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CAPITAL CONSTRUCTION

STANDARDS OF PRACTICE MANUAL Memorial Hermann Healthcare System

Capital Construction Standards of Practice Manual

The purpose of this Manual is to provide individuals employed by Memorial Hermann as well as those individuals/organizations that are directly or indirectly contracted to Memorial Hermann, guidelines to standards of practice established by the Construction, Real Estate and Support Services (CRESS) Department, to

ensure that capital construction projects are carried out in an effective and consistent manner across the Organization.

The use of this manual is restricted to use for users employed by Memorial Hermann Hospital System and individuals/organizations directly or indirectly

contracted to Memorial Hermann Hospital System.

Any distribution, reproduction or other use of this manual unrelated to its stated purpose and user is strictly forbidden without written consent from the CRESS

Director of Architecture and Construction.

Memorial Hermann Healthcare System Capital Construction Standards of Practice Manual 1 PROJECT ADMINISTRATION 1.1 Introduction to CRESS and Project Manager Glossary -Introduction to CRESS -Other Project-Related Definitions 1.2 Capital Expenditure Definition -Definition of Capital Expenditure -Distribution of Capital Expenditure Workload 1.3 Construction Delivery -General Contracting -Construction Management -Design Build 1.4 CRESS and Project Management Organization/Responsibilities -Organizational Chart -Responsibilities 1.5 Internal Project Teams -Internal Team Membership 1.6 Reports and Communication Process Overview -Pre-construction Conference -Pre-installation Conference -Construction/Project Weekly Meetings -Design Meeting -Owner’s Weekly Meeting -Monthly Project Status Report -Construction Reports -Web-based Project Management 1.7 Permitting Process -External Permitting Requirements -Internal Permitting Requirements 1.8 Project Document Controls DOCUMENTATION LOGS -Requests for Information (RFI) -Submittal Log -Hot Issues Log -Change Management Log -Document Log -Rolling Deficiency/Non-conformance Log -Punchlist -Closeout Log

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Memorial Hermann Healthcare System Capital Construction Standards of Practice Manual

PROJECT CONTROL MONITORING REQUREMENTS -Construction Performance Measurement, Reporting and Submittals -Project Control Inputs and Outputs -Electronic Document Control PROJECT RECORD DOCUMENTS

1.9 Schedule Development and Management Procedures -Critical Path Method (CPM) Schedule -Update and Modifications to the Construction Schedule -Key Administrative Milestone Dates 2 PROJECT APPROVAL

Project Request Form (PRF)/Capital Construction Request (CCR) Process 2.1 Form Definitions and Appropriate Usage 2.2 Project Initiation Process with Checklist 2.3 Project Request Process 2.4 Project Approval Process

3 BUDGET DEVELOPMENT AND REPORTING

3.1 Budget Variance Analysis 3.2 Revisions and Approval Process 3.3 Potential Costs

4 PROJECT ACCOUNTING 4.1 Purchase Order Process

-Administrative Details -Purchase Order Initiation -Purchase Order Approval -Respect for CRESS Distribution of Duties/Paperwork Process -Purchase Order Activation -Purchase Order Cancellation/Reduction -Purchase Order Tracking 4.2 Invoice Approval Process -Administrative Details -Invoice Payment Initiation -Respect for CRESS Distribution of Duties/Paperwork Process -Handling of Freight Purchase Order/Invoice Differentiation -Invoices for Reimbursables, PSSAs and Additional Services -Invoice Payment -Invoice Payment Tracking 4.3 Purchase Requisition and Invoice Inquiry Process 4.4 Vendor Categorization 4.5 Construction Change Order Process


-Change Order Overview -Construction Change Directive -Change Order Discipline -Change Order Log 4.6 Project Budget Change Process – HCCO and SCO -Administrative Details -Hidden Condition Change Order (HCCO) Approval -Scope Change Order (SCO) Approval 4.7 Reconciliation Process -Responsiblities of Project Manager in Reconciliation -Responsibilties of CRESS Accounting in Reconciliation 4.8 Audit Process -Construction Contract Audits -Capital Construction Project Audits 4.9 Project Closure Process

5 TEAM PROCUREMENT PROCESSES 5.1 External Project Team Procurement Process

5.1.1 External Team - Architect / Professional Services

- Project Manager - General Contractor - Subcontractors - Miscellaneous Third Party 5.1.2 Request for Proposals 5.1.3 Request for Qualifications 5.1.4 Evaluation Criteria / Forms 5.1.5 Services Checklist 5.1.6 Contract Award/Negotiation - Letter of Intent - Notices to Proceed - Standard Rejection Letter

6 CONTRACT DEVELOPMENT PROCESS

6.1 Contract Types 6.2 Construction Contract Approval 6.3 Insurance and Bonding Requirements 6.4 Role of Risk Management 6.5 Contractor Application for Payment

-Schedule of Values -Payment for Materials Stored Off-Site -Waivers of Lien

Memorial Hermann Healthcare System Capital Construction Standards of Practice Manual 7 SAFETY 7.1 Safety Procedure 7.2 Inspections 8 DESIGN AND PLANNING BEST PRACTICES Department and Room Design 8.1 Existing Rooms 8.2 In Design 8.3 New 8.4 Intensive Care Units 8.5 Nursing Care 8.6 Operating Rooms 8.7 Imaging 8.8 Cath Labs 9 PROJECT CLOSEOUT PROCESS

9.1 Construction Closeout Process - Closeout Process Defined - Closeout Process Overview - Project Closeout Documentation Checklist - 9 Steps to an Effective Closeout - Closeout Requirements for Consultants/Contractors - Move Planning - System Demonstration and Start-Up - Demonstration Instructions 9.2 Closeout Log - Warranty/Guarantee Matrix - Release of Liens - Releases from Surety - Operations & Maintenance Manual - Final Payment Requests - Final Executed Change Orders - Permit Release / Sign-Offs - Training Materials 9.3 Lien Release Procedures - Interim/Final Lien Releases for Standard Construction Contracts - Interim/Final Lien Releases for Projects NOT Using Standard Construction Contracts - Lien Releases with Pay Applications


GUIDE TO APPENDICES Appendix Policy Name Project Purchase Requisition Table 4.1a Managerial Project Budget Summary Worksheet 4.1b Initial Vendor Correspondence 4.1c PO Cancellation Request 4.1d Initial Vendor Correspondence 4.3a Invoice Table 4.3b Form Letter of Invoice Recognition 4.3c Managerial Project Budget Summary Worksheet 4.3d Change Proposal Format 4.5a Change Order Documentation 4.5b Hidden Condition Change Order Form 4.6a Scope Change Order Form 4.6b Letter to Vendor Notifying of Project Closure Date 4.9a Project Closure Form 4.9b Construction Protection Requirements 6.4a Computer Room Protection Requirements 6.4b Project Closeout Checklist 9.1a Letter to Vendor Notifying of Project Closure Date 9.1b Project Closure Form 9.1c

1.1 CRESS Intro & PM Glossary Page 1 of 16


STANDARDS OF PRACTICE MANUAL

Policy #: 1.1 Policy Title: Introduction to CRESS and Project Manager Glossary Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: The purpose of this policy is to explain what the CRESS Department within Memorial Hermann is, its role within the organization and definitions/explanations of commonly used terminology within CRESS. Policy Statement: A. Introduction to CRESS

1.) Definition of CRESS (Construction, Real Estate, and Support Services): The CRESS department is comprised of individuals with a specialized background in architecture and construction.

2.) Purpose of CRESS: ALL Capital Projects are to be coordinated through

the CRESS Department before work begins if costs are expected to exceed $500,000; if less than $500,000 the on-site facility manager will coordinate.

a. The CRESS department develops and maintains:

i. Existing vendor relationships

ii. Economies of scale due to the volume and quantity of projects it oversees

iii. Current knowledge on all OSHA, ADA, and other state and

local regulations and is


iv. Familiar with System Best Practices (see Section 8-Design

and Planning Best Practices)

b. MHHCS Corporate Policy Number (FIN – 00009)

B. Other Project-Related Definitions*

AIA Documents - AIA Contract Documents comprise over 80 forms and contracts that define relationships and terms involved in design and construction projects. Memorial Hermann utilizes several of those documents among its Projects. See Policy 6.1.

AIA A101 – Standard Form of Agreement Between Owner and Contractor (where the basis of payment is a STIPULATED SUM). This contract form requires the A201 General Conditions form (see below). See Policy 6.1. AIA A107 – Abbreviated Standard Form of Agreement Between Owner and Contractor for Construction Projects of Limited Scope (where the basis of payment is a STIPULATED SUM). See Policy 6.1. AIA A111 – Standard Form of Agreement Between Owner and Contractor (where the basis of payment is the COST OF THE WORK PLUS A FEE with a negotiated GMP). This contract form requires the A201 General Conditions form (see below). See Policy 6.1. AIA A121 (with Amendment #1) – Standard Form of Agreement Between Owner and Construction Manager (where the CM is also the Constructor). This contract form requires the A201 General Conditions form (see below). See Policy 6.1. AIA A201– General Conditions of the Contract for Construction. The A201 General Conditions contract form is for use with the A101, A111 and A121 contract forms. See Policy 6.1.

AIA B141 (Part 1&2) – Standard Form of Agreement Between Owner and Architect (with Standard Form of Architect’s Services). See Policy 6.1. AIA B171 – Standard Form of Agreement Between Owner and Architect for Architectural Interior Design Services. See Policy 6.1.

AIA G702 “Application for Payment” – The G702 document requires the contractor to show the status of the contract sum to date, including the total


dollar amount of the work completed and stored to date, the amount of retainage (if any), the total of previous payments, a summary of change orders and the amount of current payment requested. See Policy 6.3.

AIA G703 “Continuation Sheet” – The G703 application for the G702 form breaks the contract sum into portions of the work in accordance with the Schedule of Values required by the general conditions. It serves as both the contractor's application and the architect's certification, and its use can expedite payment and reduce the possibility of error. If the G703 application is properly completed and acceptable to the architect, the architect's signature certifies to the owner that a payment in the amount indicated is due to the contractor. The form also allows the architect to certify an amount different than the amount applied for when explanation is provided by the architect. See Policy 6.3.

AIA G707 “Consent of Surety to Final Payment” – The G707 is a standard form for recording the date of substantial completion of the work or a designated portion thereof. The contractor prepares a list of items to be completed or corrected, and the architect verifies and amends this list. If the architect finds that the work is substantially complete, the form is prepared for acceptance by the contractor and owner. Appended thereto is the list of items to be completed or corrected. The form provides for agreement as to the time allowed for completion or correction of the items, the date when the owner will occupy the work or designated portion thereof, and a description of responsibilities for maintenance, heat, utilities and insurance. With the G707, the owner may preserve its rights under bonds by obtaining the surety's approval of final payment to the contractor and its agreement that final payment will not relieve the surety of any of its obligations. Acceptance - The act of taking custody based on satisfactory verification. See Policy 9.1. Acceptance Criteria - Performance requirements and essential conditions that have to be achieved before project deliverables are accepted. See Policy 9.1. Acceptance Test - A predefined test to prove equipment will perform the allotted task. See Policy 9.1. Account (General Ledger) Number – Identifying number that indicates where incurred project expenses should be recorded. See Policy 4.1, 4.2. Action Plan / Responsibility Matrix - A description of what needs to be done, when and by whom. See Policy 1.6.


Activity - A task or set of tasks that are carried out in order to create a deliverable. It should be noted that the term "activity" is used as a collection of tasks, synonymous with task or as a subset of a task. It is recommended that a "task" should be thought of as a subset of "activity". Activity Number – An identifying Project Number. See Policy 4.1, 4.2. Actual Cost of Work Performed ("ACWP") - Total costs incurred (direct and indirect) in accomplishing work during a given time period. ACWP is used in the earned value method of progress measurement. Actual Direct Costs - Those costs specifically identified with a contract or project, based upon the contractor's cost identification and accumulation system. Actual Finish Date - The calendar date that work actually ended on an activity. It must be prior to or equal to the data date. The remaining duration of this activity is zero. Actual Start Date -The calendar date work actually began on an activity. It must be prior to or equal to the data date. Acquisition Process - The process of acquiring personnel/goods/services for new or existing work within the general definitions of contracts requiring an offer and acceptance, consideration, lawful subject matter and competent parties. Policy 1.5 and 5.1. Agenda - A list of things to be done or discussed, typically at a meeting. No project meeting should be convened without the prior circulation of an Agenda. This enables attendees to prepare and ensure a productive and time-effective meeting. Policy 1.6. Anticipated Award Cost - The most probable contract price at time of tender and award. It forms part of the forecast to complete. Approve - To accept as satisfactory. Approval implies that the item approved has the endorsement of the approving party, however, the approval may still require confirmation by somebody else. In management use, the important distinction is between approve and authorize. Persons who approve something are willing to accept it as satisfactory for their purposes, but this decision is not final. Approval may be by several persons. The person who authorizes has final organization authority. This authorization is final approval. See Policy 9.1. Approved Bidders List - A list of contractors that have been pre-qualified for purposes of submitting competitive bids.


As-built Design - The documentation that describes the ultimate "As-built" configuration to provide for future replication. It includes design changes implemented for manufacturing improvements and integration and verification corrective actions. The "As-built" baseline becomes the "Build-to" baseline for new builds. In construction, "As-built" drawings are referred to as the "record" drawings. As-built Documentation - Drawings and diagrams that provide an accurate representation of how the product or facility is actually built. Authorize - To give final approval. A person who can authorize something is vested with authority to give final endorsement which requires no further approval. Backward Pass - Calculation of the latest finish times by working from finish to start for the uncompleted portion of a network of activities. Best Practices - Techniques that agencies may use to help detect problems in the acquisition, management, and administration of service contracts. Best practices are practical techniques gained from experience that have been shown to produce best results. See Section 8. Bid - An offer to perform the work described in a set of bid documents at a specified cost. Bid Documents - A set of documents issued for purposes of soliciting bids in the course of the acquisition process. Budget Summary Worksheet – Worksheet given to Project Manager by CRESS Accounting Office to track budgeted costs, revised budgeted costs due to change orders and committed costs to date. See Policy 4.1 and 4.2. Capital Equipment Request (“CER”) - Form to be completed by the Project Manager for equipment (except personal computer’s or personal computer software or network printers) associated with capital projects which individually or grouped cost $1,000 or more, having an estimated useful life of two years or more. This is the only instance where assets may be grouped to reach the capitalization requirements. The Purchasing Department will be the central clearing point for the actual procurement of all capital equipment and a CER must be completed. Policy 1.2, 2.1


Capital Construction Request (“CCR”) - Form to be completed by the Project Manager for new projects (or projects that are ready to proceed) with a budget approved in routine quarterly capital budget review. Policy 1.2, 2.1 Certification - A written testimony to certain facts. Used to satisfy regulatory bodies or customers that a person's or thing's capability, qualities, performance, etc. are up to specified standards.

Change Order - Written order directing the contractor to make changes according to the provisions of the contract. Policy 4.5

Change Request - A request needed to obtain formal approval for changes to the scope, design, methods, costs or planned aspects of a project. Change requests may arise through changes in the business or issues in the project. Change requests should be logged, assessed and agreed on before a change to the project can be made. Policy 4.5 Claim - The assertion of one of the contracting parties against the other seeking financial adjustment or interpretation with financial implications of an existing contract, subject to the terms of the contract's dispute clause. Closeout - The completion of all work on a project. See Policy 9.1. Closeout Log – A tool a Project Manager uses to ensure that all items of a closeout have been completed prior to occupancy and commissioning. See Policy 9.2. Commissioning - Advancement of an installation from the stage of static completion to full working order and achievement of the specified operational requirements. See Policy 9.1. Committed Costs - Costs that are legally committed even if delivery has not taken place with invoices neither raised nor paid. Completion Date - The calculated date for completion derived from estimating, planning and risk evaluation taking into account contingencies for identified risks. Concept Phase - The first phase of a project in which the need is examined, alternatives are assessed, the goals and objectives of the project are established and a sponsor is identified. Construction Cost - Any of the cost types (appropriations, commitment, expenditure or estimate to complete) associated with the scope of the construction work.


Construction Management/Manager ("CM") - The process by which a potential owner of a capital facility engages a professional agent, referred to as a construction manager, to coordinate, communicate and direct the entire process of construction from the project planning stage through design, procurement, construction and startup, in terms of scope, quality, time and cost. Contingencies - Specific provision(s) to mitigate random or unknown project risks from causing project failure or frequent baseline changes. See Policy 4.6. Contingency Allowance - Specific provision to cover variations which may occur in the expected values of elements of cost or schedule, but not scope or quality. See Policy 4.6. Contract - A binding agreement to acquire goods and/or services in support of a project. See Section 6. Contract Closeout - Activities which assure that the contractor has fulfilled all contractual obligations and has released all claims and liens in connection with work performed. See Policy 9.1. Contractor - A person, company or firm who holds a contract for carrying out the works and/or the supply of goods in connection with the Project. Corporate Accounting Construction in Progress (CIP) Report - Corporate Accounting produces a monthly report called the Construction in Progress (CIP) report. This report is produced from data from the Lawson general ledger system. .See Policy 1.6. Cost - Cost can be divided into internal and external expenses. External costs can be controlled by contracts and budgets for each phase of a project and for each deliverable or work product. Internal cost is the cost of project resources. Cost Types - Four different cost types are typically associated with the scope of work in a cost class. They reflect whether a cost is authorized, contractually committed, spent or forecast for spending. These types are:

1. Authorized Appropriation 2. Committed Cost 3. Expenditure (or Actual) 4. Estimate To Complete, or Forecast to Complete, or Uncommitted.

Types 1 and 4 contain contingencies. The sum of type 2 and type 4 is the estimated cost at completion. Before any commitments are made within a cost class, the type 4 cost contains a component called the anticipated


award cost, which in turn may contain an allowance for escalation. Type 3 costs are further sub-divided into payments and retentions (holdbacks).

Cost Variance ("CV") - The difference between the budgeted and actual cost of work performed. CRESS Report - A report that is produced from a database maintained by CRESS and it lists all of the active capital construction projects. See Policy 1.6. Critical Activity - Any activity on a critical path. Any activity viewed as requiring special attention, i.e. particularly effective or efficient execution because of high risk to scope, cost or time, should be included on the "critical" list for the project to be successful. Critical Path - The series of tasks that must finish on time for the entire project to finish on schedule. Each task on the critical path is a critical task. See Section 1.9. Critical Path Method ("CPM") - A technique used to predict project duration by analyzing which sequence of activities has the least amount of scheduling flexibility. Early dates are figured by a forward pass using a specific start date and late dates are figured by using a backward pass starting from a completion date. See Section 1.9. Critical Task - A task that must finish on time for the entire project to finish on time. If a critical task is delayed, the project completion date is also delayed. A critical task has zero slack time. A series of critical tasks make up the projectÍs critical path. Data Date - The calendar date that separates actual (historical) data from scheduled data. Design - The process of developing and documenting a solution to a problem using technology experts and tools. Design & Development Phase (“DD”) - The second phase in the generic project life cycle encompasses detailed technical, commercial and organizational decisions. There is often substantial opportunity to optimize these decisions without the expenditure of significant resources. Modeling, prototyping and testing may thus be effort well spent. Design Build - Combining design and construction in a single contract with one contractor. See Policy 1.3.


Endorsement - Written Approval. Endorsement signifies personal understanding and acceptance of the thing endorsed, and recommends further endorsement by higher levels of authority if necessary. Endorsement of commitment by a person invested with appropriate authority signifies authorization. Escalation - An anticipated rise in uncommitted costs of resources (labor, material, equipment) over time, due to reduced purchasing power of money. A component of a cost type. The allowance for escalation is a component within the anticipated award cost of a cost class. Estimated Cost at Completion - Actual Direct Costs, plus all related indirect costs, plus the estimate of costs, both direct and indirect for all the work remaining. See also Forecast Final Cost. Financial Closeout - Accounting analysis of how funds were spent on the project. Signifies a point in time when no further charges should be made "against" the project. See Policy 4.9. Forecast Final Cost - The sum of committed cost and estimated to complete. Forward Pass - Calculating the earliest start dates moving from left to right along a network. General Consultant Agreement – Standard contract utilized by a Project Manager for miscellaneous consultants on a Project. Guaranteed Maximum Price (“GMP”) – See Policy 1.3. Hand-Over Phase - The fourth phase in the generic project life cycle covers completion of the project to the satisfaction of the sponsor. It includes management of the introduction of the product or service being delivered by the project. During Hand-Over, project records together with an audit trail documentation are completed and delivered to the Owner/Project Manager. This documentation will be required at the post-project evaluation review. All documentation should include any operations and maintenance plans. If not to be conducted in a post-project evaluation review, there should also be a review of the original business case, i.e. a Benefits Assessment. See Policy 9.1. Hidden Condition Change Order (“HCCO”) - The occurrence of a hidden condition such as asbestos, which could not have been anticipated prior to the start of the Project. This cost should be paid from the project contingency budget. Policy 4.6.


HCCO Form – Form to be completed by the Project Manager when a hidden condition is discovered. Policy 4.6 Indirect Costs - The costs for common or joint objectives that cannot be specifically identified with a particular project or activity; however, they may be allocated to projects on a prorated basis. Also known as Overhead. In-House - Within the organization. Typically refers to work undertaken by the employees of the organization rather than by outside contract. Initial Vendor Correspondence - See Policy 4.1, 4.2. Inspection - Activities such as measuring, examining, testing, gauging one or more characteristics of a product or service and comparing these with specified requirements to determine conformity. See Policy 9.1. Insurance - A contract by which a person or company can, upon payment of a premium, be indemnified against loss due to specified risks. See Policy 6.3. Invoice - A contractor’s bill or written request for payment under the contract for supplies delivered or services performed. See Policy 4.2. Invoice Rejection Letter - A letter sent to a Vendor by the Project Manager when there is a discrepancy over an invoice requesting that the vendor provide a full credit and rebill the good/service on a new invoice. See Policy 4.2. Invoice Table - After receipt of an Invoice, the Project Manager should log invoices into the Invoice Table. See Policy 4.2. Kick-Off Meeting - Ideally, a workshop type meeting in which the principle stakeholders and participants in the project are briefed on the goals and objectives of the project, how it will be organized, etc. and who are then able to contribute to its planning, assignment of responsibilities, target dates, etc. Late Dates - Calculated in the backward pass of time analysis, late dates are the latest dates on which an activity can start and finish. Latest Finish - The latest day a work item can finish without affecting the project duration assuming that all subsequent work items start as soon as they are able and are completed in their expected times. Lawson – Accounting system utilized by Memorial Hermann Hospital System.


Letter of Intent - A type of letter sometimes issued to a contractor to confirm the award of a contract and pending the signing of formal contract documents. It is a commitment document. It allows the contractor to prepare for mobilization. Permitting work to start on site before the contract is signed is not recommended as the Owner is without full protection at that point until the construction contract is signed. Lien - A claim to some property that a lender attaches to a borrower. See Policy 9.3. Lien Releases – Contractor’s Waiver and Release of Lien. See Policy 9.3. Master Project Schedule - The highest level summary schedule for a project, depicting overall project phasing and all major interfaces, contractual milestones, and project elements. Method - A reasonably complete set of rules and criteria that establishes a precise and repeatable way of performing a task and arriving at a desired result. Milestone - A point in time representing a key or important intermediate event in the life of a project. A milestone should be capable of validation by meeting all of the items prescribed in a defining checklist as agreed with the stakeholders. Monthly Financial Capital Report - Notice to Proceed - Formal notification to the supplier, requesting the start of the work. Offer - A response to a solicitation that, if accepted, would bind the offeror to perform the resultant contract. A response to an invitation for bids or a request for proposals is an offer. A response to a request for quotations is a quote not an offer. Operations and Maintenance ("O&M") - Usually covers field operations, training, repair, logistics support, upgrades, and related items. See Policy 9.1. Operations and Maintenance Manual - A document that describes the required operations and maintenance procedures for an entity or a system. See Policy 9.1. Phase - A major period in the life of a project culminating in a major milestone. A Phase may encompass several Stages.


Pink copy - Post Project Review - A formal review of the project that examines the lessons that may be learned and used for the benefit of future projects. Progress Payment - Interim payment for delivered work in accordance with contract terms generally tied to meeting specified performance milestones. See Policy 6.5. Project - A novel undertaking or systematic process to create a new product or service the delivery of which signals completion. Projects involve risk and are typically constrained by limited resources. Project Duration - The elapsed time from project start date through to project finish date. Project Life Cycle - The four sequential major time periods through which any project passes, namely:

1. Concept 2. Definition 3. Execution (implementation or development) 4. Finishing (commissioning or close out).

Each period may be identified as a Phase and further broken down into stages that typically reflect the area of project management application and the size and complexity of the specific project.

Project Request Form (“PRF”) - Form to be completed by the Project Manager for investigational fees to assess the feasibility of a new project that does not have a budget approved by the President’s Council during the routine quarterly budget review. See Policy 2.1. Project - A novel undertaking or systematic process to create a new product or service the delivery of which signals completion. Projects involve risk and are typically constrained by limited resources. Project Budget - The amount and distribution of money allocated to a project. Project Closeout - The full completion of a project signed off by all responsible parties and the finalization of all paperwork. Contractually concluded by a consultant's total performance Certificate. See Section 9.1.


Project Closeout Checklist – As the project draws near to completion, the Project Manager should utilize a Project Checklist to ensure that every close out activity has been completed. See Section 9.1. Project Closure Form - If in the Project Manager’s opinion, all conditions of the Contract have been satisfied, the Project Manager will complete and sign the Project Closure form and obtain the signature of the director of the user group for whom the project was completed. See Section 9.1. Project Cost - The actual costs of the entire project. Project Management ("PM") - The art and science of managing a project from inception to closure as evidenced by successful product delivery and transfer. Project Manager - The person who heads up the project team and is assigned the authority and responsibility for conducting the project and meeting project objectives through project management. Project Number – An identifying number of the Project. Project Risk Management - The process of identification, assessment, allocation, and management of all project risks. Project risk management recognizes a formal approach to the process as opposed to an intuitive approach. Risks are present in all projects, whatever their size or complexity and whatever industry or business sector. See Policy 6.4. Project Scope - A concise and accurate description of the end products or deliverables to be expected from the project and that meet specified requirements as agreed between the Project’s Stakeholders. Project Startup - The complex sequence of activities that are required to start the project, mobilize the team, initiate the project definition process, obtain agreement to the project's objectives and plan to deliver them. Project Team - The central management group headed by a project manager and responsible for the management and successful outcome of the project. Purchase Order - A standard document used to obtain supplies and non-personnel services when the total amount is relatively small. The issue of a Purchase Order creates a contractual commitment. See Policy 4.1. Purchase Order Cancellation Request - A Project Manager should complete this when a purchase order should be cancelled or reduced. This form requests


written acknowledgement from the vendor whereby they agree that they will cease billing invoices under a certain purchase order number. See Policy 4.1. Purchase Requisition (“PR”) – A form the Project Manager should fill out in order to initiate a purchase order. See Policy 4.1. Purchase Requisition Table – After completion of the purchase requisition form, the Project Manager should record the purchase requisition into their Project Budget Worksheet’s Purchase Requisition Table. See Policy 4.1. Record Drawings - Drawings submitted by a contractor or subcontractor to show the construction of a particular structure or work as actually completed. Releases from Surety - Request for Information (“RFI”) - A formal inquiry in the market place for information, typically concerning "Expressions of Interest", capacity, capability and availability of contractors to undertake and bid on work described in the solicitation. Request for Proposal - A formal invitation containing a scope of work which seeks a formal response (proposal) describing both methodology and compensation to form the basis of a contract. Risk Management - An organized assessment and control of project risks. See Policy 6.4. Sequence - The order in which activities will occur with respect to one another. This establishes the priority and dependencies between activities. Successor and predecessor relationships are developed in a network format. This allows those involved in the project to visualize the work flow. Schedule - A time sequence of activities and events that represent an operating timetable. The schedule specifies the relative beginning and ending times of activities and the occurrence times of events. A schedule may be presented on a calendar framework or on an elapsed time scale. Schedule of Values – Each Contractor should submit a Schedule of Values for their entire contract to the Owner and/or Project Manager for approval as that will be the basis of payment to the Contractor. Scope Change Order (“SCO”) - A Project scope change that will require an adjustment in funding (an increase or decrease in budget). Policy 4.6


SCO Form – Form to be completed by the Project Manager when a scope change will result in a budget adjustment. Policy 4.6 Slack Time - The amount of time a task can slip before it affects another task’s dates or the project finish date. Standard - A specific statement of the rules and constraints governing the naming, contents, and operations of deliverables. The rules and constraints are designed to support specific objectives. Subcontractor - Any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor. Subledger (category) Number – An identifying project number. Task - A cohesive, individual unit of work that is part of the total work needed to accomplish a project. Transfer of Care, Custody and Control ("TCCC") - The transfer of a project's completed deliverable into the hands of the user together with responsibility for its care, usage and maintenance. Variance Analysis - The analysis of the following:

• Cost Variance = BCWP - ACWP • % Over/Under = 100 x (ACWP - BCWP) / BCWP • Unit Variance Analysis • Labor Rate • Labor Hours/Units of Work Accomplished • Material Rate • Material Usage • Schedule Variance = BCWP - BCWS

Vendor Categories – The Project Manager should properly classify vendors into the proper category for purchase order and invoice purposes. See Policy 4.4. Vendor Letter (Closure Date) – A letter sent to the Vendor by the Project Manager notifying that the Project will be closed as of a certain date and after that, no further expenses will be charged to that Project. See Policy 9.1. Warranties/Guarantee Matrix – A Project Manager should log all of the warranties/guarantees associated with a Project into this Matrix. See Policy 9.2.


* Many definitions came from Wideman’s Comparative Glossary of Common Project Management Terms v3.1. The Glossary is copyright by R. Max Wideman, March 2002, with the permission given for copying due to a non-profit use.

APPROVED: DATE:

1.2 Capital Expenditure Definition Page 1 of 2



Policy #: 1.2 Policy Title: Capital Expenditure Definition Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: The purpose of this policy is to define what a capital expenditure is and depending on the expenditure amount, whether the coordination of the expenditure will be handled in-house or within the CRESS Department. Policy Statement: A.) Definition of Capital Expenditure

1.) All equipment (except personal computer’s or personal computer software or network printers) associated with capital projects which individually or grouped cost $1,000 or more, having an estimated useful life of two years or more. This is the only instance where assets may be grouped to reach the capitalization requirements.

2.) Capital projects including space changes or major building repair (those

which extend the life of the building) with costs in excess of $5,000 (not including equipment costs) and a useful life of two years or more.

3.) Information Systems projects with costs in excess of $5,000 (not including

equipment/software costs) and a useful life of two years or more

B.) Distribution of Capital Expenditure Workload

1.) Generally, if a capital project is less than $500,000 in scope, it will be handled in-house by the Facility Manager within the Facility that the Project is to take place.

1.2 Capital Expenditure Definition Page 2 of 2

2.) If a capital project is greater than $500,000 in scope, the project will be carried out by a Project Manager within the CRESS department.

APPROVED: DATE:

1.3 Construction Delivery Methods Page 1 of 6



Policy #: 1.3 Policy Title: Construction Delivery Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: The purpose of this policy is to describe the various contract delivery methods and the preferred delivery method(s) within CRESS. Policy Statement: Capital projects can be managed in a variety of ways but the basic contract methods are Construction Management, General Contracting, and Design Build. While each method has advantages and disadvantages that are reviewed below, Memorial Hermann primarily uses General Contracting as its contract method. It is, however, important to look at the anticipated capital project to determine if a rare circumstance (a critical schedule, a small project or emergency/disaster) dictates another method to be utilized. In those instances, the Project Manager should seek written, CRESS approval if conditions warrant an alternative delivery method. In this section, each delivery method is described and decision tools are included. Please refer to Section 6.1 “Contract Types” for the contracts utilized within CRESS. A. General Contracting The General Contracting Method is also known as the design-bid-build method. The general contractor does not have any contractual obligation to work with the Owner in managing the project. The contract types used by the General Contractor are as follows: Lump Sum Contracts


The lump-sum or fixed price construction contract is the most common of the formats and is one of the most commonly used within Memorial Hermann. Generally, a competitively bid project is set up on a lump-sum basis. At least in theory, this competitive bidding process should result in an economy to Memorial Hermann due to the competition involved. In addition, this format most clearly fixes the responsibilities of the parties and the limits of each party's liability. However, certain practical problems with this theory must be reviewed for an accurate picture of the risks that each of the parties assumes in this format. The lowest bidder may not be the best overall choice for Memorial Hermann, for a number of reasons. For example, the lowest bidder has every incentive to use the least expensive materials and methods allowed under the contract. The lowest bidder may not always provide the best long-term value, especially if their bid is substantially lower than other bidders. Although the lump-sum contract gives the benefit of a certain price, that price may be higher than necessary. A lump-sum bidder is will include a contingency amount or cushion in its bid to allow for uncertainties which may or may not materialize. If these feared events do not occur, the lump-sum Owner has paid unnecessarily for contingencies that did not happen. Cost Plus/ Time and Material Contracts The simplest format, in theory, is the cost plus contract (sometimes known as the "time and materials," or T&M, contract). This is rarely used within Memorial Hermann and under this scheme, Memorial Hermann agrees to reimburse the contractor for specified direct and indirect costs, with a fee to cover the contractor's overhead and profit (often stated as a percentage of the total reimbursable cost). These contracts have the necessary disadvantage to both parties of leaving total construction costs unclear; Memorial Hermann, however, retains more control over the work and over the contractor's methods than there would be under a lump-sum contract. Cost-plus contract work is still regarded by many as a suspicious format, since this plan, in its simplest form, gives the contractor little or no incentive to save money. Indeed, any incentive would, at least theoretically, be in the opposite direction, since the greater the cost, the larger the fee. Perhaps as a result, Owners have derived several cost-plus variations. In one such scheme, the contractor takes a fixed fee or a declining percentage fee, thereby eliminating or reducing the contractor's incentive to increase direct costs so as to increase its fee. Unit Price Contracts


A final contract type seldom used, the unit price contract, is used commonly in heavy and subsurface construction. This contract form gives an Owner some of the advantages of competitive pricing along with an ability to assess actual costs incurred. This has particular applicability to heavy construction, where estimated quantities may turn out to have little relationship to the actual quantities of work performed, making bidding a less than exact science. Accordingly, the Owner may save itself the payment of substantial contingencies or claims by tying unit prices to actual work performed. Under a unit price contract, an Owner must monitor performance to assure the ability to confirm actual quantities for final payment purposes. Nevertheless, the advantages may be substantial, especially in subsurface work. As an aside, the use of a unit price for differing site conditions or changes clause in a lump-sum contract can help assure an Owner that no contingencies for unknown site conditions are included by the bidders. Thus, the use of unit pricing in one form or another may allow an Owner to limit the risk of substantial contingencies in lump-sum contracts. No such clause can prevent a claim by the subsurface contractor, but by assuring the contractor of adequate payment for unanticipated conditions, an Owner may avoid the contingency. A contract can be negotiated, especially in a unit price context; a hidden contingency cannot. OTHER ALTERNATIVE DELIVERY METHODS B. Construction Management There are two forms of Construction Management – agency and at-risk. Agency Agreement The agency form of Construction Management is when the CM acts as an agent for an Owner. The CM works for a negotiated fee and reimbursable items. Their contract does not hold risk in the outcome of the project except litigated professional negligence. The CM does not hold any contracts of contractors or consultants. They are the Owner’s representative in the construction process beginning typically in the pre-construction/design phase. They are not typically involved in planning. They do not have contractual authority over the contractors or consultants. They represent an Owner on the construction site and maintain an “open-book” relationship with the Owner. They ensure that project procedures and quality are maintained. They are responsible for document control and manage the problem-solving process. The Owner maintains control of the design, contracts, payments and risk.


Guaranteed Maximum Price Contracts (CM-at-Risk) The guaranteed maximum price contract, also called the GMP or Gmax, is actually another variation on the cost-plus contract, although there are elements of the lump-sum contract included as well. While the contract is on a cost-plus basis up to the GMP agreed upon, the contractor agrees to absorb all costs beyond the GMP. The CM-at-Risk contract method is characterized by the following:

1.) The CM holds the contractor contracts. 2.) The CM guarantees the price based on the design documents.

3.) The CM shares in the risk for the project with the Owner.

4.) The CM shares or reverts savings back to the Owner.

5.) The CM shares in or bears the losses of exceeding the approved

Guaranteed Maximum Price (GMP).

6.) The CM has an “open book” relationship with the Owner.

7.) The CM ensures project procedures and quality or maintained.

8.) The CM maintains document control and manages the problem-solving process.

9.) The CM works in tandem with the Owner to manage the cost and

schedule.

10.) The Owner maintains control of the design. As with the standard cost-plus contract, there is little incentive for a contractor to reduce costs, at least until the Gmax price is reached. As a practical matter, therefore, where an Owner requires the contractor to agree to a guaranteed maximum price, it may make sense to give the contractor a portion of any cost savings that are recognized in order to give the contractor an affirmative incentive to minimize construction costs, benefiting both parties. Some Owners may feel that GMP contracts imply a lack of competition in pricing. While GMP contracts are often negotiated with a contractor with whom an Owner is familiar, there is nothing to prevent the Owner from soliciting several GMP


proposals from pre-qualified contractors on a competitive basis. This can be done at the completion of construction documents in the same manner as is traditionally done with lump sum contracts. In institutional and commercial construction, typically subcontractors perform 80 to 85 percent of the work in a general construction contract. An Owner can therefore, reasonably require in the GMP contract that the general contractor obtain a minimum of three or four lump sum competitive bids from pre-qualified subcontractors on the major portions of the work. The Owner can retain the right to review and approve subcontractor selection. This ensures competitive pricing on the majority of the work. Additionally, there are often options within a GMP contract for improving the economy to the Owner. For example, the contractor's fee can be set at a fixed amount to be adjusted only if approved change orders exceed a specified range. The contractor's cost of general conditions can be set as a separate GMP within the overall GMP. These approaches prevent the contractor from loading the job with excessive supervision if he perceives an under-run in the overall GMP. On phased or fast track projects, one way to employ a GMP at early stages would include soliciting proposals from pre-qualified contractors for a lump sum fee and general conditions cost at some design milestone such as design development. The actual GMP amount can be negotiated later, including subcontractor bids. This approach provides site planning, scheduling and estimating prior to completion of the documents. C. Design Build

Design-build means contracting with a single entity for performing both design and construction on an entire project. Design-build is a contracting process that brings designers and contractors together early in the detail design portion of a project. The Owner clearly defines the standards and general specifications they expect for a project, and the design-build team works together to satisfy those requirements. Because the team works together, they are able to develop innovative and efficient solutions to meet the Owner's expectations. The design-build process differs from the traditional method by overlapping design and construction, allowing construction to begin after a portion of the design has been completed. Design-build has a significantly different approach to risk management and project responsibilities. Recently, however, "design-build" contracting has emerged anew wherein the Owner looks entirely to one entity hired by contract to do all functions normally provided by the previously independent design professional and construction professionals, as well as, the entire project construction.


Some of the benefits and drawbacks are as follows:

1.) Shorter time to complete a project by overlapping design and construction by allowing construction to begin before all design details is finalized.

2.) Results in economy in selection of design, materials, and construction

methods due to collaboration between the designers and contractors.

3.) Reduces claims construction delays due to design errors because the design and construction are performed under the same contract.

4.) Accelerates response times, and resolves concerns and disputes more

quickly through a team environment.

5.) Provides a single point of contact for quality, cost, and schedule from design through construction.

6.) Allows for the use of the best-value project award-selection criteria, which

evaluates both technical and financial elements.

7.) The rules and practices of the traditional process are familiar to contractors, and consulting engineers. New rules for design-build changes stakeholders' roles.

8.) The bidding process is more expensive for design build teams.

9.) Coordination responsibility can be more challenging due to a faster pace.

10.) Single Risk for Owner –“eggs all in one basket”.

The application of the type of contracting method selected largely depends on the project size, schedule, and risk evaluation. The decision to choose a methodology should be decided upon when the capital project request is initiated.

APPROVED: DATE

1.4 CRESS & PM Organization and Responsiblities Page 1 of 1



Policy #: 1.4 Policy Title: CRESS and Project Manager Organization / Responsibilities Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: Policy Statement: -Need rough/sketch org chart (either description or actual chart), how PM’s fit *Current list of PM’s *2 Org charts… 1 internal and 1 internal/external? -Who does what within CRESS / PM? -Internal teams (only MHHS and PM)…when use and why? Discuss? Structure? #

of teams?

APPROVED: DATE

1.5 Internal Project Teams Page 1 of 2



Policy #: 1.5 Policy Title: Internal Project Teams Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: Policy Statement: A. Internal Team Membership

1.) Membership of internal teams varies project by project, depending on project scope.

2.) The Project Manager shall work with the Project Sponsor to develop

Internal Team membership. Every internal team will consist of CRESS involvement and either some or all of the following (not intended to be exhaustive, internal team membership will depend on project’s scope):

a. CRESS Facility Departments b. Laundry/Linen c. Safety/Security d. Parking e. Biomedical f. Facilities/Engineering g. Property Management h. Real Estate System Departments i. Infection Control

1.5 Internal Project Teams Page 2 of 2

j. Information Systems k. Insurance

3.) Please refer to Section 5 for External Team Membership/Responsibilities.

APPROVED: DATE

1.6 Communication Processes and Formats Page 1 of 9



Policy #: 1.6 Policy Title: Reports and Communication Process Overview Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: Policy Statement: Preconstruction Conference A. Preconstruction Conference

1.) Upon placement of the Project Team (Internal (Policy 1.5) and External Members (Section 5)), the Project Manager should commence the Project with a Pre-construction Conference. The Pre-construction Conference, Pre-installation Meetings, Job Progress Meetings, and specially called meetings throughout the progress of the Work should be managed by the Project Manager or Construction Manager depending on the project delivery type.

2.) Representatives of the Contractors, subcontractors and suppliers attending

the meetings should be qualified and authorized to act on behalf of the entity each represents. The Construction Manager or Project Manager will chair all meetings, and will write and distribute the minutes of all meetings if required. If the attendees do not object in writing to any part of the meeting minutes within five (5) days of receipt of the minutes, the minutes should be accepted as written.

a. When: The Pre-construction Conference should be scheduled and

organized at the Project site or other convenient location no later than 15 days after execution of the Notice to Proceed and prior to commencement of construction activities. The Project Manager will


conduct the meeting to review responsibilities and personnel assignments.

b. Attendees: The Construction Manager/General Contractor, Project

Manager, Architect and their consultants, the Contractor and its superintendent, major subcontractors, manufacturers, suppliers and other concerned parties should each be represented at the conference by persons familiar with and authorized to conclude matters relating to the Work.

c. Agenda: The agenda should include items of significance that could

affect progress including such topics as:

i. Working construction schedule ii. Critical work & sequencing or phasing iii. Project coordination and responsibilities iv. Procedures for processing field directives, proposal requests

and Change Orders v. Procedures for resolving Requests for Information (RFI) vi. Procedures for processing Applications for Payment vii. Distribution of Contract Documents viii. Submittal of Shop Drawings, Product Data and Samples ix. Record documents x. Site Logistics xi. Construction temporary facilities xii. Office, work and storage areas xiii. Equipment deliveries and priorities xiv. Safety procedures xv. Security xvi. Housekeeping xvii. Working hours xviii. Traffic and parking procedures xix. Other critical or operational issues

B. Pre-installation Conference

1.) When: Conduct a Pre-installation Conference at the site before each construction phase that requires coordination with other construction phases. The Installer and representatives of manufacturers and/or fabricators involved in or affected by the installation, and its coordination or integration with other materials and installations that have preceded or will follow should attend the meeting.


