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Mayor Fahey and Members of the City Council October 19, 1990 Page 2 You will note that both analyses include the sales tax contingency amount and the construction manager fee in the total upon which the fee is based. Based on Article 5 of the contract which relates to the definition of the cost of construction and based on Section 11.2.1 which defines the contract fees related to the actual cost of construction, the argument can definitely be made that neither of these two items should be included in the construction costs total figures. In reference to the sales tax amount, if we do not pay sales tax, how can that be considered an actual cost of construction. In reference to the CM fee, Sections 3.32 and 3.33 of our contract state that we will not be charged additional services related to the use of a construction manager. This is done by referencing Section 12.1. However, under normal circumstances (general contracting) these amounts would be included in the construction cost total. I cannot tell you that at the time I negotiated this contract, I contemplated the exclusion of these costs .from the "actual cost of construction ". To remove these amounts would have the following impact on Boarman's fees: Fire Station City Center Construction $1,092,596 $402,523 Estimated Budget 1,139,500 420,000 Under Budget (46,904) (17,477) .07 .08 (3,283) (1,398) As stated earlier, interpretation of the contract will allow the removal of these amounts from the cost of construction calculation. I am compelled to recommend they be included based on the fact "actual cost" was not clearly defined at the outset utilizing the CM scenario. Boarman's request for additional compensation for additional work scope items is as follows. At the Fire Station, Boarman's request would consist of the floor sealer in the apparatus bay, the installation of the lower parking area, electronic keyed lock access, interior cavity wall revisions, irrigation system, and redrawings related to re -bid of the retaining wall. At the City Center, the work scope changes would include the brick facia, irrigation system, and site lighting. At this point in time, the only item I feel is qualified as additional work scope would be the irrigation systems for both buildings. However, allowances for both projects have been included in the totals used in this analysis. Therefore, compensation is in fact being paid for the design of these services based on our contract. Furthermore, under Sections 2.21, 2.31, and 2.41 of our contract, it talks about the various stages of the project development and review by the owner. Other items referenced by the Page 5