordination?
Usually not. Under most CM at risk agreements, contractor contingency is the first source for coordination cost, and once it is exhausted the contractor absorbs further coordination cost within the GMP, often against fee. Check your contract, because some agreements treat contingency exhaustion differently.
What if the design engineer signed off on the coordination model?
The engineer's review is usually limited to design intent and does not shift coordination responsibility. If the model showed a clash and the engineer did not object, that does not make it a design gap. The installer still had the model and the obligation to resolve it.
Should coordination draws appear in the owner report?
Yes, as draws on contractor contingency with a coordination cause. The owner does not pay them, but the rate at which they consume contractor contingency tells the owner how much room is left before the contractor starts absorbing cost from fee, which changes how the contractor behaves.
In the product
Contingency ledger, Change order register, Shared savings. Free tool: Change Order Exposure, Contingency Runway.
Keep reading
Earlier: The change order register: fields an owner should keep. Later: Unforeseen conditions: what the contract says about who pays. All articles on change orders.
See the cause register on a project like yours.
Thirty minutes on a call. The change order register with causes, the audit trail, and the notice clock, on a fictional project.