2.) Agenda: Review the progress of construction activities and preparations for the particular activity under consideration at each pre-installation conference. Be prepared to discuss requirements for:

a. Contract Documents b. Possible conflicts and Alternate Materials or solutions c. Change Orders d. Deliveries of key materials e. Shop Drawings, Product Data and quality control Samples f. Compatibility of materials g. Acceptability of substrates h. Temporary facilities i. Space and access limitations j. Governing regulations k. Safety l. Inspection and testing requirements m. Required performance n. Recording requirements o. Protection

C. Construction/Project Weekly Meetings

1.) When: On-site Project Job Progress Meetings should be held on a weekly basis throughout the duration of the Project.

2.) Attendees: The Construction Manager/General Contractor, Project

Manager, the Architect and their consultants, Contractors (and their subcontractors and suppliers if requested by the Construction Manager) should attend. The representatives of the Contractor should be the Project Manager and Field Superintendent, and required to attend unless a substitute representative has been approved by the MH Project Manager. Each Contractor should begin attending the Project Job Progress Meetings at least four (4) weeks prior to mobilization on site and continue until the Contractor has fulfilled the obligations of his Contract.

3.) Agenda: The Project Manager will establish the agenda for the Job

Progress Meeting. At a minimum, the Participants should be prepared to discuss the following:

a. Review of the Responsibility Matrix b. Actual versus scheduled progress for the past week c. Planned construction activities for the next three weeks d. Anticipated sequencing of the work and any sequencing revisions e. Status of submittals and shop drawings


f. Procedures for resolving Requests for Information (RFI) g. Status of fabrication and delivery schedules h. Coordination issues i. Status of any cost proposals and pending change orders j. Safety k. Security l. Site access and utilization m. Temporary utilities and services n. Housekeeping o. Administrative procedures p. Quality control q. Status of Requests for Information r. Anticipated design changes s. Field observations, problems and conflicts

4.) See Figure 1.6a – Job Progress Meetings for a template.

D. Design Meeting

1.) When 2.) Attendees 3.) Agenda

E. Owner’s Weekly Meeting

1.) When 2.) Attendees 3.) Agenda

F. Monthly Project Status Report

1.) When: The Project Manager should submit a monthly report to CRESS

throughout the duration of the Project. 2.) Format: The Project Manager will write the Monthly Project Status Report.

At a minimum, the Report should include the following:

a. An executive summary b. Project Budget Worksheet & Expense Reconciliation c. Project Schedule (Complete, In-progress, Upcoming and milestones) d. Relevant Photographs e. Major activities f. Critical Upcoming Decisions


G. Construction Reports 1.) The Project Manager should be familiar with the construction activity

reports and take action when necessary. The reports are as follows: 2.) CRESS Monthly Facility Capital Report (MFCR)

The CRESS Sr. Financial Analyst produces a monthly report called the Monthly Facility Capital Report (MFCR). It is a report that is produced from a database maintained by CRESS and it lists all of the active capital construction projects and includes the following information:

a. Project name, number, Project Manager, and status

b. Total Original budget, change orders and total final budget

c. Total inception to date funds committed (sum of POs issued against

project)

d. Total inception to date actual expenditures (sum of all invoices paid against project)

e. Funds remaining on project (total budget less actual expenditures)

Expenditures that are charged to construction projects that are NOT routed through the CRESS Division will not be included on the MFCR, would show up on Corporate Accounting’s CIP report (see below)

CRESS will require each Project Manager to periodically reconcile his/her Project Budget Worksheet with the CRESS database.

3.) Corporate Accounting Construction in Progress (CIP) Report

Corporate Accounting produces a monthly report called the Construction in Progress (CIP) report. This report is produced from data from the Lawson general ledger system. Capital construction costs are accounted for in two main categories on the MHHS general ledger. The first category is construction in progress (CIP). CIP is the category where costs of projects currently under construction are accumulated and accounted for until the project is substantially complete. When the project is complete, the CIP costs are transferred to the second category of capital construction costs which is fixed assets.

When costs are transferred to fixed assets, depreciation can begin. To ensure that depreciation expense is properly stated in the correct


accounting period, Corporate Accounting has to periodically transfer costs of substantially completed projects to fixed assets, even though the project may be less than 100% complete.

4.) MFCR vs. CIP

The CIP report shows total construction costs, less amounts transferred to fixed assets whereas the MFCR shows total costs since the inception of the project. In other words, the MFCR report shows the gross amount of the original budget and inception to date expenditures where the CIP report shows the net amount less costs transferred to fixed assets.

Expenditures that are charged to construction projects that are NOT routed through the CRESS Division will not be included on the MFCR, would show up on Corporate Accounting’s CIP report.

CRESS is currently working with ISD to develop an electronic reconciliation process whereby the CRESS database and Lawson general ledger system can produce a periodic exception report as needed showing differences between entries posted on the two databases. This will help ensure the two databases are in sync with respect to project costs.

H. Web-Based Project Management


Figure 1.6a – Job Progress Meetings

3050 Post Oak Blvd., Suite 700, Houston, Texas 77056 Phone: 713/963-1000 Fax: 713/623-4672

OOAACC MMeeeettiinngg AAggeennddaa

AApprriill 66,, 22000055 –– 33::0000ppmm CCSSTT MHSW/Heart Vascular Institute

I. Old Business A. Contract Review - FKP MHHS / TCC

a. B141-97 Part 1 & 2 (rev. 04/04/05) b. A201-97 (rev. 04/04/05) c.

B. Demolition of Toys R’ Us TCC a. Recap of today’s 2:00 meeting b. Parking blocked off today (4/6/05) c. Demolition Starts Thursday (4/7/05) d. Duration – 3 weeks

II. New Business A. Job Progress Summary –

Demolition to start this week, drawings to go out next week to city and GC, eye center parking improvements being bid out.

B. Schedule Milestones–

a. Bid Schedule Milestones

i. RFP Review by MHHS – 4/8/05 – 4/11/05 (is this enough time?) ii. Distribute RFP to GC’s – 4/12/05 (dependant on review) iii. Pre-Bid Meeting – 4/14/05 or 4/15/05 (per MHHS availability) iv. GMP Drawings Complete – 4/15/05 v. GC’s Pickup Drawings – 4/18/05 vi. Bid Meeting Q & A – 4/20/05 (answer questions about drawings) vii. Bids Due – 5/13/05, 2:00pm viii. Bid Review – 5/13/05 – 5/17/05

b. Permit Schedule Milestones

i. BP #1 – Driveway & Sanitary & Storm Relocation Package - Received comments, addressing and resubmitting on 4/7/05 per Walter P. Moore

ii. BP #1A– Waterline Separation Package - Separated out waterline from BP#1 due to city requirements

iii. BP #2 – Piers & Building Pad – in to city, no comments yet


iv. BP #3 – Eye Center Parking Improvements - in to city, no comments yet

v. BP #4 - GMP / Permit Set – ready on 4/15/05 for submittal to city, revisions/updates to be sent in 6/21/05 to city when final construction set is complete

c. Construction Schedule Milestones

i. Award Contract Date – 5/17/05 ii. Start Construction Date – 6/1/05 iii. Open Doors Date – 12/1/06

C. Drawing Changes – Drawings being updated for GMP & Permit Issue D. Submittals – None E. Change in Services – Dealing w/ Contract Adjustment

a. MHSW - 00R Revision of Basic Services due to scope changes $3,561,350

b. MHSW - 01R2 Revision of Basic Services due to scope changes ($207,500)

c. MHSW - 02R Site Development Redraw – Invoiced against $80,000

d. MHSW - 03R Revision of Basic Services due to scope changes ($765,783)

F. Change in Services – Other a. MHSW - 04 Elevator Consultant Services

$20,700 b. MHSW – 05 Basic Landscaping Plan for HVI due to permit requirements $3,600

G. Interiors – Last Meeting w/ Tracy & O’Neil Hill on 3/29/05 a. Interiors Mockup – Best Practices Mockup - Shared Cost vs. O’Neil Hill CSA b. Finishes Review (not all Best Practices per MHHS)

H. Telecom/Low Voltage - Meeting w/ Richard Graziani (MHHS), Ray Baker (MHHS), Jill

Allison (TCC), Elliott Avery (SSR) on 4/5/05 a. Notes of meeting & Revised telecom to be sent out by Elliott Avery showing new

conduit routing

I. Equipment - Meeting w/ Doctors, Chris V., Ray, Genesis, TCC on 4/8/05 a. MRI vs. CT Scan b. GE vs. Phillips c. Additional Hospital Requests for equipment d. Drawing Review / Sign off e. Doctor Comments on Cath, Radiology, MRI f. Packs – Volume of system

J. Invoices

a. SSR outstanding invoice

K. Critical Issues/Comments a.

III. Safety (see Section 7 for Safety Report Template)


APPROVED: DATE

1.7 Permitting Processes Page 1 of 6



Policy #: 1.7 Policy Title: Permitting Processes Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: Policy Statement: A. External Permitting Requirements

1.) Capital projects must be permitted prior to starting work. It is the Project Manager’s responsibility to obtain all permits.

2.) The jurisdictional bodies applicable to Memorial Hermann are: The Cities of

Houston, Katy, Missouri City, and the counties of Harris and Fort Bend. CITY AUTHORITIES City of Houston Department of Planning & Community Development 100 Main Street Houston, TX 72801 (513) 432-7700 City of Katy Department of Planning & Community Development 100 Main Street Katy, TX 72801 (513) 432-7700 City of Missouri City Department of Planning & Community Development


100 Main Street Missouri City, TX 72801 (513) 432-7700 COUNTY AUTHORITIES Harris County Building Official: 30 East Main Street Houston, TX 72801 (513) 564-3040 Fort Bend County Building Official: 30 East Main Street Houston, TX 72801 (513) 564-3040 STATE AUTHORITIES Texas Dept of Health Texas Department of Licensing & Regulation

3.) Harris and Fort Bend Counties require permits for the following: a. Additions, Alterations, and Repairs b. All New Construction (Building Permit) c. Decks d. Electrical e. Farm Buildings f. Mobile Home Placement g. Plumbing h. Signs i. Storage Buildings j. Vinyl Siding

4.) There are varying fees associated with the above permits. However, some

requirements vary between the city/county governing bodies. Information pertaining to city and county entities is described below. However, it is always important to call the applicable permitting office as requirements may change.

CITY OF HOUSTON/KATY/MISSOURI CITY 1.) The Cities of Houston/Katy/Missouri City requires a permit for the following

construction operations:


a. Blasting b. Building c. Demolition d. Electrical e. Mechanical f. Plumbing g. Storage Tanks

2.) The Cities of Houston/Katy/Missouri City requires a building permit for the

following: a. any new construction b. alterations c. additions d. demolitions e. accessory buildings f. swimming pools and/or g. any other improvements or property upgrades.

3.) An architect or engineers seal is required on all drawings for all construction,

irrelevant of size or complexity, that impacts assembly, educational, high hazard, institutional, hotel-motel and dormitory use. Other types of construction may require an architect or engineer’s seal based on height and/or square footage.

4.) All applications must contain the following information:

a. Owner’s complete legal name b. Owner’s mailing address c. Owner’s phone number d. Contractors complete legal name e. Contractor’s mailing address f. Contractor’s phone number g. Copy of State Contractors Registration h. Contractor’s City business license number i. Fees – based on total value of project j. Check made payable to the City of Houston/Katy/Missouri City k. Site Plan as described below l. Building plans m. Supplemental plans

5.) The site plan should have the following incorporated therein:

a. A north indicator b. Actual dimensions of the lot drawn in 1”-20’ scale and to the actual

bearings of the property c. Actual location and dimensions of existing structures on the property d. Actual dimensional setbacks form the property lines to the structures


e. Actual size of the property f. All easements contained within the property or that cross the property at

any point g. All off-street parking

6.) The building plan must be submitted in two identical sets of documents. One set

will remain on record at the building inspection office. The other set will be stamped “approved” and returned to the owner or contractor. The “approved set” must remain on the jobsite at all times during construction. The building plan should have the following incorporated therein:

a. Scaled floor plan for each floor b. Typical wall sections c. At least two elevations d. Overall dimensions of the structure e. Internal dimensions of the rooms in the structure f. All rooms must be labeled as to their use g. All bathrooms and kitchens must show locations of all fixtures and

appliances to be installed h. All doors, windows, and stairways must be sized on the drawings

7.) Supplemental plans may be required and include the following:

a. Electrical b. Plumbing c. Mechanical d. Fire Protection Systems

8.) It is important to note that in addition to the building permit, separate permits

are required for electrical, plumbing, mechanical, signs, and fire protection systems. When submitting fire protection system drawings, four sets of drawings and calculations must be submitted in addition to the building permit drawings.

9.) Once a permit has been issued, it must be displayed on the outside of the

building so that it is plainly visible from the street. It cannot be removed until the building or renovation is complete and ready for occupancy.

10.) During the course of construction, the city building inspector must be called to

inspect the following work:

a. Building i. Footers ii. Slabs iii. Foundations iv. Framing v. Insulation vi. Drywall vii. Chimney work viii. Firewalls


ix. Fire separation walls x. Final construction

b. Plumbing

i. Under slab ii. Rough-in iii. Service lines iv. Final construction

c. Electrical

i. Under slab ii. Rough-in iii. Final construction

d. Mechanical

i. Under slab ii. Rough-in iii. Gas lines iv. Gas fireplaces/logs v. Final construction

11.) Inspections should be called in and set-up the prior day to the needed

inspection. It is a good idea to give the inspectors a “heads-up” prior to the inspection period so they can assist in planning the inspection dates. This can help to reduce “downtime” due to prior commitments by the inspectors.

12.) Once the final construction inspections are complete and approved, a

certificate of occupancy will be issued prior to any occupancy by the owner. Harris/Fort Bend County

1.) Harris and Fort Bend Counties require similar documentation to the Cities of Houston/Katy/Missouri City as described above. In addition to those requirements, zoning approval must be obtained. Health Department approval is required for any habitable buildings not served by public water and sewer systems. If the building will be serviced by public water and sewer, the service provider approval is required.

2.) It is always a good idea to communicate with the permitting office prior to

submitting any application to determine what the present fee structure is, what documents are required, how many sets should be submitted, what supplemental documents will be required, and approximate estimate of review time prior to receipt of permit.

State of Texas Electronic lock Waste water Impact fees


Food service Usage/disposal Certifications?

B. Internal Permitting Requirements

ISLM (Interim Life Safety Measures) PCRA (Pre-construction Risk Assessment) – see Policy

Filled out prior to construction start and ideally, bid in order that would affect bid Hatton may have a list JCAHO

APPROVED: DATE

1.8 Project Document Controls Page 1 of 10



Policy #: 1.8 Policy Title: Project Document Controls Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: Policy Statement: DOCUMENTATION LOGS Project logs should be set up at the initiation of a project and should be project specific. Logs that are typically used for tracking are as follows: • Request for Information • Submittals • Hot Issues Tracking Logs • Change Management: Potential Change Orders and Change Orders • Document Log: Drawings, specifications, bulletins, ASI’s, etc. • Rolling Deficiency Log/Non-conformance Log • Payment Log • Testing & Inspection Logs • Punchlist • Close-out Logs A. Request for Information (RFI)

1.) Contractors are required to submit all questions using a Request for Information.


2.) When the Contractor requests a new RFI, an identifying number will automatically be assigned and the Contractor's name, contract number and contract description will be included on the form. The question will be scripted into the given box and submitted to the Architect for answering. The new RFI will be added to the Request for Information Log which tracks each RFI, date of request, date of response and the direction or clarification from the Architect/Engineer. All RFI's will be available to all contractors for reference. Once the RFI is answered it will appear in the RFI Log with a brief description of the answer. The entire RFI may be viewed by clicking on the desired RFI number.

B. Submittal Log

1.) A Submittal Log will be used to track the submittals and samples. The Contractor shall prepare a complete submittal register that identifies all the submittals required by the Contract Documents and the dates for their submission.

2.) The submittal log shall, as a minimum, list the following items to be

submitted:

a. Listing of subcontractors b. Insurance certificate c. Performance and payment bonds d. Permits e. Payment applications f. Schedule of Values g. List of products h. Project closeout submittals

3.) The Submittal Log should coordinate with the Contractor's construction

schedule. The log should be prepared in chronological order. The following information should be provided for each submittal item identified in the submittal log:

a. Scheduled date for the initial submittal b. Related section number c. Submittal category (shop drawing, product data, sample, other) d. Name of subcontractor e. Description of the part of the Work covered f. Scheduled date of resubmittal g. Scheduled date for the Architect's final release or approval

C. Hot Issues Log


1.) The hot issues log is a To-do list for the project to track the upcoming hot issues to ensure timely addressing of potential obstacles for the project.

2.) This log should be used at progress meetings.

D. Change Management Logs

1.) A Change Request will be issued for any revision requiring a cost proposal from the contractor(s).

2.) The form will contain the Contractor's name, contract name and number

and a description of the revision. A Potential Change Log will be developed and maintained to record the following:

a. Potential Change Number – sequential listing of all potential

changes, even those not resulting in a cost or schedule modification.

b. Change Request Date c. Change Request Description d. Proposal quotation from the contractor - date and estimate e. Change Order Number and Date

E. Document Log

1.) The document log should list all of the following: a. The contract drawings - date, revision numbers and description b. The contract specifications – date, revision numbers and

description c. The Bulletins issued by the A/E – date revision number and

description d. Architect's Supplemental Information (ASI): All A/E clarifications to

RFI's or clarifications in general will be issued as an ASI. The ASI is a no cost clarification generated by the A/E. ASI's accompanied by a sketch will be distributed to the appropriate Contractors. An Architect's Supplemental Information Log should be kept with a brief description of each ASI.

F. Rolling Deficiency List/Non-conformance Log

1.) As the construction project progresses, the rolling deficiency list/non-conformance log should be tracked and should list the following non-conformances identified by:

a. A/E field inspection reports


b. Testing and inspection reports c. Field Inspections by hospital personnel d. Governmental & Jurisdictional Inspection Agents e. Other inspections during construction

G. Punchlist

1.) Upon acknowledgement of substantial completion, the project formal punchlist should be developed.

2.) The Architect/Engineer is contractually obligated to compile the final

punchlist. The Architect/Engineer punchlist is a more formal and documented process than the deficiency lists developed throughout the construction process.

3.) Once the punchlist is completed, it should be distributed to all contractors

involved in the project. Once the contractors indicate that the punchlist is complete, a final sign-off walkthrough needs to be performed.

H. Close-Out Log

1.) The close-out log should track the close-out documents including the following:

a. Warranties b. Guarantees c. Release of Liens d. Releases from Surety e. Operation & Maintenance Manuals f. Final Payment Requests g. Final Executed Change Orders h. Permit Release/Sign-offs i. Spare Parts, Tools & Extra Materials j. Training Materials k. Other documents required by the contract documents

2.) See Section 9 for further information about Close-Out Log

PROJECT CONTROL MONITORING REQUIREMENTS

A. Construction Performance Measurement, Reporting and Submittals


1.) Measurement and metrics are important management tools and will be a key part of monitoring the construction process. Some items that need to be tracked with each project are as follows:

a. RFI Turn-around

b. Submittal Review Time

c. Invoice Processing Time

d. Quality Performance

e. Safety Performance

f. Project Schedule Progress

g. Earned Value to Date

h. Costs Expended to Date

i. Manpower to Date

j. Contractor Performance

2.) As the Project evolves additional useful metrics to measure progress and ensure safe, high quality, at-cost on-time performance should be developed and added to the process.

3.) The measuring and monitoring process starts with the strategic planning

and continues through design and construction. This information identifies areas needing corrective action to ensure continuous improvement. Furthermore, these reports will highlight any trends that may require special attention.

B. Project Control Inputs and Outputs

1.) Initially, the project control system will function with the items listed in Figure 1.8b – Project Control Inputs and Outputs below serving as principal inputs and outputs; however, successful project control is a living process and evolves with changes and progress through the projects in continuous improvement.

Figure 1.8b - Project Control Inputs and Outputs

Inputs Outputs • Manpower Costs • Material Costs • Unit Costs • Equipment Costs • Work Breakdown Structure

• Progress Photos • Milestone Status • Performance Measurement Report • Recommended New Metrics • Contract Costs to Date


• Integrated Project Schedule • Integrate Project Plan • Milestone Progress • Progress Photos • Team Performance Measurement

Data • Subcontractor Performance Data • Quality and Safety Audit Reports • Design Information • Planning and Estimating Information • Contract

• Cost Curves • Recovery Recommendations • Change Control Issues and

Resolution • Project Schedule Modifications • Project Planning Modifications • Quality Record Documentation • Safety Record Documentation • Lessons Learned – Continuous

Improvement

2.) Communication is vital, the team should be able to view and print specific project data (meeting minutes, reports, submittal and correspondence logs, photos and other pertinent project information) as needed.

3.) To allow for timely information the logs and project control measures

should be contained in an electronic “share-able” system. This typically requires an internet application based system. When the contractors and consultants use web-based systems, the Project Manager will be able to access real-time cost and schedule information. The “site manager” should ensure that the system is secure, and that it has full backup and restoration processes. A system like this will afford increased access to project information at a lower overall cost to all project team members.

C. Electronic Document Control

1.) All correspondence for project related subjects should be prepared and distributed using the latest personal computing software and hardware such as MS Office. All project documentation should be recorded and tracked using software. Windows based software including word processing, spreadsheets, and data based programs ensure that correspondence related data can be quickly assembled, revised, and distributed efficiently. Also, the use of these popular software programs allows the Project team to be compatible with most other business applications currently in use.

2.) For more efficient processing, all correspondence entering the project

office could be scanned and filed electronically. Although originals are maintained at the office, all subsequent “handling” of the document (reading, copying, transmitting) can be accomplished on the computer screen. By utilizing e-mail extensively, documents can be transmitted, edited, and copied, electronically filed, and available as needed to inform


project participants of pertinent data. The best way to explain this type of system of document control is to outline the path of a document as it comes into the program office.

a. Document Received. All correspondence of any type is received

at a central location. The clerk opens all envelopes, boxes and packages. All correspondence is stamped with a date received stamp and a routing stamp. The routing stamp lists the initials of the Project team members and a block for them to sign off or record action. The clerk also logs the correspondence into a Correspondence Received database and assigns a file number to the document for later filing. The database records such information as Date Received/Sent, Sender/Recipient, Subject, Letter Number, File Number and a unique log number for each piece of correspondence.

b. Review by Manager. The manager will review all documentation

daily. The manager determines who needs to review the correspondence and marks off project team members on the routing stamp for review, copies, or action. One final check mark is made to denote whether this item gets scanned or logged into the Submittals Log.

c. Scanning and Linking. If it is deemed appropriate, the

document is scanned and linked to the Correspondence Received database. This allows users of the system to review an electronic image of the document from their workstation by simply clicking on a link in the database table.

d. Action. The correspondence is then routed to the appropriate

person for action. The action person will begin processing the document. If it is a submittal, they will log the submittal into the submittal log, review the document and forward to the appropriate organization. If it is a schedule, the scheduler will review it. Invoices are processed for payment by accounting.

e. Informational Routing. After the appropriate person takes the

required action, the document is then routed through the staff so that they are aware of its existence.

f. Filing. Upon completion of all routing, the document is filed

according to the File Plan.


g. Read File. The manager will designate which items will need to be posted in the Project Read File. These items will have an additional copy made and placed in the read file for that calendar month. The Read File will be located at the project office and available for team review.

h. File Plan/Network Drive Organization. The network-shared

drives should be set up with a directory structure that mirrors the project file plan. Documents and correspondence sent and received, RFIs, invoices, schedules, and all other documents will be filed either physically, electronically, or both according to the file plan. In addition, each team member should have a shared directory on the network drive to keep work in progress and other working documents.

3.) Upon completion of a project, physical files should be archived for storage

by the Project Manager. Electronic files will be written onto dual CDs. PROJECT RECORD DOCUMENTS A. Project Record Documents

1.) The contractor should be responsible to maintain at the job site one copy of the following:

a. Record Contract Drawings b. Record Project Manual c. Addenda d. Reviewed/Approved Shop Drawings e. Change Orders f. Other modifications to Contract g. Field test records h. Affidavits

2.) The Contractor should store the record documents apart from documents

used for construction. They should be maintained in a clean, dry, legible condition. Failure to maintain documents up-to-date should be used as a cause for withholding payments to the Contractor.

3.) The Contractor should include the following on the Project Record

Documents:

a. Labels identifying each document as "Project Record".


b. Record documents must be kept current. c. Work should not be permanently conceal until associated

information has been recorded. d. Contract Drawings should be legibly marked to record actual

construction:

i. Depths of various elements of foundation in relation to survey data.

ii. Horizontal and vertical location of underground utilities and

appurtenances referenced to permanent surface improvements.

iii. Location and depths of internal utilities and appurtenances

concealed in construction referenced to visible and accessible features of structure.

iv. Field changes of dimension and detail.

v. Changes made by Field/Change Order.

vi. Details not on original Contract Drawings such as

arrangement of conduits, circuits, piping, ducts and similar items shown schematically on the Drawings and dimensions accurate to within 1" of the center of items shown schematically. Identify each item, for example, "cast iron drain", etc. Identify location of each item, for example, "under slab", etc. The Project Manager or the Architect may waive requirements, when in their opinion, it serves no beneficial purpose.

e. Technical Specifications and Addenda should include:

i. Manufacturer, trade name, catalog number and Supplier of

each product and item of equipment actually installed.

ii. Changes made by Field/Change Order. f. The Final Project Record Submittal should include the following:

i. Date


ii. Project title and number

iii. Contractor's name and address

iv. Title and number of each record document

v. Certification that each document as submitted is complete and accurate.

vi. Signature of Contractor, or his authorized representative.

APPROVED: DATE

1.9 Schedule Development Page 1 of 4

CAPITAL CONSTRUCTION STANDARDS OF PRACTICE MANUAL

Policy #: 1.9 Policy Title: Schedule Development and Management Procedures Category: Project Administration Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: The purpose of this policy is to provide guidelines that pertain to construction schedule development and schedule management procedures. Policy Statement: A.) Critical Path Method (CPM) Schedule

1.) Each Project should have a working schedule created prior to the commencement of work and act as a basis for the development of the Master Project Schedule. This schedule should be created using the Critical Path Method or CPM. The schedule should be monitored regularly. The purpose of the detailed schedule is to assist the Contractor in completing the Work on time and as a means for the Project Manager to monitor progress of the contractors.

2.) The Contractor should meet with the Project Manager after award (See Section

5) to review the schedule for their portion of the work. Following the review, the Contractor should meet with each subcontractor and supplier to prepare detailed plans for performing the Work. Within fourteen (14) days after Contract Award or written Notice to Proceed, the Contractor should prepare and submit the following material for the Project Manager's approval:

a. A bar chart of all activities included in the Scope of Work. This bar chart is

to indicate durations for all activities in working days (as opposed to calendar days). The activities on the bar chart should be at a level of detail


approved by the Project Manager and agree with the terminology established by the contract documents.

b. Each bar chart activity requiring a cost expenditure should have a cost

associated with it.

c. Precedent relationships between the Contractor's activities and those of other contractors based on a thorough review of the Contract Drawings details showing interface between contracts should be identified.

d. Graphic diagrams indicating the proposed direction of work whenever

applicable.

e. Planned crew sizes, equipment, production rates and similar data used to arrive at adequate durations and sequences.

f. The bar chart should include activity descriptions and durations for shop

drawings preparation and review, fabrication, delivery and installation of products, materials and equipment.

g. The bar chart and schedule information will be incorporated into a Project

Master Schedule prepared by the Project Manager.

h. The Contractor will be required to send only representatives knowledgeable of the items to the Schedule Coordination Meetings. The purpose of these meetings is to coordinate the various contractor schedules.

i. The Construction Manager will utilize the Project Master Schedule to plan

and coordinate all construction activities of the contractors. All contractors are to complete all work in accordance with the detailed Project Master Schedule issued by the Construction Manager.

B.) Update and Modifications to the Construction Schedule

1.) If during the progress of the work, the Contractor determines he will not be able to complete his work in the time allotted, he should notify the Project Manager after publication of the updated Project Schedule.

2.) Periodic schedule "update" meetings should be held at the job site. The Project

Manager and each contractor are to provide the services of a qualified representative at each meeting. Contractors are to provide necessary scheduling information and manpower commitments at these meetings. The Construction Manager/General Contractor will update the detailed Project Master Schedule and prepare progress reports accordingly. Each Contractor should be responsible to be familiar with this schedule, how it affects or


modifies his operations and how it affects his coordination with activities of other contractors.

3.) Periodic progress meetings will be held at the job site. Field Supervisors from

all contractors are to attend all progress meetings. The Contractor should prepare a short interval schedule, generally covering four-week periods, to coordinate the detailed activities of subcontractors and suppliers. The short interval schedules should be prepared in bar chart form and submitted twenty-four (24) hours prior to the job progress meetings.

4.) Whenever it becomes apparent that any activity duration, activity completion

date, and/or milestone date may not be met, the responsible Contractor should take the actions to get the schedule back on track. If the Contractor fails to take action, the Project Manager may proceed in accordance with the terms in the contract documents.

5.) The Project Manager should establish the Milestone Date for completion of all

contract start-up activities in the Notice to Proceed to the Contractors. Each Contractor is responsible for construction sequencing and means and methods for his own work.

C.) Key Administrative Milestone Dates

1.) The following documents should be typically be submitted in accordance with the following durations:

a. Fully executed contract agreement: 7 days after receipt b. Contract award or written Notice to Proceed c. Performance and payment bonds: 10 days after Contract Award or NTP

d. Permits/licenses: prior to start of construction e. Certificates of insurance: 10 days after Contract Award or written NTP

f. Contractor safety program: prior to start of construction

g. Submittal log: 14 days after receipt

h. Construction schedule and completed work item listing: 14 days after Initial

Schedule Meeting

i. List of subcontractor's, suppliers and fabricators: 14 days after Contract Award or written NTP


j. List of contractor's staff assignments and emergency phone numbers: 14

days after Contract Award or written NTP

k. Schedule of values: 21 days after receipt APPROVED: DATE:

2.1 Project Approval and PRF- CCR Overview Page 1 of 12



Policy #: 2.1 Policy Title: Project Approval and PRF/CCR Overview Category: Project Approval Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: To establish an orderly and systematic process for the initiation, routing, and approval of CCR and PRF forms. Policy Statement: There will be a controllable mechanism for capital expenditures encompassing need and the ability to fund expenditures. A. Definition of Capital Expenditure Refer to Policy 1.2 B. Forms Used for Capital Expenditures

1.) Capital Construction Request Form (CCR) – For new projects (or projects that are ready to proceed) with a budget approved in routine quarterly capital budget review. A Project Manager initiates all CCR forms (see Figure 2.1a – CCR Form).

2.) Project Request Form (PRF) – A PRF is used related to investigational fees

to assess the feasibility of a new project that does not have a budget approved by the President’s Council during the routine quarterly budget review (see Figure 2.1b – PRF Form).


3.) Capital Equipment Request (CER) – The Purchasing Department will be the central clearing point for the actual procurement of all capital equipment and a CER must be completed.

a. CRESS will coordinate all capital projects. The CRESS Accounting

Department will serve as the control point to assure that all capital expenditures are properly approved and authorized.

b. If an expenditure is being made to replace equipment, a Capital

Equipment Transfer or Disposal form must be completed. (This form is available on the MHHS intranet).

c. The MHHS Clinical Engineering Department will be involved in every

aspect of medical equipment and system purchases, modifications and retirement in varying degrees. In some cases, they will need to know that something is going on and in other cases, such as installations, they would need to know every detail of the equipment’s purchase and service life. The Project Manager should contact the department directly for appropriate coordination of medical equipment and system purchases, modifications and retirement. Please see Figure 2.1c-Clinical Engineering Responsibility Chart for a current listing of the biomedical department’s contact information and coordination responsibility areas.

C. Further Information Regarding the Coordination with Clinical Engineering

1.) The Project Manager will incur charges in coordinating with the Clinical Engineering Department and those product labor charges are defined as labor expenses incurred by the MHHS Clinical Engineering Department for required work accomplished by the members of its Biomedical Engineering, Radiology SVC Engineering and Electronic Engineering staff in order to bring about the successful completion of said project. The bulk of the expense will be incurred during the middle to final states of the project when equipment is being received and installed. Significant analytical and consultative work will be required throughout the project. Currently, the average monthly expense for this labor is $1,557.

2.) Staging Areas are temporary locations for receiving, securing and

processing equipment received into the facility directly associated with said project. The requirements are as follows:

a. This location must contain appropriate ventilation, lighting and

temperature control.


b. This location must have the ability to be locked and secured at all times.

c. Clinical Engineering staff must have 24/7 access since much of the work is accomplished after business hours and on weekends.

d. Multiple electric duplex outlets will be necessary (120 VAC/15A) 3.) Once the bulk of the equipment inventory is received and processed, this

location will be vacated and returned to the proper authorities. 4.) Shop Space are physical locations at or close to the medical equipment

and systems that will need to be maintained by Clinical Engineering personnel. It is vital that the Department have a maintenance shop located as close to the equipment as possible. This will minimize equipment down-time and wear and tear, provide easy and quick access to parts inventory and minimize response time and our interference in the customer’s normal routine by bringing the equipment to alternate shop locations for servicing and repairs. The requirements are as follows:

a. Industry average for number of pieces of equipment per support

technician – 850 pieces of maintenance significant equipment per Clinical Engineering technician [each of the three disciplines (Biomed, Radiology, Electronic) are assessed independently].

b. Shop Space Requirements

i. 100 square feet per technician ii. 200 square feet for parts and test equipment inventory

(must be secure) iii. Shop entrance must be one large, double door entry point

for moving large, bulky pieces of equipment in and out of the shop

iv. Bathroom facilities must be convenient v. Lighting, Temperature and Noise levels must be considered

c. Shop Utility Requirements

i. Shop Telephone Lines (multiple) ii. Fax Telephone Lines (multiple) iii. Network Drops (multiple) iv. Medical Gases (Air, Water, O2 and Vacuum-multiple) v. Electrical Duplex Outlets (120 VAC/15A – multiple) vi. Electrical Outlet (220 VAC/40A) vii. Cable Television Signal Outlet viii. Ceiling Bolt for mounting a hoist capable of picking up 1,000

pounds


d. Furniture/Fixture Requirements i. Work Bench & Chair (1 per technician at $1,200 per set) ii. Tool Kit (1 per technician, Jensen-PN JTK-7500 DBL at

$500/each) iii. Multimeter (1 per technician, 87V Fluke True – RMS

Multimeter-Calibrated at $420/each) iv. Electrical Safety Analyzer (1 per technician, Fluke MedTester

5000 at $6,000 each) v. Computer (1 per 2 technicians & 1 in the office) vi. Telephone (multiple) vii. Fax machine viii. Copier ix. Coffee Maker x. Sink & Counter Space xi. Computer Work Station & Chair (1 per 2 technicians) xii. Office Furniture (1 supervisor) xiii. Shelves (spare parts and technical manuals – multiple)

D. Capital Expenditure Requests

1.) Capital expenditure requests must be submitted and approved to begin the capital expenditure process.

2.) Upon approval by the appropriate authority, all requests are then

reviewed and approved by the Executive Council before the actual expenditure. This may be done at budget time as well as periodically throughout the year, as financing is deemed available or unavailable.

E. Project Initiation and Approval

1.) The CEO / VP and CFO of facility/originating department submit a routine quarterly list of construction project requests to the President’s Council for review.

2.) The President’s Council approves a list of projects (Figure 2.1d -

Routine Quarterly Capital Projects Approved by President’s Council) establishes a project budget and returns signed copies of the lists to the originating facility and CRESS.

3.) The Project Manager for a project will then complete a CCR (Policy 2.1)

as the project has been given authorization and budget.


4.) The CRESS Sr. Financial Analyst compares individual project requests documented on CCRs to the approved project list to ensure budgeted funds were approved.

F. PRF/CCR Initiation

1.) The Project Manager completes the PRF or CCR form, signs it and obtains signature of facility CEO. Please refer this Policy or MHHS intranet for a PRF or CCR form. PRF/CCR expenditure categories can be tailored for specific project needs.

2.) The Project Manager forwards the PRF or CCR to a CRESS Sr. Financial

Analyst who routes for additional approvals in accordance with policy. See Figure 2.1e – Approval Levels for signature authority levels.

3.) After all approvals obtained, the CRESS Sr. Financial Analyst activates

project and sets up budget worksheet.

4.) The CRESS Sr. Financial Analyst submits the CCR to Corporate Accounting for entry into Lawson accounting system.

5.) Purchase orders cannot be issued and invoices cannot be paid until the

project is activated in Lawson.

6.) Unused funds must be returned to MHHS and cannot be used for expenditures not specifically included in approved project budget unless approved by the Vice President of CRESS and the President’s Council.


Figure 2.1a Capital Construction Request (CCR) Form


Figure 2.1a Capital Construction Request Form (cont’d)


Figure 2.1b Project Request Form (PRF)


Figure 2.1c - Current Clinical Engineering Responsibility Chart

Organizational Chart & General Areas of Responsibilities NEW Web-Site: www.mhhsclinicalengineering.com

The following individuals are all housed at: 7600 Beechnut Street Energy Services Building/2nd Floor – Mezzanine Level Houston, Texas 77074 1. Al Alfonso, Director of Clinical Engineering for MHHS – (713) 456-

5486

2. Nancy Scales-McDonald, Administrative Assistant – (713) 456-5076

(Pick #4)

2.1. Doug Dreps, Manager of BioMedical Engineering for MHHS

– (713) 456-4223

2.1.1. General Areas of Responsibility

2.1.1.1. All BioMedical Equipment within the MHHS

2.1.1.2. Patient Monitoring

2.1.1.3. Diagnostic Equipment

2.2. Dennis Dowell, Manager of Electronic Engineering for

MHHS – (713) 456-2536


2.2.1.1. Security Monitoring (in a partnership with MHHS Security

Department)

2.2.1.2. Overhead Paging

2.2.1.3. Code Alert System Maintenance

2.2.1.4. Nurse Call System Maintenance

2.2.1.5. Television and Cabling System Maintenance

2.2.1.6. FAX Machine Service Maintenance

2.3. Dan Cawthon, Manager of Radiology Engineering for MHHS

– (713) 456-5744



2.3.1.1. X-Ray Imaging Systems and Peripherals (Radiographic,

Fluoroscopy & Mammography)

2.3.1.2. Ultrasound Systems and Peripherals

2.3.1.3. CT/MR Systems and Peripherals

2.3.1.4. Catheterization Laboratories

2.3.1.5. Nuclear Medicine Laboratories

2.4. Steve Tipton, Medical Equipment Coordinator for MHHS –

(713) 456-4556


Steve will function as the primary Point-of-Contact for issues relating

to Campus Expansion Projects for all of Memorial Hermann

Healthcare System:

MH Southwest Hospital MH Health Centers MH The Woodlands Hospital MH Hermann Hospital MH Northwest Hospital MHHS Corporate Offices MH Memorial City Hospital MH Katy Hospital MH Southeast Hospital MHHS Affiliates being

support MH Continuing Care Centers MH Fort Bend Hospital MH Hermann Children’s Hospital MH Health Centers


Figure 2.1d - Example Listing of Routine Quarterly Capital Projects Approved by President’s Council (Construction Projects

Only)

Budgeted RequestedCER # New CER Requests Amount Amount 1st Quarter 2nd Quarter 3rd Quarter

System Parking OperationsCCR 959G Emergency Garage Repairs 450,000 0 0CCR SW Lots Upgrade Scan Parking System 247,000 247,000 247,000CCR MC Paving Between New Garge and POB I 115,000 0 0CCR MC Pay Lot Construction 250,000 0 0CCR SW Lone Star Lot Repair/Reconfiguration 247,000 0 0CCR SW Lot Renovations 250,000 0 0CCR 959G Restriping 17,000 17,000 17,000CCR NWG Pressure Wash Floors 13,740 0 0CCR NWG Replace Fire Hose Cabinets 5,000 5,000 5,000CCR SW Garge Lighting Upgrades 25,000 25,000 25,000CCR SW Lots Cashier Booth Chairs 7,639 7,639 7,639CCR NWGII Office/Storage Build-Out 15,000 15,000 15,000CCR HPB Garage Lighting Replacement 140,000 0 0CCR Metronational Garage Street Paving 113,234 113,234 113,234CCR Beechnut Garage Paint Decking 50,000 50,000 50,000CCR Beechnut Garage Lighting Replacement 8,500 8,500 8,500

Biomedical / Radiology Engineering Services18605 Infutester Analyzer, PCA Trigger, Probes, Software 10,563 10,563 10,56315061 Medtesters 8,459 8,459 8,45913872 CM 500 2,295 2,295 2,295

Laundry Services14598 Tunnel Washer System / Renovation / Installation - Phase II 2,351,927 1,487,487 1,487,487

POB Property ManagementBeechnut POB - Base Building Improvements 32,000 32,000 32,000Beechnut POB - Tenant Improvements 66,288 0 0Ft. Bend - Base Building Improvements 4,400 4,400 4,400Health Center I - Base Building Improvements 16,500 6,500 6,500Health Center I - Tenant Improvements 46,225 0 0Health Center II - Base Building Improvements 13,000 3,000 3,000HPB - Tenant Improvements 475,030 254,630 254,630HPB - Base Building Improvements 369,800 132,400 132,400Katy POB - Base Building Improvements 24,000 24,000 24,000Kingsland POB - Base Building Improvements 2,550 2,550 2,550Memorial City POB I - Base Building Improvements 329,000 319,000 319,000Memorial City POB I - Tenant Improvements 68,395 68,395 68,395Memorial City POB II - Base Building Improvements 553,815 152,000 152,000Memorial City POB II - Tenant Improvements 28,528 28,528 28,528Memorial City Medical Square - Base Building Improvements 15,000 15,000 15,000Northwest POB I - Tenant Improvements 73,775 73,775 73,775Northwest POB II - Base Building Improvements 225,000 225,000 225,000Pearland Clinic - Tenant Improvements 41,303 41,303 41,303Southeast POB - Base Building Improvements 41,798 11,306 11,306

Cash Flow

FY 2004, 2nd QUARTER September 2003 through November 2003

Incremental Cash Flow and Capital Spending RequestsConstruction/Engineering/Support Services Division


Figure 2.1e - Levels of approval for the request for capital expenditures:

AMOUNT APPROVAL AUTHORITY$0 - $25,000 Dept Director

$25,000 - $100,000 AVP or Hospital V$100,000 - $150,000 System VP or Hospital CEO$150,000 - $250,000 Sr. VP or Executive VP

$250,000 - $1,500,000 System CFO & President or COO or Sr. VP

AMOUNT APPROVAL AUTHORITY$0 - $100,000 Hospital VP

$100,000 - $150,000 Hospital CEO & System VP$150,000 - $250,000 Hospital CEO & Sr. VP or Exec. VP

$250,000 - $1,500,000 System CFO & President> $1,500,000 MHHS Board of Directors (w/ Business Plan)

AMOUNT APPROVAL AUTHORITY$0 - $25,000 Hospital VP

$25,000 - $100,000 Hospital CEO & System VP$100,000 - $250,000 Hospital CEO & Sr. VP or Exec. VP

$250,000 - $1,500,000 System CFO & President

MEMORIAL HERMANN HEALTHCARE SYSTEMCAPITAL APPROVAL AUTHORITY GUIDELINES

BUDGETED EQUIPMENT

BUDGETED CAPITAL PROJECTS

UNBUDGETED

APPROVED: DATE:

Project Budget Overview Page 1 of 12



Policy #: 3.1 Policy Title: Project Budget Overview, Preparation and Reporting Category: Budget Development and Reporting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to outline the general guidelines related to the preparation of a Project budget and providing CRESS Leadership, various budget reports. Policy Statement: These guidelines provide an overview of the cost estimating process, and summarize the assumptions and considerations that must be addressed to prepare a comprehensive budget estimate. It identifies those items and factors which have an impact on project costs, and provides cost data that can be used to develop the budget estimate. These are guidelines only, and should be used accordingly. It is the responsibility of the estimator to ensure that the costs used are complete, accurate, and reflect actual job conditions. Care must be exercised in preparing every estimate. This is particularly true when developing the budget for a remodeling or a multi-use building containing laboratories, patient rooms, computer facilities, high security, or other complex spaces. The estimator must thoroughly understand the scope of the project, the sophistication of the program, specific facility design requirements, how it will be constructed, its proximity to adjacent facilities, the time of construction, the retroactive applicability of building codes to an existing building, ADA requirements, site and utility conditions, etc. Good estimates are the result of searching out program and design details, evaluating construction and site conditions, and accurately reflecting their cost impacts. The project budget includes all of the estimated costs associated with an agency’s request, and quantitatively and qualitatively reflects program requirements. While the


budget estimate is normally prepared far in advance of the actual design and construction phases, its importance should not be underestimated. A. Budget Format and Definitions The following is an outline of the major cost components and their definitions. This list can be used to summarize the cost estimate developed using the procedures in this guideline.

