Public Works Division

basis for liquidated damages

DEPARTlVlEN’T 01 ACCOUNTING AND GENERAL SERVICES
DIVISION OF PUBLIC WORKS
OCT 2 7 2006
Ltr. No. (P)l 265.6
MEMORANDUM
TO:
FROM:
Mr. Ernest Y. W. Lau
Public Works Administrator
Ralph Morita f J.. J /\ 1 1 A ” cJChief,
Planning Brn v ‘- VVl.Y \AJv–J
SUBJECT: Updated Basis for “Liquidated Damages (LD)”
As requested, Planning Branch updated the basis of LD charge computations for CIP fonded work.
The following comments and attachments are provided for your reviev,1 and approval:
A. It is assumed that LD charges are associated with:
1. Ca.lcnclar days or working clays past the authorized construction completion date (i.e.,
.§fter adjustment for DAGS approved project time extensions related to additional
work days).
2. Compensatory costs related to “time sensitive” issues, such as:
a. DAGS direct operational costs for typical “CIP fund” related work is about
$168 per calendar day or about $240 per working day, average cost per
project (refer to attachment Stc1ff Services Branch computations).
NO’TE: Staff Services Branch computed “average yearly Cff> expencl.itures”
over the last five (5) fiscal years (converted to an “average daily cost per CIP
funded project” based on Pub.1ic Works Division staff working on about l50
CIP funded projects each year) is about $240 per working day. Planning
Branch converted the cost per working day Lo cost per calendar based on “21
working days = 30 calendar days,, or” l work day = 1.4 calendar clay” or “1
calendar day= 0.7 work day.’,
· b. Public Works Divisjon in-direct operational cost for typ.ical “general fund”
related administrative work for all DAGS pro_jccts is about $21 per calendar
day or about $30 per working day, ave.rage cost per project (refer to
attachment Staff Services Branch computations).
Mr. Ernest Y. W. Lau
Ltr. No. (P)1265.6
Page 2
c. Miscellaneous and/or related “user agency” operational costs resulting from
delays in scheduled completion of required construction work, \Vhich includes
(but: .is not limited to):
(1) ”Loss of revenue” because a scheduled event or function had to be
clclayecl/cancelled/postponed.
(2) “Unanticipated incurred costs” because a scheduled event or function
had to be clelayccl/canccled/postponecl, such as: monetary penalties for
delay/cancellation/postponement; upfront guarantees; new public notices
or advertisements; relocation of a scheduled event or function to another
location; additional site security considerations; and .interim provisions
or accommodations for continued ongoing operations (i.e. temporary
fencing or barricades; temporary lights; portable generators; portable
water tank; portable restrooms; etc.).
(3) “User agency” direct costs (staff time charges) and indirect costs (related
administrative \vork).
NOTE: Public Works Divis.ion has the discretion to include this charge on a
“project by project” basis or to exclude this charge in entirety (i.e., as deemed
appropriate and/or necessary by Project Management Branch and/or Quality
Control Branch staff with the “user agency”).
d. “Lost opportunity” for building space utiLization (i.e., equivalent: lease rental
costs computed on the daily cost over 30-calcndar days per month), such as:
(l) About $3.00 (average; includes connnon area maintenance) per gross
square feet (gsf) of lease rental space per month for building spaces that
can readily accornmodate the functional rcqu ire men ts for (but not
limited to) the following “typical” operations:
(a) Offices, conference rooms, etc.;
(b) Classrooms, computer labs, et:c.;
(c) Office equipment rooms, office storage areas (not warehouse
spaces), etc.; OR
(2) About $4.00 (average; includes common area maintcnance)/gsf/month
for bui1ding spaces that can readily accommodalc the functional
requirements for (but not limited to) the following “specialized
operational requirements”:
Mr. Ernest Y. W. Lau
Ltr. No. (P)1265.6
Page 3
NOTE: Ti: is assumed the building spaces will need extensive
plumbing, ventilation, acoustical treatment, other accommodations, etc.
for these types of “specialized operations”.
(a) Special education classrooms, science classrooms, medical or
health center facilities, libraries, computer centers, etc.
(b) Cafeteria/kitchen/cooking facilities, dining rooms, etc.
(c) Workshop areas for industrial, graphic arts, electronics,.
technology, etc.
(d) Auditorium and/or performance spaces for musicals/concerts,
dancing, singing, acting, filming, etc.
NOTE: For conversion of lease rental cost per calendar day to lease rental cost
per working day, assume “1 calendar day = 0.7 work day.”
NOTE: Staff Services Branch computed “average yearly operating budget
expenditure” over the last five (5) fiscal years (converted to an “average daily
cost per DAGS project based on Public Works Division staff working on about
150 DAGS projects each year) is about $30 per working day. Planning Branch
converted cost per working day to cost per calendar day based on “1 work day
= 1..4 calendar day.”
B. Accordingly, Planning Branch (based on discussions with Jack Rosenzweig, AG office)
recommends LD charges be computed by Public Works Division staff, as coordinated with
the “user agency” (including project file documentation on the coordination efforts), as
follows:
LD DAGS direct operational CIP costs per calendar clay (or working day) + DAGS indirect
administrative costs per calendar day (or working day) 4- miscellaneous “user
agency” costs per calendar day (or working clay), as applicable + estimated “lost
opportunity” lease rental costs per calendar clay (or working day), as applicable.
Example: ITEIM Hawaii I-Tall Renovations
DAGS job No. 12-31-4077
LD = $168/calendar day for the DAGS direct operational CIP costs + $21/calendar day for
the DAGS in-direct operational administrative costs + any miscellaneous “user
Mr. Ernest Y. W. Lau
Ltr. o. (P)l265.6
Page 4
agency” costs (if deemed applicable or necessary by the “user agency”) + (say 37,000
gsf (based on t.he t.olal size of the building) x $3/gsf/month)/30 calendar days per
month].
LD = $168 + $2.1 + $3,700 = about. $3,890 per calendar day.
If you concur with this Planning Branch’s recommendation, please sign and return a copy of this
letter for distribution to the Project. Management Branch for use and further handling. It is also
understood lease rental costs (average; includes common area maintenance)+ Staff Services Branch
computation worksheet+ basis for calculating LD charges shonld be reviewed and. updated about
every two (2) years, if nccdccl.
Should you have further questions, please call 1ne at 586-0500.
CONCURRENCE (Proposed update of LD charge computations):