An addendum is an addition to the original project contract. The original contract budget, for example, defines specific transportation and labor requirements. The project budget defined in the contract is based on and is limited by the contractor’s quote which is based on the institutions transportation and labor request. This budget will have been approved by the institution financial officers, lead managers, presidents or owners and funds will have been allocated to cover the project. If an additional service is requested outside of the original request and not covered by the quote, substantial crating or rigging requests that have been added after the contract are an example, then an addendum is added to the contract indicating the additional services and costs. An addendum will require the same financial authorizations as the original contract and once signed it becomes part of the contract and part of the project budget.
Contingencies are percentages built in to the original contract to cover for unknowns that occur during a project. Contingencies are usually 5 to 10% of the quote and cover small adjustments such as an extra trip, an additional few days of labor or a few crates. A contingency is added so that an addendum does not need to be drafted for small adjustments to the project outside of the scope of the contract. This allows work to continue without stoppages that an addendum would require.
Both the institution project manager and the art service provider project manager are responsible for monitoring contingencies. The art service project manager will monitor and record additional requests or delays that fall outside of the contract and re
port to the institution’s project manager that the requests or delays could increase costs. The institution project manager is responsible for monitoring the same, but they are also responsible for authorizing and documenting the contingencies. A contingency delay is considered any requested action that delays the days events from being fully accomplished or a request that adds an additional cost to the project, Additional crates or vehicle requests would be considered a cost addition that affects the contingency. A vehicle breakdown that delays a day would be a cost absorbed by the contractor but an elevator breakdown on the project site that wastes a day of labor would be an institution cost that would be covered as a contingency. The addition of a hard cost such as rigging, or equipment rental may require an addendum to the contract if the costs are prohibitive. A lost day’s labor would be a contingency. An extension of the project end date adding a month’s extension of labor would be an addendum to the contract.
Commercial project managers often do not document delays that affect the contract’s contingency. When I managed commercial projects I always required documenting contingency delays regardless of how small and I required my site captains to do the same. It may seem petty to document 30-minute delays but several of these a week add up to substantial lost labor. If for example the project schedule requires 4 art-handlers, in two teams of two, slipcase 100 framed paintings in one week for an end of week delivery that would require that 20 paintings a day are slip-cased or 2.85 paintings every hour during a 7-hour work day. If there are four 30-minute delays in a week then 2 hours have been lost which is the equivalent of 5.7 slip-cased paintings. If at the end of the week the institution project manager notes that the quota of 100 paintings is short by 5 for the next end of week delivery the contractor project manager can point to the two hours of delays as the cost of the shortage. Time on a project is money and delays, no matter how brief, have a cost. What I suggest is a dated and signed voucher be done at the time of the request and prior to the delay. This voucher should describe the requested delay or addition to the daily schedule, the amount of time lost because of the delay or time required for the request and it should name the person along with their title that caused or requested the delay. The person requesting the addition or delay would be required to sign this note. An effective institution project manager would note the delays as they occur and consider adding extra labor towards the end of the week to make up the difference in lost time. This addition of labor comes out of the contingency only if the time and labor cannot be made up somewhere else in the project. If the example used of two hours of labor for two art-handlers or 4 labor ours, has been added to the project the institution project manager should be looking down the project time-line to reduce a regularly scheduled day by 4 hours of labor so as not to use the contingency.
Chuck Agro - Project Management For The Arts 