1.) Base Building and Remodeling Costs - All general construction including the excavation, foundations, structure, envelope, interior finishes, fixed equipment, but excluding site work, major interior demolition and special construction or built-in equipment. Also included are plumbing and fire protection work; heating, ventilating, and air conditioning (HVAC); lighting, electrical, and code required alarm systems; and elevator work.

2.) Special Foundations and Site Preparation - Includes any unusual costs

required to prepare the site to receive the building. For example, rock outcroppings or unstable soil may require removal, pilings or other stabilization measures; a site located in a flood-plain may require re-grading or other protection from flooding before construction can begin. The cost of demolishing existing buildings, rerouting utilities and roadways, and clearing the site should also be included.

3.) Special Design Features/Other Construction - Includes additional costs

associated with the construction of special design features and other special functional spaces not covered by the base building or remodeling cost. This includes design features such as atriums, plazas, passive solar or other special interior or exterior finishes. It may also include the added cost of providing hazardous materials storage facilities, controlled environmental rooms, high security areas, and other special functional spaces. It should also include the replacement of windows/exterior doors and replacement of the existing roof surfaces or roof repair to the existing structure. For remodeling work, the cost of meeting current fire safety, handicapped access (current ADA requirements), and other building code requirements occurring outside the area of program remodeling, but retroactively required because of the degree of remodeling work, should be included.

4.) Built-in Architectural Equipment - Includes the added cost of providing

special built-in or attached equipment which is bid and installed by the construction contractor. This includes built-in equipment for food service, laboratories, specific use areas in hospitals, vehicle maintenance, parking, waste handling, and other special functional spaces.


5.) Special Mechanical/Electrical Equipment - Includes the added cost for

stand alone source heating and air conditioning systems and special mechanical systems such as heat recovery or other energy conservation equipment, refrigeration, chemical fire suppression, or energy management. It also includes the added cost of special electrical systems such as electronic surveillance and alarms, special lighting controls, universal telecommunications and data transmission cabling systems, A/V equipment for Distance Education and other high technology space, plus special services for owner supplied equipment. For remodeling, the cost of upgrading existing mechanical and electrical source equipment should be added.

6.) Testing and Balancing - Includes the cost of testing and balancing the

completed (HVAC) heating, ventilating, and air conditioning systems by an independent contractor to assure that design performance has been achieved.

7.) Building Complexity - Includes the added cost of unusual design requirements

such as heavy floor loads, irregular building shape, high-rise construction, heavy HVAC or electrical loads, high density interior construction, etc.

8.) Utility/Service Hook-ups - Includes the cost of extending underground and

overhead utility services such as water, sewer, steam, chilled water, gas, electric, and mechanical monitoring system from an appropriate source to the building. All costs of expanding the supporting infrastructure shall be included in the project budget.

9.) Site Development - Includes access roads, parking, sidewalks, curbs, site

lighting, retaining walls, storm sewers, landscaping, and other site improvements.

10.) Project Location/Site Conditions - Added costs may be incurred for

projects with such conditions as limited access or storage space, work occurring within an occupied or secure space, and projects with an unusually short construction period.

11.) Telecommunications Equipment - Includes the cost of telephone and

authorized terminal data equipment (telephones, data processing, or audio/video equipment), which is normally purchased and installed independently from the building construction contracts.


12.) Asbestos Abatement/Environmental Clean-Up - Includes the removal and proper disposal of asbestos and lead containing materials, PCBs, and underground fuel storage tanks occurring within the project area, plus the environmental remediation associated with these or other hazardous materials. This work may be handled as a separate contract, but the cost should be included in the budget estimate below the construction line.

13.) Design Fees - Includes the design fees for the architect/engineer services.

14.) Other Design Fees - Includes other Planning and/or Design Consultants, the

cost for surveys, soil borings, master plan studies, Air Balance Consultant, Asbestos/Environmental Consultant, and other items generally not in the A/E contract.

15.) Administration/Construction Management Fees- Includes the

management fee for contract administration and construction management.

16.) Project Contingency - Is included in the budget to provide a bidding contingency and to cover unforeseen revisions required during construction. The amount of contingency is dependent upon the type of work and the degree of difficulty in developing the budget estimate. The contingency line will be reduced on a sliding scale after the design report has been completed by the A/E and when the project has gone through the bidding process.

17.) Movable Equipment - Includes expenditures for furnishings not provided as

part of the construction work such as chairs, tables, desks, etc. The life expectancy for items included in the movable equipment list should be at least 10 years.

18.) Special Equipment - Includes special program equipment such as electron

microscopes, automated filing equipment, needed computers & start-up software, etc. which are generally purchased directly from a manufacturer or distributor and not included in the building construction contracts.

19.) Land Cost - Includes the cost of all parcels comprising the construction site

and associated costs. Land costs should be included in the project budget only when land purchase is required. The value of land already owned should not be included.


20.) Artwork & Plants - All cost associated with the decoration of the facility relative to artwork (including paintings, sculpture, tapestries, etc.) and interior plantings.

21.) Start Up Costs - The start up cost for a new building or remodeled facility

should be included in the operating budget. Start up costs normally are considered to be expendable or consumable supplies.

B. Project Budget Estimating Procedures The following step-by-step procedure is a summary for developing a project budget estimate:

1.) Define Project Space Needs - Special features or detailed design

requirements may not be defined at this point and assumptions about their cost impact may be required. The total gross area to be remodeled or constructed to accommodate the program is the requested net assignable area divided by an appropriate efficiency factor. The gross area and cost of individual portions of a building can be determined separately and added together to arrive at the total building area and base building cost.

2.) Select Base Building or Remodeling Unit Costs - Perform a thorough

review of the request and select appropriate unit costs from a source of cost data that closely reflect their scope of work for the proposed project. These unit costs should be adjusted for size and escalated to the project bid date.

3.) Identify Additional Building/Remodeling Costs - This is additional cost

items generally not covered by the selected base unit costs. Identify and calculate additional costs and escalate to the proposed bid date. Each of these additional cost items and factors may have an impact on the cost estimate and, if overlooked may result in an inaccurate estimate. Amounts used for added costs can be derived from cost experience on past state projects, estimates provided by local contractors, or cost estimating data published by R.S. Means or any other historical data. Each project will usually contain some additional design or construction features which may result in higher costs. This is especially true for remodeling projects where the scope of work varies widely from one project to another. Make sure all costs are documented on the work sheet so the final project estimate can be reproduced by others.

4.) Calculate Total Building and Construction Cost - The total adjusted

building cost is the sum of the base building cost, plus the additional costs and adjustments. The cost of site and utility work is then added and further adjustments for location and site conditions are made, producing a total


estimated construction cost. Finally, allowances for fees, contingency, etc. are added to arrive at the total project budget estimate.

5.) Calculate Safety Fees - The Project Manager can use the formula below in

developing safety fees for the Project Budgets. This element should be included always in the budgeting process. Before finalizing the budget, however, the Project Manager should consult with the Safety Engineering Department to come to an agreement of what to budget for Safety Engineering.

$ 0 - 499,999$ "In-House Engineering"NO BUDGET for Safety Fees

500,000$ - 999,999$ 1%1,000,000$ - 1,999,999$ 0.5%2,000,000$ - 4,999,999$ 0.4%5,000,000$ - 9,999,999$ 0.3%

10,000,000$ - + 0.2%

Revised "Secret Formula" for Safety FeesBased on Projected Costs ONLY

6.) Review Assumptions and Calculations - Review the project request and

functional program, look at other sources of cost information, and confirm the validity of the total budget amount.

While the general procedures for cost estimating outlined above are relatively simple, the estimator must fully assess the scope of work in the program and its cost impact in order to produce an accurate project budget. Graphs, charts and worksheets on costs do not substitute for good judgment in arriving at a realistic budget estimate. C. Cost Estimating Basics- Scope and Purpose

1.) Building Efficiency - A capital improvement need generally defines how much assignable interior area is required to accommodate a new or modified program. However, additional non-assignable areas for public circulation, building mechanical systems, custodial services, and space occupied by walls and other structural elements must also be designed and constructed to provide a complete functional building. Building efficiency is the relationship between the net assignable area (ASF) and the total gross area (GSF) of the completed building.

Following are definitions of these terms:


a) Gross Area: Total gross square feet (GSF) is the sum of all enclosed building floor areas regardless of functional use, including usable basements, hallways, attics, and mezzanines. This is also called the shell of the building. It includes enclosed porches, roofed over work areas, elevator and mechanical shafts, and unfinished program areas. It does not include exterior balconies and plaza areas, covered walks, or low-head pipe trenches. Measurement is from the outside face of the exterior walls, disregarding cornices, pilasters, chimneys, etc., which extend beyond the wall face. Large program areas with non-standard ceiling heights such as an atrium which extends through two or more floors should be measured only once.

b) Net Assignable Area: A net assignable square feet (NASF) is the sum of all

areas on all floors assigned to or available for assignment to a program. Areas for public restrooms and circulation (hallways), mechanical systems, custodial services, or building construction elements are not included. Measurement is from the inside face of enclosing walls to the occupied side of a public corridor or permanent wall. No deduction is made for columns or minor building projections.

c) Non-Assignable Area: Total non-assignable square feet is the difference

between the total gross area and the net assignable area. It generally includes all mechanical, circulation, custodial, crawl spaces and construction areas that are not usable by the building occupant for their functional program.

d) Building Efficiency: Efficiency is a comparison of the net assignable area to

the total gross area, expressed as a percent: Building Efficiency = Net Assignable Area (ASF)/Total Gross Area (GSF)

To determine the total gross area of the proposed building construction, divide the net assignable area by the building efficiency factor. If too high an efficiency factor is used, inadequate space will be available for mechanical equipment and other non-assignable areas. Conversely, too low an efficiency will make the project appear too costly. For a building with different types of spaces, the gross area for each type can be calculated separately and then added together to derive the total gross building area.

2.) Degree of Remodeling - For a remodeling project it is important to determine the portion of the total gross area of the building involved in a proposed remodeling because the Texas Building Code may require up-graded fire exits, sprinkler systems, and handicapped accessibility work in the non-remodeled


portions of the building. A change in use of a portion of an existing building to a more stringent code occupancy classification can also have cost impacts beyond the limits of the proposed remodeling work. For example, additional fire rated separations between remodeled and non-remodeled areas. The total square feet of remodeling is the sum of all areas both assignable and non-assignable which are directly affected by the remodeling work.

3.) Project Size to Cost Equation - Assuming other cost factors are equal, a

larger project will generally have a lower cost per gross square foot than a smaller similar type project. Therefore, when using a unit cost from an existing project to estimate the cost of another, the cost will need to be adjusted to allow for the difference in construction factors.

4.) Project Scheduling and Cost Escalation - The time required to design a

project may be several months to a year depending upon its size. In order to provide adequate construction funding, the cost estimate must be adjusted to reflect any increases in the cost of material and labor, which occur during this period. In the past few years the rate of inflation has ranged from 2 to 4 percent per year. Likewise, it is important that once a project schedule is established that it be followed and any delays and associated cost increases be avoided. An approximate schedule for the design, preparation of bid documents, and construction of a project can be developed from the data provided by the designers and the project planners. The design work cannot begin until the project program is completed and funding is authorized to hire an A/E. Estimate when this will occur and establish your schedule accordingly. If a building occupancy date is critical, work back from the required occupancy date to determine when the design work must start in order to have the construction completed on time. From a cost standpoint the key date is the projected bid date. Unit costs from previous projects or the new construction and remodeling cost data may be used to develop a cost estimate for the proposed project. This figure must be escalated to the projected bid date of the proposed project.

5.) Building Design and Construction Cost Factors - Each new building or

remodeling project is unique. Construction costs are dependent on the complexity of the hospital’s project program, the quantity and quality of the required construction, the location of the project and its site conditions, the market conditions at the time of bidding, and many other factors. Therefore, it is important that the costs used to develop the project cost estimate reflect the true conditions anticipated for the project.

To make the budget estimate as accurate as possible, additional cost adjustment factors related to the complexity of the building design and construction, the


location of the project, site conditions, etc. should be considered and appropriate assumptions made, based on anticipated conditions.

6.) General Considerations - The cost of constructing a new building or an

addition to an existing building can be estimated by comparing it with the construction costs of similar projects. The estimate can be prepared utilizing either the “gross square foot” (GSF) or the “building component” cost methods.

7.) The Gross Square Foot (GSM) Method - These costs provide a design and

quality level consistent with their functional use. They include all general, mechanical and electrical construction for a complete building, excluding utility extensions and site work. They include code required fire protection systems. They also include a reasonable amount of equipment such as standard library shelving, lab casework, and built-in-food service equipment as indicated. Air conditioning is included as indicated. They do not provide for special foundations, unique architectural design or special program construction, telecommunications cabling systems, or special mechanical and electrical equipment not specifically identified. Following a complete review of the project program requirements, the cost estimate is developed by selecting an appropriate GSF unit building cost for the type of building being constructed, adjusting it for size and cost escalation, and multiplying it by the gross square feet of building area.

8.) Building Component Cost Record - Use of the Building Component Cost

method requires more detail than is required for the GSF cost method. This method requires separating the construction work into its basic components or systems such as excavation and foundations, structure and envelope, interior subdivision and finishes, plumbing and fire protection, heating and ventilation, electrical, elevator and other special construction. Quantities or parameters which define the scope of each section of work are multiplied by an appropriate unit cost, and the subtotals are added together to produce the estimated total building cost.

9.) Estimating Remodeling Project Costs - A cost estimate for remodeling an

existing building is generally more difficult to develop than an estimate for construction of a new building. This is primarily due to the difficulty of assessing the extent of the revisions required to major components such as the heating, ventilating, electrical, plumbing systems and to upgrade the building to current ADA requirements. Therefore, when preparing a remodeling cost estimate it is necessary to evaluate the condition of those components and to make assumptions regarding the need for, and cost of, their replacement. Consideration must also be given to the degree of remodeling involved and any retroactive fire safety and access barrier removal code work which may be required in non-remodeled portions of the building. A remodeling cost estimate


can be prepared utilizing either the “descriptive cost” method or the “detailed cost” method as described below;

a. Descriptive Cost Method - The descriptive cost method is most

applicable to a large comprehensive interior remodeling project where program requirements are known, but where quantities or construction details are difficult to determine. With this method the remodeling work is classified according to the following definitions:

i. Minor Remodeling - This involves the remodeling of space for the

same occupancy or for occupancy which requires a comparable or lesser degree of services or surface treatment. The primary emphasis is on utilizing existing spaces with limited partition changes and very limited changes in mechanical and electrical systems. Typically the scope of work involves minor relocating or adding of movable partitions to improve the space utilization; patching floor, wall, and ceiling finishes; minor reallocations of existing plumbing and electrical fixtures; and adjusting the sprinkler heads and air distribution ducts, grilles, temperature control, electrical switches and outlets to conform to the new partition arrangement. It does not include adding air conditioning.

ii. Partial Remodeling - This involves the remodeling of space to

accomplish functional or physical changes for an occupancy which requires more sophisticated services or a higher degree of surface treatment. Typically the scope of work includes removing and replacing a portion of the interior partition systems, upgrading floors, ceilings and wall finishes, and plumbing and electrical fixtures; revising the air distribution and air conditioning system; and rebalancing the air and temperature control system, limited modifications to the fire sprinkler system and correction of minor fire safety and accessibility code violations.

iii. Complete Remodeling - This involves extensive demolition and

replacement of existing partitions, floor and ceiling coverings, mechanical, and electrical distribution systems within the affected space, and plumbing and electrical fixtures. Replacement of heating/cooling source equipment, main supply ducts, main plumbing waste/vent piping, and medium voltage distribution system are not included. Complete remodeling may also include the replacement of the windows and correction of major fire safety and accessibility code violations.


The cost estimate is computed by multiplying the gross remodeled area by the appropriate base unit cost.

b. Detailed Cost Method - A more detailed method of cost estimating may be used where the type and area of work is clearly defined and quantities can be estimated. This would be most applicable to a smaller, more limited remodeling project such as remodeling an individual room or replacing a single building component. This method can also be used in conjunction with the descriptive method to cost those items of work not covered by descriptive unit costs.

10.) Total Building Rehabilitation - The cost of total rehabilitation of a building

may exceed the cost of constructing new space; therefore, such a project requires the evaluation of its total physical, functional, and economic adequacy for the intended program use.

D. Budget Setup 1.) The preparation of a Project budget will be a collaborative effort led by the

Project Manager, with significant input from the Administrative Team of the Facility in which the Project is being requested.

2.) Oftentimes, the Project Manager will utilize a Project Request Form (“PRF”), see

Policy 2.1 “Project Approval – PRF/CCR Overview” to launch investigational fees in order to develop a preliminary budget.

3.) The Project Manager should procure the services of an Architect and any other

necessary parties so as to secure an accurate preliminary budget.

E. Budget Approval 1.) The Project Manager, will finalize a Project Budget, and submit for approval to

the MHHS Finance Committee (for projects > $1.5M. 2.) If approved by the MHHS Finance Committee, it will go to the MHHS Board of

Directors, for final approval and authorization.

3.) At the time of authorization, the Project may complete a Capital Construction Form in order to initiate the Project. Please refer to Policy 2.1 “Project Approval – PRF/CCR Overview” for further information.

F. Budget Approval


1.) The Project Manager should submit to CRESS, a Monthly Project Report in which a Budget variance is completed (forecast vs. actual). The Project Manager should:

a. Explain any significant variances and alert CRESS to any future anticipated cost overrides.

b. State to what extent the Project is on its established schedule c. Major phases left to complete and timetable d. Anticipated funds remaining on remaining major phases

DATE: APPROVED:

4.1 PO Process Page 1 of 10



Policy #: 4.1 Policy Title: Purchase Order Process Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to establish an orderly and systematic process for purchase order initiation, approval, activation, cancellation/reduction and tracking. Policy Statement: A. Administrative Details Definition:

Purchase Order (PO): A purchase order is needed to charge Project related invoices.

Form Used to issue purchase order:

Purchase Requisition (PR) Form Form Completed by: Project Manager B. Purchase Order Initiation

1.) Before a purchase order can be issued (or invoices processed), the Project Budget should be approved and activated in the Lawson accounting system.

2.) The Project Manager should examine the Project Budget to verify

budgeted funds are available before submitting purchase requisitions to the CRESS Accounting Office.


3.) If funds are available, the Project Manager prepares a purchase

requisition (a triplicate form) that should be approved in accordance with purchase order approval levels (see § 4.1 (C)(7). The purchase requisition should be submitted to the CRESS Accounting Office for activation.

4.) It is recommended that the Project Manager prepare purchase requisitions

for all blanket purchase orders as soon as possible after Project/budget activation in order to expedite subsequent payments (e.g. architect, engineer, consultants and construction contractor).

5.) For Rush purchase orders, the Project Manager should clearly indicate

“RUSH” on the purchase requisition. The use of this should be limited to only the most urgent requests.

6.) Expenditures not included in the approved Project scope should be

approved in advance. The Project Manager should verify the levels of approval required with the applicable CRESS AVP/Director.

C. Purchase Order Approval

1.) The Project Manager should include on every purchase requisition all pertinent information including the Project name, Project number, Activity number, Subledger (category) number and Account (general ledger) number corresponding to the Project to which the Project Manager is issuing a purchase requisition. These numbers will have been provided by the CRESS Sr. Financial Analyst at the time of Project activation/approval. All documentation to substantiate the purchase order should be attached to the purchase requisition.

2.) The Project Manager should include in the “Description” section any

special instructions. 3.) Along with the above, the Project Manager should sign and date the

purchase requisition and any attached documents and forward immediately to a CRESS Financial Analyst in the CRESS Accounting Office.

a. The Financial Analyst assignment will vary by analyst workload.

Generally, a Financial Analyst will be assigned all Projects at a Facility. The Facility/financial analyst assignment can be provided by sending an e-mail request to the Sr. Financial Analyst.


b. The CRESS Financial Analyst to whom the purchase requisition should be sent to for processing (and future contact), is generally determined by the three digit Facility code (the last three digits of the Project number).

4.) The Project Manager should record the purchase requisition into their

Project Budget Worksheet’s Purchase Requisition Table (See Figure 4.1a – Project Purchase Requisition Table). This table can be provided by the CRESS Sr. Financial Analyst.

5.) The Project Manager should make a copy of all paperwork before

submitting the paperwork for processing. There should be minimal requests for processed paperwork from the CRESS Accounting file room.

6.) A CRESS Financial Analyst verifies that the Project budget has sufficient

uncommitted funds remaining to cover the purchase requisition. If a Project does not appear to have sufficient uncommitted funds, or a purchase order balance remaining in the budget, or the purchase order balance appears to be insufficient, a CRESS Financial Analyst will attempt to resolve the matter with the Project Manager. If the matter cannot be resolved within approximately three (3) business days, a CRESS Financial Analyst will return the purchase requisition to the Project Manager for resolution.

7.) The following signatures are required before the purchase requisition can

be processed into a purchase order:

a. Project Manager – should sign purchase requisition and attached back-up documentation

b. CRESS AVP/Director – can approve purchase requisition up to

$25,000 without further approval required

c. VP of CRESS – should approve purchase requisition of $25,000 or more. It is common practice for the CRESS AVP/Director to sign “Recommended for Approval” before VP of CRESS approval.

If additional signatures are required, the VP of CRESS will obtain them.

D. Respect for CRESS Distribution of Duties/Paperwork Process

1.) There is a methodology to the processing of paperwork in the CRESS Accounting Office. If there is an urgent issue, a Project Manager may


“expedite a purchase requisition through” for signatures on their own accord.

2.) If this option is chosen (and it should be an infrequent occurrence), the

Project Manager should “expedite through” from the start. The Project Manager should not submit a purchase requisition for processing in the normal way and then later decide to obtain signatures manually as that will interrupt the accounting process and it creates potential errors and delays in the CRESS Accounting Office.

E. Purchase Order Activation

1.) Upon successful completion of the purchase requisition, including appropriate approval signatures, a CRESS Financial Analyst will set up the purchase order in the Lawson accounting system, will record the purchase order in the CRESS database and update the Managerial Project Budget Summary Worksheet (see Figure 4.1b – Managerial Project Budget Summary Worksheet). The Project Manager should NOT input data directly into this Summary Worksheet because it contains formulas to calculate total budget and commitment amounts.

i. The Project Manager uses the Managerial Project Budget

Summary Worksheet as a tool to track budget versus inception-to-date commitment amounts.

ii. Timely maintenance of Managerial Project Budget Summary

Worksheet will enable Project Manager to have up-to-date financial data on the Project.

2.) A CRESS Financial Analyst will send the pink copy of the purchase

requisition triplicate form with the purchase order number to the Project Manager. This should serve as notification to the Project Manager that the purchase order has been approved and set up in the Lawson system.

3.) Upon receipt of the pink copy, it is the Project Manager’s responsibility

to:

a. Send a letter to the vendor to communicate contact information and billing processes. The Project Manager will be the vendor contact for all vendor inquiries. Please see a sample letter template to utilize upon initial communication with the vendor (Figure 4.1c – Initial Vendor Correspondence).


i. Some vendors may be unable to send correspondence and invoices to a Project Manager. In those cases, the Project Manager should communicate to the vendor that all invoices should reference all information provided on the vendor letter, but at a minimum should reference a purchase order and Project number. The Project Manager’s name as well as the Facility and Project name should be in the billing notations.

ii. By doing this, when an invoice is received at MHHS, it can

be forwarded to the Project Manager for appropriate processing.

4.) The Project Manager is allowed to approve a one-time increase in a

purchase order up to $1,000 to cover freight, shipping/handling or minor price differences. This prevents the need to issue a new purchase requisition if there are not enough funds available on a purchase order to pay for this increase. If the Project Manager elects to increase the purchase order amount, the Project manager should document the amount of the purchase order increase and the new purchase order amount on the invoice and their purchase requisition table and forward to a CRESS Financial Analyst. A CRESS Financial Analyst will then verify available funds and increase the purchase order amount in Lawson.

F. Purchase Order Cancellation/Reduction

1.) A purchase order should not be cancelled or reduced without the written acknowledgement from the vendor whereby they agree that they will cease billing invoices under a certain purchase order number. Refer to Figure 4.1d – Purchase Order Cancellation Request, for an example that the Project Manager can utilize. An electronic copy can be supplied by the Assistant to the CRESS Director of Architecture & Construction.

a. An exception to this is if the Project Manager overestimated the

freight, shipping or handling charges. b. In this case the Project Manager should attach a copy of the

original quote/proposal to the original purchase requisition and note “Amendment of estimated freight/shipping and handling charges”.


2.) If the Project Manager is unable to obtain written confirmation from the vendor, he/she should attach the letter as illustrated in Figure 4.1d and note “unable to obtain signature”, sign the letter and return it to a CRESS Financial Analyst along with the purchase requisition in order to reduce the purchase order.

3.) When voiding a purchase requisition due to a quote that was not

used, the Project Manager should write “VOID” on the purchase requisition and follow steps 1 and 2 above.

4.) Upon the Project Manager’s receipt of the vendor’s written

acknowledgement of a request for purchase order cancellation, the Project Manager will forward the purchase requisition with the letter to a CRESS Financial Analyst to process.

G. Purchase Requisition Tracking

1.) To foster purchase requisition accountability for all team members, the following aggregate data will be presented periodically at the Project Manager Team Meetings by the CRESS Sr. Financial Analyst:

a. Total Time to Process Purchase Requisitions (in calendar days)

b. Time between quote date and receipt of purchase requisition in the

CRESS Accounting office

c. Time between receipt of purchase requisition and issuance of purchase order

APPROVED: DATE:


Figure 4.1a Project Purchase Requisition Table

APpurchase requistionOVED: DATE:


4.1b Managerial Project Budget Summary Worksheet (Do Not Input Data Into This Worksheet)


Figure 4.1c Initial Vendor Correspondence

July 15,2004

VIA FACSIMILE 214-576-7771 and U.S. Mail SBC Attn: Rose Bivond 2600 N. Central Expressway Richardson, Texas 75080 Re: Project Billing The purchase order below is now activated. Please use the information listed below for Project correspondence and invoicing:

Project Name: LTACN Project Number: 0402009 Project Manager: Laura Schmidt Project Location: Memorial Northwest P.O. Amount: $6,637.36 Proposal Date: 06/28/2004 Purchase Order Number: 123275-6

Any and all correspondence, contracts, invoices and change orders received without this information will be returned. All correspondence should be mailed to 9401 Southwest Freeway, Suite 1103-A, Houston, Texas 77074-140 1, Attention : Laura Schmidt. Direct all questions, confirmations & delivery inquiries to Laura Schmidt at 713-448-6408. Your cooperation in fulfilling this request will expedite the processing and payment of your invoices. Thank you for your attention to this matter. Sincerely,

Laura Schmidt Senior Project Manager

Corporate Offices

Memorial Hermann Healthcare System 9 4 0 1 SOUTHWEST FREEWAY a HOUSTON, TEXAS 7 7 0 7 4


Figure 4.1d PO Cancellation Request (for Vendor to Sign)

[Click here and type DATE] [Click here and type Vendor Name, Contact, Vendor Address] Re: Purchase Order Closure Project: [Click here and type PROJECT AND NUMBER] Location: [Click here and type LOCATION] This correspondence confirms that [Click here and type VENDOR NAME] will not be further billing against Memorial Hermann Healthcare System using Purchase Order # [Click here and type PURCHASE ORDER NUMBER] for services identified in your proposal/quote to us. Total billing to-date on the purchase order is [Click here and type AMOUNT]. Proposals or invoices for subsequent services you provide will be issued a new Memorial Hermann Healthcare System purchase order. Please sign, date and return to [Click here and type PROJECT MANAGER] at facsimile number: [Click here and type FAX NUMBER] immediately. Thank you, ________________________________ Signature and Date ________________________________ Printed Name/Title

4.2 Invoice Process Page 1 of 11



Policy #: 4.2 Policy Title: Invoice Process Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to establish an orderly and systematic process for invoice payment initiation and disbursement of funds. Policy Statement: A. Administrative Details Definition:

Invoice: An invoice is submitted by vendors for payment of services. Form Used:

Original Vendor Invoice. If the invoice is a duplicate, it should clearly be marked “COPY” to avoid duplicate payment.

Form Completion/Routing: The vendor sends an invoice to the Project Manager who will forward to a

CRESS Financial Analyst. B. Invoice Payment Initiation

1.) An invoice cannot be paid without a purchase order. See Policy 4.1-“Purchase Order Process” for the process of obtaining a purchase order.

2.) The vendor will send an invoice for payment to the Project Manager as

the Project Manager is the vendor’s contact on all communication. The Project Manager should give the vendor a


secondary contact, preferably the CRESS Director of Architecture and Construction in case of contact difficulty with the Project Manager.

a. The Project Manager will use the form letter (illustrated in Figure

4.2a – Initial Vendor Correspondence) as the notification to the vendor that all correspondence, contracts, invoices and change orders should be sent to the proper Project Manager, at a correct address and should contain all of the information listed in Figure 4.2a.

b. Failure of a vendor to timely submit invoices to the appropriate

Project Manager may delay processing. c. Some vendors confuse the handling of multiple contacts for one

client and are thus unable to send an invoice to Project a Manager directly. In those cases, the vendor will still need to include a purchase order and Project number on the invoice and the vendor can reference in the billing notations, the Project Manager’s name and the Project name and forward to the address on record for MHHS, which is oftentimes Accounts Payable in this situation. The recipient will then forward the invoice to the Assistant to the CRESS Director of Architecture & Construction. The Assistant will summarily forward those to the respective PM for processing.

3.) After receipt of the Invoice, the Project Manager should log the invoice

into the Invoice Table of his/her Budget Tracking Worksheet (see Figure 4.2b – Invoice Table). Budget Tracking Worksheets will be provided by the CRESS Sr. Financial Analyst.

4.) Before a Project invoice can be paid, the Project Budget and associated

purchase order should be approved and activated in the Lawson accounting system

a. Project invoices can only be charged to the Project that those

invoices are related. b. If there is a request to use funds from another Project, a request

should be submitted to the CRESS Director of Architecture and Construction in advance of committing the funds with an indication as to why the other Project funds should be considered. The CRESS Director of Architecture and Construction will review the request and if appropriate, will process the request with the appropriate signatures(s) as required and outlined in §4.2(B)(9).


5.) For Federal Emergency Management Agency (FEMA) invoices, the following process should be followed:

a. The outlined policy in §4.2(B)(2a-c) is especially critical as it

relates to FEMA Projects as there are regulatory issues that could compromise FEMA funding to MHHS.

b. No commitment of funds should be authorized unless a specific

category line item with an associated Project work number (provided by the Corporate Accounting Financial Analyst) has already been identified on the approved Capital Construction Request (CCR) form (please refer to Policy 2.1-“CCR/PRF Usage” for further information on CCRs). For example, there is often an “other” line item for capital Projects, but FEMA Projects should be specific. The Project Manager’s budget should include for example, “Safety Engineering” and “Dust Control”.

6.) Upon receipt of the invoice, the Project Manager will immediately date

stamp the invoice and will verify the following:

a. The purchase order number is indicated on the invoice. b. The purchase order quantity/amount matches the invoice

quantity/amount. c. The invoice is for the proper Project number.

7.) If there is a discrepancy over an invoice, the Project Manager will need to

request that the vendor provide a full credit invoice and rebill a new invoice. The rebilled invoice date will be used for reporting purposes. Potential issues include:

a. Non-compliance with agreed billing terms b. Incomplete shipment received

c. Incorrect services rendered or goods received

d. Damaged goods

e. Incomplete services rendered

f. Incorrect pricing per agreement/quote/contract, or


g. Any other invoice /service related issue

The Project Manager (or IS Project Manager) will not return the original invoice, but will send the vendor a form letter of invoice rejection (Figure 4.2c – Form Letter of Invoice Rejection) along with a copy of the invoice, indicating the following:

a. The vendor to whom the letter is addressed

b. The Project name and number

c. The individual to whom the letter is addressed

d. Why the invoice is being rejected e. A request for a corrected invoice with preferably a new invoice

number and new date, along with a full credit memo for the rejected invoice.

f. Other notes as applicable.

In the case of the IS Project Manager, the letter should be copied to the Construction Project Manager so he/she can note it in their records in case the vendor calls.

In order to avoid duplicate payments and ensure quality control, no invoice numbers or dates can be manually changed as Accounts Payable will not process invoices that have manual changes in the date or invoice number.

8.) Upon successful verification of the invoice to the purchase order, the

Project Manager will write on the invoice or circle if already provided: the Project number, Activity number, Subledger (category) number and Account (general ledger) number. The Project Manager will then sign and date the invoice and forward immediately (within 10 business days of date stamp of receipt) to a CRESS Financial Analyst in the CRESS Accounting Office.

a. The CRESS Financial Analyst assignment will vary by analyst

workload. Generally, a Financial Analyst will be assigned all Projects at a Facility. The Facility/financial analyst assignment can be provided by sending an e-mail request to the Sr. Financial Analyst.


b. The CRESS Financial Analyst to whom the invoice should be sent to for processing (and future contact), is determined by the three digit Facility code (the last three digits of the Project number).

c. For Rush Invoice payment, the Project Manager should clearly

indicate “RUSH” on the invoice and ensure that it is submitted to a CRESS Financial Analyst in a timely manner. Rush invoice payment should be for special circumstances and not frequently encountered.

d. The Project Manager should make a copy of all paperwork before

submitting the paperwork for processing.

9.) A CRESS Financial Analyst will perform the following functions: a. Date stamp receipt of invoice upon arrival in the CRESS Accounting

Office b. Verify the PO balance c. Route for approval for signatures and dates of signature

i. Project Manager – Can approve up to $25,000 for a

previously approved Purchase Order.

ii. CRESS AVP/Director – Must sign and approve invoice without a previously approved Purchase Order and can approve up to $50,000 with an existing Purchase Order.

iii. VP of CRESS – Must sign and approve invoice if $25,000 or

greater without a previously approved Purchase Order and all invoices with a previously approved Purchase Order $50,000 or greater.

d. Log invoice in the CRESS database e. Send invoice to Accounts Payable for payment

10.) There should be minimal requests for processed paperwork from the

CRESS Accounting file room. 11.) A CRESS Financial Analyst should process the invoice within ten (10)

business days of receipt or less.


C. Respect for CRESS Distribution of Duties/Paperwork Process

1.) There is a methodology to the processing of paperwork in the CRESS Accounting Office. If there is an urgent issue, a Project Manager may “expedite a purchase requisition through” for signatures on their own accord.

2.) If this option is chosen (and it should be an infrequent occurrence), the

Project Manager should “expedite through” from the start. The Project Manager should not submit a purchase requisition for processing in the normal way and then later decide to obtain signatures manually as that will interrupt the accounting process and it creates potential errors and delays in the CRESS Accounting Office.

D. Handling of Freight PO/Invoice Differentiation

1.) If the invoice and the purchase order do not match and the difference is

related to freight, shipping/handling charges or a minor price difference and because the Project Manager can approve a $1,000 increase in purchase order amount, the Project Manager should not only sign the invoice but write/acknowledge upon the invoice that the difference is related to freight/insignificant price variance and note the new purchase order total. This will prevent the need to issue a new purchase requisition if there are not enough funds available on a purchase order to pay for this increase.

2.) The Project Manager should record the invoice and the new purchase

order total on his/her Project Purchase Requisition table as well.

3.) Invoices that are received that exceed the purchase order amount and have no additional notation that the Project Manager acknowledges and approves this additional amount will result in the purchase order being sent back to the Project Manager.

E. Invoices for Reimbursables, PSSA’s and Additional Services

1.) Invoices for reimbursables should be submitted on a separate invoice fees and should include a copy of the expenses to substantiate the reimbursables. It will be the Project Manager’s responsibility to communicate this to the vendor. If an invoice is received with a total and without a backup to substantiate the cost and purpose of the reimbursable, the Project Manager should follow the process as outlined in §4.2(B)(7). Additionally, if reimbursables include a mark-up then the


invoice should reflect this as a mark-up. The mark-up is zero unless otherwise agreed to in a contract or agreement.

2.) The Project Manager should submit invoices for additional services

separately, rather than the existing base amount of services. This will be the Project Manager’s responsibility to communicate this to the vendor. By keeping them separate, it will simplify the management of the contract and improve CRESS’ ability to audit.

3.) Additional services should be approved in advance by the CRESS Director

of Architecture and Construction or the appropriate person at CRESS. The Owner’s representative on a specific Project can advise the Project Manager who is the appropriate person to sign these. An invoice should not be submitted by a consultant without having approval in advance.

F. Invoice Payment

1.) Accounts Payable typically generates checks twice per week. 2.) Invoices will not be short paid, except for sales tax, which is not

applicable.

G. Invoice Payment Tracking

1.) To foster accountability among all team members, the following aggregate data will be presented periodically at the Project Manager Team Meetings by the CRESS Sr. Financial Analyst:

a. Total time to process invoices (in days) b. Days past invoice date when received by CRESS Accounting Office,

broken out by:

i. 0-45 days past invoice date

ii. 45 or more days past invoice date c. CRESS Accounting Office processing time (in days) d. AP processing time (in days) e. Average invoice age when received in CRESS Accounting Office by

Project by Project Manager


APPROVED: DATE:


Figure 4.2a Initial Vendor Correspondence

July 15,2004

VIA FACSIMILE 214-576-7771 and U.S. Mail SBC Attn: Rose Bivond 2600 N. Central Expressway Richardson, Texas 75080 Re: Project Billing The purchase order below is now activated. Please use the information listed below for Project correspondence and invoicing:

Project Name: LTACN Project Number: 0402009 Project Manager: Laura Schmidt Project Location: Memorial Northwest P.O. Amount: $6,637.36 Proposal Date: 06/28/2004 Purchase Order Number: 123275-6

Any and all correspondence, contracts, invoices and change orders received without this information will be returned. All correspondence should be mailed to 9401 Southwest Freeway, Suite 1103-A, Houston, Texas 77074-140 1, Attention : Laura Schmidt. Direct all questions, confirmations & delivery inquiries to Laura Schmidt at 713-448-6408. Your cooperation in fulfilling this request will expedite the processing and payment of your invoices. Thank you for your attention to this matter. Sincerely,

Laura Schmidt Senior Project Manager

Corporate Offices

Memorial Hermann Healthcare System 9 4 0 1 SOUTHWEST FREEWAY a HOUSTON, TEXAS 7 7 0 7 4


Figure 4.2b Invoice Table


Figure 4.2c Form Letter of Invoice Rejection

FORM LETTER Date John Doe 0000 Doe Street Anytown, USA 00000-0000 Project: Name and Number RE: Invoice Rejection Dear ________, The attached invoice is being rejected for the following reason (s): _____ Non-compliance with agreed billing terms _____ Incomplete shipment received _____ Incorrect pricing per agreement/quote/contract _____ Incomplete services rendered _____ Other ________________________________________________________________________________________________________________________________________________________________________________________________________________________ Notes: ________________________________________________________________________________________________________________________________________________________________________________________________________________________ Please submit a corrected invoice with a new invoice number and date along with a full credit memo for the rejected invoice. Please reference the above PO and Project information on the corrected invoice and the credit memo and send them directly to me at _____________________________. If you have any questions, please feel free to call me at _________________. Thank you for your assistance. Sincerely, Project Manager Name

4.3 PR and Invoice Inquiry Process Page 1 of 3



Policy #: 4.3 Policy Title: Purchase Requisition and Invoice Inquiry Process Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to establish an orderly and organized process for inquiries regarding purchase requisition and invoice status. Policy Statement:

1.) Purchase Requisition and Invoice Inquiries: a. Inquiries to CRESS Accounting are to be submitted by the Project

Manager via e-mail to the CRESS Financial Analyst assigned to process payments for the applicable Facility. The purpose of requiring e-mail requests is to facilitate tracking the quality and timeliness of the CRESS Department’s responses to Project Manager inquiries.

b. Inquiries from vendors and consultants are to be directed to the

assigned Project Manager. Vendor inquiries to CRESS Accounting or to the CRESS Director of Architecture & Construction will generally be forwarded to the Project Manager unless the vendor indicates they cannot get a response from the Project Manager.

2.) At a minimum, all inquiries should include the following information in

order to facilitate timely investigation and response: a. Date of inquiry b. Project number c. Project name


d. Project Manager e. Vendor name f. Purchase requisition or invoice number g. Purchase requisition or invoice date h. Dollar amount i. Purchase order number (if known) j. Date originally sent to CRESS Accounting k. Nature of inquiry

3.) If the Project Manager does not provide the required information, CRESS

staff will respond with the following message: “We do not have sufficient information to respond to your inquiry at this time. Please provide the necessary information and we will respond as soon as possible”.

4.) Response Time: a. It is the goal of CRESS Accounting staff to respond to inquiries

within one business day. b. Project Managers should respond to inquiries within two business

days.

5.) CRESS Accounting staff will research inquiries if both of the following criteria are met:

a. The item(s) should have been received in the CRESS office more

than fifteen (15) days prior to the date of the inquiry, and b. Forty-five (45) or more days have elapsed from the invoice date or

purchase requisition date and the date of the inquiry. 6.) CRESS Accounting staff will respond to all inquiries that do not meet the

criteria described in #5 above with the following message:


“Due to the volume of paperwork received and processed through CRESS, any paperwork received by CRESS within the previous 15 days can be considered “in process.” If there are urgent, extenuating circumstances that require research or status inquiries, within the given time frames, please direct them to the CRESS Sr. Financial Analyst per his/her request.”

7.) Responses to inquiries by both CRESS Accounting staff and by Project

Managers should indicate the current status and the estimated timeframe for processing. The vendor should be advised of the status. If there is a reason the purchase requisition or invoice will be delayed, the vendor should be notified in writing and if necessary, the documentation provided by the vendor returned to the vendor.

APPROVED: DATE:

4.4 Vendor Categories Page 1 of 2



Policy #: 4.4 Policy Title: Vendor Categorization Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to establish a consistent categorization of expenditure types for Project Manager use. Policy Statement:

1.) Category 0010 – Architecture: This category is to be used to capture architecture related costs. Some architect contracts include engineering fees. In those cases, it is acceptable to classify all fees related to the contract to this category, including engineering. Some architecture firms also provide Project management services. Project management fees, if performed by an Architect, should be a separate contract and classified separately in Category 0015 – Professional Fees.

2.) Category 0011 – Construction: This category should be for

construction contracts or work performed by construction contractors.

3.) Category 0012 – Abatement: This category is to be used to capture abatement costs such as asbestos removal.

4.) Category 0013 – Contract Labor: This category is to be used to

capture costs for contract labor. The contract labor can include administrative temporary employees or contract skilled labor such as plumbers or welders.

5.) Category 0014 – Engineering: This category is to be used to record

engineering-related costs that are not part of architecture services (Category 0010).

4.4 Vendor Categories Page 2 of 2

6.) Category 0015 – Professional Fees: This category should be for services performed by a professional consultant, if Memorial Hermann Hospital System is paying for the consultant’s knowledge and there is no installation or construction deliverable. Project management fees, pre-construction services, medical equipment planning, graphics design and financial services (e.g. auditing) would be classified in this category.

7.) Category 0016 – Construction Materials: This category is to be used

to track the costs of construction materials that are not part of a construction contract.

8.) Category 0018 – Administrative Fees: This category includes legal

fees, regulatory fees, internal staffing charges such as ISD PM salaries, CRESS salaries, Biomedical Engineering expenses, Security expenses and marketing related expenses.

9.) Category 0017 – Purchased Services: This category includes third

party services such as printing, repairs, material testing, waste disposal, environmental services, couriers, landscaping and work that is permanently a part of the building but not included in the construction contract such as signage and graphics. Cabling and ISD servers would be coded here if not part of the construction contract.

10.) Category 0019 – Safety Engineering: This category is to be used to

track costs of Project safety charges.

11.) Category 0200 – Equipment: This category is to be used to account for costs of medical and non-medical equipment, furniture and artwork. Equipment should not include infrastructure equipment such as an ISD server.

12.) Category 0008 – Contingency: This category is to be used to

account for the Project contingency.

APPROVED: DATE:

4.6 HCCO & SCO Page 1 of 7



Policy #: 4.6 Policy Title: Project Budget Change Process – HCCO and SCO Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy

Policy Purpose: The purpose of this policy is to establish an orderly and systematic process for processing requests to reallocate, increase or decrease capital Project budgets. Policy Statement: A. Administrative Details

Definitions: Hidden Condition Changes – Occurrence of a hidden condition such as asbestos, which could not have been anticipated prior to the start of the Project. This cost should be paid from the Project contingency budget. Scope Changes – Project scope change that will require an adjustment in funding (an increase or decrease in budget). Form Used: Hidden Condition Change Order (HCCO) Scope Change Order (SCO) Forms Prepared by: Project Manager

B. Hidden Condition Change Order (HCCO) Approval


1.) If a change order arises because a hidden condition is discovered (e.g. asbestos) that could not have been anticipated prior to Project commencement, and once the Project Manager reviews the Change Proposal for compliance, he/she should follow the process as delineated in §4.6 (B)(6)(a-c), that calls for a HCCO to be completed when contingency funds should be used to fund the work. Reasonable contingency funds should be included in a Project budget for unanticipated occurrences.

2.) The Project Manager must complete and sign the Hidden Condition

Change Order (HCCO) form as illustrated in Figure 4.6a – Hidden Condition Change Order Form and the following:

a. A memo containing

i. A description of the hidden condition

ii. Project Manager’s recommendation and justification as to why the HCCO is needed

iii. An indication if the change will negatively affect the Project

budget b. Printout of the Project Manager’s Project Budget Worksheet

showing the current reconciliation of budget and forecasted to complete

c. Other documentation as applicable such as quotes and purchase

requisitions 3.) Purchase orders cannot be issued and invoices cannot be paid until the

HCCO is reflected in Lawson. To expedite processing, pending purchase requisitions may be attached to the HCCO to be processed once the HCCO is activated.

4.) The Project Manager will have the designated Administrator sign the

HCCO (if applicable) and then forward the HCCO, along with the other required documentation as noted in § 4.5 (A)(8)(a-g), to the CRESS Sr. Financial Analyst who will then verify funding, sign and route the HCCO for additional approvals which may include the following:

a. CRESS AVP/Director b. VP of CRESS


c. If additional signatures are required, the VP of CRESS will obtain them.

5.) After all the requisite approvals have been obtained on the HCCO, the

CRESS Sr. Financial Analyst will amend the Project Budget Worksheet. 6.) The CRESS Sr. Financial Analyst will then submit the HCCO to Corporate

Accounting for entry into Lawson accounting system.

7.) Upon approval of the HCCO, the CRESS Sr. Financial Analyst will notify the Project Manager who in turn will follow-up as required.

8.) Approvals may be obtained from the VP of CRESS in advance and followed

by a written HCCO if a Project schedule or budget will be negatively impacted.

C. Scope Change Order (SCO) Approval

1.) The Project Manager should complete the Scope Change Order form (See Figure 4.6b – Scope Change Order Form) to request an increase or decrease in funds on the Project budget. The SCO should provide details on how the funds will be allocated between the budget categories.

2.) See § 4.6 (B) (2-8) for guidelines related to the proper processing of

SCOs.

APPROVED: DATE:


Figure 4.6a Hidden Condition Change Order Form


Figure 4.6a Hidden Condition Change Order Form (cont’d)


Figure 4.6b Scope Change Order Form


Figure 4.6b Scope Order Change Form (cont’d)

4.5 Change Order Process Overview Page 1 of 7


STANDARDS OF PRACTICE MANUAL Policy #: 4.5 Policy Title: Construction Change Order Process Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy

Policy Purpose: This policy sets forth the proper process whereby a change order is initiated and approved. Policy Statement:

In spite of a design team's best efforts, there is no such thing as a perfect set of Drawings and Specifications, and consequently there will potentially be Change Orders required to complete the Project. It is the Project Manager's responsibility to try to ensure that these changes do not negatively impact the Schedule or quality of the Project and that they can be accomplished within the Project budget. The Construction Contract requires, and the Project Manager should enforce, that the Contractor not proceed with changes without a Change Order or Construction Change Directive signed by the Owner. A. Change Order Process Overview

1.) If a change issued by the Architect could result in an additional cost to the

Contractor; the Project Manager will issue a "Request for Proposal (RFP) with the Architect's documents. The RFP will describe the change or reference the appropriate documents and will have attached the detailed descriptions, sketches and plans required for the contractor to quote the change. The RFP should be sent to the affected Contractor. Once the Contractor receives the Request for Proposal, he/she should prepare a detailed cost estimate for the change. This estimate should include an itemized takeoff of labor, equipment and material with a unit cost for each item.


2.) The Contractor and its Subcontractors should sign and date the RFP upon receipt, and respond with the proper backup to the Project Manager. The response should include a price, schedule impact (if any), and include all appropriate backup along with a detailed breakdown supporting the costs. There should be no exceptions.

3.) The Architect and Project Manager should review, evaluate, possibly

negotiate and then process the Change Proposal to ensure it includes the following:

a. Proper scope b. Conforms with the contract documents c. Priced fairly d. Addresses any time extension accurately, and e. Respond to the Contractor with any required revisions or necessary

clarification as soon as possible.

4.) The “Cost of the Changed Work” estimate should include the following: a. Total labor b. Equipment, materials and supplies

c. Rental equipment charges d. Bond insurance premium (if applicable) e. Sales tax (if applicable)

f. Subcontractor cost g. Mark-up (if applicable)

A sample format for the Change Proposal Estimate is provided in Figure 4.5a – Change Proposal Format. The Contractor is to provide backup and breakdown of all work items sufficient for the Project Manager to accurately approve for Change Order.

5.) An executed change order will include the following items:


a. All costs, impacts, delays, time extensions, damages, and other claims of any nature, resulting in whole or in part from the change(s) reflected in the change order

b. Language that ensures the contractor waives all claims to the

extent not requested within the change order

6.) The Change Order can modify not only the Contract Sum but also the contract terms and schedule as well. It is important to:

a. Periodically revise the Schedule of Values and Request for Payment

forms to record each change as a separate item of Work, and to record the adjusted Contract Sum.

b. Periodically revise the Construction Schedule to reflect each change

in Contract Time; including revising sub-schedules to show changes for other items of work affected by the changes.

c. The changes should be recorded in the Record Documents.

7.) Upon a satisfactory review, the Project Manager will forward the Change

Proposal with recommendation for approval to the Owner for approval and signature. The Change Proposal should include signatures of the Contractor, Architect, and Project Manager.

8.) Upon approval of the Change Proposal (or revised proposal) by the

Owner, copies will be returned to the Project Manager who will have a Change Order prepared that will be signed by the Contractor, Architect and Project Manager. The Project Manager will forward the following documentation to a CRESS Financial Analyst, who will in turn process with the required approvals (see Figure 4.5b – Change Order Documentation).

a. A purchase requisition to adjust the purchase order amount if it will

be modified b. A memo containing:

i. Project Manager’s recommendation

ii. An indication if the scope of the Change Order is within budget.

iii. An indication how the change will be funded.


c. A HCCO or SCO if the Change Order is not within the Project

Budget (Please refer to Policy 4.6- “Project Budget Change Process” for detailed handling of HCCO and SCOs).

d. Four (4) originals of a Change Order e. A list of the original contract amount plus previous Change Orders

and this Change Order along with the original Purchase Order amount and new purchase order amount

f. Printout of the Project Manager’s Project Budget Worksheet

showing the current reconciliation of the budget and forecasted to complete.

g. A summary description of each change and whether it is a: Hidden

Condition; Error or Omission; Owner Request; or Code or Regulatory.

9.) Once approved, a CRESS Financial Analyst will send two (2) originals of

the executed Change Order for the Project Manager to forward to the Contractor and Architect.

10.) Upon receipt of a fully executed Change Order, the Contractor may

proceed with the change. 11.) Final approval of the Change Order is required prior to any billing for the

Change Order in the regular monthly Applications for Payment submitted by the Contractor.

B. Construction Change Directive

1.) There may be times where it is not possible to follow the above-stated process without adversely impacting the Project schedule.

2.) In those cases, the Project Manager and the Contractor should agree on

the impact of the change to the Schedule and a not-to-exceed price (if possible) or allowance amount for the change.

3.) A Construction Change Directive should be executed by the Contractor

and Owner. The Project Manager and Architect will recommend approval to the Owner, who will execute the Directive accordingly, allowing the Contractor to proceed with the changed Work as directed. Once the change has been fully priced, a Change Order should be issued and


executed to adjust the Guaranteed Maximum Price (where applicable) or Contract Sum following the Change Order process noted above.

C. Change Order Discipline

1.) The Project Manager should have a goal of never allowing the Contractor to proceed without an executed Change Order or Construction Change Directive. To do so could result in unavailable funds or agreeing to a schedule that may not be acceptable.

2.) It may be very difficult to negotiate the price and time extension of a

change after the changed Work has been done. In addition, executed Change Orders greatly reduce the Contractor's ability to make claims for changes made on the Project. For these reasons, Construction Change Directives should only be used when absolutely necessary.

Reference: MHHS Standard Construction Contract A111 Article 6; MHHS Standard General Conditions A201 Article 7. D.) Change Order Log

1.) The Project Manager is responsible for the management of a Change Order Log, which should identify the status of all Change Proposals, Change Orders and Construction Change Directives.

2.) It is necessary that the Project Manager control this process, as

Contractors tend to add to the log any conceivable item that could be a possible cause for additional compensation and extension of time. Therefore, it is important that the Project Manager control this process and require the Contractor to follow the proper steps for requesting additional compensation or extensions of time instead of circumventing the process through the Change Order Log. The Change Order Log should then be linked to the Project Budget in order to track the impact of Change Proposals, Change Orders and Change Directives on the Project Budget.

APPROVED: DATE:


Figure 4.5a Change Proposal Format The following format could be utilized by Contractors on their letterhead or format for capital Project change proposal estimates: RFP/Directive/etc. Identification # _______________________ Date _______________________ Description of Change Estimated Cost of Change: Labor: Carpenter (No. of Hrs. x Rate) xxx.xx Labor (No. of Hrs. x Rate) xxx.xx Ironworker (No. of Hrs. x Rate) xxx.xx Subtotal xxx.xx Mark-up on labor @ % xxx.xx Equipment, Materials, Supplies: Vendor 1 price with backup xxx.xx Vendor 2 price with backup xxx.xx Subtotal xxx.xx OH&P @ ____ % xxx.xx Subcontractor Costs Firm 1 price with backup xxx.xx Firm 2 price with backup xxx.xx Subtotal xxx.xx OH&P @ ____ % xxx.xx Total Change xxx.xx


4.5b Change Order Documentation

Date:

Project:

PCO #: PO #:

Change Order #: Budget Acct. #:

Contract #:Change Order w/in

Budget (Y/N)?:ICO/SCO/HCCO Attached (Y/N)?:

To:

EncumberedDate

InitialsApproval Code

Adjustments this change order

Current Contract

In accordance with the terms of your Contract cited above with ____________, you are directed to execute the changes to that Contract described herein. It is agreed that the compensation and time provided by this Change Order constitute full and complete

DESCRIPTION OF CHANGE ORDER

Cost Cause Code

Previous Change Orders

Original Contract

For Accounting Purposes Only:

(Owner)

(Contractor)

(Signature and date)



(Architect)

(Owner’s Representative) (Signature and date)

Contract Cost(Dollars)

Contract Time(Calendar Days)

CONSTRUCTION CONTRACT CHANGE ORDER MEMO

Construction, Real Estate, and Support Services

Why is this work necessary?

Why wasn’t this work included in the original contract?

Differing Site Conditions

Fire Code/Life Safety Issues

Value Engineering

Inspector Requests

Scope Increase by Owner

Acts of God

Errors & Omissions

Field Conditions Other (List)

4.7 Reconciliation Process Page 1 of 2



Policy #: 4.7 Policy Title: Reconciliation Process Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to establish an orderly and systematic process for reconciling the accounting records maintained separately by Project Managers, CRESS and Memorial Hermann Corporate Accounting. Project Managers should perform reconciliations on a quarterly basis at the least, however, CRESS reserves the right to ask for more frequent reconciliations should the need arise. Project reconciliations do not include examination of forecast expenditures. Forecasted expenditures are tracked and maintained by the Project Manager within his/her Project budget and reported monthly to the CRESS Director of Architecture and Construction. Policy Statement: A.) Responsibilities of Project Manager In Reconciliation

1.) The Project Manager is responsible for the following:

a. Performing a reconciliation between their Project accounting records and the records maintained by CRESS. Reconciliations should occur quarterly or as directed by the CRESS Sr. Financial Analyst or the CRESS Director of Architecture and Construction.

b. Submitting a written reconciliation report with the Project Monthly

Report, to the CRESS Director of Architecture and Construction and when applicable, explain variances and opportunities to resolve variance differences.

4.7 Reconciliation Process Page 2 of 2

B.) Responsibilities of CRESS Accounting Office in Reconciliation

1.) CRESS Accounting personnel are responsible for the following:

a. Providing CRESS Project accounting reports to Project Managers for their use in performing reconciliations.

b. Responding to Project Manager inquiries resulting from reconciliations.

c. Assisting Project Managers in resolving issues arising from

reconciliations.

d. Performing periodic reconciliations between CRESS accounting system (Access database) and MHHS Corporate Accounting system (Lawson).

APPROVED: DATE:

4.8 Audit Process Page 1 of 5



Policy #: 4.8 Policy Title: Audit Process Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to establish an orderly and systematic process for:

Auditing construction contracts Auditing Project accounting records maintained separately by Project

Managers, CRESS and Memorial Hermann Corporate Accounting Ensuring that capital construction Project accounting records are accurate

and complete Ensuring that all capital construction Project transactions are properly

approved, processed in a timely manner and accurately recorded in Project accounting systems.

The Project audits do not include examination of forecast expenditures. These forecasted expenditures are tracked and maintained by the Project Manager within his/her Project budget. Policy Statement: A.) Construction Contract Audits

1.) Timing - Guaranteed maximum price (GMP) contracts will be audited

twice. The first audit will be when the Project is approximately 25% complete and the second will come at the end of the Project. Lump sum contracts will be audited at the discretion of the CRESS Accounting Office.


CRESS management reserves the right to conduct unscheduled audits and additional audits, as they deem necessary and appropriate. CRESS management will generally give advance notice to the contractor that an audit will be performed.

2.) Scope - The auditor’s scope of work on construction contract audits will

include, but is not limited to the following:

a. Examining contracts, change orders and any other documentation necessary to evaluate whether Project commitments and actual expenditures are in accordance with the contract and are accurately stated and recorded in the accounting records of the Project Manager and CRESS.

b. Interviewing contractor, Project management and any other

personnel involved in the negotiation, preparation and execution of construction contracts.

3.) Contractor personnel are responsible for the following:

a. Allowing the auditor access to contract files and documentation

that are pertinent to the construction contract under review. b. Responding to inquiries of the auditor during audit fieldwork. c. Providing written responses to audit findings and implementing

audit recommendations pertaining to the contract.


a. Managing the construction contract audit. All correspondence will be coordinated through the Project Manager and all follow-up actions will be tracked by the Project Manager to verify completion with copies to the CRESS Director of Architecture and Construction.

b. Determining with the CRESS Director of Architecture & Construction

or Director of Capital Construction the timing of the audit.

c. Providing supporting documentation requested by the auditor that is necessary to perform the audit process.

d. Responding to inquiries of the auditor during audit fieldwork.


e. Providing written responses to audit findings and implementing audit recommendations pertaining to Project management.

f. Provide audit report and results to CRESS Director of Architecture &

Construction.

g. Resolving any findings/variances CRESS elects to address

5.) CRESS personnel are responsible for the following:

a. Providing supporting documentation requested by the auditor that is necessary to perform the audit process.

b. Responding to inquiries of the auditor during audit fieldwork. c. Providing written responses to audit findings and implementing

audit recommendations pertaining to CRESS operations.

6.) Audit Reports – Auditor will provide a written report providing detailed explanations of findings and recommendations at the conclusion of the audit and issue the report to the Project Manager, CRESS Director of Architecture and Construction and Director of Capital Construction.

B.) Capital Construction Project Audits

1.) Timing- Generally, each major Project will be audited twice. The first audit will be when the Project is approximately 25% complete and the second will come at the end of the Project. CRESS management reserves the right to conduct unscheduled audits and additional audits, as they deem necessary and appropriate. CRESS management will generally give advance notice to the Project Manager that an audit will be performed.

2.) Scope- The auditor’s scope of work on the capital Project audits will

include, but is not limited to the following:

a. Selecting a sample of transactions from the Project Manager’s and CRESS accounting records and reviewing supporting documentation to ensure transactions were approved in accordance with policy and correctly recorded in the accounting records.

b. Examining selected Project Manager’s monthly reconciliation

reports and evaluating the nature of reconciling items identified and whether they were sufficiently resolved in a timely manner.


c. Reviewing Project Manager and CRESS accounting records to determine if they are complete with respect to inclusion of all transactions.

d. Interviewing Project management and CRESS staff as necessary.

e. Performing other audit processes as needed.

f. Providing final reports to CRESS Director of Architecture and

Construction.


a. Providing reports and documentation to the auditor as needed. b. Responding to auditor inquiries during audit fieldwork. c. Responding to audit findings and implementing recommendations

that pertain to Project Manager records.

4.) CRESS staff is responsible for the following:

a. Managing the capital Project audit. All correspondence will be coordinated through a designated CRESS staff member and all follow-up actions will be tracked by the CRESS staff member to verify completion.

b. Providing supporting documentation requested by the auditor that

is necessary to perform the audit process. c. Responding to inquiries of the auditor during audit fieldwork. d. Providing written responses to audit findings and implementing

audit recommendations pertaining to Project management.

e. Provide audit report and results to CRESS Director of Architecture & Construction.

5.) Audit Reports – Auditor will provide a written report providing detailed

explanations of findings and recommendations at the conclusion of the audit and issue the report to the CRESS Director of Architecture and Construction and Director of Capital Construction.


APPROVED: DATE:

4.9 Project Closure Page 1 of 5



Policy #: 4.9 Policy Title: Project Closure Process

Category: Project Accounting Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to describe the process for the accounting close of a Project. Policy Statement:

1.) The CRESS Sr. Financial Analyst monitors the Monthly Financial Capital Report for completion dates and follows up with Project Managers regarding Project status.

2.) The Project Manager should send letters to all Project vendors informing them

that the Project will be closed as of a specified date and that all invoices should be paid prior to that date. Please refer to Figure 4.9a – Letter to Vendor Notifying of Project Closure Date for a sample letter template. This can be sent electronically to the Project Manager, by requesting the template from the Assistant to the CRESS Director of Architecture & Construction.

3.) After a Project is closed, no additional expenditures can be charged to the

Project. 4.) The Project Manager will complete and sign the Project Closure form (see

Figure 4.9b – Project Closure Form) and obtain the signature of the representative of the user group for whom the Project was completed.

5.) After the signature of the representative of the user group for whom the

Project was completed is obtained, the Project Manager will submit the completed Project Closure form to the CRESS Sr. Financial Analyst.


6.) The Project Manager then submits the Project Closure form to the CRESS Sr. Financial Analyst.

7.) The CRESS Sr. Financial Analyst will obtain the approval, via signature, of the

CRESS AVP/Director and VP of CRESS on the Project Closure Form.

8.) After the Project Closure form has been completed and approved, the CRESS Sr. Financial Analyst will send the completed and signed Project Closure form to MHHS Corporate Accounting where the Project will be closed in the Lawson Accounting System and transferred to a fixed assets account. Any remaining funds will be transferred to the Memorial Hermann General Fund.

9.) The CRESS Sr. Financial Analyst will notify the Project Manager and the CFO

of the Facility in which the Project was completed that the Project has been closed.

APPROVED: DATE:


4.9a Letter to Vendor Notifying of Project Closure Date

MEMORIAL HERMANN HEALTHCARE SYSTEM Construction, Real Estate and Support Services

January 1, 2006 Vendor Name Street Address City, State, Zip Attn: Accounts Receivable RE: FINAL PROJECT BILLING Project Name Facility Name MHHS Project #9999999 Please be advised that January 15, 2006 is the scheduled date for closure of the Project Name Project. Final invoices are due to the Project manager, ________, before this date. Please advise all of your subcontractors accordingly. Sources for payment are not accessible once a Project is formally closed. Memorial Hermann Healthcare System will not pay any invoices submitted for this Project after the scheduled closure date. Thank you in advance for your attention to this matter. Sincerely, Project Manager Company Name


cc: CRESS AVP/Director CRESS Sr. Financial Analyst Project File

Figure 4.9b Project Closure Form


MEMORIAL HERMANN HEALTHCARE SYSTEMCONSTRUCTION, REAL ESTATE AND SUPPORT SERVICES

PROJECT CLOSURE FORM

CORP: PROJECT #

PROJECTNAME:

LOCATION

COST CTR:

ARCHITECT: CONTRACTOR:

COMPLETION/CANCELLATION AGREEMENTThe work performed under this contract has been reviewed by the tenant or user group and has been found to be readyfor occupancy. All warranties/guarantees will be effective as of the date stated on the Certificate of Substantial Completion. A list of items to be completed or corrected by the contractor is attached hereto.

IN-SERVICE DATE:

CANCELLATION DATE:

APPROVALS

Department Director Date Sr. Financial Analyst DatePaul Shearon

Project Director Date Vice President, Construction, DateReal Estate and Support ServicesMarshall Heins

PROJECT BALANCE $ ____________________________________

5.1 External Project Team Procurement Page 1 of 4


Policy #: 5.1 Policy Title: External Project Team Procurement Process Category: Team Procurement Processes Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Introduction to the Selection Process A. External Team Selection and Timing

1.) The process of consultant and contractor selections can be a time consuming and complex process. The timing for selection of consultants/contractors may vary from project to project; however, the timing for selection should in general follow these guidelines:

a. Functional Programmer - Assuming the project is large enough to warrant

the services of a functional programmer, the selection thereof is the first key step to the development process. In some cases, a project will be small enough that the architect can provide adequate programming services. On a large, complex healthcare project it is common to need the services of a functional programmer who specializes in this work. The programmer must be selected early enough to provide the architect with the foundation of the schematic design. Therefore, based on a desired design schedule, work backward from the desired start of schematics to determine when the programmer must be engaged.

b. Architect/Engineer (A/E) - For the purposes of this discussion, it is

assumed that A/E selection includes master site planning, MEP design, structural design, civil engineering, and landscape design. The A/E team should generally be selected during the latter stages of the programming phase. This will allow input from the A/E team into the program and for a smooth transition into schematic design.


c. Equipment Planner - The equipment planner must provide information to the A/E team and can be crucial to finalizing the budget for a large project. The A/E team will need equipment information during design development. Therefore, the equipment planner should be selected shortly after the architect such that major fixed equipment information can be compiled before the A/E team gets very far into design development.

d. Telecommunications Consultant - The telecommunications consultant will

provide a wide variety of information pertaining to the way verbal and non-verbal communication will be transmitted in the new project which in turn may have profound impact on the schematic layout. All too often the telecommunications element of the project is introduced well into the design process. The potential to include communication systems in the proximity equation when laying out spaces should not be overlooked as modern systems are capable of saving steps, reducing staffing requirements and minimizing the need to meet physically with someone to communicate effectively. The telecommunications consultant should be selected shortly after the selection of the architect.

e. Interior Design/Signage and Graphics Consultant - The interior

design/signage and graphics consultant should be selected by the end of the schematic design phase to assist in the aesthetic development of the finish spaces. The scope of services provided by the interior designer should be well defined as to not to conflict with the services being provided by the architect. Many times the interior design consultant will also provide the signage and graphics; however, there are separate firms that specialize in the design and manufacturing of exterior and interior signs that may be more appropriate for the scope of the project.

f. Geotechnical Engineer/Materials Testing Firm - The geotechnical

engineer (GE) is required in order to provide soils and foundation design information to the A/E at least by the end of schematic design if not earlier. It is usually desirable for the geotechnical engineer who performs the site investigation to be the same as who provides subsurface inspection during construction. Most inspection firms can also provide materials testing services. It is not imperative to select the inspection/testing firm in conjunction with the geotechnical engineering firm. Usually the design is not far enough along at the time the GE is selected to obtain firm and reasonable pricing for inspection and testing. Selection of an inspection and testing firm can occur later, just prior to start of construction.

g. Preconstruction Contractor (PC) - It is advantageous to select the PC as

early as possible and, at the latest, upon completion of schematic design. Then the PC can comment on the schematics and provide pricing for same.


h. Construction Contractor - Obviously, engagement of a construction contractor depends on many factors, including financing, rezoning, CON issues, design completion, etc. With a given desired construction start date, the contractor should be selected to allow time for contract negotiation and execution, assistance with permitting, and mobilization.

i. Relocation Services Contractor - All projects will not require a relocation

services contractor but as the effort to reduce materials management staff in our client’s facilities accelerates relocation services will become the norm rather than the exception. Very few firms specialize in moving contents of healthcare facilities. Those available are very knowledgeable and can be instrumental in the move planning effort. For this reason the relocation services contractor should be selected shortly after the establishment of the Owner’s Move Coordination Committee.

B. How Firms are Selected

1.) The process by which firms are selected may vary from project to project. On a new project where there are no pre-existing relationships, there are three basic steps to the selection process:

a. Prequalification b. Solicitation c. Evaluation of proposals, and d. Selection

2.) Selection may or may not include interviews. The specific procedures for each of

these steps have been outlined below. It is important to understand the project criteria to use for selection prior to developing request for proposals and evaluating them.

3.) As stated earlier, the criteria for selecting a particular firm may vary between

projects. For The list of firms to be invited and the criteria or selection must be tailored to the specific needs of a project. If an interview process is involved, often the firms selected for interview are all qualified to do the work. The selected firm from an interview session is often only a matter of "chemistry" and a good fit to the specific project.

4.) In general, the selection process will often include evaluation of the following

information relative to each firm:

a. Related experience of firm - size and type of projects b. Location of firm c. Resumes of proposed project team


d. Depth of firm's resources, including personnel, finances, etc. e. Use of subconsultants f. Fee structure, including markups on expenses, subconsultant, and estimated

reimbursables, if applicable g. Unique capabilities of the firm in providing the desired services

5.) While the above represents a generalized list of criteria, it is often necessary to

evaluate voluminous information and ask several questions to extract the data necessary for this criterion.

6.) Several documents are involved throughout the selection process as follows:

a. Request for Qualifications (RFQ) - Outlines qualification data required for

review prior to selecting firms to solicit proposals from. b. RFQ Evaluation - Objective format for evaluating RFQ and developing a

recommendation. c. Request for Proposal (RFP) – Outlines the information required, selection

criteria, scope of work required, calendar of events, etc., to be evaluated for selection for interview. See Policy 5.2 “Request for Proposals” for more information on RFPs.

d. Evaluation of Proposals - Objective format for evaluating and provide

weighted value to data supplied in proposals. e. Invitation to Interview - Letter inviting firm to make a presentation. f. Interview Evaluation - Objective format for evaluating a firms interview. g. Rejection Letter – Letter informing the firms of their unsuccessful status in

the various stages of the process. This letter should be sent at each stage of elimination.

h. Acceptance Letter – Letter to successful firm indicating their successful

status in the various stages of the process. This letter should be sent to the successful firms at the various stages of the project. The final letter would be to the selected firm.

DATE: APPROVED:

5.2 Request for Proposals Page 1 of 23



Policy #: 5.2 Policy Title: Request for Proposals and Bidding Phase Category: Team Procurement Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to outline the proper process that a Project Manager should follow when initiating and evaluating a Request for Proposal (“RFP”). Policy Statement:

A. Request for Proposals

1.) Proposals are required for the following:

a. Architect Services b. Consultants c. Medical Equipment Planners (MEPs) – Proposal should include

performance standard requirements d. Graphics e. General Contracting

2.) The Project Manager should prepare a Request for Proposal (“RFP”). See

Figure 5.2a – Sample General Contractor RFP for format template.

3.) No RFP should be sent to a contractor/consultant without a contract. See Policy 6.1 - “Contract Types” for the appropriate contract for a given situation.

4.) No RFP should be sent to potential bidders with the “A701 – Instructions to

Bidders”.


5.) All proposal responses should include estimated reimbursable expenses, which are to be documented on purchase requisition.

6.) If the party to whom the RFP/contract is sent, has issue with the contract,

the party should indicate within the RFP response that they “accept the contract with no exceptions” or note specific exceptions in the RFP response.

B. Bidding Phase

This phase is used to secure the CM guaranteed maximum price (GMP), or a General Conditions (GC) lump sum bid and to provide oversight of all bid solicitation and procurement processes. Advertisement, availability and distribution of documents are key components of accurate subcontractor bidding. The responsibility for marketing the project to subcontractors and distribution of documents lies with the CM/GC; however, the Project team should be responsible for authorizations to the A/E for sufficient numbers for documents. Adequate bidding times, in accordance with the Master Schedule, should be allowed based on the complexity of the Project. When the preferred method of General Contracting Method is used, the Owner/Project Manager will solicit bids directly from Contractors and will control the bid process. When a Construction Management Delivery Method is incorporated and prior to receipt of bids, the Project Team should be assured that the CM has an organized and efficient process for capturing the best value from all bidders for incorporation with the guaranteed price. Sufficient time should be discussed and agreed upon from the date of receipt of the subcontractor bids to the actual presentation of the GMP. The presentation of the GMP should contain sufficient detail to compare with previous budgets. The Project Team and planning resources should be permitted to review bid tabulation and other qualification information and actual bids to ascertain agreement with the CM regarding bidder/primary recommendation. Unless otherwise waived for the Project, the CM will require all major subcontractors to provide appropriate performance bonds. Consideration for a waiver may be given to the CM for bonding of the overall project if sufficient safe guards are in place to ensure the Owner’s payments flow promptly to subcontractors. Ultimately, the decision to bond a project or not comes down to an assessment of risk and the tolerance or risk on the part of the Hospital Facility. With the cost of bonds adding .5% to 2% of construction cost, the advantage of waiving the bond is clear. However, prior to making this decision, the Project team, planning resources, and the Hospital Facility representative should discuss this and evaluate the many relevant factors: proposed cost of the bond, current market conditions, financial condition of the CM and major subcontractors, their backlog, etc. Consensus should be gained and then the decision implemented.


What follows is a general overview related to insurance and bonding during the bidding process, for further information regarding Contractor Insurance Requirements; please refer to Policy 6.3 “Insurance and Bonding”. Within the contract and bidding documents, it is common practice to require various bonds and insurance. They are usually provided by the contractor within his/her bid price. The bonds required are Bid Bond, Performance Bond and Labor/Material Bond. Insurances are usually general liability insurance (claims made on Occurrence Form) which covers premises and operations, lightning, extended coverage, vandalism and malicious mischief. Finally, workman’s compensation insurance is required.

C. Bond and Insurance Types

1.) Bid Bonds - A bid bond warrants that a selected bidder will execute the construction contract and if required, furnish a performance bond. Generally, governmental or public agencies, who are required by law to take public bids and who usually take the “low” bidder, require bid bonds. Some private owners require a bid bond but a licensed surety does not have to be used as it does for public work. Cash, certified or cashier’s check, bank draft or money order are acceptable bid securities in a private owner situation.

A bid bond can be a lump sum or a percentage of the contractor’s based bid. The bid bond is a mere formality. The surety company executing the bond has done most of its underwriting and investigation for the bid bond so that by the time a performance bond is to be issued, all information is available.

2.) Performance Bonds - The general conditions of the contract for construction AIA A201-1987 Article 11.4 states that “The Owner shall have the right to require the Contractor to furnish bonds covering faithful performance of the contract and payment of obligations arising thereunder”. The performance bond is issued after a proposal has been accepted. It binds a surety company to complete the construction contract if the Contractor defaults. It guarantees that the work will be completed in accordance with the plans and specifications and at the contract price. The performance bond protects the Owner only to ensure completion of the Project. It does not guarantee to creditors of the Contactor that unpaid obligations are directly covered.

3.) Labor and Material Payment Bonds - The labor and material

payment bond protects from liens or suits arising out of the original Contractor’s failure to pay for labor (subcontractors) and material (manufactured supplies). Usually the labor and material payment bond


is issued in conjunction with the performance bond. The labor and material bond allows the Owner to take possession of a lien free project on completion. It is normally issued for the same coverage as the performance bond. Occasionally a combination “performance and payment bond” is asked for in lieu of two separate bonds. To be sure of adequate protection, it is recommended that the bonds be separate and not combined.

4.) Builder’s Risk Insurance - Builder’s Risk Insurance purchased by the

Contractor protects against physical damage to a building or a structure and equipment to be installed or incorporated in the structure during the course of construction. The most common and accepted type of Builder’s Risk Insurance is a Completed Value Form insuring the Project for the full contract price or at least the full value of all destructible work. Normally a reduced rate is charged for this form of insurance since the full value is not at risk until actual completion of the contract. Another method for providing Builder’s Risk Insurance is on a reporting basis for Projects with unusual construction schedules. An example would be a building complex involving several structures that are not directly exposed to each other.

5.) Liability Insurance - Commercial general liability insurance purchased

by the Contractor covers against claims arising out of:

a. Premises owned, rented, leased or used by the Contractor and for operations such as actual construction work

b. Operations performed by subcontractors and sub-subcontractors c. Bodily injury and property damage which occur after the

operations or work have been completed d. Products manufactured, sold or distributed e. Broad Form Property Damage Liability which modifies the old

care, custody or control exclusion and provides coverage for real property considered in the Contractor’s care, custody or control

f. Damage by fire to premises rented or leased to the insured

Contractor if the fire damage results from the Contractor’s negligence

g. Bodily injury or damage to property lease agreements, easement

agreements and permits required by cities, counties and other public entities


h. “Personal Injury” claims defined in the policy as claims for false

arrest, detention or imprisonment, malicious prosecution, wrongful entry or eviction, libel, slander and oral or written publication of material that violates a person’s right to privacy.

There are two (2) versions of the General Liability policy. The “Occurrence” form and the “Claims Made” form. The coverage is identical under both policies. The different is the “triggering” of coverage. The “Occurrence” form uses the date of the injury or loss as the “trigger”. With this form the Contractor is assured that protection will be available for claims made at any time in the future if the injury or damage occurs during the policy period. A “Claims Made” policy is triggered when the claim is made against he insured rather that when the covered injury or damage occurs.

6.) Once the Project team is ready to recommend approval of a guaranteed price, a formal amendment is prepared. This amendment to the CM contract should fully incorporate, at a minimum, the following:

a. Guaranteed maximum price b. Revised set of contract documents with a specific list attached c. Revised contract price and appropriate breakdown d. List of the major subcontractors e. Updated schedule with any contract schedules specifically

addressed in the body of the contract f. Updated risk assessment requirements including insurance and/or

adequate modifications that may be required. 7.) The architect and/or the contractor are not invited to the bid opening

and no details of the bid are discussed until a decision to awards is made. Bids should be received and opened at MHHS. All bids are privately opened.

D. Letters of Intent and Notices to Proceed

1.) Letters of Intent or Notices to Proceed need to be signed off by the

CRESS Director of Architecture and Construction or the appropriate person at CRESS. This is necessary because CRESS policies do not permit the Project Manager to authorize funds on behalf of MHHS.

APPROVED: DATE:


Figure 5.2a – Request for Proposal (SAMPLE)

MEMORIAL HERMANN HOSPITAL SYSTEM

REQUEST FOR PROPOSAL FOR

GENERAL CONTRACTOR

PROJECT:

MEMORIAL HERMANN MEMORIAL CITY HOSPITAL HEART CENTER

HOUSTON, TEXAS

August 12, 2004


TABLE OF CONTENTS

1. SCOPE OF PROJECT

2. SCOPE OF SERVICES

3. PROJECT TEAM

4. AGREEMENT BETWEEN OWNER AND CONTRACTOR

5. PROPOSAL PROCEDURES / SUBMITTAL DUE DATE

6. PROJECT SCHEDULE

7. GENERAL CONDITIONS DEFINITION

8. PREAPPROVED SUBCONTRACTORS & VENDORS

9. PROPOSAL LETTER FORMAT

10. PROJECT COST WORKSHEET

11. LIST OF PROPOSED G.C. SUBCONTRACTORS

12. OWNER SUPPLIED OR ASSIGNED SUBCONTRACTORS, VENDORS OR

EQUIPMENT


1. SCOPE OF PROJECT

The project includes 3 stories (Levels 7, 8 & 9) approximately 90,000 S.F. of medical interiors, including M.E.P. systems, and finishes within an existing 9 story hospital building. Levels 7, 8 & 9 are currently in shell condition, with some M.E.P. distribution of which a portion (in accordance with the contract documents) will have to be relocated. FF & E/ medical equipment is NOT part of this request for proposal. General Contractor Services will include all work in accordance with the plans and specifications as issued for the project.


2. SCOPE OF SERVICES

This Request For Proposal (RFP) seeks to identify a General Contractor for the Memorial Hermann Memorial City Hospital Heart Center (MHMC). The General Contractor (GC) will be required to work in conjunction with the owner’s representatives and the architect to accomplish the work outlined. The selected GC will be expected to enter into a modified AIA A111 agreement. No further modifications to the agreement will be accepted. The GC will work with Memorial Hermann Memorial City Hospital’s designated program manager, Irvine Team, to ensure that the construction efforts adhere to the quality, cost, and schedule objectives of the project. The scope of services for the GC will include those services traditionally performed by a GC and as referred to within the agreement between owner and GC, in addition to the following:

1. Perform the services outlined in the agreement between owner and GC for the construction of the MHMC project in a manner acceptable to the owner and in keeping with the financial resources of the owner.

2. Agree that your firm is familiar with MHMC best practices standards before bidding on the project and identify any discrepancies on the documents which may conflict with the owner’s best practices standards for all components of the building.

3. Work closely with the project team to ensure resources are wisely allocated and rework is not necessary.

4. Provide qualified project staff with the necessary experience to ensure the successful execution of the work in a safe, quality-focused, cost effective manner within the scheduled time frames.

Listed below are some of the areas the GC will provide services on the project;

A. Coordinate with MHMC designated program manager (Irvine Team) and architect

(Morris Architects) in the successful execution of the project. B. Provide a complete review of the construction documents and examination of the site

prior to start of construction and to the best of your abilities as an experienced GC firm assure the owner that the documents do not conflict with one another, that they are free of errors and omissions and that the site and its condition which you have examined in detail is identified accordingly on the documents provided.


(Scope of Services continued) C. Provide a complete code review, MEP and waterproofing systems review of the project

to the best of your ability as an experienced GC and consult or advise the owner on recommendations, conflicts, errors, or omissions that are discovered during the pre-construction review of the project documents.

D. Assist the owner in coordinating the planning and phasing of necessary temporary re-locations or shutdowns due to the progress of the work.

E. Familiarize your firm, staff, and subcontractors or suppliers with MHMC best practices, and safety policies and assure compliance to those policies.

F. The GC agrees to enter into an owner contractor agreement as qualified within this RFP, and agrees to meet the guaranteed maximum price, scheduled completion date and the quality and safety requirements of the project.

G. The GC agrees to accept the role of the owner’s program manager (Irvine Team) as the project team leader and the GC will work thru Irvine Team as the owner’s designated representative and primary contact.

The GC understands that the owner will monitor the progress of the work and that the owner will evaluate the success of the project based on the ability of the GC to clearly communicate throughout the project with the other members of the project team and the GC ability to perform the work in a quality like and safe manner within the projects schedule and agreed-to GMP.


3. PROJECT TEAM

At the present time the project team for the project includes the following parties: All inquires should be directed to the Owner’s Representative / Project Manager Owner: Memorial Hermann Hospital System System Contact: Mr. Adam Lane

Director of Capital Planning & Asset Development Memorial Hermann Healthcare System Telephone: (713) 448-5090 Fax: (713) 448-5373 Project Manager: Mr. Chris Kay (Owner’s Representative) Irvine Team Telephone: (713) 840-1880 Fax: (713) 840-1891 E-Mail: [email protected] Architect: Mr. David Asaud, Project Architect Morris Architects Telephone: (713) 622-1180 Fax: (713) 622-7021 M.E.P.S. Engineer: Carter Burgess

Structural Engineer: Haynes Whaley & Associates, Inc.

Graphics: FD2S, Inc.


4. AGGREEMENT BETWEEN OWNER AND CONTRACTOR

A standard AIA document, modified by the owner to meet its needs will be utilized. Refer to the attached copy. The selected GC is expected to have reviewed this agreement in detail prior to submitting their response to the owner’s RFP and has included any and all proposed qualifications to this agreement. The owner will evaluate qualifications proposed and will take such qualifications into account when determining a final selection for GC on the project.


5. PROPOSAL PROCEDURES

The purpose of this Request For Proposal is to select a GC on a competitive basis to provide total construction services to accomplish the successful execution of the work as shown within the contract documents. The successful participant will be expected to work with the owner, its representatives including, but not limited to, Irvine Team and Morris Architects to help accomplish the project with satisfactory levels of quality, cost effectiveness and the minimum time consumption or time disruption to the owner’s existing facilities. The successful participant is requested to indicate a stipulated fixed fee and stipulated fixed general conditions cost for the project. The guaranteed maximum price for the cost of the work will be fixed upon owner acceptance of the respondent’s proposal including, but not limited to, contractors proposed subcontractors for the project. Respondents to the RFP are requested to provide (in addition to their stipulated fees, stipulated general conditions, and GMP on the cost of the work) a project schedule identifying by calendar days the construction, commissioning and post construction close out phases of the work and to include any and all critical milestone dates. In addition to fees and schedules the owner’s acceptance of proposals will be based significantly on the participants past experience, current staffing being proposed, and ability to be a productive team member who can provide input beneficial to the project and the proven ability to meet an aggressive schedule that will be required by the owner.

ALL PROPOSALS MUST INCLUDE THE FOLLOWING IN THE ORDER AS SHOWN:

A. A brief summary regarding the history and milestones of your firm. B. A fully executed AIA qualification statement. C. Recent professional and financial references (including a letter from your bonding

company stating that if selected bonding is available). D. A record of all litigation that your firm is or has been involved with during the last five

years and including this fiscal year. E. A history of both insurance claims and insurance reserves for open claims against your firm

during the last five years in excess of $10,000.00 along with proof of insurance. F. Information on 3 to 5 recent representative projects including medical facilities similar in

scope within the State of Texas including: • Project name and location, with photos; • Client reference, name and contact information; • Project scope, size, cost and completion schedule.

G. Identify and describe the key members of your team being proposed, including an organization chart. Include resumes, photos, and references. Individuals should include at a minimum.

• Project executive • Project manager • Project superintendent • Project engineer

(Proposal Procedures continued)


H. Provide any indication of ownership in any companies that may participate in any portion or capacity with the project.

I. A phasing and logistics plan for the project.

ALL PARTICIPANTS SHALL RECOGNIZE AND CONFORM TO THE FOLLOWING STIPULATIONS REGARDING THE SUBMITTAL OF THIS PROPOSAL:

A. Each participant, by submitting a proposal, represents that it has read and understands this

Request for Proposal and that his or her proposal is made in accordance herewith on or before 31 August 2004 @ 2PM.

B. Participants shall promptly notify Chris Kay of any ambiguity, inconsistency or error which they may discover upon examination of the Request for Proposal.

C. All clarifications, interpretations, exceptions or qualifications to this Request for Proposal will be made to Chris Kay at the time of receipt of this Request for Proposal. Any interpretation, correction, or change of the Request for Proposal will be made by a written addendum. Interpretations, corrections or changes of the Request for Proposal made in any other manner will not be binding, and participants shall not rely upon such interpretations, corrections or changes.

D. Proposals shall be submitted on forms identical to the proposal letter included in this Request for Proposal. Proposals shall be typewritten only.

E. Each proposal shall state that the participant is a sole proprietor, a partnership, a corporation or a legal entity. Each copy shall be signed by the person or persons legally authorized to bind the participant to a contract. A bid by a corporation shall give the state of incorporation and have the corporate seal affixed thereto.

F. All proposals shall be submitted with a total of three (3) copies. All proposals will be submitted in a sealed opaque envelope addressed to the party receiving the proposal and shall be identified with the project name. Proposals shall be submitted in accordance with the date and time stipulated. Participants shall assume full responsibility for timely delivery at the location designated for receipt of the proposals. Oral, facsimile, telephonic or telegraphic proposals are invalid and will not receive consideration.

G. These proposals submitted cannot be withdrawn, modified or canceled by the participant for sixty (60) days after the date of proposal submittal.

H. Prior to the time and date designated for receipt of proposals, any proposal may be modified or withdrawn by notice to the Owner at the place designated for receipt of the proposals. Such notice shall be in writing over the signature of the participant. Withdrawn proposals may be resubmitted up to the time designated for the receipt of proposals provided that they fully conform to the Request for Proposal.

I. All proposals will be opened privately. The Owner will not issue proposal results. J. The Owner shall have the right to reject any or all proposals, including but not limited to

those that are in any way incomplete, inconsistent or irregular with respect to the Request for Proposal.


(Proposal Procedures continued)

K. It is the intent of the Owner to award a contract for the project to a responsible General Contractor that offers the best team for the overall requirements of this Request for Proposal. The contract will be executed upon the selection of that team. The Owner shall have the right to waive any informality or irregularity in any proposal received and to accept the proposal which, in its judgment, is in its own best interest.

L. Prior to the commencement of work, the successful participant shall furnish evidence of insurance covering the faithful performance of the Contract.

M. Participants shall return their copy of the Request for Proposal with the proposal response.

SELECTION OF THE GC WILL BE BASED ON THE FOLLOWING CRITERIA:

A. The qualifications and proven experience of the proposed firm. B. The experience of the proposed firm in the construction of medical facilities. C. The ability of the construction team to produce excellent proven results and maintain cost

and schedule. D. The fee and general conditions based on a stipulated fixed dollar amount. E. The project schedule phasing and logistics plan. The Contractor should include a two week

Owner negotiations/approval period at the beginning of the project for contract execution. F. The demonstrated ability/capacity of the firm to work effectively with the project team and

owner’s representatives. G. The respondent’s safety record. H. The respondent’s financial and bonding resources.

Please note that the owner assumes no obligation for the costs your firm may incur in preparing and submitting this proposal. Any materials submitted in connection with this process will become the property of the owner.

RFP SUBMITTAL DUE DATE: Submit (3) three signed originals by 2PM CDT 12 August 2004 to: Mr. Adam Lane Director, Capital Planning and Asset Development Memorial Hermann Healthcare System 9401 SW Freeway, Ste 1103A Houston, TX 77074 Submit (1) copy of original by noon CDT 13 August 2004 to:

Chris Kay Irvine Team

One Riverway, Suite 1800 Houston, TX 77056


6. PROJECT SCHEDULE

It is expected that the construction phase will begin immediately after the owner’s notice to proceed is issued. The owner requires the project to be completed within 6 months from the date of the owner’s notice to proceed. The respondent to this RFP should include a construction schedule, and logistics plan illustrating the proposed phasing and sequence of the work to achieve the schedule goal set forth in this proposal.


7. GENERAL CONDITIONS DEFINITION GENERAL CONDITIONS OUTLINE The following items of work will be considered general conditions and should not be included in the cost of work. The owner intends to award a contract for construction services based on a fixed fee and fixed general conditions with the cost of work to be a guaranteed maximum price. GENERAL CONDITIONS SHOULD BE LIMITED TO: (All other scopes of work excluding fee should be included in the cost of the work as identified by the contract documents) Miscellaneous Reimbursables:

• All temporary job site facilities (including installation & maintenance, etc.) • Office supplies • Office equipment • Telephones/Facsimile/Computers/Copiers • Project photos • Miscellaneous office / administrative expenses • Pre-construction services (including, but not limited to, estimating and purchasing)

Staff Reimbursables:

• All G.C. project staff (including home office staff involved with project) • Staff burdens / Fringes, Taxes, and Insurance • Staff vacations, relocation fees, bonuses or other expenses/benefits • Permits / Insurance, Sub bonds, Association fees • SubGuard or SubBonds • Builders risk insurance • Contractors equipment insurance (if applicable)

Project Support Costs:

• Safety programs and expenses (including safety equipment and supplies) • Surveying and equipment • Security • Signage • Other consultants (please specify) • Staff autos, fuel, maintenance, tires, etc. • Project accounting and cost support • Miscellaneous printing costs (after permit documents) • Scheduling • Home office support services (equipment and labor) • Cell phones and radios

8. PRE-APPROVED VENDORS / SUBS


Memorial Hermann Healthcare System has pre-approved the following vendors / subcontractors to be used for seeking bids for the following scopes of work for The Memorial City Heart Center Project. HVAC LOW VOLTAGE / CABLING Gowen Mechanical Fisk Way Engineering MCA T.D. Industries Letsos Mechanical PLUMBING SECURITY / CCTV & ALARMS Humprhries Fisk Gowen Mechanical SecureNet Way Engineering Siemens T.D. Industries MCA Access & Video Integration D/A MidSouth ELECTRICAL CONTROLS To Be Assigned MidWest Electrical Fisk Electrical AV Melton Electrical To Be Assigned Capp Electric Merit Electric MILLWORK To Be Assigned 8.1 ASSIGNED VENDORS, SUPPLIERS, SUBCONTRACTORS

It is Memorial Hermann’s intent to assign the following trades to the successful general contractor.

• Audio visual equipment subcontractor • Architectural woodwork and millwork subcontractor • Decorative glass subcontractor • Building controls subcontractor


9. PROPOSAL LETTER FORMAT _____ August 2004 Adam Lane Director, Capital Planning and Asset Development Memorial Hermann Healthcare System 9401 Southwest Freeway, Suite 1103A Houston, Texas 77074 RE: Memorial Hermann Memorial City Hospital Heart Center General Contractor Services Dear Mr. Lane: We are pleased to submit our proposal to you to provide General Contractor Services. Our proposal is based on the Request For Proposal issued on July 23, 2004. Should our proposal be accepted, we will enter into a contract for the work under the terms and conditions requested within the RFP. We propose the following: 1. A fixed fee amount of: $____________________

2. A fixed general conditions amount of: $____________________ 3 A guaranteed maximum price on the cost of the work of: $____________________ (Excluding Fee & GC costs listed above) 4. A scheduled completion of __________ calendar days 5. A ______% markup on changes to the work (that effects the scheduled completion of the project). 6. A proposed shared savings of __________ to the owner, and __________ to the GC.

7. A P&P bond cost of: $____________________

• Please refer to the attached schedule of values and list of proposed subcontractors as requested within the RFP.

• Please refer to our attached proposed project phasing and logistics plan along with our project team organization chart.

• Also enclosed herewith are the following items of information requested in the Request For Proposal.

1. A brief history of the firm; 2. An AIA qualification agreement; 3. History of litigation over the past five years; 4. Insurance claims and reserves for open claims over the past five years;


(Proposal Letter Format continued) 5. Information on similar projects; 6. A listing of ownership interests (if any) in any firms that may participate in the project. Also, returned herewith is the original Request For Proposal document. This proposal will not be withdrawn or amended for a minimum of sixty (60) days from the date submitted. Thank you for the opportunity to submit this proposal. Yours Truly, ___________________________________ ___________________________________ Company Officer (Title) Notary ________________________________________________ Corporate Seal


10. PROJECT COST WORKSHEET General Contractor Proposal Schedule of values proposal form "Cost of the work" PROJECT NAME: _______________________________________ Proposers Name: _______________________________________ Date: _________________________________________ AMOUNT $ Demolition Concrete Steel / Misc. Metals Drywall / Framing Water Proofing / Roofing Rough Carpentry Lath & Plaster Glass Glazing Millwork / Finish Carpentry Doors, Frames, Hardware Terrazzo Tile Finishes VCT Carpet Base Paint / VWC Wallguards / Rails Wall Protection – Wains Coating Specialties Security Fire Sprinkler System Plumbing Electrical Low Voltage Fire Alarm HVAC Controls

The Total GMP on the cost of work is: _________________ General Contractors Proposal


11. LIST OF PROPOSED SUBCONTRACTORS General Contractor Proposal Proposed Subcontractor Listing PROJECT NAME: Memorial Hermann Memorial City Hospital Heart Center Proposers Name: _____________________________________________________________ Date: _________________________

• Subcontractor • Subcontractor • Subcontractor • Subcontractor • Subcontractor


12. OWNER SUPPLIED OR ASSIGNED SUBCONTRACTORS, VENDORS, OR EQUIPMENT To be provided by owner, coordinated by G.C. or assigned to G.C. (Owner’s option)

• Millwork will be assigned to the successful General Contractor. • Medical equipment will be owner furnished and owner installed, with the exception of medical

equipment listed in the contract documents as G.C. installed. • Building control systems will be assigned to the successful general contractor. • Banquet seating will be assigned to the successful general contractor.

• Decorative art glass will be assigned to the successful general contractor. • Non medical furniture will be supplied and installed by owner. The GC is to facilitate the

coordination of all FF&E.

5.3 MHHS Bid and Rebid Policy Page 1 of 3



Policy #: 5.3 Policy Title: Policy on Bid and Rebid for Products and Services Category: CORPORATE ADMINISTRATION Original Date: 05/22/2003 Last Review Date: 4/27/04 Supersedes: 5/22/03 Policy Purpose: To ensure that Memorial Hermann is receiving the best valued for products and services being provided to Memorial Hermann by its vendors. For products or services where the annualized dollar volume to be paid by Memorial Hermann will be greater than $100,000, the Chief Financial Officer (CFO) of MHHS shall formally evaluate whether to Bid or Rebid for these products or services at least every 3 years. The CFO shall also present the results of the Bid or Rebid evaluation to the Audit Committee of the Board on a quarterly basis. Contracts negotiated by the Group Purchasing Organization (VHA) will be excluded from this process because the VHA already adheres to a Bid/Rebid process. Policy Statement:

A. Definitions 1.) Bid/Rebid: Obtain a proposal from at least three (3) providers of the

particular product or service, based on a formal and consistent request for proposal using a standard format from the CRESS department.

2.) Items Excluded from this Policy: Minor Construction, Minor Repairs and

Maintenance (unless the total dollar amount for an individual Vendor exceeds $100,000 per year) and Utilities.

3.) Major Vendors with multiple products: Major healthcare vendors often

provide more than one product. When this is the case, the Bid/Rebid process will apply to major product categories where the $ volume of purchases exceeds $100,000 per year.


B. Procedure

1.) To initiate this policy, the CFO shall convene a group to screen the complete population of vendors (not excluded above) and product categories from Major Vendors to determine a suggested schedule and timeline for vendors and products to undergo the rebidding process. This schedule and timeline shall then be reviewed by the Executive Council. Subsequent to the Executive Council’s review and approval, the CFO shall present the prioritized schedule and timeline to the Audit Committee of the Board of Driectors. Once all applicable vendors and products have been screened and reviewed for Bid or Rebid, applicable vendors and products shall be screened for review on a rolling 3-year basis.

2.) MHHS’ Purchasing Department shall maintain a master list of providers

of products or services and related contracts and contract terms.

3.) Each quarter, the Purchasing Department shall prepare a list of vendors and products due for review, sorted in descending order by annual dollar volume and provide this list to the CFO for screening and review. This list shall include the following categories:

a. Name of Vendor b. Category of Vendor, i.e. Consulting, Legal, Outsourced Pharmacy c. Services of products provided d. Date of latest Bid or Rebid e. Date of contract, length of term and other pertinent contract

provisions f. Estimated total annual $ volume of business done with MHHS by

the Vendor g. Estimated total annual $ volume of major product where the

vendor is a Major Vendor with multiple products 4.) Based on the MHHS Executive Council review and recommendation for

Bid or Rebid and subsequent review and concurrence from the Audit Committee, the AVP/VP responsible for the product or services shall proceed with the request for proposal process. MHHS Corporate


Purchasing Department shall assist in all request for proposal Bid or Rebid processes to ensure consistency and independence.

5.) Prior to entering into a purchase agreement for products or services, the

AVP/VP shall obtain approval of MHHCS’ Legal department.

6.) Unless otherwise approved by the Executive Council, no contractual arrangement to purchase products or services shall have a term longer than 3 years.

APPROVED:

Carol E. Aulbaugh Senior Vice President and CFO Kenneth J. Wine Executive Vice President and COO DATE: April 27, 2004

6.1 Contract Types Page 1 of 2


Policy #: 6.1 Policy Title: Contract Types Category: Contract Development Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to illustrate the different types of construction contracts currently utilized by Memorial Hermann Hospital System. The Project Manager should consult with CRESS Management to determine which contract should be used for the Project in which they are to manage. Current versions of each contract form are kept on file within the CRESS Department and can be obtained by requesting the appropriate form from CRESS Management. Policy Statement:

A. A101 – Standard Form of Agreement Between Owner and Contractor (where the basis of payment is a STIPULATED SUM). This contract form requires the A201 General Conditions form (see below).

B. A107 – Abbreviated Standard Form of Agreement Between Owner and

Contractor for Construction Projects of Limited Scope (where the basis of payment is a STIPULATED SUM).

C. A111 – Standard Form of Agreement Between Owner and Contractor (where

the basis of payment is the COST OF THE WORK PLUS A FEE with a negotiated GMP). This contract form requires the A201 General Conditions form (see below).

D. A121 (with Amendment #1) – Standard Form of Agreement Between

Owner and Construction Manager (where the CM is also the Constructor). This contract form requires the A201 General Conditions form (see below).

6.1 Contract Types Page 2 of 2

E. A201– General Conditions of the Contract for Construction. The A201 General Conditions contract form is for use with the A101, A111 and A121 contract forms.

F. B141 (Part 1&2) – Standard Form of Agreement Between Owner and

Architect (with Standard Form of Architect’s Services).

G. B171 – Standard Form of Agreement Between Owner and Architect for Architectural Interior Design Services.

H. General Consultant Agreement (with Exhibits A&B).

APPROVED: DATE:

6.2 Contract Approval Process Page 1 of 2


Policy #: 6.2 Policy Title: Construction Contract Approval Category: Contract Approval Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to establish guidelines for the approval and execution of construction contracts. Policy Statement:

Contracts may be signed only by the authorized official as designated herein below. The Memorial Hermann corporate party to a contract should be that corporate subsidiary the assets of which are the primary subject of the contract (e.g. the Hospital system for services rendered by or to one or more hospitals, including construction services).

A. Construction Services

1.) Requires same approvals as Purchase Requisitions and Invoices (see

Policy 4.1 – “PO Process” & 4.3 – “Invoice Process”). 2.) Requires additional review of VP of CRESS (A CRESS representative will

forward for legal review). 3.) Project Manager should:

a. Obtain four (4) originals of contracts (one for contractor, Project

Manager, legal and CRESS) and three (3) construction change orders and change directives (one for contractor, Project Manager and CRESS)

b. Verify that budgeted funds are available

6.2 Contract Approval Process Page 2 of 2

c. Prepare purchase requisition, enter the purchase requisition into the Purchase Requisition Log (See Policy 4.1 – “Purchase Order Process”), and attach original contracts, construction change orders and change directives and forward to the CRESS Financial Analyst for processing.

4.) The CRESS Financial Analyst will:

a. Verify budget b. Route contract/Change Order/Change Directive for appropriate

signatures c. Return two signed, executed copies of the contract/Change

Order/Change Directive with the pink copy of the purchase requisition to the Project Manager (who will distribute to the Project Manager files and contractor)

APPROVED: DATE:

6.3 Insurance and Bonding Page 1 of 7


Policy #: 6.3 Policy Title: Insurance and Bonding Requirements Category: Contract Development Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to detail the requirements for insurance and bonding on the part of the engaged Contractor. Policy Statement: CONTRACTOR INSURANCE REQUIREMENT Contractor will keep in force during the course of the contract, policies of insurance covering Worker’s Compensation and Employer’s Liability, Automobile Liability and Commercial General Liability, and if there is design responsibility, Professional Liability, with minimum limits as provided below or as modified by the Contract Documents, if any, with an insurance company licensed to operate in the State where work is being done. Contractor will advise its insurer of its obligations under the contract documents, including indemnification, and will provide contractual coverage as part of its commercial general liability insurance with limits sufficient to discharge its obligations therein set forth. Contractor will furnish, before any work is started, certificates from said insurance companies showing the coverage, limits of liability, and policy expiration dates as required herein. As a condition of performing work as a Contractor with Memorial Hermann Hospital System (MHHS), the Contractor should provide satisfactory evidence of their insurance coverage as follows:

A.) Minimum Scope of Insurance


Coverage should be at least as broad as:

1.) Insurance Services Office Commercial General Liability coverage

(“occurrence” form CG 0001, Ed. 10/1993 or later edition). 2.) Insurance Services office form number CA 0001 (Ed. 12/1993 or later

edition) covering Automobile Liability, Symbol 1 “any auto”

3.) Worker’s Compensation Insurance and Employers’ Liability insurance on forms approved by the Texas Department of Insurance.

B.) Minimum Limits of Insurance Contractor should maintain limits no less than:

1.) Commercial General Liability: $1,000,000 limit per occurrence / $2,000,000 General Aggregate / $2,000,000 Products Completed Operation Aggregate for bodily injury, personal injury and property damage. The General Aggregate limit should apply separately to this Project location.

2.) Automobile Liability: $1,000,000 limit per accident for bodily injury and property damage

3.) Workers Compensation and Employer’s Liability: Providing Statutory Limits for the Sate of Texas and Employers’ Liability with limits of $1,000,000 per accident Bodily Injury by Accident / $1,000,000 policy limit Bodily Injury by Disease / $1,000,000 each employee Bodily Injury by Disease

a) Subcontractors’ Employers’ Liability Limits: $500,000 each accident Bodily Injury by Accident / $500,000 policy limit Bodily Injury by Disease / $500,000 each employee Bodily Injury by Disease

4.) Excess Liability (Umbrella): $10,000,000 per occurrence / $10,000,000 general aggregate / $10,000,000 completed operations aggregate

a) Subcontractors’ Excess Liability (Umbrella) Limits:


$2,000,000 per occurrence / $2,000,000 general aggregate / $2,000,000 completed operations aggregate

5.) Contractors’ Pollution Liability: $5,000,000 each claim / $5,000,000 aggregate

a) Subcontractors’ Contractors’ Pollution Liability Limits: $1,000,000 each claim / $1,000,000 aggregate

C.) Other Insurance Provisions

The policies are to contain, or be endorsed to contain, the following provisions:

1.) Commercial General Liability, Automobile Liability Coverages, and Contractors’ Pollution Liability:

a) MHHS, its officers, directors, shareholders, partners, managers,

members, employees, agents, subsidiaries, and affiliates, and the foregoing’s respective successors, assigns, heirs, estates, and personal representatives collectively called herein, the “Indemnified Parties” are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of the Contractor, general supervision of the work by MHHS, products, and completed operations of the contractor, premises owned, occupied or used by the Contractor, or automobiles owned, leased, hired, or borrowed by the Contractor. The coverage should contain no special limitations on the scope of protection afforded to the indemnified parties.

b) The Contractors’ insurance coverage should be primary insurance

as respects the indemnified parties. Any insurance or self-insurance maintained by the indemnified parties should be excess of the Contractors’ insurance and should not contribute to it.

c) Any failure to comply with reporting provisions of the policies

should not affect coverage provided to the indemnified parties.

d) Completed Operations coverage should be maintained for 10 years after substantial completion of the work.

e) Contractors’ Pollution Liability should include coverage for mold.

2.) Workers’ Compensation and Employers’ Liability Coverage:


a) The insurer should agree to waive all rights of subrogation against the indemnified parties for losses arising from work performed by the contractor for MHHS.

b) MHHS should require an “Alternate Employer” endorsement,

naming the indemnified parties as the alternative employer. 3.) All Coverages:

Each insurance policy required by this clause should be endorsed to state that coverage should not be suspended, voided, canceled by either party, reduced in coverage or in limits except after 60 days’ prior written notice by certified mail, return receipt requested, has been given to MHHS.

D.) Builder’s Risk Coverage

1.) MHHS master property policy (Chubb) automatically affords Builders’ Risk coverage (property coverage only excluding flood) for all Projects $5,000,000 or less. Coverage applies only to locations scheduled on MHHS’s policy. For any Projects requiring Builders’ Risk coverage that exceed $5,000,000 in completed value, a separate Project specific Builders’ Risk is required. Builders’ Risk coverage for Projects that exceed $5,000,000 will be obtained by MHHS. However, at MHHS’s option, Builders’ Risk coverage for Projects exceeding $5,000,000 may be requested to be provided by the General Contractor

The coverage will be subject to policy, terms, conditions, exclusions, and will cover all buildings, structures, and materials to be incorporated into and forming a part of the structure, whether or not such buildings, structures, materials, or real property will have been supplied or made available to the Contractor or subcontractors by MHHS.

2.) The Builders’ Risk Insurance may contain such deductibles as MHHS

may select. The Contractor should be accountable for the first $25,000 deductible each claim arising from loss for all perils including flood, earthquake, and wind. The Contractor should require each tier of subcontractor to be accountable for the first $10,000 deductible each claim arising from loss for all perils including flood, earthquake, and wind. Any deductible amounts remaining after the application of such deductible should be borne by MHHS.

3.) MHHS and/or its insurer(s) will not be responsible in any way for

equipment, tools, construction trailers, and any other property of similar nature of the contractor or its employees or subcontractors which are not consumed in or do not form a part of the completed work.


4.) Any insured loss should be adjusted with MHHS and made payable to

MHHS as trustee for the insureds, as their interest may appear, subject to the requirements of any applicable lender’s clause.

5.) The contractor should agree to waive and should require each

subcontractor to waive all rights of subrogation against each other and MHHS, its officers, and employees for damages caused by fire or other perils to the extent covered by Builders’ Risk Insurance. This waiver should not apply to loss or damage for which contractor, manufacturer, supplier, or vendor has agreed under a guarantee or warranty to make good.

6.) Contractor should report the value, time and means/location of any

transit to MHHS prior to transit or storage. Contractor should be responsible for any loss that is uninsured or underinsured arising out of such failure to notify MHHS.

E.) Acceptability of Insurers

Insurance is to be placed with insurers with an A.M Best rating of no less than “A”, FSC VII.

F.) Verification of Coverage

Contractor should furnish MHHS with certificates of insurance effecting coverage required by this clause. All certificates are to be received and approved by MHHS before work commences. MHHS reserves the right to require complete, certified copies of all required insurance policies at any time. Certificates of Insurance are to be provided annually as evidence thereof of Completed Operations coverage for five (5) years after completion of the work.

G.) Subcontractors

Contractor should include all subcontractors as insureds under its policies or should furnish separate certificates for each subcontractor. All coverages for subcontractors should be subject to all of the requirements stated herein.

H.) Surety Bonds

1.) Not later than ten (10) days from and after date on which a contract between MHHS and Contractor is entered into, Contractor should execute, as Principal, bonds joined into by a Surety Company, acceptable to MHHS as follows:


a) Bonds should remain in-force for and until one year after final completion and final acceptance by MHHS of the work.

b) Surety Company executing bonds should be acceptable to MHHS,

authorized to do business in Texas and acceptable according to the latest list of companies holding Certificates of Authority from the United States Secretary of the Treasury.

I.) Expired Coverages During Term of Contract

If the coverages required herein have an expiration or renewal date occurring during the term of the contract, such renewal certificates are to be delivered prior to the expiration of the existing coverage(s). Each coverage specified herein should be carried until the respective obligations required to be performed have been completed in accordance with the terms of the contract.

J.) Warranty Work

If Contractor or any tier of subcontractor is required to return to the site of the work during a warranty period, insurance should be provided and maintained as required herein.

K.) Vendors, Suppliers, Material Dealers, Off-site Fabricators, Haulers, and Others

The Contractor and each tier of subcontractor should require their respective vendors, suppliers, material dealers, off-site fabricators, haulers, and others who merely transport, pick up, deliver, or carry materials, personnel, parts or equipment or any other items or person to or from the site of the work to maintain Workers’ Compensation, General Liability, Automobile Liability, and if purchased, Umbrella Liability coverages. Contractor should furnish certificates of insurance to MHHS.

L.) Aviation and/or Marine

Should aircraft or watercraft of any kind be used by Contractor or any tier of subcontractor or anyone else on their behalf, Contractor or subcontractor should maintain or cause the operator of the aircraft or watercraft to maintain aircraft or watercraft public liability insurance for bodily injury, property damage including passenger liability in limits of $5,000,000 each occurrence each aircraft or watercraft.

M.) Failure to Provide Certificates of Insurance or to Carry and Maintain Insurance

Failure of the Contractor to provide certificates of insurance and/or carry and maintain such insurance in force as required herein or to require the same of


their subcontractor should constitute an event of default under the contract. MHHS maintains the right to withhold the issuance of the Notice to Proceed, to deny access to the site of the work, or to withhold payments under the contract until MHHS receives proper evidence of insurance as required herein.

N.) Professional Indemnification

Consultants will defend, indemnify and hold harmless the MHHS Facility from all claims and lawsuits, including reasonable legal fees, arising from any and all negligent acts, errors or omissions of the Consultant in the performance of professional services under this agreement, to the extent that the Consultant is responsible directly or indirectly for such losses.

O.) Royalties and Patents Indemnification Clause for Consultant

Consultants will indemnify and hold the MHHS Facility harmless from all liability of alleged or actual infringement of any patent resulting from the use of apparatus or equipment furnished, designed or specified by Consultant or from the use of any process designed or specified by consultant or effected by said apparatus or equipment, and consultant should indemnify and hold the MHHS Facility harmless from and against all costs, legal fees, expenses and liabilities incurred in or about any claim of or action for such infringement; provided, however, that the MHHS Facility promptly transmits to Consultant all papers served on the MHHS Facility in any suit involving such claim of infringement. If, because of actual infringement, the use of such apparatus, equipment design or process is enjoined, Consultant will refund the purchase price thereof in proportion to the length of service uncompleted, and the life of such apparatus or equipment being assumed as five (5) years. Consultant should be required to grant the MHHS Facility a non-exclusive, royalty-free license under patents now or hereafter owned by Consultant covering any machines, apparatus, processes, articles, designs or products included in the Work.

APPROVED: DATE:

6.4 Role of Risk Management Page 1 of 11


Policy #: 6.4 Policy Title: Role of Risk Management Category: Contract Approval Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to detail the roles of the MHHS Risk Management Department and MHHS’ Insurance Carrier in capital construction projects. Policy Statement: A. Role of Risk Management and Insurance Carrier

1.) System Risk Management (Risk Manager and Insurance Specialist) and

Memorial Hermann Hospital System’s (MHHS) Insurance Carrier should be should be notified (and appropriate plans/documents transmitted) during project planning (SD/DD time frame) for kept apprised by the Project Manager (or Facility Engineer) anytime the Facility undertakes the following:

a. All projects that have a TIV (property and equipment costs along with

estimated BI values) of $1 million or greater. b. Projects involving high value equipment such as OR suites, MRI suites,

CT scanner rooms, Catheterization Labs, Central Pharmacy, EDP scanner, etc.

c. All projects, regardless of cost, involving high hazard areas such as

kitchens, Central Plant areas, Central Supply, Laundry, helipads, etc.


d. All new building construction projects (primary building construction features along with fire protection information) that include flood plain information and flood mitigation specifications, if any.

2.) It is not necessary for the two parties to review small head re-locations, small

projects (less than $1 million in TIV) involving patient care rooms, lobby areas, administrative offices, etc.

3.) It is important to provide information to these parties regarding any projects

that fit the aforementioned criteria to ensure that timely comments can be obtained from Risk Management and the MHHS Insurance Carrier so that MHHS can keep coverage in effect for MHHS properties as they change.

4.) Figure 6.4a – Construction Protection Requirements and Figure 6.4b –

Computer Room Protection Requirements contains current Insurance Carrier construction guidelines to help reduce the possibility of having to rework plans based upon the Insurance Carrier’s requirements.

APPROVED: DATE:


Figure 6.4a – Construction Protection Requirements

FOR LOSS CONTROL PURPOSES ONLY CHUBB GROUP OF INSURANCE COMPANIES Loss Control Services 9606 Mopac Expressway North, Suite 925 Austin, TX 78759

CONSTRUCTION & PROTECTION REQUIREMENTS Frame or Ordinary Construction

1.) Buildings of frame or ordinary construction shall be fully automatic sprinklered. 2.) Horizontal fire/smoke areas shall have separation by a minimum of a 3-hr. rated parapeted fire

wall with all openings protected with 3-hr. rated U. L. listed Class A automatic self closing fire doors.

Non-Combustible or Fire Resistive

1.) Non-combustible or fire resistive constructed hospitals should be fully sprinklered. Non-sprinklered hospital buildings shall be 100% equipped with a fire detection system of the products of combustion type.

2.) Guidelines for separation:

• Three (3) hour (as opposed to four (4) hour) fire ratings on masonry walls. ) Dry wall or

gypsum board on metal or wood studs or similar non-masonry construction is not an acceptable fire division.

• Single automatic self-closing 1 ½ hour rated (Class B) fire door protecting all doorways,

stairways, elevator shafts. • Protection of all other openings which penetrate fire walls, floors or ceilings (i.e., penings for

electrical cable, piping, ductwork, etc.) in accordance with the standards set by the appropriate regulatory agency, commission or organizations (e.g., The Joint Commission of Accreditation of Healthcare Organization).

• Two (2) floors subject for FIRE RESISTIVE construction, with two (2) hour cut-offs from floor

to floor. • Four (4) floors subject for NON-COMBUSTIBLE construction, with two (2) hour cut-offs from

floor to floor. New Construction or Building Additions

1.) Construction should be of non-combustible or fire-resistive construction.

Our evaluations, reports and recommendations are made solely to assist the insurer in underwriting and loss control. No warranties or representations of any kind are made to you or any other party. Evaluation for any hazard or condition does not mean that it is covered under any policy. Any reports or certificates we provide in connection with any state-required pressure vessel inspection do not mean that all hazards or conditions were under control at the time of the inspection. Neither we nor the insurer shall be liable to you or any other person for the use of any information provided or statements made by any of our employees or agents during the performance of an evaluation


FOR LOSS CONTROL PURPOSES ONLY 2.) Roof - Class I (Factory Mutual Standard) or non-combustible UL-listed roof assembly should be

specified and must meet the wind load design requirements per ASCE-7(American Society of Civil Engineering).

3.) Fire Areas - Building should be subdivided into fire areas with a maximum of 100,000 square

feet. 4.) Fire walls should be reinforced concrete or masonry 3-hour construction. The walls should be

designed to confirm to NFPA 221. The wall should be freestanding with Class A fire doors protecting all openings and all wall penetrations meeting UL Fire Resistance Standards. The number of openings in the wall should be kept to a minimum. There should be no unprotected steel columns permitted within the firewall. Roof support details at the fire wall junction should be such that collapse of the roof on either side will not affect the integrity of the firewall. Where a roof deck deficient to the Class I FM Standard is utilized, the firewall should be parapeted 3 feet through the roof.

5.) All openings should be protected by fire doors and meet the following criteria:

a. At least a 3 hour rating, UL Listed or FM Approved. b. Installed as per NFPA 80 Fire Doors and Windows. c. To minimize the possibility of sprinkler main rupture due to building settling, metal

sleeves should be used to surround any sprinkler main penetration. These sleeves should have an inner diameter of 1.5 times the outer diameter of the sprinkler main.

d. All wall/floor penetrations should be sealed with UL listed materials to minimize the

spread of fire. All openings (i.e. ventilation ducts, electrical, etc.) should be protected by 3 hour rated UL Listed or FM Approved automatic closing fire dampers.

6.) Water Damage Potential:

a. The surrounding land should pitch away from the building and drains and/or pumps

should discharge the water well away from foundation walls and event levels openings. b. All vital electrical and boiler machinery equipment should be placed at an above grade

level. c. Basement sump pumps, with back flow preventors, should be designed for adequate

capacity and a back up pump should be available on site. d. Pumps should be tied into the emergency generator. e. All remaining equipment and inventory should be placed on shelves or pedestals a

minimum of four inches from the floor and anchored. f. Hydrostatic seal concrete floor slabs and below grade walls.

Fire Protection

1.) Provide sprinkler protection to conform to current NFPA 13.



FOR LOSS CONTROL PURPOSES ONLY

2.) Areas of particular concern should be provided with additional or special fixed extinguishing systems and include:

a. NUCLEAR MEDICINE, MRI’s, CT SCANNERS, X-RAY EQUIPMENT FACILITIES -

Describe the special shielding construction requirements, storage and handling of radioactive isotopes, number & types of equipment, any special fire detection or extinguishing systems.

b. HYPERBARIC OR HYPOBARIC CHAMBERS - Describe the size, construction &

location of the chambers, operating pressures and protection systems. Reference NFPA 99, Chapter 19, Hyperbaric Facilities.

c. KITCHEN AND LAUNDRY FACILITIES - Describe cooking capabilities in the cafeterias

or kitchens and fixed fire extinguishing systems above the equipment and in exhaust hoods. Describe laundry facilities. Include number and type of equipment, particularly dryers. What energy source is used for dryers,steamers and presses? Any special fire protection? References NFPA 96, 82, 54.

d. UTILITIES (ELECTRIC, GAS, WATER), BACK-UP CAPABILITIES, DURATION -

Describe the type of utilities hospital is dependent on, back-up systems, fuel supplies, protection & detection. Describe gas systems of the hospital and the storage & piping methods. References NFPA 99, 70, 100.

e. HELICOPTER LANDING PAD - Describe the construction and location of any aircraft

landing pads – roof top or ground level. Detail fuel storage & refueling arrangements and fire protection systems. Note any obstructions – power lines, trees, other buildings. References NFPA 418, 407, 1.

f. F. FLAMMABLE LIQUID AND GAS STORAGE & HANDLING - Describe type,

quantities, storage arrangements and handling procedures. Include details on fire protection – detection, ventilation, sprinklers, spill containment, grounding, explosion proof electrical fixtures. References NFPA 99, 30.

g. Electronic Data Processing - Describe: Construction of the room, UPS system or

emergency power, Location – (Must be located at grade or above grade), Air conditioning equipment, Smoke detection, Liquid (water) detection, Flame spread rating less than 25, Fixed automatic fire suppression.

h. Record Storage Rooms.

i. Cooling Towers.

3.) Every building should have a manual operated fire alarm system with audible alarm devices

where practical. Visible alarms may be used in place of audible alarms, where there may be an adverse effect on patients.

4.) Clearly mark all shut-off valves for a sprinkler system by signs. Many times, sprinkler control

valves are located above suspended ceilings and in closets. NFPA 25

5.) Provide as much information as possible relating to the maintenance and documentation procedures for all fire protection equipment. NFPA 25




6.) Fire extinguishers suitable for the particular hazard shall be located throughout the hospital and

in all ancillary buildings. They should be properly maintained and inspected so that they will be readily available to personnel in accordance with NFPA10.

7.) Determine the quantity and method of storage of flammable anesthetics and disinfecting

agents. Common gaseous agents include ethylene and cyclopropane and common liquid agents include diethyl ether, divinyl ether, and ether chloride. Gaseous and flammable anesthetic and disinfecting agents should be properly stored in a dedicated room. It should be provided with Exhaust that should discharge to the exterior of the building at least 12 feet above grade in a manner to prevent reentry into the building. Electrical wiring should conform to NFPA 70, National Electrical Code for hazardous locations. These enclosures should not be used for any purposes other than storage flammable agents. It is also important that the above-mentioned chemicals not be stored in close proximity to cylinders containing oxidizing gases (i.e. oxygen or nitrous oxide). These agents should be stored in separate rooms. Reference NFPA 99.

8.) Minimum Water Supply Criteria

a. Design in accordance with NFPA 13. b. Safety Factor- For hydraulically designed systems, a safety factor of 10 psi or 10% of

the demand pressure, which ever is greater, should be included in the calculations at the point of connection (city, fire pump discharge, etc.)

c. Underground mains - Looped mains with minimum size of 8 inches for buildings over

250,000-sq.ft. Divisional control values should be installed in the loop. The number of divisional valves required will vary however at minimum of no more then 6 sprinkler systems and fire hydrants should be impaired by any one divisional valve. Underground main should be installed in accordance with NFPA 24.

9.) Gate Valves and Post Indicator Valves - Inside sprinkler control valves will be accepted if

located 25 feet or less from an accessible door. Otherwise a post indicator valve or wall indicator valve should be provided. Butterfly type control valves are not recommended.

10.) Hydrant and Post Indicator Valve Location (NFPA 24)

a. Hydrants and PIV's should be located not less than 40 feet from the building. b. Private hydrants with at least two 2 ½-inch hose connections should be installed 300-

feet or less apart if any part of the building perimeter is more than 400 feet from a municipal hydrant. Fire hydrants should be equipped with a foot valve to isolate the hydrant from the underground water main. If exposed to damage, i.e. parking lots, the fire hydrant should be protected from damage by guard posts (such as concrete filled steel pipe and painted yellow). The threads on the hydrant should match the local fire department.

11.) Inside Hose Stations should be installed in accordance with applicable NFPA codes.




12.) Fire department (Siamese) connection should be minimum of 2 1/2-inch diameter with two

connections. If flow rates, sprinkler and hose demands combined are greater then 1500 gpm then additional 2 1/2 inch connection should be added at a rate of 750 gpm per connection. The pipe for the connection should be increased from 4 inch to 6 inch. Where the local fire department utilizes large diameter hose, 4” & 5”, the connection can be a single 4” or 5” for flows up to 1500 gpm. Note most fire department pumpers are 1500 gpm, use the above as a guideline. If possible, the fire department connection should be no more then 50 feet from a municipal fire hydrant. The threads of the connection should be the same as the local fire department.

13.) A secondary water supply is highly desirable when the primary water supply cannot be

expected to control a fire situation. Size of tanks/ reservoirs should be consistent with supply duration requirements.

14.) Fire Pumps

a. Should a fire pump (booster or fire pump) be required, it should be diesel fired. An

electric driven pump is acceptable if the electric power in the area is reliable and the electrical entry is protected. i.e. power with NFPA 20. The electrical power should be provided directly from the utility to the pump room without passing through the plant or any plant switch gear. The incoming power electrical before all facility disconnects. Turning the power off to the building should not cut the power supply to the fire pump. For high valued properties, backup emergency power is required.

b. Should this be impossible, NFPA 20 addresses alternatives.

c. The recommended location of a booster pump is a detached non-combustible

sprinklered building. If the pump is located in the building, it should be cut off from the rest of the building by a 3 hour rated wall, if the wall does not extend tight to the roof then the ceiling should also be 3 hour rated. The preferred entry into the room is from the outside of the building, if not practical, then the door to the room should be 3 hour rated.

Fire Department Access

1.) Means of access for the fire department apparatus must conform to NFPA 1141. 2.) Other factors adversely affecting access to the property should be considered, including snow

removal, railroad crossings, a stream or river subject to recurrent flooding, etc. Alarms UL Listed FC or FA Central station should monitor the fire protection systems on site as follows: Wet Systems- Water flow, valve tamper, and low building temperature alarms (in areas subject to freezing temperatures). On wet pipe sprinkler systems only, a vane type water flow detector is desirable. Dry System- Water flow, valve tamper, and low temperature alarms in the valve room (in areas subject to freezing temperatures). Also monitor low and high air pressure in system side of the system. Our evaluations, reports and recommendations are made solely to assist the insurer in underwriting and loss control. No warranties or representations of any kind are made to you or any other party. Evaluation for any hazard or condition does not mean that it is covered under any policy. Any reports or certificates we provide in connection with any state-required pressure vessel inspection do not mean that all hazards or conditions were under control at the time of the inspection. Neither we nor the insurer shall be liable to you or any other person for the use of any information provided or statements made by any of our employees or agents during the performance of an evaluation



Pre-Action Systems- Water flow, valve tamper, and low temperature alarms in the valve room (in areas subject to freezing temperatures). Also monitor low air pressure in system side of the system. Deluge Systems- Water flow, valve tamper, and low temperature alarms in the valve room (in areas subject to freezing temperatures). Fire Pumps- Electric- Pump running, power availability, and phase reversal. Diesel- Pump running, engine or controller in trouble, and controller switch in position other than automatic. Low fuel if automatic test timer for weekly test is used (NOT RECOMMENDED).

1.) Pump room/building should be monitored for low temperature (in areas subject to freezing temperatures).

2.) Valves- All valves, 2 1/2” and larger should be monitored as listed above. If post indicator

valves are used the wires for valve tamper should be installed when the valve is installed to reduce the cost of installation.

3.) Suction Tanks- Low water level in tank, low tank temperature (in areas subject to freezing

temperatures).

4.) Plug type valve tamper switches are not desirable.

5.) A burglar alarm system should be installed, monitored by a UL certified central station. Certification requirements for the system depend on the extent of exposure.

When UL listed central station monitoring services are not available, consult Chubb to determine the best possible alternative. Our review is not intended to imply, guarantee, ensure or warrant in any way that Hermann Memorial is in compliance with any Federal, State or local codes, laws or regulations including those relating to life safety issues. Additionally, our review does not imply in any way that compliance with these comments or recommendations as stated in this document will eliminate all hazards or accidents or that hazards not referred to in this letter do not exist. Compliance with the comments stated in this document, does not relieve Hermann Memorial from its obligations to comply with project specifications, design drawings, applicable law, NFPA standards and the provisions of local code requirements. Our review is for insurance purposes only.


Figure 6.4b – Computer Room Protection Requirements

FOR LOSS CONTROL PURPOSES ONLY DATA CENTER MINIMUM REQUIREMENTS

1. CONSTRUCTION OF THE BUILDING

The data center must be located in a building of fire resistive, non-combustible, or tilt-up construction. Buildings of frame, ordinary, or tilt-up construction with combustible floor, roof, or structural members are UNACCEPTABLE.

2. FLAME SPREAD RATING

The materials in the data center and storage rooms must be constructed of and contain materials (e.g.-curtains, carpeting, furniture, or fixtures) with a flame spread rating less than 25.

3. LOCATION

The EDP room must be located at grade level or above. Basement locations are UNACCEPTABLE. 4. EXPOSURE

Data centers containing unusual sources of ignition, flammable liquids, flammable gases, accumulation of paper or other combustibles, or material beyond a one shift supply are UNACCEPTABLE.

5. EDP ROOM ACCESS

All areas of data processing and support operations should be restricted to authorized access only. 6. SMOKE DETECTION SYSTEMS

The smoke detection system in the EDP room must be connected to a U.L. listed central station. The following detection devices are recommended:

a. In the room: smoke detection of the ionization, photoelectric, or projected beam types. b. Below a raised floor in the room: (Same as A) c. Above the ceiling: (Nothing is required as long as this area does not communicate with

other areas of the building and the ceiling or is the ceiling is of above the hung ceiling is of non combustible construction and all wiring is properly plenum rated wire; in BX, conduit or other non combustible covering. Other situations require the same protection as in A above.

7. LIQUID DETECTION

Liquid detection systems and/or floor drains are REQUIRED for EDP rooms when total insured values equal or exceed $2 million. They must be supervised locally and by a U.L. listed central station.

a. WATER DETECTION DEVICES: There are two detection systems available: spot and strip type. Consideration should be given to the channeling effects caused by cabling. Also, system activation should shut down the main water valve and provide a local audible and U.L. listed central station alarm signal.

1. SPOT DETECTORS should be located 6-8 feet from the environmental control

units in a wet trap or near a floor drain. Sensors should not be mounted directly under the unit. Experience shows downward air movement from A/C units blows water away from the detectors and renders them ineffective.




2. STRIP DETECTORS Strip detectors should be arranged so that they surround all

potential water sources. These are the preferred detection devices due to the extensive coverage they provide. Strip detectors can require rather intensive maintenance and this should be taken into consideration when selecting a system.

b. PROPER FLOOR DESIGN consists of sloped floors leading to a safe drain. The floor

should be partitioned off with gutters to guide water into the drains. Again, consider how cabling interacts and affects the floor design system.

8. SUPPORT SYSTEMS

This includes input/output devices, tape, and cartridge libraries and telecommunications equipment, etc. Protection for these support systems should be the same as in the EDP area. EXCEPTIONS are:

a. Sprinkler or alternate clean gaseous extinguishing agent deemed acceptable according to NFPA 2001, protection is not required in battery rooms. Smoke detection, hydrogen detection, and adequate ventilation are required.

b. Sprinklers are not recommended for the uninterrupted power supply (UPS) room; however,

all other protection and detection requirements apply. 9. EQUIPMENT ROOM CUT-OFF

The following operations must be cut off from the main equipment room: a. Media library b. Output devices (printers) c. Uninterruptible power supply d. Air Conditioning compressors/pumps (this does not preclude, the use of package AC units

in the room) e. Manufacturing and warehousing operations.

Walls must have a 1-½ hour fire resistive rating and extend from the concrete floor to the underside of the noncombustible floor above. (slab to slab)

10. AUTOMATIC FIRE SUPRESSION SYSTEM

An automatic fire suppression system is required in the following situations: a. When hardware values exceed $5 million. b. When the data center runs unoccupied, and the total hardware value and business income

limits exceeds $5 million. c. Where fire/life safety is a major concern. d. Where there is significant combustible loading. e. When the data center is critical to the vital business function of the insured.

If any of the above apply, one of the following is required:

a. Sprinkler system designed, installed, and maintained per NFPA 75 Standard for the Protection of Electronic Computer/Data Processing Equipment 1999 Edition and NFPA 13 Standard for the Installation of Sprinkler Systems 2002 Edition. Wet pipe or pre-action systems are acceptable. Dry pipe systems are unacceptable.

b. A gaseous fire suppression system listed in NFPA 2001 Standard on Clean Agent Fire Extinguishing Systems 2000 Edition, in the EDP room and below the floor in rooms not exceeding 25,000 square feet, or 50,000 square feet where the area is compartmentalized and no one area exceeds 25,000 square feet.

c. An existing carbon dioxide system that has been installed, maintained, and tested per NFPA 12.



FOR LOSS CONTROL PURPOSES ONLY Life safety issues are paramount in carbon dioxide installations; however, they can be acceptable in some cases, such as unoccupied computer rooms. CARBON DIOXIDE SYSTEMS ARE NOT RECOMMENDED FOR NEW FACILITIES. Existing Halon systems are acceptable protection provided:

a. The protected area is not over 25,000 square feet or 50,000 square feet (2323 or 4645 sq.

m) where compartmentalized and no one area exceeds 25,000 square feet. b. The system has undergone a full acceptance test, including either a full dump test or a fan

pressurization test per NFPA 12A. All test results must be reviewed. c. A preventive maintenance and testing program must be in place per NFPA 12A.


6.5 Contractor Application for Payment Page 1 of 4



Policy #: 6.5 Policy Title: Contractor Application for Payment Overview Category: Contract Development Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to define the process requirements for the initiation and disbursement of Contractor payment applications. Policy Statement: A.) Schedule of Values

1.) Once a construction contract is awarded, using the Project Construction Schedule as a foundation, each Contractor should submit a Schedule of Values for their entire contract to the Owner and/or Project Manager for approval. The contractor/construction manager should submit the Schedule of Values to the Project Manager for approval no less than fifteen (15) days before the date scheduled for submittal of the initial Application for Payment.

2.) The Schedule of Values should include sufficient detail and support for each

portion of the work including subcontractor work, self-performed work, bond & insurance costs, general conditions and fees on a line-item basis to allow for effective and accurate evaluation by the Owner, Project Manager and/or Architect. The sum of the parts of the Schedule of Values should total to the contract sum including a listing of approved and executed change orders to the contract, if any, in sequential order. Schedule of Value items should have a direct and understandable relation to the Project master construction schedule. The Schedule of Values should be the basis for the Contractor's application for payments.

3.) The Contractor is required to correlate the documentation for payment of stored

materials requested in the application for payment against the agreed upon


breakdown of the Schedule of Values as described in Section B of this policy, “Payment for Materials Stored Off-Site”.

4.) The Contractor should be advised of the payment cycle utilized by Memorial

Hermann Hospital System (MHHS) prior to bid, award or contract execution. The following steps should be used to approve payment: STEP 1 JOB-SITE INSPECTION - DRAFT PAYMENT REQUEST

Once a month the Contractor should submit an itemized rough draft of the Application for Payment to the Project Manager (using AIA Documents G702 and G703 and based on the approved Schedule of Values) identifying the work completed, if any, during the current calendar month and obtain a preliminary approved copy of the draft for official submission.

STEP 2 PAYMENT REQUEST PREPARATION/SUBMISSION With the information agreed upon in Step 1, the Contractor will prepare a formal Application for Payment request. The payment request will be made on an Application For Payment form (AIA documents G702 and G703). Before submitting these documents to the Project Manager, each request for payment should be signed by an authorized agent of the Contractor and notarized. The Contractor should include with each request for payment a waiver of lien for all previous payments, and subcontractor's waivers of lien (See Policy 9.3 – “Lien Release Procedures”).

STEP 3 CHECK DISTRIBUTION

a. The Project Manager will route the request for payment within MHHS for

appropriate processing. b. The Contractor should provide all supporting documentation substantiating

the Contractor’s right to payment as MHHS/Project Manager may require.

c. Upon appropriate documentation and approvals, MHHS will issue checks to each Contractor.

d. MHHS will withhold ten (10%) percent of each payment due to a

Contractor subject to the terms and conditions of this paragraph and other applicable conditions of the Contract.


e. The Contractor, when requesting a reduction of retention, should submit an AIA G707, Consent of Surety to Reduction In or Partial Release of Retention.

f. Within forty-five (45) days after the Certificate of Substantial Completion

has been issued for all portions of his work, the Contractor may invoice for a sum sufficient to increase total payments to one hundred (100%) percent of Contract Sum, or portion thereof, less such retainage determined suitable for all incomplete work and unsettled claims.

B.) Payment For Materials Stored Off-Site

1.) The Contractor, if intending to use an off-site storage area or Facility for stored materials, should provide a written request and obtain approval prior from the Project Manager prior to submitting the first application for payment. Properly stored should mean in an insured warehouse with MHHS being named as the insured, and all material identified as property of MHHS. The Contractor is responsible for all associated off site storage costs, transportation, insurance, including coverage for stored material, while in transit, if not covered by the Project’s Builders Risk policy, etc.

2.) The Project Manager will require the Contractor to provide supporting

documentation in the form of invoices, etc. for items stored on-site. Documentation should include the following:

a. Detailed description of the material that will serve as a material

description for the billing and as information to file a claim with an insurance company.

b. Itemized cost of materials and the total cost value, which should not

exceed the subcontractor's or material supplier cost. The total cost value should be supported by the subcontractor's or material supplier invoices for the stored material.

c. An estimated cost value for those materials that are fabricated by the

subcontractor or material supplier.

d. Provide the location where the material is physically stored. The location will include the warehouse address and storage location within the warehouse. All material should be segregated and marked.

e. Provide specific insurance coverage that is equal to or exceeds the value

of the material.


f. A certificate of title listing Facility’s ownership of the off-site stored materials equal to the amount paid effective at the time funds are delivered.

C.) Waivers Of Lien

1.) The Contractor’s first Application for Payment will be based upon 100% of the value of work installed. The first payment, amounting up to ninety (90%) percent of application, will be made to the Contractor without supporting documentation. Subsequent Applications for Payment should be accompanied by lien waivers from the Contractor, their sub-contractors, sub-subcontractors, and suppliers or receipted invoices covering payment to the Contractor for previous calendar month period. Lien waivers should show the amount paid. The Waiver of Lien is to be signed by an authorized representative of the Contractor.

2.) Final payment will not be made until a Final Release has been submitted. The

Final Release should be signed by an authorized representative of the Company and notarized. In the instance where the bond requirements for the Project have been waived for the contractor, final unconditional waivers will be required for all subcontractors/material vendors listed on contractor’s sworn statement. These final waivers should be submitted along with the final release, before payment can be made.

Waivers of Lien are discussed more in Policy 9.3 – “Lien Release Process”

APPROVED: DATE:

7.1 Contractor Safety Requirement Page 1 of 55



Policy #: 7.1 Policy Title: Contractor Safety Requirements Category: Safety Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: Policy Statement:


CONTRACTOR SAFETY REQUIREMENTS

Section Title Section Title

1 General 16 Fire Prevention

2 Penalty Provisions 17 Fire Reporting & Evacuation

3 Contractor Safety Data 18 Housekeeping

4 Contractor Safety Orientation 19 Hazard Communications

5 Contractor Identification 20 Contractor Injuries

6 Permits & Activity Board 21 Personal Protective Equipment

7 Safe Work Permit 22 Work Zone Safety

8 Lock Out/Tag Out 23 Labs

9 Hot Work Permit 24 Pharmacy

10 Infection Control & Pre-

Construction Risk Assessment

25 Electrical Safety

11 Asbestos Containing Material 26 Ladder Safety

12 Confined Space Entry Permit 27 Fall Protection

13 Cable Pull Permit 28 Roof Work

14 Bloodborne Pathogens 29 Sanitation

15 Interim Life Safety Measures 30 End Of The Day Or Shift


APPENDICIES

Appendix Subject

1 Contractor Safety Data

2 Site Specific Information

3 Safe Work Permit

4 Hot Work Permit

5 Infection Control (ICRA)

6 Pre-Construction Risk Assessment (PCRA)

7 Confined Space

8 Cable Pull Permit

9 Interim Life Safety Measures


CONTRACTOR SAFETY REQUIREMENTS

The Memorial Hermann Healthcare System is dedicated to the preservation of life and property. It is through this commitment that we provide our patients, visitors, employees, and contractors with a safe and healthy work environment. We believe safety must be equal to productivity, quality, and morale. OSHA regulations mandate communication between the employer and contractor; prudence dictates enforcement of all required safety rules while personnel are working on hospital property. These requirements summarize the safety rules and procedures with which the contractor and their employees must comply. These will be used by the Architecture & Construction Services, Facilities Engineering, and Safety Departments when advising the contractors’ employees and all sub-contractors of pertinent safety requirements. These requirements cover some, but not all of the rules mandated by the hospital. Contractors are expected to comply with all applicable federal, state, and local regulations. Contractors shall comply with any additional safety requirements deemed necessary and appropriate by the Safety Departments, Facilities Engineering, or other owner representative. 1. GENERAL

Failure to adhere to these contractor safety requirements or the OSHA safety requirements in the General and Construction Industry Standards (29 CFR 1910 & 1926) may be cause for interruption of contractual agreement and dismissal from properties, or invoke the “penalty” provision outlined in Section 2. 1.1 Smoking will be permitted only in designated smoking areas. Anyone found in

violation of this policy will be immediately dismissed from the job site. (See Appendix 2)

1.2 No alcoholic beverages or controlled substances will be allowed on the project site.

Contractor shall not permit any person to operate any vehicle or heavy equipment while taking any prescription medication that may impair their ability to operate safely.

1.3 All contractors are responsible for public safety as well as the safety of their

employees and Memorial Hermann Healthcare System employees at the work site. Contractors are responsible for providing whatever devices or equipment is needed to accomplish this task per city, state, or OSHA Regulations / Guidelines.

1.4 Contractor personnel shall be courteous to all tenants, business invitees, patients,

visitors, and employees.

1.5 Personal grooming, personal hygiene and language by all contractors must be conducted in a professional manner at all times.


1.6 All contract personnel will adhere to these minimum standards of attire:

1.6.1 Shirts must have collars and at least 3” of sleeve, measured from the armpit seam

(Polo type or button front). Shirts must be buttoned to at least the third button from the top. T-shirt styles may be approved if part of a contractor’s uniform and identified with the company logo or legend.

1.6.2 Pants that are excessively loose, torn, ragged or with dragging cuffs will not be

permitted. Shorts are not allowed.

1.6.3 All clothing must be clean and sanitary at the beginning of the work shift. 1.6.4 No clothing, accessories, or Hard Hat stickers that display offensive, derogatory

or inflammatory wording or graphics may be worn on the work site. Per Hospital policy, Tattoos must remain covered.

1.6.5 Footwear shall be leather work shoes or boots. Work Boots with fabric or nylon

may be permitted on a case-by-case basis. Specialized footwear and foot protection may be required for specific tasks.

1.7 No radios or music shall be allowed on the project including headphone systems.

Personnel must be able to hear alarms and warnings in the immediate work area. (This does not pertain to the use of two-way hand held communications equipment.)

1.8 No tools or equipment will be loaned to contractors to assist them in completing

projects.

1.9 Hazardous materials shall be stored and disposed of properly. No waste products of any type are allowed to be disposed of in any storm drain.

1.10 Hazardous materials are limited to one days supply and must be properly labeled.

(See also Hazard Communications, Section 19) 1.11 Contractors will obtain prior approval for the use of storage areas for supplies and

tools that are to be used on projects.

1.12 Contractor personnel shall not tape back lock/latch mechanisms nor prop open any exterior door, security door, stairwell door, or fire/smoke door.

1.13 Escape routes and evacuation routes in the project shall remain free and

unobstructed at all times.

1.14 All damages to hospital property resulting from faulty workmanship, neglect, or accident will be back charged to the contractor. This sum will be deducted from his bid price or fee. The balance will be paid out thereafter.


1.15 Contractor shall be responsible for the inspection, quality control, and punch-out of contractor’s work. This should be done on a daily basis and specifically prior to contractor’s request for payment on work completed. No payment shall be made by the owner for work that is not in compliance with the contract.

1.16 The Director of Contractor Safety, or his representative may visit the job site at any

time to perform inspections and identify any problems. A job may be suspended if an imminent danger to patients, visitors, hospital employees, or contractor personnel is observed. Violations will be brought to the attention of the Project Manager and immediate corrective action will be taken.

2. PENALTY PROVISIONS

Violations of these safety requirements will be reviewed and given a limited time frame for abatement of conditions. The abatement time will be determined according to the severity of the condition and the immediate effects to contractor and Hospital safety. Convenience of completing the abatement measures will not be a decisive factor. Contractors who violate the provisions of these requirements more than twice during the scope of the project, or who fail to abate the conditions in the allowable time frame may be assessed a $1,000 per day or occurrence penalty.

3. CONTRACTOR SAFETY DATA

All contractors and sub-contractors are required to provide data related to their safety performance no later than February 1st annually. (See Appendix 1) The Director of Contractor Safety will review the safety data and determine the contractor’s eligibility to perform work at Memorial Hermann Hospital System based on the following criteria: 3.1 Contractors current Experience Modification Rate (E.M.R.) must be less than or equal

to 1.00. 3.2 If a contractors current E.M.R. is greater than 1.00, then the immediate past 3 year

trend must be downward with no single E.M.R. greater than 1.20.

3.3 If a contractor E.M.R. cannot be provided due to size, self-insured status or length of time in business then the OSHA recordable incident rate must be less than or equal to 15 injuries or illnesses per 200,000 man-hours.

3.4 Any OSHA recordable incident greater than 15 per 200,000 man-hours with an

acceptable EMR will not disqualify contractors provided adequate explanation of injuries and illnesses is provided.


4. CONTRACTOR SAFETY ORIENTATION

All contractor and sub-contractor personnel are required to complete the safety orientation before beginning work on any of the hospital projects. 4.1 Completion of the orientation is required to obtain a Contractor Identification Badge. 4.2 Contractor must make reservations for the next available orientation session at least

one working day prior to the session no later than 3:00 p.m.

4.3 A fee of $10.00 is required for each person attending the orientation. Payment will be by company check or money order; cash will not be accepted. For Capitol Construction projects, these fees may be included in the project budget.

4.4 Safety orientation credentials are valid for one year. An annual refresher will be

required to review any changes during the past year.

4.5 Variances from this requirement may be permitted on a case-by-case basis by the Manager of Facilities Engineering and/or the Contractor Safety Department. (i.e., day laborers, emergency repairs, etc.)

4.6 Contractor Safety Orientation will be held on an as needed basis. Appendix 2

contains site-specific information about location and scheduling of sessions. 5. CONTRACTOR IDENTIFICATION

All contractor and sub-contractor personnel are required to display their BLUE Contractor Identification Badge when working in or around the hospital. Contractor Project Managers, Superintendents or Service Technicians who require Electronic Access Cards must display BOTH I.D.s. Expiration dates must be the same. 5.1 The badge is valid for one year after completion of the Contractor Safety Orientation. 5.2 A fee of $5.00 will be required to replace a lost Contractor badge.

The replacement fee for a lost Electronic Access Cards will be determined by campus policy. Loss of an access card shall be immediately reported to Security.

5.3 Damaged I.D. badges will be replaced free of charge.

5.4 A VISITOR PASS for Contractors or Vendors may be obtained through Facilities Engineering or Security.


6. PERMIT SYSTEM

Permits serve to coordinate those activities necessary to safely complete a task or project that may impact patient care and also protect hospital property. 6.1 All shutdowns of Medical Gas, Oxygen, Vacuum Systems, Deionized Water,

Domestic Water, Natural Gas, Electrical Systems, Fire Suppression, and Fire Alarm Systems will be scheduled a minimum of 48 hours in advance, in writing, before work can begin. The Manager of Facilities Engineering at each campus may determine the lead-time required for a shutdown request. The only exception to this is in the event of an emergency. In either case, written (verbal for emergences) approval is required by the Manager of Facilities Engineering or designated representative. (See also Lock Out/Tag Out, Section 8)

6.2 Major construction projects that are isolated from the existing hospital facilities may

be granted a blanket work permit, exempting the project from the daily permit issuance process.

6.3 In general, permits are issued for one shift only. If work will continue past the time

of shift change, the permit must be re-issued or issued over multiple shifts at the onset of permit issuance.

6.4 Contractors will check in with Facilities Engineering at the beginning of the shift to

obtain applicable permits.

6.5 A copy of any and all permits issued will be posted on the Activity Board in Facilities Engineering.

6.6 When work is completed or at the end of the day, contractors will close out their

permits before leaving the hospital property. 7. SAFE WORK PERMITS

7.1 Safe Work Permits are required for all construction or renovation projects, and for contractors engaged in maintenance work. (See Appendix 3)

7.2 Safe Work Permits are issued in Facilities Engineering Work Control and must be

issued daily unless prior arrangements are made. 7.3 A copy of the Permit will be posted on the Activity Board in Facilities Engineering and

the original form must be posted at the job site.

7.4 Any additional specialized permits will be noted on the Safe Work Permit.


8. LOCKOUT/TAGOUT

Each facility has a Lockout/Tag out Program. Contractors whose work will involve the lockout/tag out process shall comply with all provisions of the Facilities Engineering program. If there is a difference between the contractor’s program and the hospital’s program, the more stringent procedure shall prevail.

9. HOT WORK PERMIT

Hot Work includes welding, cutting, soldering, burning, grinding, friction cut-off saws and the use of open flame, such as propane torches for heating floor tiles. All Hot Work requires the issuance of a fully executed Hot Work Permit from the Facilities Engineering Department. (See Appendix 4) 9.1 Any cutting or welding will require welding screens or shields be used to block

welding flash and debris from the public. 9.2 The contractor will be responsible for the evacuation of smoke from the building

through exhaust fans, fume vacuums, “smoke eaters”, or other ventilation equipment. The use of mechanical ventilation equipment and points of exhaust from the building will require approval from the Manager of Facilities Engineering and Security. Smoke detectors in the area must be taken off line for the duration of hot work.

9.3 Protective eyewear that meets ANSI standards for welding or cutting shall be worn.

Standard safety glasses or sunglasses shall not be used. 9.4 Combustibles must be removed or covered with a fire blanket.

9.5 The contractor must furnish a 20-pound ABC Dry Chemical Extinguisher within 20

feet of the Hot Work. Hospital fire extinguishers will not be loaned.

9.6 A fire watch must be present and remain for 20 minutes after the Hot Work is completed to ensure no smoldering materials remain or re-ignite.

9.7 The area shall be monitored for TWO HOURS. A final inspection of the area will be

conducted.

9.8 The completed Hot Work Permit must be returned to Facilities Engineering.


10. INFECTION CONTROL RISK ASSESMENT (ICRA) AND

PRE-CONSTRUCTION RISK ASSESSMENT (PCRA) Contractors working in or near patient areas may be required to obtain an Infection Control Permit and implement special precautions to reduce the risk of infection to patients during the project. Each hospital has their own Infection Control Permit developed for their specific needs. (See Appendix 5) A pre-construction risk assessment must be completed for all activities that will impact a patient care area for more than three consecutive shifts or if deemed a construction project. (See Appendix 6)

11. ASBESTOS CONTAINING MATERIALS

11.1 All jobs must be reviewed prior to start date to determine the presence of Asbestos Containing Material (ACM)

11.2 All ACM must be removed by a licensed abatement contractor (by owner’s direction)

before any job can begin that may disturb or release asbestos fibers. 11.3 No suspected ACM or unknown material shall be dislodged or removed by a

contractor that is not a licensed asbestos abatement contractor. 12. CONFINED SPACE ENTRY PERMITS

12.1 If entry into a Permit Required Confined Space is necessary, a confined space entry permit must be issued by the Facilities Engineering Manager.

12.2 The contractor or sub-contractor is required to provide all safety equipment needed

for the entry including rescue equipment.

12.3 Each hospital has their own confined space entry program. (See Appendix 7) 13. CABLE PULL PERMIT

Contractors installing communication cables, antenna leads, or data transmission equipment shall comply with all provisions of the Cable Pull Permit and appropriate infection control requirement (See Appendix 8)


14. BLOODBORNE PATHOGENS

14.1 The contractor must make every effort to prevent exposure to blood and/or body fluids while in the hospital.

14.2 All patient care areas are considered to have the potential for exposure and

instructions will be given by the nursing unit manager on how to avoid potential contamination.

14.3 Contractors shall instruct their employees in the concept of Universal

Precautions and document such training.

14.4 Contractor employees shall not handle bags or containers identified as containing biohazards materials; (red biohazard bags/containers).

15. INTERIM LIFE SAFETY MEASURES (ILSM)

Any project that compromises life safety features of the hospital will require the implementation of appropriate Interim Life Safety Measures. (ILSM)

15.1 A Pre-Construction review of the project scope, prior to the start date, will determine which of the stated ILSM’s are appropriate and should be implemented for the project.

15.2 Appendix 9 outlines the decision logic to be used in determining the

applicable ILSM for each project.

15.3 ILSM may include the following minimum provisions as appropriate:

15.3.1 Ensuring free and unobstructed exits. Staff get additional training when alternative exits are designated. Buildings or areas under construction must maintain escape routes for construction workers at all times and the means of exiting construction areas are inspected daily.

15.3.2 Ensuring free and unobstructed access to emergency services for fire,

police, and other emergency forces.

15.3.3 Ensuring that fire alarm, detection, and suppression systems are in good working order. A temporary but equivalent system must be provided when any fire system is impaired for an extended period of time. Temporary systems must be inspected and tested monthly.

Note: The Life Safety Code (LSC), NFPA 101, requires that the municipal fire department (or applicable emergency forces group) be notified and a fire watch be provided whenever an approved fire alarm


or automatic sprinkler system is out of service for more that 4 hours in a 24-hour period in an occupied building.

15.3.4 Ensuring that temporary construction partitions are smoke tight and

built of noncombustible or limited combustible materials that will not contribute to the development or spread of fire.

15.3.5 Providing additional fire-fighting equipment and training staff in its

use.

15.3.6 Prohibiting smoking throughout the hospital’s buildings and, in or near construction areas.

15.3.7 Developing and enforcing storage, housekeeping, and debris-removal

practices that reduce the buildings flammable and combustible fire load to the lowest feasible level.

15.3.8 Conducting a minimum of two fire drills per shift per quarter for

workers and adjacent departments (as applicable).

15.3.9 Increasing hazard surveillance of buildings, grounds, and equipment, with special attention to excavations, construction areas, construction storage, and field offices.

15.3.10 Training staff to compensate for impaired structural or

compartmentalization features of fire safety.

15.3.11 Conducting hospital wide safety education programs to promote awareness of life safety building deficiencies, construction hazards, and ISLM.

15.4 Contractor shall post and maintain any required temporary signs directing

Exit routes. 16. FIRE PREVENTION

16.1 All combustible materials shall only be stored in approved areas.

16.2 Combustible scrap, trash, and debris shall be removed from the project site on a daily basis, or, more frequently as required.

16.3 Flammable products shall be limited to one days supply inside the building.

Flammable materials shall be stored outside the building or in approved storage cabinets. Flammable liquids shall be in approved safety cans.


16.4 Compressed flammable gas cylinders (i.e., propane, LPG, acetylene) shall not remain inside the building overnight and must be stored in a designated flammable storage area.

16.5 Work on fire sprinkler systems shall continue until the system operation is

fully restored. No impairments will be allowed for extended periods of time or during times when the site is left unattended.

16.6 When working in the ceiling space, all holes and penetrations through

firewalls for wires, pipes, and conduits shall be sleeved and fire safed.

16.6.1 The sleeve must be of ferrous metal and extend at least one inch on both sides of the wall.

16.6.2 All penetrations shall be sealed prior to the end of each shift with an

approved UL fire resistant sealant. The Manager of Facilities Engineering or designated representative must approve the specific sealant used.

17 FIRE REPORTING AND EVACUATION PLAN

In the event of a smoke or fire incident the following procedures should be followed: Remember the key word R.A.C.E.

Rescue Alarm Confine Extinguish

17.1.1 Rescue efforts need to start immediately.

17.1.2 A fire alarm station should be activated as quickly as possible.

17.1.3 Confine the fire or smoke by closing all doors to the area.

17.1.4 Extinguish the fire only if you can do so safely.

17.2 When reporting a fire by phone:

17.2.1 Call the emergency number found on your badge, phone, or emergency

information poster. (See Appendix 2)

17.2.2 Give your name, the location of the fire, and a brief description of the incident. Do Not hang up until the other party is finished.


17.3 Be prepared to guide the Hospital Fire Response Team to the fire location.

17.4 All contractor personnel shall report to their designated assembly area

immediately. (See Appendix 2) 18 HOUSEKEEPING

Contractors shall keep construction areas as clean as possible during the workday. It is recommended that crews clean up as they go though the workday.

18.1 The work site shall be clean at the end of the shift. Scrap, trash, and debris shall be removed daily. No more than half of a trash buggy should remain overnight.

18.2 Aisles, corridors, and exits shall remain unobstructed at all times.

18.3 Contractors must use appropriate signage or other warning devices as

necessary.

18.4 Materials must be stored and secured properly, (i.e. electrical wiring and components, conduit, pipes, metal framing materials, lumber, etc.).

18.5 Any mess made by the contractor shall be cleaned up before leaving the area

(i.e., sweeping, vacuuming, dust mopping, etc.).

18.6 When working in areas that have carpet, a drop cloth or plastic sheeting will be laid down first over the area before any work is started.

18.7 There will be no cleaning supplies provided by the hospital for the contractor

to clean up their area.

18.8 Any ceiling tiles that are damaged, broken, or soiled while working on the job, will be replaced by the contractor before he will be paid.

18.9 If, after written notice, the contractor fails to clean up, the owner may have the

area cleaned up by others and the contractor back charged for the cost of clean up. In addition to the cost of clean up, the owner may invoke the penalty provisions in Section 2 of $1,000 per day.


19 HAZARD COMMUNICATION (HAZ COM)

19.1 The contractor shall provide documentation that their personnel and sub-contractors have received proper training in Hazard Communications under the provisions of OSHA’s requirements in 29 CFR 1910.1200 and/or 1926.59.

19.2 The contractor shall provide a Chemical Inventory of all chemicals and

hazardous materials that will be brought onto the job site. The inventory must be amended when a new substance is to be introduced. A copy of the current Chemical Inventory shall be provided to Contractor Safety and the Hospital Safety Officer.

19.3 A printed, legible copy of the Material Safety Data Sheet (MSDS) shall be

immediately available on the job site for each chemical on the inventory.

19.4 Hazardous materials shall be stored in properly labeled approved containers.

19.5 Hazardous materials shall be limited to amounts that can be used in one shift. 20 CONTRACTOR INJURIES

20.1 Contractors shall make prior provisions for the treatment of minor injuries.

20.2 Contractor employees requiring immediate medical treatment should be taken to the emergency center.

20.3 If an injured worker cannot be moved and assistance is needed, call the

emergency number on your emergency information poster. (See Appendix 2)

20.4 Any injury requiring treatment, beyond Job Site First Aid, shall be reported immediately to Facilities Engineering and Contractor Safety.

20.5 A copy of any Incident / Accident Report must be provided in a timely manner to

Contractor Safety and to the hospital’s Safety Officer. A preliminary report must be made within 24 hours or the end of the next working day.

21 PERSONAL PROTECTIVE EQUIPMENT (PPE)

21.1 The contractor shall ensure that all workers on the job are provided the appropriate Personal Protective Equipment and are properly trained in their use.

21.2 All PPE and safety equipment is subject to inspection and approval by

Contractor Safety.


21.3 If the scope of the project, or the MSDS for the material in use, requires the use of

respiratory protective equipment, the contractor shall document compliance with 29 CFR 1910.134 “Respiratory Protection”. Only N.I.O.S.H. or M.S.H.A. approved equipment shall be used.

21.4 Projects involving major construction or renovation activities with overhead

work above the ceiling grid level shall be designated “Hard Hat Areas”.

The following shall apply to all personnel entering the area regardless of purpose or duration.

21.4.1 ANSI approved Hard Hats shall be properly worn at all times. Except

for specific Craft’s requirements, the bill shall be in the front and the suspension properly mounted with the nape strap to the rear. Ball caps or knit hats shall not be worn under Hard Hats. Snug fitting welder’s caps or similar may be permitted provided they do not impair the fit.

21.4.2 ANSI approved safety eyewear shall be worn at all times. Prescription

eyewear must be industrial grade and have side shields. Cover type Visitor eyewear may be permitted over regular street type prescription eyewear.

21.4.3 Dark tinted Safety glasses shall not be worn inside the building as soon as

exterior walls are in place.

21.4.4 Footwear shall meet the requirements under Section 1.6.5.

21.5 Projects that do not involve overhead work, the ceiling grid is installed and the permanent lighting is in place, may be reduced from the requirements of a Hard Hat Area. The General Contractor’s rules then apply to the wearing of Hard Hats in the work area.

21.5.1 ANSI approved protective eyewear is required for any task presenting

an eye hazard (i.e. powder actuated tools, drilling overhead, etc.).

21.6 Face shields, in addition to safety glasses, shall be used when grinding, chipping concrete, or using a friction cut-off saw.

21.7 Appropriate hearing protection shall be used in high noise operations or loud

impact noise tasks.


22 WORK ZONE SAFETY

Construction areas must be delineated from public access areas.

22.1 Construction areas shall be separated by appropriate barriers to control noise, dust, and the spread of fire.

22.1.1 DUST BARRIERS are intended only to control dust and particulate matter.

The material shall be of Fire Resistant Polyethylene, 6-mil minimum thickness, and sealed to floors, walls and ceilings. Poly barriers are intended for a maximum use of only FIVE working days.

22.1.2 DUST BARRIERS intended to be used for more than FIVE working days

shall be drywall with joints covered and sealed.

22.2 TEMPORARY FIREWALLS shall be smoke tight and non-combustible.

22.3 To maintain Indoor Air Quality, the Contractor shall provide for adequate removal of dust, particulates, gasses, irritants, fumes, and flammable vapors to the exterior of the building. The use of mechanical ventilation equipment and points of exhaust from the building will require approval of the Manager of Facilities Engineering and Security.

22.4 When working in hallways and public areas the work zone shall be marked by

orange safety cones.

22.4.1 Minimum height of cones to be 12”.

22.4.2 Minimum of 6 cones is required.

22.4.3 When working near a corridor intersection, place one cone at the corner to be seen by persons in the other corridor.

22.4.4 When working near doorways, appropriate signage or other warnings must be

posted to warn persons on the other side.

22.5 All tools, supplies, and equipment shall be kept to one side.

22.6 Staff, patients, and visitors will be given the right of way.

22.7 When painting, “Wet Paint” signs will be posted liberally throughout the affected area.

23 LABORATORY SERVICES

Contractor employees must receive orientation from a Laboratory Services Supervisor before work is allowed in any laboratory area.


24 PHARMACY AREAS

Contractor must coordinate any work in pharmacy areas with the Manager of Pharmacy Operations and Security.

25 ELECTRICAL POWER TOOLS AND CORDS

All electric power tools, equipment and extension cords must be inspected daily before use. Defective items shall be immediately removed from service for repair or replacement. NOTICE: RED OUTLETS are for power requirements provided by the Emergency Generator System and shall not be used by contractor personnel.

25.1 Ground Fault Circuit Interrupters (GFI’s) shall be in use between any hospital permanent receptacle and any contractor equipment.

. 25.1.1 Temporary power panels shall have GFI protected circuits built into the

panel.

25.1.2 The GFI shall be tested for function before plugging in any contractor equipment.

25.2 Electric power tools shall be grounded, doubled insulated or battery powered.

The cord on the tool must be free of defects.

25.3 Extension cord sets shall be the heavy duty three-wire grounded typed.

25.3.1 Three wire flat type extension cords are not permitted.

25.3.2 Defective cord ends must be replaced with a UL rated repair end; follow the manufacture instructions.

25.3.3 Damage to the cord jacket shall not be repaired or taped over.

25.3.4 Extension cords shall be routed 7’ overhead whenever possible or

otherwise protected against damage. 26 LADDER SAFETY

Ladders must be inspected prior to each use. Defective ladders shall be removed from service, immediately tagged as defective and removed from the job site. Ladders shall be used only in accordance with the manufacturers’ labeled instructions.


26.1 Stepladders shall be used only in the fully opened position with spreaders locked in place. Using a folded stepladder leaned against a support is prohibited.

26.1.1 Employees shall not stand on the top platform, the step below the top

platform or the back stretchers. 26.1.2 No sitting on, or straddling the top platform.

26.1.3 Stepladders shall not be used for access to platforms or other elevated

areas – an extension ladder is required.

26.2 Extension ladders must be properly positioned and locked in place.

26.2.1 Extension ladders used for access to elevated areas shall extend at least three feet beyond the supporting structure.

26.2.2 Extension ladders must be secured to the supporting structure or be

held at the base by another employee.

26.3 Job built ladders shall conform to applicable ANSI Standards AND shall be limited to use in excavations or concrete form work only.

27 FALL PROTECTION

Work in areas not protected by standard guardrail system OR present a fall hazard greater than six feet shall require compliance with all current applicable OSHA Fall Protection requirements.

28 ROOF WORK

28.1 Contractors shall comply with all applicable Fall Protection requirements. 28.2 The contractor shall have a 20 pound ABC Fire Extinguisher on the roof and

immediately available for use. Hospital fire extinguishers will not be loaned.

28.3 Any roof repairs that are performed around fresh air intakes will have to be scheduled with Facilities Engineering 24 hours in advance. Contractor is required to provide fume control devices when performing roof repair/replacement/new installation.


29 SANITATION

29.2 On stand-alone projects, the contractor shall furnish chemical toilets and hand washing facilities.

29.3 Toilet facilities in the hospital shall be kept clean or privileges may be revoked. Only

designated toilet facilities shall be utilized.

29.4 Food and beverages will be consumed only in designated break areas. Trash, garbage, and beverage containers shall be properly disposed of. Glass containers are prohibited on any project.

29.5 Portable water cans shall meet the following requirements:

29.5.1 Water cans shall be cleaned and sanitized DAILY using a bleach solution and

be thoroughly rinsed. 29.5.2 Can lids will be sealed with duct tape. The date and initials of the person

filling the water can shall be written in permanent maker on the tape.

29.5.3 When electrolyte solutions (Gatorade, Quencher, etc.) are provided, the water can shall be labeled as to its contents. The empty pouch may be taped to the water can to identify the specific contents.

29.5.4 Single use cups and a trashcan are required for each water can location.

30 END OF DAY OR SHIFT

30.2 When contractors are working on equipment, they will ensure all panels; covers, etc. are secured back in place before they leave that job for the day.

30.3 All smoke detectors on construction projects that are covered to prevent dust from

setting them off will be required to be put back in service before that job is finished for the day. Verify all protection systems are operational.

30.4 All penetrations shall be sealed with an appropriate fire/smoke sealant prior to the

end of shift.

30.5 Complete daily inspection (safety) logs and daily sign-off of job site safety inspections.

30.6 Before leaving the job for the day, contractors shall clear any permits in Facilities

Engineering.


APPENDIX 1

Contractor’s Safety Data

See Section 3 Specific questions should be directed to the Director of Contractor Safety and/or

Local Facility Management.

NOTE: This report format is under revision to reflect changes according to the

now required OSHA 300 form.


Memorial Hermann HEALTHCARE SYSTEM

CONTRACTOR’S SAFETY DATA

Contractor’s Name Project Number

Address City State Zip Code

Contact Telephone Number

Memorial Hermann Healthcare System is committed to working with safe contractors. Toward that end, we have”pass/fail” criteria to help find contractors with good safety track records. Before you can work at a Memorial Hermann Healthcare System site as a prime contractor or as a subcontractor, your safety performance is compared to these criteria. If your performance does not pass, Memorial Hermann Healthcare System can utilize your company only on an exception basis. An explanation of your “pass/fail” criteria is given in Section II. First, please complete the safety data in Section I. I. YOUR FIRM’S SAFETY PERFORMANCE AND PROGRAM

A. Worker’s Compensation Insurance–Experience Modification Rate (EMR)

1. Please obtain from your insurance agent (or state fund, if applicable) your interstate

EMR’s for the last three rating periods. If you do not have an interstate rating, obtain your intrastate EMR’s. Then complete the following data:

Policy Year Modification Rate Most Recent Policy Year 1 Year Previously 2 Years Previously Are the above rates interstate or intrastate? _________________________________________ If intrastate, which state? ________________________________________________________ If your EMR is exactly 1.0 for any policy year, is it because your firm is (or was) too new or too small to have an EMR calculated? _______ YES _______ NO

2. We require back up for the above information. Any of the following methods would be acceptable:

• Furnish a letter from your insurance carrier, or state fund on their letterhead)

verifying the EMR data listed above; or


• Furnish copies of the last three years Experience Rating Calculation Sheets which

your insurance carrier should forward to you annually; or • Furnish a copy of the page from each of your last three years insurance policies

showing the modification rate and the coverage period; or • If you’re in a “state fund” state, such as Ohio or West Virginia, furnish a copy of the

state’s last three years annual statement pages showing the modification rate and the coverage period.

B. OSHA Recordable Incidents

1. Furnish a copy of your firms OSHA 300 Log from last year. It is unlikely we can qualify your company to bid Memorial Hermann Healthcare System work without your OSHA 300 Log.

2. Some firms are not permitted to complete the OSHA 300 Log, because they have too few

employees or are exempted by virtue of the services they perform. If you don’t complete the OSHA 200 Log, is it because your firm has too few employees? _______ YES _______ NO _______ N/A

Or is it because your firm performs a service that is exempted from completing an OSHA 300 Log? _______ YES _______ NO _______ N/A If you do not complete an OSHA 300 Log and you answered “NO” to the above questions, please explain. ____________________________________________________________ ____________________________________________________________

3. Using the OSHA 300 Log, complete the following:

a. Number of injury-related fatalities from Column 1 _______ b. Number of injuries with lost workdays from Column 2 _______ c. Number of injuries without lost workdays from Column 6 _______ d. Number of illness-related fatalities from Column 8 _______ e. Number of illnesses with lost workdays from Column 9 _______ f. Number of illnesses without lost workdays form Column 13 _______ g. Total number of injuries and illnesses on OSHA 300 Log _______ h. Total number of cases listed in Columns 6 and 13 that are

“first aid” cases. Highlight each of these cases by placing an asterisk beside them on the OSHA 300 Log. (_______)

4. Total employee hours worked last year (field, supervisory, and clerical) by your firm.

__________


C. Safety Program

1. Do you hold site safety meetings for:

YES

NO

FREQUENCY *

TITLE OF PERSON CONDUCTING MEETING

Field Supervisor? Employee? New Hire? Sub-Contractors?

2. Do you conduct job safety inspections? _________ YES _________ NO _________ FREQUENCY

3. Do you have a formal (written) safety program? _______ YES _______ NO

May we obtain a copy upon request? _______ YES _______ NO * D - Daily M - Monthly A - Annually W - Weekly Q - Quarterly N – None II. SAFETY “PASS/FAIL” CRITERIA

Beginning February 1, 2003, our safety “pass/fail” criteria are as follows:

• “Pass” a contractor whose current Workers Compensation Insurance Experience Modification Rate (EMR) is less than or equal to 1.00.

• “Pass” a contractor whose current EMR is greater than 1.00, if the trend of his last three EMR’s is

downward and no single EMR in that period is above 1.20. (For example, pass someone whose EMR’s for the last three years have been 2000 – 1.19, 2001 – 1.13, 2002 – 1.05)

• For a contractor who can’t provide a true EMR because their firm is too new, too small, or self-

insured, “pass” them if the OSHA Recordable Incident Rate is less than or equal to 15 injuries and illnesses per 200,000 man-hours.

• If a contractor “passes” the EMR criteria, the OSHA data is not “pass/fail”. However, Memorial

Hermann Hospital System must analyze any OSHA 300 Log with a Recordable Incident Rate greater than 15 injuries and illnesses per 200,000 man-hours. In this analysis, we’ll be trying to understand the types of safety problems experienced by the contractor.

If your firm does not “pass” our safety criteria, we invite you to explain why and the steps being taken to improve your safety performance. Printed Name: _________________________________ Title: ___________________________ Signature: ____________________________________ Date: ___________________________


APPENDIX 2

Site Specific Information

This information should be completed by the Director of Facilities Engineering and a copy given to each primary contractor working on your campus. Emergency Telephone Numbers These are the in-house numbers or extensions accessible from any facility telephone (Security, Emergency Teams, etc.). The Area Code and Prefix should also be provided for access by non-system phones (i.e. Contractor office trailer or Cellular phones). Use 911 only for the Fire Department or Police. Contractor Assembly Areas These areas should be selected for:

• Access from the exterior of the facility • Out of the way of Fire Lanes and approaches by Emergency Vehicles • Large enough for the contractor’s work force • Utilize landmarks when possible and post signs as necessary

Designated Smoking Areas

Contractor Smoking Areas should be located away from doors to the facility. The specific area should be delineated rather than simply “outside the building”. Ash Cans and signs should be provided and maintained by the contractor. Hospital Rest Rooms Your Campus policy of assigning Rest Rooms for use by contractor personnel OR requirements for placing portable toilettes on campus. Cafeteria Usage Your Campus policy for contractor personnel to utilize the cafeteria facilities.

Contractor Safety Orientation

These instructions are for your facilities in-house Contractor Safety Orientation.


SITE SPECIFIC SAFETY INFORMATION

CAMPUS _____________________________________________________________ Address ______________________________________________________________

EMERGENCY TELEPHONE NUMBERS

Hospital Emergency Services Area Code _____ Prefix _____ Extension _______ Security ………………………………………………………………….. Extension _______ Fire …………………………………………………………………. Extension _______ Facilities Engineering ………………………………………………….. Extension _______

CONTRACTOR ASSEMBLY AREAS

Primary _____________________________________________________ First Alternate _____________________________________________________ Second Alternate _____________________________________________________

DESIGNATED SMOKING AREAS

_____________________________________________________________________________ _____________________________________________________________________________

USE OF HOSPITAL RESTROOMS

_____________________________________________________________________ _____________________________________________________________________

CAFETERIA USAGE

_____________________________________________________________________ _____________________________________________________________________

CONTRACTOR SAFETY ORIENTATION

_____________________________________________________________________ _____________________________________________________________________ Revised 11/03



APPENDIX 3

Safe Work Permit

See Sections 6 & 7 See following example of the permit form. Specific questions should be directed to the Shift Supervisor of Facilities Engineering.


INSERT

SAFE

WORK

PERMIT

Form No. 80407


APPENDIX 4

Hot Work Permit

See Section 9 The term “Firesafety Supervisor” applies to:

• Current Shift Supervisor of Facilities Engineering • Senior Maintenance Technicians who maintain fire detection and

suppression systems. The Manager of Facilities Engineering will designate those individuals who are authorized to sign the permit. Specific questions should be directed to the Manager of Facilities Engineering, or Fire Safety Supervisor.


INSERT

HOT

WORK

PERMIT

Form No. 80406


APPENDIX 5

Infection Control Risk Assessment (ICRA)

Each hospital has determined their Risk Groups in Part 1.2 Each Hospital has reviewed their Infection Control Procedures as they pertain to construction activities and modified the attached procedures as necessary. This is an example of the Infection Control Procedures developed for the Memorial Hermann Hospital Campus.


INFECTION CONTROL

PART I – GENERAL 1.1 CONSTRUCTION ACTIVITY TYPES

A. The construction activity types are defined by the amount of dust that is generated, the duration of the activity, and the amount of shared HVAC systems. Contact the Owner’s Safety, Construction & Architectural Services and Infection Control Departments if any activity is questionable under these guidelines.

B. Type A: Inspections and Non-invasive activities. Includes, but is not limited to

removal of ceiling tiles for visual inspection (limited to 1 tile per 50 square fee) painting (but not sanding), wall covering, electrical trim work, minor plumbing, and activities that do not generate dust or require cutting of walls or access to ceiling other than for visual inspection.

C. Type B: Small scale, short duration activities that create minimal dust. Includes,

but is not limited to, installation of telephone and computer cabling, access to chase spaces, cutting of walls or ceiling where dust migration can be controlled.

D. Type C: Any work that generates a moderate to high level of dust or requires

demolition or removal of any fixed building components or assemblies. Includes, but is not limited to, sanding of walls for painting or wall covering, removal of floor coverings, ceiling tiles and casework, new wall construction, minor ductwork or electrical work above ceilings, major cabling activities and any activity that cannot be completed within a single work shift.

E. Type D: Major demolition and construction projects. Includes, but is not limited

to, activities that require consecutive work shifts, requires heavy demolition or removal of a complete ceiling system and new construction.


1.2 INFECTION CONTROL RISK GROUPS

GROUP I

GROUP 2

GROUP 3

GROUP 4

• All Office Areas • Rehab • Sleep Lab • Hallways and Lobbies not in patient care areas

• All Patient Care Areas • All Clinics • Admitting and Dis- charge Areas • Emergency Center • Children’s Hospital • Radiology/M.R.I. • Nuclear Medicine • Gamma Knife • 4 Jones • 5 Jones • 6 Jones • 7 Jones • 8 Jones (Nephrology) • Epilepsy Monitoring • C.O.U. • P.A.C.U. • L & D • Newborn • Day Surgery • PT/OT (Including Tank Rooms) • Cardiac I.M.U. • Oncology • Kitchen & Cafeteria Areas

• Burn Unit • All O.R.’s • All I.C.U.’s • Dialysis • L & D O. R. • Pulmonary/G.I. • Cath. Labs • Hyperbaric/ Wound Care • Transplant • N.I.C.U. • N.S.C. • P.S.C.U. • 4 Cullen • 5 Cullen • Endoscopy • Sterile Supply Work Room • Pharmacy – Admixture Area • Laboratories

Reviewed by Infection Control Department: Date: ____________ By: ______________________

1.3 CONSTRUCTION ACTIVITY/INFECTION CONTROL MATRIX

A. If not shown on the drawings, determine the level of infection control classification necessary for the work by matching the construction activity with the designated risk group in the matrix below. Provide the associated infection control procedures under Part 3 – Execution of this specification.


CONSTRUCTION ACTIVITY RISK LEVEL TYPE “A” TYPE “B” TYPE “C” TYPE “D”

GROUP 1 I II II III/IV GROUP 2 I II III IV GROUP 3 I III III/IV IV GROUP 4 III III/IV III/IV IV

1.4 PERFORMANCE REQUIREMENTS

A. Infection control is critical in areas of all facilities. Construction activities causing disturbance of existing dust, or creating new dust, must be conducted in tight enclosures cutting off any flow of particles into patient areas.

B. Require all contractors, sub-contractors, material suppliers, vendors, employees, or agents to

be bound by these same requirements. Before any construction on site begins, the contractor’s on-site management team shall attend a mandatory meeting held by the Owner’s Infection Control authorities, for training and instruction on precautions to be taken.

C. HEPA equipped air filtration machines shall provide air flow into construction area fewer

than 100 fpm at barricade entrances with doors fully open. HEPA equipped air filtration machines shall be connected to normal power, ganged to a single switch for emergency shut off, and shall run continuously.

D. Performance requirement for certain activities may be modified by the Owner’s Safety or

Infection Control Departments. Any modifications will be written on the Infection Control Permit. Any modifications made by Owner’s personnel do not relieve the Contractor of compliance with proper infection control procedures.

1.5 SUBMITTALS

A. Submit report of infection control procedures, including location and details of barriers. B. Product Data: Submit product data for products used in infection control program.

1.6 QUALITY CONTROL

A. The Owner’s Infection Control Department will determine the need to monitor biological counts in vicinity of work. Whenever safe levels are exceeded, Contractor will be notified to correct conditions immediately.

1. All work shall be stopped on the project whenever a hazardous infection control

deficiency exists.

2. Contractor shall take immediate action to correct all deficiencies.

3. Failure of Contractor to correct such deficiencies will result in corrective action taken by the Owner and deduction of all costs to correct the deficiencies from the contract.

1.7 INFECTION CONTROL PERMIT


A. An infection Control Permit is required for Class III or higher procedures and any activity in a

Group 4 Infection Control Group. Refer to shaded area on Construction Activity Control Matrix.

B. When required, obtain Infection Control Permit from the Owner’s Safety Department before

beginning any demolition or construction work.

C. Infection Control Permit is to be displayed at entrance to work area during entire construction period.

D. Return permit at completion of work.

PART 2 – PRODUCTS 2.1 MATERIALS

A. Sheet plastic: fire retardant polyethylene, 6-mil thickness. B. Barrier doors: solid core wood in metal frame, painted.

C. HEPA equipped air filtration machines: Forced Air 2000 HEPA equipped air filtration units

as manufactured by Advanced Containment Systems, Inc., Houston, Texas 77075. Provide HEPA filter, primary and secondary filters or equal.

D. Exhaust hoses: heavy duty, flexible steel reinforced, Ventilation Blower Hose, WPC as

manufactured by Federal Hose Mfg. Co., Painesville, Ohio 44077 or equal.

E. Adhesive walk off mats; provide minimum size mats of 24” x 36” as manufactured by 3M, St. Paul, Minnesota 55144 or equal.

F. Disinfectant: Owner-approved disinfectant. G. Control Cube: portable ceiling access module, “Kontrol Kube, Jr.” with heavy duty vinyl

enclosure as manufactured by Fiberlock Technologies, Inc. 630 Putnam Ave., Cambridge, Massachusetts 02139 or equal.

2.2 BARRIERS

A. Closed door with masking tape applied over the frame and door is acceptable for projects that

can be contained within a single room. B. Construction, demolition or reconstruction not capable of containment within a single room

must have the following barriers erected:

1. Airtight plastic barrier that extends from floor to ceiling. Seams must be sealed with duct tape to prevent dust and debris from escaping.

2. Dry wall barrier erected with joints covered or sealed to prevent dust and debris from

escaping.

3. Seal all penetrations in existing barriers airtight.


4. Barriers at penetration of ceiling envelops, chases, and ceiling spaces to stop movement of air and debris.

5. Anteroom or double entrance openings that allow for workers to remove protective

clothing or vacuum off existing clothing.

6. At elevator shafts or stairways within the field of construction.

7. Overlapping flap minimum 2 feet wide at polyethylene enclosures for personnel access.

PART 3 – EXECUTION 3.1 GENERAL

A. Maintain manpower and equipment, including dust mops, brooms, buckets and clean wiping

rags, for cleaning fine dust from floors in adjacent occupied areas. B. Contain work areas outside of construction barriers, including spaces above ceilings, with full

height polyethylene sheet barrier, tightly taped.

C. Clean up dust tracked outside of construction area immediately. 3.2 INSTALLATION

A. Temporary construction barriers and closures above ceilings shall be dust tight. B. Removal of debris shall be in tightly covered containers.

C. Adhesive mats or carpets at barricade entrances and in the anteroom shall be clean and

changed daily, or as necessary, to prevent accumulation of dust.

D. Any dust tracked outside of barrier shall be removed immediately. Cleaning outside barrier to be done by HEPA filtered vacuum or damp mop.

E. Any ceiling access panels opened for investigation beyond sealed areas shall be replaced

immediately when unattended.

F. Block off all existing ventilation ducts within the construction area. Method of capping ducts shall be dust tight and withstand airflow.

G. When openings are made into existing ceilings, use Control Cube or provide polyethylene

enclosure around ladder sealing off opening, fitted tight to ceiling and floor. Provide thorough cleaning of existing surfaces, which become exposed to dust.

H. Removal of construction barriers and ceiling protection shall be done carefully, outside of

normal work hours. Vacuum and clean all surfaces free of dust after the removal.

I. When access panels are opened in occupied areas, for work above ceilings, use Control Cube or provide polyethylene enclosure around ladder sealing off opening, fitted tight to ceiling and floor.


J. All vacuuming outside areas not under negative pressure to be with a certified HEPA filtered vacuum.

K. Construct anteroom to maintain negative airflow from clean area through anteroom and into

work area. 3.3 INFECTION CONTROL PROCEDURES

A. The Contractor is responsible for obtaining the Infection Control Permit from the Owner’s

Safety Department prior to commencing construction. B. The Owner’s Safety, Construction & Architectural Services and Infection Control

Departments will evaluate every work order. They reserve the right to add requirements to a project on an individual basis.

C. The Owner’s Safety Department will make periodic visits to work site to ensure compliance

with this policy.

D. CLASS I:

1. Execute work by methods to minimize raising dust from construction operations. 2. Immediately replace any ceiling tile displaced for visual inspection.

E. CLASS II:

1. Provide active means to prevent air borne dust from dispersing into atmosphere. 2. Water mist work surfaces to control dust while cutting. 3. Seal unused doors with duct tape or masking tape. 4. Block off and seal air vents. 5. Wipe work surfaces with disinfectant. 6. Contain construction waste before transport in tightly covered containers. 7. Wet mop and/or vacuum with filtered vacuum before leaving work area. 8. Place dust mat at entrance and exit of work area.

F. CLASS III:

1. Obtain Infection Control Permit from the Owner’s Safety Department before construction begins.

2. Isolate HVAC system in area where work is being done to prevent contamination of duct system.

3. Complete all critical barriers before construction begins or implement Control Cube method.

4. Maintain negative air pressure within work site utilizing HEPA equipped air filtration units.

5. Do not remove barriers from work area until complete project is inspected by the Owner’s Safety Department and (if required in block below) Infection Control Department, and thoroughly cleaned by the Owner’s Environmental Services Department.

6. Vacuum work area with HEPA filtered vacuum. 7. Wet mop area with disinfectant. 8. Remove barrier materials carefully to minimize spreading of dirt and debris associated

with construction.


9. Contain construction waste before transport in tightly covered containers. 10. Cover transport receptacles or carts. Tape covering. 11. Remove isolation of HVAC system in areas where work is being performed.

G. CLASS IV:

1. Obtain Infection Control Permit from the Owner’s Safety Department before construction begins.

2. Isolate HVAC system in area where work is being done to prevent contamination of duct system.

3. Complete all critical barriers or implement Control Cube method before construction begins.

4. Maintain negative air pressure within work site utilizing HEPA equipped air filtration units.

5. Seal holes, pipes, conduits and punctures appropriately. 6. Construct ante-room and require all personnel to pass through this room so they can be

vacuumed using a HEPA vacuum cleaner before leaving work site or they can wear cloth or paper coveralls that are removed each time they leave the work site.

7. All personnel entering work site are required to wear shoe covers. Shoe covers must be changed each time the worker exits the work area.

8. Provide adhesive walk off mats at entrance to work area within the anteroom. Replace

used mats with new mats in accordance with manufacturer’s recommendations. 9. Do not remove barriers from work area until complete project is inspected by the

Owner’s Safety Department (if required in block below) Infection Control Department, and thoroughly cleaned by the Owner’s Environmental Services Department.

10. Vacuum work area with HEPA filtered vacuums. 11. Wet mop area with disinfectant. 12. Remove barrier materials carefully to minimize spreading of dirt and debris associated

with construction. 13. Contain construction waste before transport in tightly covered containers. 14. Cover transport receptacles or carts. Tape covering. 15. Remove isolation of HVAC system in areas where work is being performed.

3.4 FIELD QUALITY CONTROL A. Contractor is responsible for maintaining equipment and replacement of HEPA and other

filters in accordance with manufacturer’s recommendations.

B. Field inspection and testing will be performed by the Owner’s Safety and Infection Control Departments.

C. Owner’s Safety Department will confirm specified air velocity whenever barricades are

erected or modified.

D. Owner’s personnel will monitor air quality throughout project 3.5 ENFORCEMENT


A. For any breach of this infection control policy, the Owner will stop the work of the project and the Contractor shall pay for all associated costs incurred by the Owner, as well as for correction of the work.

B. The Owner’s Safety, Construction & Architectural Services and Infection Control

departments will record the following:

1. Document each violation with photographs. 2. Extract Contractor or department information from the work tag. 3. Maintain a record of all infection control violations.

C. Violations of infection control policies may affect status as a responsible Contractor for

bidding future work.


INFECTION CONTROL CONSTRUCTION PERMIT Permit #: Location of Construction: Project Start Date:

Project Manager: Estimated Duration:

Contractor Performing Work: Permit Expiration Date:

Supervisor: Telephone #:

YES NO Construction Activity YES NO Infection Control Risk Group TYPE A: Inspection, non-invasive activity GROUP 1: Least Risk TYPE B: Small scale, short duration, minimal dust

generating activity GROUP 2: Medium Risk

TYPE C: Activity that generates moderate to high levels of dust, requires greater than one work shift for completion

GROUP 3: Medium/High Risk

TYPE D: Major demolition and construction activities requiring consecutive workshifts

GROUP 4: Highest Risk

CLASS I: 1) Execute work by methods to minimize raising dust from construction operations.

2) Immediately replace any ceiling tile displaced for visual inspection.

CLASS II:

DATE

INITIALS

1) Provide active means to prevent air-borne dust from dispersing into atmosphere.

2) Water mist work surfaces to control dust while cutting. 3) Seal unused doors with duct tape or masking tape. 4) Block off and seal air vents. 5) Wipe work surfaces with disinfectant.

6) Contain construction waste before transport in tightly covered containers.

7) Wet mop and/or vacuum with filtered vacuum before leaving work area.

8) Place dust mat at entrance and exit of work area.

CLASS III:

DATE

INITIALS

1) Obtain infection control permit from Owner’s Safety Department before construction begins.

2) Isolate HVAC system in area where work is being done to prevent contamination of duct system.

3) Complete all critical barriers or implement control cube method before construction begins.

4) Maintain negative air pressure within work site utilizing HEPA equipped air filtration units.

5) Do not remove barriers from work area until complete project is inspected by the Owner’s Safety Department and (if required in block below) Infection Control department, and thoroughly cleaned by the owner’s Environmental Services department.

6) Vacuum work area with HEPA filtered vacuum. 7) Wet mop area with disinfectant. 8) Remove barrier materials carefully to minimize spreading

of dirt and debris associated with construction. 9) Contain construction waste before transport in tightly

covered containers. 10) Cover transport receptacles or carts. Tape covering. 11) Remove isolation of HVAC system in areas where work

is being performed.

CLASS IV:

DATE:

INITIALS

1) Obtain Infection Control Permit from Owner’s Safety Department. Before construction begins.

2) Isolate HVAC system in area where work is being done to prevent contamination of duct system.

3) Complete all critical barriers or implement control cube method before construction begins.

4) Maintain negative air pressure within work site utilizing HEPA equipped air filtration units.

5) Seal holes, pipes, conduits and punctures appropriately. 6) Construct anteroom and require all personnel to pass

through this room so they can be vacuumed using a HEPA vacuum cleaner before leaving work site or they can wear cloth or paper coveralls that are removed each time they leave the work site.

7) All personnel entering the work site are required to wear shoe covers. Shoe covers must be changed each time the worker exits the work area.

8) Provide adhesive walk off mats at entrance to work area within the anteroom. Replace used mats with new mats in accordance with manufacture’s recommendations.

9) Do not remove barriers from work area until complete project is inspected by the Owner’s Safety Department and (if required in block below) Infection Control Department, and thoroughly cleaned by the Owner’s Environmental Services Department.

10) Vacuum work area with HEPA filtered vacuums. 11) Wet mop area with disinfectant. 12) Remove barrier materials carefully to minimize spreading

of dirt and debris associated with construction. 13) Contain construction waste before transporting in tightly

covered containers. 14) Cover transport receptacles or carts. Tape covering. 15) Remove isolation of HVAC system in areas where work

is being performed.

Permit sent to Infection Control Department for review: COPY FAX DATE: __________ BY: _________________________________ Final inspection by Infection Control required: YES NO Additional Requirements: 12 hour uninterrupted air exchange required Date: _______________ Initials: _______________

Exceptions/Additions to this permit are noted by attached memo Date: _______________ Initials: ______________

Permit requested by: ________________________ Date: ______________ Permit Authorized by: ___________________ Date: _____________


CONSTRUCTION ACTIVITY TYPES TYPE A: Inspection and non-invasive activities. Includes, but is not limited to removal of ceiling tiles for visual

protection limited to 1 tile per 50 square feel, painting (but not sanding), wallcovering, electrical trim work, minor plumbing and activities which do not generate dust or require cutting of walls or access to ceilings other than for visual inspection.

TYPE B: Small-scale short duration activities which create minimal dust. Includes, but is not limited to, installation of telephone and computer cabling, access to chase spaces, cutting of walls or ceilings where dust migration can be controlled.

TYPE C: Any work, which generates a moderate to high level of dust or requires demolition or removal of any fixed building components or assemblies. Includes, but is not limited to, sanding of walls for painting or wallcovering, removal of floorcoverings, ceiling tiles and casework, new wall construction, minor duct work or electrical work above ceilings, major cabling activities and any activity which cannot be completed within a single workshift.

TYPE D: Major demolition and construction of projects. Includes, but is not limited to, activities which require consecutive work shifts, requires heavy demolition or removal of a complete cabling system and new construction.

INFECTION CONTROL RISK GROUPS

GROUP I GROUP 2 GROUP 3 GROUP 4

• All Office Areas • Rehab • Sleep Lab • Hallways and Lobbies not in patient care areas

• All Patient Care Areas • All Clinics • Admitting and Discharge Areas • Emergency Center • Children’s Hospital • Radiology/M.R.I. • Nuclear Medicine • Gamma Knife • 4 Jones • 5 Jones • 6 Jones • 7 Jones • 8 Jones (Nephrology) • Epilepsy Monitoring • C.O.U. • P.A.C.U. • L & D • Newborn • Day Surgery • PT/OT (Including Tank Rooms) • Cardiac I.M.U. • Oncology • Kitchen & Cafeteria Areas

• Burn Unit • All O.R.’s • All I.C.U.’s • Dialysis • L & D O. R. • Pulmonary/G.I. • Cath. Labs • Hyperbaric/Wound Care • Transplant • N.I.C.U. • N.S.C. • P.S.C.U. • 4 Cullen • 5 Cullen • Endoscopy • Sterile Supply Work Room • Pharmacy – Admixture Area • Laboratories

CONSTRUCTION ACTIVITY/INFECTION CONTROL MATRIX

Infection Control Permit will be required when the Construction Activity and Risk Level indicate that Class III and Class IV control procedures are necessary. CONSTRUCTION ACTIVITY

RISK LEVEL TYPE “A” TYPE “B” TYPE “C” TYPE “D”

GROUP 1 I II II III/IV

GROUP 2 I II III IV

GROUP 3 I III III/IV IV

GROUP 4 III III/IV III/IV IV


APPENDIX 6

Pre-Construction Risk Assessment (PCRA)

This is a proactive method to analyze the projects potential impact on air quality, infection control, utilities, noise, vibration, life safety and emergency procedures. The attached risk assessment tool (PCRA) is designed for evaluating the project prior to commencement of construction. Team members involved in this process (as applicable) include the A&E group, Contractors, Safety, Infection Control, Project Manager, and Facilities Engineering.


Memorial Hermann Hospital System

Facility Engineering Policy & Procedure Subject: Pre-Construction Risk Assessment Policy: FE-SM-115 Date: 8/02 Revised: 9/02 Page: 1 of 2 1.0 PURPOSE

1.1 To ensure that appropriate design, safety and risk assessments are performed when designing and building the hospital environment.

2.0 GUIDELINES

2.1 The construction project team will conduct a proactive risk assessment using risk criteria to identify hazards that could potentially compromise patient care activities when planning demolition, construction, and renovation work.

3.0 DEFINITIONS

3.1 Construction Project Team – a collaborative group, (as applicable) of design professionals, clinical specialists, infection control practitioners, facilities/safety, project management, and construction personnel.

4.0 PROCEDURES

4.1 Pre-construction Risk Assessment (PCRA) process:

4.1.1 The Construction Project Team evaluates the risk and impact of the proposed project on the facility and patient care environment during the planning and implementation state of the project.

4.1.2 A Pre-Construction Risk Assessment (PCRA) form has been developed which provides a framework for discussions and assessment of risks to the built environment relative to air quality


and infection control, utility systems, noise, vibration, and emergency procedures or impacts to fire and life safety systems.

4.1.3 From the assessment, specific recommendations and further research/processes may be outlined to minimize the impact of the proposed project on the patient care environment.

4.1.4 There are existing procedures and assessments that are utilized in conjunction with this evaluation to provide the complete evaluation. The initial team review will outline which issues require in-depth assessments (as applicable) and further follow-up.

4.2 Implementation:

4.2.1 Construction Project Team reviews and documents required analysis utilizing the PCRA form. If applicable, additional documentation is completed regarding ILSM, Infection Control, Emergency Procedures and Utility Interruption notices (as applicable).

4.2.2 Project manager(s) ensure documentation is properly executed and distributed to team members.

4.2.3 PCRA should be posted on the job site and the original form(s) should be kept in the project file.

4.3 Reporting:

4.3.1 A summary of projects that are included in this process shall be periodically reviewed by the hospital Safety Committee or Construction Coordinating Committee reporting structure.

References:

• Management of the Environment of Care, CAMH • Guidelines for Design and Construction of Hospitals and Healthcare Facilities, the AIA

Attachment: PCRA Process Diagram


Infection Control Indoor Air Quality

Emergency Procedures Utility Impacts

Vibration

ILSM Fire & Life Safety

Noise

New Construction

Demolition

Renovation

Risk Minimization Steps for:

Patient Environment of Care

Pre-Construction Risk Assessment

(PCRA) Process

Memorial Hermann Healthcare System Pre-Construction Risk Assessment

Process

Safety Committee or

Construction Committee


APPENDIX 7

Confined Space Entry Permit

See Section 12 – See following form Each hospital has their individual Confined Space Entry Program to comply with applicable facility, OSHA and your firm’s requirements. Specific questions should be directed to the Manager of Facilities Engineering.


CONFINED SPACE ENTRY PERMIT

(All copies of permit must remain at job site until operation is complete)

Location And Description Of Confined Space

Date of Entry _____________________ Time of Entry _________________________ Expiration ____________________________

Description Of Work To Be Done

Test (s) To Be Taken Prior To Entry Valid for one 8 hour period only

P.E.L. *

YES

NO

RESULTS

SIGNATURE

DATE/TIME

% of Oxygen >19.5% and <23.5% % of L.E.L. ** < 10% Carbon Monoxide <50ppm Hydrogen Sulfide <10ppm Aromatic Hydrocarbon <10ppm Other Tests (list below):

Testing/Monitoring Instruments Used I.D. Number

Note: Continuous or periodic testing must be performed for the duration of the job. Perform applicable tests across different sections of the space. Individual(s) performing test(s): __________________________________________ Specify frequency of test(s): _______________________________________________________ * P.E.L. (Permissible Entry Level) ** L.E.L. (Lower Explosion Level)


SPECIAL REQUIREMENTS YES NO RESULTS SIGNATURE DATE/TIME Lock Out/De-energize

Lines Broken – Capped or Blanked

Purge – Flush and Vent

Ventilation

Secure Area

Other Requirements (specify):

Personal Protective Equipment (check if required for entry) Hard Hat Gloves Lighting Hearing Protection Respirator Safety Harness Goggles Gas Monitor Lifeline Protective Clothing Fire Extinguisher Emergency Retrieval System Other (specify) _________________________________________________________________ Supervisor(s) in Charge of Operation Department Phone

Authorized Entrant(s) ________________ Attendant(s) ___________________________ ____________________________________ _______________________________________ In Emergency Contact _______________ _______________________________________ _____________________________________ Signature of Supervisor Authorizing Entry

Work Completed and Ready for Operation Authorizing Signature _____________________ Date: __________________________ _________________________________________ Time: __________________________


APPENDIX 8

Cable Pull Permit

See Section 13 – See following form Specific questions should be directed to the Manager of Facilities Engineering.


CABLE PULL PERMIT DATE: NUMBER: COMPANY NAME: ____________________________ CONTACT: ___________________________ HOSPITAL DEPT. WORKING FOR: ________________________________________________________ HOSPITAL CONTACT: __________________________________________________________________ TYPE OF WORK BEING DONE: ___________________________________________________________ STARTING LOCATION: __________________________________________________________________ ENDING LOCATION: ____________________________________________________________________ TYPE & QUANTITY OF ITEMS BEING INSTALLED (i.e. number and type of cables, conduits, water lines, etc.): _________________________________________________________________________________ NUMBER OF WALLS OR FLOORS TO BE PENETRATED: _____________________________________

∗

ACTIVITY IS APPROVED ONLY DURING THE CALENDER WEEK FOR WHICH THE PERMIT IS DATED.

∗

PERMIT WILL BE ATTACHED TO SIDE OF LADDER OR WORK CART. ∗

ALL FLOOR AND WALL PENETRATIONS MADE DURING THIS PROJECT SHALL BE SLEEVED (WITH FERROUS METAL EXTENDING ONE INCH EITHER SIDE) AND SEALED WITH APPROVED FIRE RESISTANT MATERIAL BY CONTRACTOR ACCOMPLISHING THE WORK.

∗ PERMIT NUMBER SHALL BE APPLIED BY PERMIT HOLDER TO THE CABLE BEING PULLED (conduit, pipe, duct, etc.) ON EACH SIDE OF A PENETRATION.

∗ MAKE NOTE OF ANY EXISTING IMPROPER PENETRATIONS IN THE AREA WHICH YOU ARE WORKING AND REPORT THESE TO WORK CONTROL.

∗

ABOVE CEILING CHECKLIST CORRIDOR BARRICADE (MIN. 6 CONES) SEAL ALL WALL PENETRATIONS

NO OPEN CEILING AROUND PATIENTS

REPLACE TILES

CLEAN AREA

ASBESTOS PRECAUTIONS

CERTIFIED WORKER

AIR MONITORING

CONTROL CUBE / CONTAINMENT

NEGATIVE AIR SYSTEM – HEPA FILTERED

PPE REQUIREMENTS___________________ ______________________________________

Signed: __________________________ Title: ______________________ Date: __________________

REV 10/03


APPENDIX 9

Interim Life Safety Measures

See Section 15 – See following forms Specific questions should be directed to Contractor Safety and/or local campus Safety Officer and Facilities Engineering.


NO I.L.S.M.

REQUIRED

RE-EVALUATE AS NECESSARY

CONSTRUCTION OR

REMODELING

IMPLEMENT I.L.S.M.

AS APPROPRIATE

WILL THE SCOPE OF THE PROJECT:

REQUIRE EXIT DOORS OR

EXIT COORIDORS TO BE BLOCKED OR RE-ROUTED

OR

REQUIRE ADDITIONAL COMBUSTIBLE OR

FLAMMABLE MATERIALS TO BE BROUGHT INTO

THE AREA

OR

Memorial Hermann Healthcare System INTERIM LIFE SAFETY MEASURES

DECISION LOGIC

CAUSE FIRE ALARM OR EXTINGUISHMENT

SYSTEMS TO BE IMPAIREDFOR 4 HOURS OR LONGER

REQUIRE FIRE WALLS OF FIRE DOORS TO BE

REMOVED, PENETRATED OR COMPROMISED FOR

GREATER THAN ONE SHIFT

OR

OR

CAUSE EXITWAY LIGHTING OR

EXIT SIGNS TO BE REDUCED

NO TO ALL

QUESTIONS

YES TO ANY

QUESTION


Project: Location:Start Date: Contractor(s):Assessment Completed By: Date:

ILSM

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and

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x x x x xx x x x x

x x x x x x xx x x x x x x xx x x x x

Comments:

Note: Although the items indicated are typical, each project must be examined on a case by case basis.Copies: Project Manager, Safety Office, Contractors (as applicable), Project file(s)

* Smoking is limited only to designated areas (external) on all MHHS projects. Increased hazard surveillance of facility and construction areas are standard practice for active projects.

Exitway lighting or exit signs to be reduced.

ILSM Assessment

Exit doors or exit corridors to be blocked or re-routed.Require substantial amount of additional flammable materials within the area.Fire alarm or extinguishment systems are/to be impaired more than 4 hours in a 24 hour period.Fire/smoke walls or doors to be removed, penetrated or compromised in any other way.


DATE: APPROVED:

7.2 Inspections Page 1 of 4



Policy #: 7.2 Policy Title: Inspections Discuss with CRESS to clarify Category: Safety Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: The purpose of this policy is to give guidelines related to an appropriately scheduled and conducted facility inspection. Policy Statement: All required inspections should be anticipated and scheduled in advance. On all final occupancy inspections, the following steps should be taken:

Verify that the building is clean and appears ready for its intended use

Verify that representatives from each major subcontractor are available at

the job site to answer questions from inspectors and to make immediate adjustments or corrections to work in place at the recommendation of the inspectors.

Note takers should accompany each inspector during the inspection to

record all inspection comments. When required, early conditional occupancies should be coordinated with

Hospital Facility. The following is specific protocol for the Project Manager to follow for inspections:

A. Protocol for Job Site / Area Inspections 1.) All individuals performing inspections should inform the Project Manager

that they will be on the project and during what time frame.


2.) Note in your Daily Log, the start time for billing purposes. 3.) Check the Facilities Engineering Board for PERMITS 4.) SIGN-IN SHEET

a. General Contractor b. Job Site c. Facilities Engineering (in-house projects)

5.) Contact the Job Superintendent (or designated “Responsible Person”)

a. If neither is available nor on the job site, inform the Facilities

Engineering Manager or Director immediately. b. A representative of the General Contractor and the Facilities

Engineer shall accompany the Contractor Safety Inspector throughout any Audit.

6.) Conduct Inspection / Audit / Fire Drill 7.) Complete the Job Site / Area Inspection Report 8.) Obtain signature of appropriate Job Representative. Leave top sheet of

report. 9.) Leave a copy with the Facilities Engineering Director 10.) Sign Out 11.) Note time of departure from site or campus in Daily Log. 12.) Note in Daily Log of time spent for making copies, reports and

distribution to support time charged to the Project.


Contractor Safety Job Site / Area Inspection

DATE:_________ TIME:_________ CAMPUS:___________ Project Name:_____________________________________________ Project Manager:__________________________________________ Specific Location:__________________________________________ General Contractor/Company:________________________________ Contractor or Job Site Representative:__________________________ The following violations of the Contractor Safety Requirements OR Safety deficiencies are noted: ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ ________________________________________________________ IMMEDIATE CORRECTIVE ACTION IS REQUIRED This is a REPEAT violation SERIOUS VIOLATION – WRITTEN RESPONSE IS REQUIRED

Failure to abate these conditions by (DATE)_______(TIME)________ may result in penalties outlined in Section 2 of the Contractor Safety Requirements.

Safety Representative:__________________________________________ Job Representative:____________________________________________


CONTRACTOR SAFETY JOB SITE / AREA INSPECTION

DISTRIBUTION

Original (White) Job Representative

- GC Superintendant - Craft Foreman

Form Copy (Yellow) Safety Campus/Project Binder Copies Facilities Engineering (Hermann – To Kent Trammel) Project Manager (All SpawMaxwell – Charlene) John Houchin Packet - Friday APPROVED: DATE:

8.1 Best Practices for Design & Planning Page 1 of 3


Policy #: 8.1 Policy Title: Best Practices for Design/Planning Category: Design and Planning Best Practices Original Date: November 2005 Last Review Date: November 2005 Supersedes: No prior policy Policy Purpose: The purpose of this policy is to provide the Project Manager with CRESS Best Practices related to:

□ Architectural/Design □ Interior Design

□ Biomedical Engineering □ Engineering

□ Parking □ Engineering

□ Security

Policy Statement:

A. Architectural and Design Best Practices 1.) Patient Room – Existing 2.) Patient Room – In-Design 3.) Catheterization Lab 4.) Intensive Care Unit – Existing 5.) Intensive Care Unit – In-Design 6.) Nursing Care 7.) Operating Room 8.) Imaging Equipment Decisions 9.) Outpatient Imaging 10.) Post Occupancy Measurements


B. Interior Finishes 1.) Finishes

a. System b. Facilities

2.) Furniture

a. Office Typicals b. Task & General Seating c. Filing & Storage d. Tables e. Waiting Area Seating f. Patient Room Furniture g. Pediatric Furniture h. Outdoor Furniture i. Accessories j. Bariatric Seating

C. Graphics & Wayfinding

1.) General Specifications 2.) Interior Graphics 3.) Exterior Graphics

D. Parking

1.) Fire Cabinets 2.) Garage Lighting 3.) Miscellaneous 4.) Parking Booths 5.) Parking Equipment 6.) Security Systems

E. Biomedical Engineering

1.) Medical Equipment Management Plan 2.) Performance Improvement Plan 3.) JCAHO Cross-Reference 4.) Annual Analysis 5.) MEMP Binder Procedures 6.) General Reference Material

F. Engineering


1.) Benchmarking 2.) Master Specifications 3.) System Engineering Standard of Practices 4.) JCAHO Compliance Metrics 5.) SOC/PFI

G. Security

1.) Standard Designs for New Projects 2.) Standard Equipment for New Projects 3.) Standard ACMS Configuration for New Projects

APPROVED: DATE:

9.1 Construction Closeout Process FULL Page 1 of 18


Policy #: 9.1 Policy Title: Construction Closeout Process Category: Project Closeout Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: As a Project nears the completion phase of construction, the formal process for substantial completion, final completion begins, turnover, occupancy and commissioning begins. The purpose of this policy is to describe the general closeout process, as well as develop and administer Project closeout coordination with the Facility/Project Manager, governing agencies, other parties and activities, including:

System Demonstration/Start-Up Closeout Requirements for Consultants/Contractors Final Certification Agency preliminary inspections Punch list inspections Agency final inspections Construction phase substantial completion Staff and stock occupancy In-service training

Policy Statement: A.) Closeout Process Defined Closeout is the process of organizing the general Project requirements near the end of contract time to evidence the completion of the work. The time of closeout directly relates to "Substantial and Final Completion". It can either be a single time period for the entire work, or a series of time periods for individual components of the work, which have been certified as Substantially of Finally Complete on different dates.


Substantial Completion of the Work is the stage in the progress of construction when the work is sufficiently complete in accordance with the contract documents so that the Owner can occupy or utilize the work for its intended use. At a minimum, this is usually represented by the Occupancy Permit or Certificate of Occupancy issued by the local jurisdictional authority. Final Completion of the Project is the stage when all of the obligations of the contract have been satisfied and a Certification of Final Completion has been issued by the Architect according to the terms and conditions of the contract documents and a Certified Application for Payment has been received from the Architect allowing for a release of final payment to the Contractor. B.) Closeout Process Overview As the Contract approaches completion, each Contractor should be required to commence the Closeout Documentation Process. Typically, a 75% completion is used as the milestone for organizing and commencing the Contractor's Closeout. The closeout process takes time and planning therefore an adequate schedule for the activities is required. Before processing the completion of all contractual responsibilities of the Contractor and to expedite final payment to the Contractor, a detailed review of all contractual requirements should be performed along with compiling a list of deficiencies - punchlist. Effective and timely contract closeout is the objective, but it also requires efficient and timely action of the Contractor to provide the necessary punch list completion work, documents, materials, etc. In most cases, the Project closeout phase will commence with the issuance of Certificate of Substantial Completion and ends with the submission of the final record documents and the payment of the Construction Manager’s/General Contractor’s (CM/GC) final application for payment. The warranty period, in most instances, is subsequent to the Project closeout phase and occupancy. Warranty periods are typically begun by the formal acceptance of the building, described here and elsewhere as “substantial completion”. The Contractor should submit the following Project closeout submittals:

a. Evidence of compliance with the requirements of the governing

authorities b. Certificates of occupancy c. Certificates of inspection for special systems such as plumbing,

mechanical, electrical, fire alarm, fire protection, communications, elevators, x-ray protection, medical gas certification, etc.


d. State governing authority approval

e. Attic-stock materials as per the specification and contract documents

f. Project record documents in accordance with the requirements of the

Project specifications, which include final record “as-built” drawings

g. Operating and maintenance data in accordance with the requirements of the Project specifications

h. Warranties and guarantees in accordance with the requirements of the

Project specifications

i. Keys and keying schedules in accordance with the requirements of the Project specifications

j. Evidence of payments to all subcontractors and material suppliers and

final appropriate lien waver and bonding company notices of final payments

C.) Project Closeout Documentation Checklist

1.) As the Project draws near to completion, the Project Manager should utilize a Project Checklist (as shown below in Figure 9.1a – Project Closeout Checklist) to ensure that every close out activity has been completed.

a. Please note that each Project is unique and the requirements vary so

tailor the Project Checklist to properly reflect the particular aspects of the Project in question.

b. The Project Manager may request a template checklist by e-mailing the

Assistant to the CRESS Director of Architecture and Construction and asking for an electronic copy.

D.) 9 Steps to an Effective Closeout The following process and forms should be used to progress through the contract closeout stage in a productive and timely manner.

1.) Preparation for Future Contract Closeout Prior to the signing of a Contract with a CM/GC, the Contract Documentation should relate the requirements and obligations for all parties for proper


submittals, shop drawings, material certifications, waivers, certificates of insurance, bonds and other contractual requirements impacting contract closeout.

2.) Initiating the Closeout Process At 75% completion, the Project Team should review the Closeout process with the Contractor. Tracking of the closeout documents should begin and a file system for the closeout documents should be started.

3.) Informing the Vendor(s) a.) The Project Manager will send letters to vendor(s) informing them that

the Project will be closed as of a specified date and that all invoices should be paid prior to that date. Ample notification should be provided and generally, thirty (30) days is recommended. Please refer to Figure 9.1b - Letter to Vendor Notifying of Project Closure Date for a sample letter template. This can be sent electronically to the Project Manager, by requesting the template from the Assistant to the CRESS Accounting Office.

b.) The Project Manager then notifies the CRESS Sr. Financial Analyst that

a Project will be closed.

4.) Obtaining the Certificate of Substantial Completion

a.) As the Contractor is nearing the completion of the work, he/she should submit a request for substantial completion and a listing of all deficiencies yet to be completed from the Project punchlist.

b.) The following documents are the minimum normally required at the time

of request for substantial completion if required by the contract documents for the Contractor's work (not intended to be a complete listing):

AIA G704 Certificate of Substantial Completion

As-built records (electronic and hard copy)

Operation and Maintenance Manuals - Typically, all O&M manuals

will be submitted to the Owner prior to acceptance of equipment systems or building occupancy

Keys, Maintenance Stock and Spare Parts


Test and Start-up Reports

Owner Training Sessions

Equipment/System Acceptance - This form will be completed for each piece of equipment or system for each contract that requires operational testing and/or training before acceptance. This will document the date of testing, the equipment tested, personnel to witness the testing and acceptance

Owner Training Register - This form will be completed for each

contract that requires training to be provided to the Owner. This will document the date of training, type of training, personnel trained and the acceptance of the training.

Submission of Permits

Fire Marshal and Department of Public Health Approvals, etc.

Guarantees and Warranties

Punchlist (list of work to be completed)

Letters of acceptance and other pertinent documents per the

specifications

c.) The Contract file will contain the correspondence files created during the Project, the submittal records as well as all other documentation required. The as-built records and O&M manuals in both electronic and hard copy format will be sent to the Owner's administration once they have been reviewed and approved by the Architect. This will allow the Architect to incorporate all revisions as required and the Owner to become familiar with the operation of the new Facility.

d.) As the Project progresses, the GC/CM should develop a schedule for the

training, start-up and turnover of all systems and equipment for building occupancy. Please refer to Policy 9.4 “Closeout Log” for a further description of this.

e.) The Architect and/or Owner will review the Contractor's request for

substantial completion. When the Architect determines that the work is substantially complete, he should complete and sign the Certificate of Substantial Completion.


f.) The Certificate of Substantial Completion will then be sent by the Architect, along with the remaining punchlist to the Project Manger/End User at Facility for written acceptance. The Project Manager will sign off on the G704 and issue the Certificate of Substantial Completion to the Contractor.

5.) Contractor Completes Punchlist Work

CM/GC Contractor should submit a letter certifying all punchlist items are completed.

6.) Inspections

The Project Manager should anticipate and schedule all required inspections in advance. On all final occupancy inspections, the following steps should be taken:

a. Verify that the building is clean and appears ready for its intended use b. Verify that the representatives from each major subcontractor are

available at the job site to answer questions from inspectors and to make immediate adjustments or corrections to work in place at the recommendation of the inspectors

c. Note takers should accompany each inspector during the inspection to

record all inspection comments

d. When required, early conditional occupancies should be coordinated with the Facility

e. Complete any commission or environmental testing as required by the

Project type

The Project Manager should oversee and participate with all authorities having jurisdiction in iterative closeout processes, including:

a. State of Texas Fire Marshal

b. Local fire department

c. Texas/Federal agencies (including the Texas Department of State Health

Services [DSHS])

d. Local building jurisdiction


The Contractor is to forward (written notice and accompanying documentation) that the work is ready for final inspection and acceptance. The Architect will perform a final inspection and sign off on the punchlist if the work is completed. If punchlist work is, in the opinion of the Architect, not completed, the CM/GC should take action to remedy any insufficiencies and then re-submit the written notice and accompanying documentation that work is ready for final inspection and acceptance (See Policy 7.2 – “Inspections” for further information).

7.) Documents Needed for Final Payment

a. The following documents are the minimum normally required to complete final

payment (not intended to be a complete listing):

i. Final Payment Request ii. Guarantees/Warranties (including subs and suppliers) iii. Final Lien Statements iv. Acknowledgment of Payment and Partial Unconditional Release v. Final Releases from Sub-tier contractors and suppliers vi. Consent of Surety Company to Final Payment (AIA G707). vii. Consent of Surety to Reduction or Partial Release of Retainage (AIA

G707A) viii. Certificate of Substantial Completion (AIA G704). ix. Completion and acceptance of all punchlist work.

b. Upon submission of the final Project closeout documents, the CM/GC should

submit the final application for payment. This application includes a final statement of accounting, which reflects all adjustments to the contract sum. The final statement of accounting should be submitted in the following format:

i. Original contract sum

Additions or deductions resulting from:

ii. Change Orders iii. Allowances iv. Unit prices v. Deductions for uncorrected work vi. Deductions for re-inspection payments vii. Other adjustments viii. Total contract sum (as adjusted) ix. Total of previous payments x. Total balance due


The following are the current MHHS A201 guidelines regarding final payment, which Project Managers should follow:

§ 9.10 FINAL COMPLETION AND FINAL PAYMENT § 9.10.1 Upon receipt of written notice that the Work is ready for final inspection and acceptance and upon receipt of a final Application for Payment, the Architect will promptly make such inspection and, when the Architect finds the Work acceptable under the Contract Documents and the Contract fully performed, the Architect will promptly issue a final Certificate for Payment stating that to the best of the Architect's knowledge, information and belief, and on the basis of the Architect's on-site visits and inspections, the Work has been completed in accordance with terms and conditions of the Contract Documents and that the entire balance found to be due the Contractor and noted in the final Certificate is due and payable. The Architect's final Certificate for Payment will constitute a further representation that conditions listed in Section 9.10.2 as precedent to the Contractor's being entitled to final payment have been fulfilled. All warranties and guarantees required under or pursuant to the Contract Documents should be assembled and delivered by the Contractor to the Architect as part of the final Application for Payment. The final Certificate for Payment will not be issued by the Architect until all warranties and guarantees have been received and accepted by the Owner. § 9.10.2 Neither final payment nor any remaining retained percentage should become due until the Contractor submits to the Architect (1) an affidavit that payrolls, bills for materials and equipment, and other indebtedness connected with the Work for which the Owner or the Owner's property might be responsible or encumbered (less amounts withheld by Owner) have been paid or otherwise satisfied, (2) a certificate evidencing that insurance required by the Contract Documents to remain in force after final payment is currently in effect and will not be canceled or allowed to expire until at least 30 days' prior written notice has been given to the Owner, (3) a written statement that the Contractor knows of no substantial reason that the insurance will not be renewable to cover the period required by the Contract Documents, (4) consent of surety, if any, to final payment; (5), if required by the Owner, other data establishing payment or satisfaction of obligations, such as receipts, releases and waivers of liens, claims, security interests or encumbrances arising out of the Contract, to the extent and in such form as may be designated by the Owner , and (6) such other information or documentation as Owner's lender reasonably may require. If a Subcontractor refuses to furnish a release or waiver required by the Owner, the Contractor may furnish a bond satisfactory to the Owner to indemnify the Owner against such lien. If such lien remains unsatisfied after payments are made, the Contractor should refund to the Owner all money that the Owner may be compelled to pay in discharging such lien, including all costs and reasonable


attorneys' fees unless Contractor is proceeding diligently and in good faith to contest such lien and has furnished to Owner reasonably security, such as a bond, title insurance, letter of credit, etc., to reasonably protect Owner and the Project against such lien. In addition to those items set forth in this paragraph, the Contractor should provide the Owner, before the Owner's payment of the final monthly progress payment, the following:

.1 A complete list of subcontractors and principal material and equipment suppliers, including addresses, telephone numbers, and name of individuals to contact who are familiar with the Project (including the Contractor);

.2 Three (3) copies of all maintenance and operating manuals, reviewed by

the Architect;

.3 Three (3) copies of all written guarantees in the form prescribed by the Contract documents after being reviewed and approved by the Architect;

.4 One (1) printed set and (1) electronic copy of as-built drawings and

specifications prepared by the Architect;

.5 Three (3) sets of the Project Manual, reviewed by the Architect;

.6 Payments which may otherwise become due to the Contractor at or following the point of Substantial Completion should be withheld contingent upon receipt of the above;

.7 All warranties and guarantees signed and dated by an authorized offer

of the Company issuing the document;

.8 Sixty (60) days prior to Substantial Completion Contractor should provide the Owner "working copies" of all Operation/Maintenance Manuals;

.9 One (1) copy of a detailed Quantity Survey which breaks down the final

cost of the work by square foot, by discipline or trade, by department (as defined by Owner) and by any other criteria required by the Owner at the time of Final Completion, and

.10 Any and all other items required by the Contract Documents.

§ 9.10.3 If, after Substantial Completion of the Work, final completion thereof is materially delayed through no fault of the Contractor or by issuance of Change Orders affecting final completion, and the Architect so confirms, the Owner should, upon application by the Contractor and certification by the Architect, and without terminating the Contract, make payment of the balance due for that


portion of the Work fully completed and accepted. If the remaining balance for Work not fully completed or corrected is less than retainage stipulated in the Contract Documents, and if bonds have been furnished, the written consent of surety to payment of the balance due for that portion of the Work fully completed and accepted should be submitted by the Contractor to the Architect prior to certification of such payment. Such payment should be made under terms and conditions governing final payment, except that it should not constitute a waiver of claims. § 9.10.4 The making of final payment should constitute a waiver of Claims by the Owner except those arising from:

.1 liens, Claims, security interests or encumbrances arising out of the Contract and unsettled;

.2 failure of the Work to comply with the requirements of the Contract

Documents; or

.3 terms of special warranties required by the Contract Documents. § 9.10.5 Acceptance of final payment by the Contractor, a Subcontractor or material supplier should constitute a waiver of claims by that payee except those previously made in writing and identified by that payee as unsettled at the time of final Application for Payment.

8.) Final Payment Request

The Architect will review the Contractor's final payment request and Closeout files. If all administrative documents are attached or have been submitted (i.e. guarantee, warranty, waiver of lien, etc.) all work is complete and all other responsibilities are met, the Architect will recommend final payments to be released by Memorial Hermann.

9.) Project Closure Form, Payment Disbursement and Final Closeout

If in the Project Manager’s opinion, all conditions of the Contract have been satisfied, the Project Manager will complete and sign the Project Closure form (see Figure 9.1c – Project Closure Form) and obtain the signature of the director of the user group for whom the Project was completed.

a. After the signature of the director of the user group for whom the

Project was completed is obtained, the Project Manager will submit the completed Project Closure form to the CRESS Sr. Financial Analyst.


b. The CRESS Sr. Financial Analyst will obtain the approval, via signature, of the CRESS AVP/Director and VP of CRESS on the Project Closure Form.

c. After the Project Closure form has been completed and approved, the

CRESS Sr. Financial Analyst will send the completed and signed Project Closure form to MHHS Corporate Accounting where the Project will be closed in the Lawson Accounting System and transferred to a fixed assets account.

d. The CRESS Sr. Financial Analyst will notify the CFO of the Facility in

which the Project was completed for, after the Project has been closed.

e. AFTER A PROJECT IS CLOSED, NO ADDITIONAL EXPENDITURES CAN BE CHARGED TO THE PROJECT.

E.) Closeout Requirements for Consultants/Contractors

1.) The closeout requirements for the consultants and contractors are similar, but less involved than the process required for the CM/GC’s closeout. The consultants and contractors may provide such services as functional programming, A/E firms, geotechnical services, equipment plans, interior designs, signage, graphics, telecommunication services, major equipment vendors, telephone, television, patient monitoring, nurse call, intercom, paging and window treatment contractors.

2.) The closeout process for consultants and contractors are as follows:

a. Obtain all final Project closeout documents such as record drawings,

operation and maintenance manuals, warranties, guarantees and attic-stock from relevant vendors

b. Monitor the vendors’ completion of all in-service training session with

Facility personnel.

3.) Upon submission of the final Project closeout documents, all consultants and vendors should submit the final application for payment. This application should include a final statement of accounting, which should reflect all adjustments to the contract sum. The final statement of accounting should be submitted in the following format:

a. Original contract sum

Additions or deductions resulting from:


b. Change Orders c. Allowances d. Unit prices e. Deductions for uncorrected work f. Deductions for re-inspection payments g. Other adjustments h. Total contract sum, as adjusted i. Total of previous payments j. Total balance due

F. Move Planning

1.) The most important aspects of move planning are patient safety and proper sequencing and scheduling of activities. To implement the relocation/occupancy plan, determine the items that need to be moved and determine if these items can be moved before occupancy. The items involved in moving a Facility are typically divided into the following areas:

a. Fixed Minor Equipment – This category covers items such as surgical

lights, exam lights, IV poles, kitchen equipment, warming cabinets, illuminators, pharmacy, laboratory and blood refrigerators, miscellaneous shelving unites and diagnostic sets

b. Items that require electrical and mechanical connections are usually

removed, relocated and reinstalled by the CM/GC and his/her subcontractors. Typically, these items would be included in a list provided by the Equipment Planner.

c. Fixed Major Equipment – This category covers items such as

RAD/Flouro, RAD/TOMO, Cath Labs, Nuclear Medicine machines, etc. They require a more sophisticated installation process. This relocation is typically completed by the actual vendors of the equipment or a firm that specializes in this type of relocation.

d. Contents Move Items – This category covers items such as desks, filing

cabinets, books and other miscellaneous items, which typically are handled by a moving company. All items should be clearly marked with an item number that designates the location of the contents in the new Facility. A summary of the furniture items to be relocated should be included as part of the Interior Designer’s report.

e. Patients – Patient moves should be handled by the employees and

volunteers of the hospital. Volunteer ambulance services can be utilized for transporting patients from a different site to the new hospital.


f. Clinical Engineering – The Clinical Engineering Department should be

integrated into the move process planning and implementation. This department will help identify outside contractors and department personnel who can assist with the move.

g. Other elements of major relocations involve operational readiness and

Facility readiness. Operational readiness deals with issues related to developing emergency plans and disaster drills. Facility readiness examines the completeness and functionality of the new Facility. This analysis makes sure that the systems function properly, that life safety issues are addressed and that all licensing requirements have been met.

G. System Demonstration and Start-Up This section describes the process for demonstration of equipment operation and instruction of Owner's personnel.

1.) When specified in individual Specification Sections, the required manufacturer should provide an authorized representative to demonstrate operation of equipment and systems, instruct Facility personnel and provide a written report that demonstrations and instructions have been completed.

2.) The Project Manager will provide to the contractor a list of personnel to

receive instructions and will coordinate their attendance at agreed-upon times.

3.) The Contractor should submit a preliminary schedule to the Project Manager listing times and dates for demonstration of each item of equipment and each system, at least two (2) weeks prior to proposed dates.

4.) The Contractor should submit reports within one week after completion of

demonstrations, that demonstrations and instructions have been satisfactorily completed. The report should give the time and date of each demonstration and hours devoted to demonstration, with a list of all attendees.

5.) The Contractor should provide substantiating information that verifies

equipment has been inspected and put into operation; testing, adjusting and balancing has been performed; and equipment and systems are fully operational.

6.) The Contractor should submit copies of the completed operation and

maintenance manuals at least two (2) weeks before for review by Project Manager and have a copy at hand for use in demonstrations and instruction.


H. Demonstration Instructions

1.) The Contractor and/or manufacturers representative should demonstrate the operation and maintenance of equipment and systems to Facility personnel two (2) weeks prior to date of final inspection.

2.) For equipment requiring seasonal operation, this demonstration should be

performed for other seasons within six months. The Contractor should document the testing, equipment start-up and training sessions.

3.) The Contractor should notify Project Manager of the amount of time required

for instruction on each item of equipment and system. They should then demonstrate start-up, operation, control, adjustment, troubleshooting, servicing, maintenance and shutdown of each item of equipment at agreed-upon times, at designated location. Operation and maintenance manuals should be used as a basis of instruction.

4.) The Contractor should review the contents of the manuals with the

appropriate Facility personnel in full detail to explain all aspects of operations and maintenance. If the need for additional data becomes apparent during instructions, the Contractor should supply within a timely manner to Project Manager who will insert the additional data in the operations and maintenance manuals upon receipt.

APPROVED: DATE:


Figure 9.1a Project Closeout Checklist

Activity Date Rec'd Comment CompleteCertificate of Substantial CompletionCertificat of OccupancyProject Record PhotographsRecord Shop DrawingsRecord Contract DrawingsRecord Specifications, Addenda, & Change OrdersRecord Produect Data SubmittalsRecord SamplesField RecordsOperating & Maintenance ManualsSoil Treatment WarrantyTesting & Disinfection of Water LinesSewer TestingStorm Sewer TestPrecast concrete guaranteeStructural steel testingSheet waterproofing warrantyWater repellent warrantyRoofing insurance certificationJoint sealer testingLabeled door & frame certificationWood door warrantyOverhead coiling door certification & testFolding doors & partitions certificationAluminum entrance certificationGlass & glazing certificationKeyingOwner's instruction to hardwareGlass & glazing warrantyGlazed curtain wall warrantyStructurally glazed curtain wall testingStructurally glazed curtain wall inspectionsExtra acoustical ceiling materialsExtra resilient flooring materialCarpet mainetnance instructionsExtra carpeting stockExtra wallcovering stockChalkboard warrantyExtra access flooring materialExtra operable partitions materialsRecord drawignsMaintenance dataReceipt for instruction of operating personnelReceipt for spare parts for variable speed drivesCertification of start-up and operation for variable speed drivesCertification of installation of vibration isolation equipmentCertification per NFPA 13-987 for fire protectionCertification of installation of underground fire protection pipingCertification of installation of fire pumpsCertification of plumbing piping testsCertification of installation and operation of vaccum cleaning systemReceipt for spare medical gas system master alarm light bulbsCertification of installation and operation of medical gas systemsReceipt for extra mechanical seals for pumpsCertification of alignment of pumpsCertification of operation and accuracy for air measuring stations and control systems

Project Close-out Documentation Check List

MEMORIAL HERMANNMemorial Hermann - Southwest Hospital - ER Fast Track

MH Project Number - 0018013


Figure 9.1a Project Closeout Checklist (cont’d) Receipt for bulk filter media and inserting toolTest, adjust and balance reportsCertification of DDC system calibration and testingPlug-in modules and printed circuit boardsHydronic and steam systems certificateRecord documents - fire protectionFire pump testingAutomatic temperature controls record diagramsAir pumping testsTest, adjust , and balancing cycle test certificationProvide spare fusesFire alarm test and certificationFire alarm guaranteeNurse call guaranteeIntercom certificationTeam call certificationPaging system certificationTelevision certificationWarranty ReserveGeneral Contractor's WarranyLien waversKeysFinance accounting of purchased materialsComplete sub and supplier listingPrecast mix design


9.1b Letter to Vendor Notifying of Project Closure Date

PM Company LOGO

January 1, 2006 Vendor Name Street Address City, State, Zip Attn: Accounts Receivable RE: FINAL PROJECT BILLING Project Name Facility Name MHHS Project #9999999 Please be advised that January 15, 2006 is the scheduled date for closure of the Project Name Project. Final invoices are due to the Project manager, ________, before this date. Please advise all of your subcontractors accordingly. Sources for Project payment are not available once a Project is formally closed. Memorial Hermann Healthcare System will not pay any invoices submitted for this Project after the scheduled closure date. Thank you in advance for your attention to this matter. Sincerely, Project Manager cc: Project File

Figure 9.1c Project Closure Form


MEMORIAL HERMANN HEALTHCARE SYSTEMCONSTRUCTION, REAL ESTATE AND SUPPORT SERVICES

PROJECT CLOSURE FORM

CORP: PROJECT #

PROJECTNAME:

LOCATION

COST CTR:

ARCHITECT: CONTRACTOR:

COMPLETION/CANCELLATION AGREEMENTThe work performed under this contract has been reviewed by the tenant or user group and has been found to be readyfor occupancy. All warranties/guarantees will be effective as of the date stated on the Certificate of Substantial Completion. A list of items to be completed or corrected by the contractor is attached hereto.

IN-SERVICE DATE:

CANCELLATION DATE:

APPROVALS

Department Director Date Sr. Financial Analyst DatePaul Shearon

Project Director Date Vice President, Construction, DateReal Estate and Support ServicesMarshall Heins

PROJECT BALANCE $ ____________________________________

9.2 Closeout Log Page 1 of 6


Policy #: 9.2 Policy Title: Closeout Log Category: Project Closeout Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to delineate and describe the closeout documents that should be maintained by the Project Manager and/or End User of the Facility. The items that should be tracked on the closeout log include:

Warranties/Guarantee Matrix Release of Liens Releases from Surety Operations & Maintenance Manuals Final Payment Requests Final Executed Change Orders Permit Release / Sign-Offs Spare Parts, Tools & Extra Materials Training Materials Other documents required by the contract documents

Each item is explained in detail below. Policy Statement: A.) Warranties/Guarantee Matrix

1.) Each Project Manager should initiate, alongside the Facility Engineer, a Warranty/Guarantee Matrix to log all warranties/guarantees associated with the completion of the Project.

2.) The warranty period, in most instances is subsequent to the Project closeout

phase and occupancy. Warranty periods are typically begun by the


formal acceptance of the building, described here and elsewhere as “substantial completion”.

4.) The Warranty/Guarantee Matrix should contain the following: a. The names of all equipment/materials under warranty/guarantee. b. The date of start of the warranty/guarantee period per each

equipment/material. c. The length of the warranty/guarantee and the date of expiration. d. The location of the material/equipment at the Facility. e. The maintenance requirements to allow guarantee to be enforced. f. The manufacturers name, address and phone number.

5.) An example of the Warranty/Guarantee Matrix is shown in Figure 9.2a –

Warranty/Guarantee Matrix.

B.) Release of Liens

1.) The Project Manager should track and log the Final Lien Release associated with the Final Pay Application. Lien Releases are discussed in Policy – 9.3 “Lien Release Process”.

C.) Releases from Surety

1.) The Project Manager should verify receipt of all Releases from Surety prior to the Final Pay Application. This would involve the receipt of written notification from every Surety (both General Contractor and Subcontractors) that final payment is being considered. This should be a prerequisite to the release of final payment.

D.) Operations & Maintenance Manual

The Contractor should prepare Operation and Maintenance Manuals for use by the End Users at the Facility in which the Project is being completed. The manuals should follow the general format described below:

1.) Paper: 8-1/2" x 11", white, for typed pages.

2.) Text: Manufacturer's printed data, or neatly typewritten.

3.) Drawings:


a. Reinforced punched binder tab, bind in with text. b. Folded larger drawings to size of text pages.

4.) Product Data for each product, or piece of operating equipment.

5.) Cover: Identify each volume with typed or printed title "OPERATING AND

MAINTENANCE INSTRUCTIONS" and Title of Project.

6.) It should be submitted in a binder as described below:

a. Commercial quality three-ring binders with durable and cleanable plastic covers

b. Maximum ring size: 3"

c. When multiple binders are used, correlate the data into consistent

groupings. The manual should contain:

1.) Neatly typewritten table of contents for each volume, arranged in systematic order.

2.) Contractor, name of responsible principal, address and telephone number. 3.) A list of each product required to be included, indexed to content of the

volume. 4.) List with each product, name, address and telephone number of the

contractor or installer and a local source of supply for parts and replacement.

5.) Identify each product-by-product name and other identifying symbols as

set forth in Contract Documents.

6.) Product Data including pertinent information to the specific product.

7.) Drawings to supplement product data as necessary to clearly illustrate relations of component parts or equipment and systems and control and flow diagrams.

8.) Written text, as required to supplement product data for the particular

installation.


9.) Copy of each warranty, bond and service contract issued.

10.) Information about proper processes in event of failure.

11.) Conditions that might affect validity of warranties or bonds.

12.) Instructions for care, maintenance and preventative maintenance, which

should include the following: a. Manufacturer's recommendation for types of cleaning agents and

methods. b. Cautions against cleaning agents and methods that are harmful to the

product.

c. Recommended schedule for cleaning and maintenance.

13.) Servicing and lubrication schedule and a listing of the lubricants required. 14.) Manufacturer's printed operating and maintenance instructions.

15.) Description of sequence of operation by control manufacturer.

16.) Original manufacturer's parts, list, illustrations, assembly drawings and

diagrams required for maintenance.

a. Predicted life of parts subject to wear. b. Items recommended to be stocked as spare parts.

E.) Final Payment Requests Refer to Policy 9.1 – “Construction Closeout Process” for further information regarding Final Payment Requests. F.) Final Executed Change Orders Refer to Policy 4.5 – “Change Order Process” for further information regarding Final Executed Change Orders. G.) Permit Release / Sign-Offs Refer to Policy 1.6 – “External and Internal Permitting” for further information regarding Permit Release and Sign-Offs.


G.) Spare Parts, Tools and Extra Materials H.) Training Materials

1.) The Project Manager, along with Equipment Vendor, develop and maintain a Training Register.

2.) This register should contain the following:

a. The names of the equipment requiring training. b. The location of the equipment requiring training. c. The manufacturer of the equipment. d. The date of initial training and anticipated length of time required for

training. e. The individuals, firms or departments requiring training. f. Any special requirements or tools to allow internal training in the future. g. If a video tape or manual is available for future training.

APPROVED: DATE:


Figure 9.2a Warranty/Guarantee Matrix

Warranty/Guarantee Matrix

ItemInstalled Location

Purchased From

Purchase Date

ManufacturerModel

NumberSerial

NumberRegistration

DateRegistration

NumberContact

InformationWarranty

DescriptionExpiration

Date

9.3 Lien Release Process Page 1 of 13


Policy #: 9.3 Policy Title: Lien Release Process Category: Project Closeout Process Original Date: November 2005 Last Review Date: November 2005 Supersedes: New policy Policy Purpose: The purpose of this policy is to describe the appropriate use and timing of lien release forms. Policy Statement: A.) Interim/Final Lien Releases for Standard Construction Contracts

1.) For Projects using Memorial Hermann Hospital System (MHHS) Standard Construction Contracts, all of the contracts now include the required Interim and Final Lien Releases to accompany all Contractor Pay Applications. No other format should be accepted.

2.) The MHHS Standard Contracts are:

a. A101 b. A107 c. A111 d. A121

B.) Interim/Final Lien Releases for Projects NOT Using Standard Construction Contracts

1.) For Projects that preceded the use of the MHHS Standard Construction Contracts, either the Project Manager can provide the Contractor the MHHS Standard Lien Release Forms MHHS now uses or MHHS can consider accepting the standard form used by the Contractor.


2.) MHHS Standard Construction Contracts require Contractors to use MHHS Standard Lien Release Forms. Therefore, the Project Manager should insist Contractors use only MHHS supplied Standard Waiver and Release Forms.

C.) Lien Releases with Pay Applications

1.) All Pay Applications should include a Partial (or Interim) Lien Release.

a. A Partial Lien Release cannot be accepted as a substitution for a Final Lien Release Form or when submitted with a Final Pay Application. Such forms typically provide a release, which is limited to claims related to a particular payment for a portion of the Project. Such releases do not extend to any claims related to payment of the retainage or amounts, which may be disputed between the Owner and the releasing party.

b. An Affidavit of Payment cannot be accepted as a substitution for a Partial or Final Lien Release.

2.) For progress payments, the standard waiver and release form identifies the amount received by the Contractor/Subcontractor/Supplier and the end date of the payment period for which such payment was received. The consideration is described in the form of an acknowledgment by the payee that such amount is "payment in full, less the Retainage withheld, for all labor, services and/or materials furnished and/or stored by the Contractor and/or its Subcontractors through the Payment Period End Date." The Contractor/Subcontractor/Supplier then "waives, releases and quitclaims in the favor of the Owner all rights to any Claim against the Owner, the Owner's Lender and the Property, except for the Retainage withheld, related to the furnishing and/or storing of such labor, services and/or materials."

a. Both the progress and final forms contain an agreement to defend, indemnify and hold the Owner harmless from any Claims waive, released "or intended to be waived and released" by the instrument.

b. Lien Release and waiver documents which reference a payment application, but do not state an amount and identify a specific payment period or invoice for which such payment was received, do not provided sufficient protection from subsequent lien claims.

c. It is better practice to identify the amount received by the releasing party and describe the consideration received for such payment.

3.) The Final Pay Application must include a Final Lien Release.

a. A Partial Lien Release cannot be accepted as a substitution for a Final Lien Release when submitted with a Final Pay Application.


b. An Affidavit of Payment cannot be accepted as a substitution for a Partial or Final Lien Release.

c. Lien Release and waiver documents which reference a payment application, but do not state an amount and identify a specific payment period or invoice for which such payment was received, do not provided sufficient protection from subsequent lien claims. It is better practice to identify the amount received by the releasing party and describe the consideration received for such payment.

d. Final Release forms should release the Owner from all claims related to payment of every kind.

e. Regarding final releases, the standard form describes the consideration received in exchange for final payment as "all labor, services and/or materials furnished and/or stored by the Contractor and/or its Subcontractors in connection with the Project." The payee forever releases, waives, and discharges the Owner of any and all claims related to the Project "without regard as to whether such Claims are presently ascertainable" at the time payment is received or at any time in the future. Also, our forms contain a certification that the amount of final payment is correct and there are no additional claims for costs related to additional labor, services and/or materials.

f. Both the progress and final forms contain an agreement to defend, indemnify and hold the Owner harmless from any Claims waive, released "or intended to be waived and released" by the instrument.

APPROVED: DATE:


THIS IS A PLACEHOLDER. THIS IS WHERE THE LIEN RELEASE FORMS SENT BY D. NOVELLI WOULD GO. WE WILL PRINT OFF AND INSERT MANUALLY SINCE COPY/PASTE FROM ADOBE DISTORTS FORMATTING CONTRACTOR’S WAIVER AND RELEASE OF LIEN

(To Accompany Each Application for Progress Payment) EFFECTIVE DATE: [DATE] To OWNER: From CONTRACTOR: MEMORIAL HERMANN HOSPITAL SYSTEM [CORPORATE NAME] 9401 Southwest Freeway, Suite 1100 [Address] Houston, Texas 77074 [Address] For certain improvements to the PROPERTY described in Attachment “B,” such improvements referred to herein as the PROJECT and identified by name and location as follows: [PROJECT TITLE] [Address] [Address] CONTRACT DATE: [DATE] APPLICATION FOR PAYMENT NO.: [NUMBER] PAYMENT PERIOD: Start Date: [DATE] End Date: [DATE] CONTRACT ACCOUNTING:

1. ORIGINAL CONTRACT AMOUNT: $0.00 2. Plus/(Less) APPROVED CHANGE ORDERS: $0.00 3. ADJUSTED CONTRACT AMOUNT (Add Lines 1 through 2): $0.00 4. COST OF THE WORK TO EFFECTIVE DATE: $0.00 5. (Less) RETAINAGE WITHHELD TO EFFECTIVE DATE: ($0.00)

6. (Less) TOTAL PAYMENTS RECEIVED TO EFFECTIVE DATE: ($0.00)

7. NET AMOUNT DUE (From Line 4, subtract Lines 5 and 6): $0.00 FOR AND IN CONSIDERATION of payments made to it by Owner, the undersigned hereby acknowledges and certifies as follows:

1. The undersigned hereby acknowledges receipt of the Total Payments Received to Effective Date as payment in full, less the Retainage Withheld to Effective Date, for all labor, services, materials (including, without limitation, all supplies, tools, equipment, machinery, and goods) furnished, stored and/or otherwise procured during each preceding Payment Period by the Contractor and its SUBCONTRACTORS (including,


without limitation, all subcontractors of every tier and all laborers, mechanics, materialmen, suppliers, vendors, agents, brokers, attorneys, architects, engineers and any other person or entity furnishing labor, services and materials to the Contractor for any purpose related to the Project) and the undersigned hereby now and forever waives, releases and quitclaims in favor of Owner all rights to any CLAIM (including, without limitation, all demands, suits, causes of action, liens and any other assertions) against the Owner, the Owner’s lender and the Property arising out of or related to such labor, services and/or materials. The undersigned hereby affirms that, as of the Effective Date, there are no outstanding Claims against the Contractor and/or its sureties in connection with the Project.

2. Upon receipt of the sum identified above as the Net Amount Due, the undersigned acknowledges and agrees that it will have received payment in full, less the Retainage withheld, for all labor, services and/or materials furnished and/or stored by the Contractor and/or its Subcontractors through the Payment Period End Date and the undersigned hereby now and forever waives, releases and quitclaims in favor of the Owner all rights to any Claim against the Owner, the Owner’s lender and the Property, except for the Retainage withheld, arising out of or related to the furnishing and/or storing of such labor, services and materials. Except for receipt of said payment, and as an inducement to the Owner and the Owner’s lender to make the same, the undersigned hereby affirms that, as of the Effective Date, there are no outstanding Claims against the Contractor and/or its sureties in connection with the Project.

3. Contingent upon the receipt of the sum of the Net Amount Due, and except for any unpaid Retainage, the undersigned does hereby forever waive, release and quitclaim in favor of Owner, the Owner’s lender, each and every party acquiring title to and/or making a loan on the Project, and the title company or companies examining and/or insuring title to the Project and any and all of their successors and assignees, all rights that presently exist to any type and form of lien which may be charged against the Property by Contractor as a result of furnishing labor, services and/or materials for the Project including, without limitation, any mechanic’s and materialmen’s lien evidenced by affidavit and/or preliminary notice filed in accordance with applicable law governing the same. The undersigned further warrants that all applicable taxes, fees and benefits relating directly or indirectly to the undersigned’s work have been paid in full.

4. The undersigned further states on oath that all Subcontractors from which it has acquired labor, services and/or materials for any purpose related to the Project, and any lien or bond claimant relating to the undersigned’s work, has been paid their respective portion of all prior payments received from the Owner (less any Retainage withheld) for any labor, services and/or materials furnished, stored and/or otherwise procured by such Subcontractor and that no Subcontractor has any Claim or lien, either actual or inchoate, against the undersigned’s work, the Project, the Owner, the Owner’s lender or the Property by virtue of their having furnished labor, services and/or materials for the Project.

5. The undersigned hereby certifies that, as of the Effective Date, no security interest has been given or executed by the undersigned for or in connection with any materials, appliances, machinery, fixtures or furnishings placed upon or installed in the Project.

6. The undersigned hereby certifies that the amounts set forth above are true and correct and acknowledges that there are no additional costs or claims for any extras of additions for labor, services and/or materials on the Project other than as set forth above.

7. The undersigned hereby certifies a complete and accurate list of all Subcontractors who have furnished or agreed to furnish any labor, services and/or materials (as of the Effective Date) is attached hereto as Attachment “A,” each Subcontractor identified therein has been paid, in full, the sum set forth therein as the “Amount Paid,” and such sum constitutes payment, in full (except for any unpaid Retainage which is not yet due and the Net Amount Due), for all labor, services and/or materials furnished and/or stored in connection with the Project.

8. The undersigned represents and warrants that it has not assigned any lien or right to perfect a lien against the Project, and the undersigned has the right, power and authority to execute this document.


9. In consideration of receipt of the Net Amount Due, the Contractor hereby agrees to defend, indemnify and hold the Owner (including its affiliated enterprises, lessees, successors, assigns, secured lenders and title insurance companies, and each of the above mentioned parties' officers, directors, shareholders, employees and agents) harmless from and against any and all Claims (including, without limitation, all liens) waived, released or intended to be waived and/or released by this instrument and to remove, release or otherwise discharge all such Claims (including, without limitation, all such liens) immediately upon receipt of notice thereof.

DULY SWORN UPON OATH, executed and delivered by the undersigned this _____ day of

_________________, 20____.

BY: (Signature of Corporate Representative) (Printed Name) (Corporate Title) WITNESS:

Sworn to and subscribed before me by _____________________________________ on this ______ day of ___________, 20___.

(Notary Public) (SEAL) My commission expires:

(Date)


ATTACHMENT "A" SUBCONTRACTOR LIST

The following is a complete and accurate list of all Subcontractors who, as of the

Effective Date, furnished, or agreed to furnish, any labor, services and/or materials for the Project; all of whom have received the “Amount Paid” as payment, in full, for all costs (including, without limitation, storage costs) resulting from such labor, services and/or materials. NAME: ADDRESS: AMOUNT PAID: [CORPORATE NAME] [ADDRESS] [$ 0.00]


ATTACHMENT "B" PROPERTY DESCRIPTION

[ENTER PROPERTY DESCRIPTION]


CONTRACTOR’S FINAL AFFIDAVIT AND RELEASE OF CLAIMS (To Accompany Each Application for Final Payment)

EFFECTIVE DATE: [DATE] To OWNER: From CONTRACTOR: MEMORIAL HERMANN HOSPITAL SYSTEM [CORPORATE NAME] 9401 Southwest Freeway, Suite 1100 [Address] Houston, Texas 77074 [Address] For certain improvements to the PROPERTY described in Attachment “B,” such improvements referred to herein as the PROJECT and identified by name and location as follows: [PROJECT TITLE] [Address] [Address] CONTRACT DATE: [DATE] APPLICATION FOR PAYMENT NO.: [NUMBER] CONTRACT ACCOUNTING:

1. ORIGINAL CONTRACT AMOUNT: $0.002. Plus/(Less) APPROVED CHANGE ORDERS: $0.003. ADJUSTED CONTRACT AMOUNT (Add Lines 1 through 2): $0.004. (Less) FINAL COST OF THE WORK: ($0.00)5. (Less) TOTAL PAYMENTS RECEIVED TO EFFECTIVE DATE: ($0.00)6. REMAINING BALANCE (Subtract Line 5 from Line 4): $0.007. (Plus) SAVINGS: $0.008. FINAL PAYMENT DUE (Add Lines 6 and 7): $0.00

FOR AND IN CONSIDERATION of payments made to it by Owner, the undersigned hereby acknowledges and certifies as follows:

10. The undersigned hereby acknowledges receipt of the Total Payments Received to Effective Date as payment in full, less the Retainage Withheld to Effective Date, for all labor, services, materials (including, without limitation, all supplies, tools, equipment, machinery, and goods) furnished, stored and/or otherwise procured during each preceding Payment Period by the Contractor and its SUBCONTRACTORS (including, without limitation, all subcontractors of every tier and all laborers, mechanics, materialmen, suppliers, vendors, agents, brokers, attorneys, architects, engineers and any other person or entity furnishing labor, services and materials to the Contractor for any purpose related to the Project) and the undersigned hereby now and forever waives, releases and quitclaims in favor of Owner all rights to any CLAIM (including, without limitation, all demands, suits, causes of action, liens and any other assertions) against the Owner, the Owner’s lender and the Property arising out of or related to such labor, services and/or materials. The undersigned hereby affirms that, as of the Effective Date, there are no outstanding Claims against the Contractor and/or its sureties, and no unpaid bills by the Contractor and/or its sureties, in connection with the Project.


11. Upon receipt of the sum identified above as Final Payment Due, the undersigned acknowledges

and agrees that it will have received payment in full for all labor, services and/or materials furnished and/or stored by the Contractor and/or its Subcontractors in connection with the Project and the undersigned hereby now and forever waives, releases and quitclaims in favor of the Owner all rights to any Claim against the Owner, the Owner’s lender and the Property, except for the Retainage withheld, arising out of or related to the furnishing and/or storing of such labor, services and materials. Except for receipt of said payment, and as an inducement to the Owner and the Owner’s lender to make the same, the undersigned hereby affirms that, as of the Effective Date, there are no outstanding Claims against the Contractor and/or its sureties in connection with the Project and no unpaid bills by the Contractor and/or its sureties, in connection with the Project.

12. Contingent upon the receipt of the sum identified above as Final Payment Due, the undersigned does hereby forever waive, release and quitclaim in favor of Owner, the Owner’s lender, each and every party acquiring title to and/or making a loan on the Project, and the title company or companies examining and/or insuring title to the Project and any and all of their successors and assignees, all rights that presently exist to any type and form of lien which may be charged against the Property by Contractor as a result of furnishing labor, services and/or materials for the Project including, without limitation, any mechanic’s and materialmen’s lien evidenced by affidavit and/or preliminary notice filed in accordance with applicable law governing the same. The undersigned further warrants that all applicable taxes, fees and benefits relating directly or indirectly to the undersigned’s work have been paid in full.

13. The undersigned further states on oath that all Subcontractors from which it has acquired labor, services and/or materials for any purpose related to the Project, and any lien or bond claimant relating to the undersigned’s work, has been paid their respective portion of all prior payments received from the Owner for any labor, services and/or materials furnished, stored and/or otherwise procured by such Subcontractor and that no Subcontractor has any Claim or lien, either actual or inchoate, against the undersigned’s work, the Project, the Owner, the Owner’s lender or the Property by virtue of their having furnished labor, services and/or materials for the Project.

14. The undersigned hereby certifies that, as of the Effective Date, no security interest has been given or executed by the undersigned for or in connection with any materials, appliances, machinery, fixtures or furnishings placed upon or installed in the Project.

15. The undersigned hereby certifies that the amounts set forth above are true and correct and acknowledges that there are no additional costs or claims for any extras of additions for labor, services and/or materials on the Project other than as set forth above.

16. The undersigned hereby certifies a complete and accurate list of all Subcontractors who have ever furnished any labor, services and/or materials for the Project is attached hereto as Attachment “A,” each Subcontractor identified therein has been paid, in full, the sum set forth therein as the “Amount Paid,” and such sum constitutes payment, in full, for all labor, services and/or materials furnished and/or stored in connection with the Project.

17. The undersigned represents and warrants that it has not assigned any lien or right to perfect a lien against the Project, and the undersigned has the right, power and authority to execute this instrument.

18. The undersigned does hereby forever release, waive and discharge the Owner, the Owner’s lender from (and quitclaim to them) any and all Claims on, against, related to, arising out of, connected with, and/or on account of the Project, the construction contract and/or all labor, services and/or materials furnished in connection therewith, whether known or unknown, and without regard to whether such Claims are presently ascertainable, which the undersigned or its successors and/or assignees ever had, now have, or ever will have against the Owner, the Owner’s lender, the Property and/or Project.

19. In consideration of receipt of the sum identified above as Final Payment Due, the Contractor hereby agrees to defend, indemnify and hold the Owner (including its affiliated enterprises, lessees, successors,


assigns, secured lenders and title insurance companies, and each of the above mentioned parties' officers, directors, shareholders, employees and agents) harmless from and against any and all Claims (including, without limitation, all liens) waived, released or intended to be waived and/or released by this instrument and to remove, release or otherwise discharge all such Claims (including, without limitation, all such liens) immediately upon receipt of notice thereof.

DULY SWORN UPON OATH, executed and delivered by the undersigned this _____ day of

_________________, 20____.

BY: (Signature of Corporate Representative) (Printed Name) (Corporate Title) WITNESS:

Sworn to and subscribed before me by _____________________________________ on this ______ day of ___________, 20___.

(Notary Public) (SEAL) My commission expires:

(Date)


ATTACHMENT "A" SUBCONTRACTOR LIST

The following is a complete and accurate list of all Subcontractors who ever furnished

any labor, services and/or materials for the Project; all of whom have received the “Amount Paid” as payment, in full, for all costs (including, without limitation, storage costs) resulting from such labor, services and/or materials. NAME: ADDRESS: AMOUNT PAID: [CORPORATE NAME] [ADDRESS] [$ 0.00]


Duly sworn upon oath, executed and delivered by the undersigned this _____ day of _________________, 20____. WITNESS: BY: TITLE: Sworn to and subscribed before me this ______ day of ___________, 20___. Notary Public My commission expires:

(SEAL)