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HomeMy WebLinkAboutS Intertie Construction Managment Agreement 1994cer dwBh bum CHUGACH ELECTRIC ASSOCIATION, INC. Cu kectric General Manager te. Ton Robray EUGENE N. BJORNSTAD, P.E. wird lt: fertth Lavfer OVS ovm™ November 10, 1994 Aw William R. Snell, Executive Director Alaska Industrial Development and Export Authority 480 West Tudor Anchorage, Alaska 99503 RE: Southern Intertie Construction Management Agreement Dear Riley: Enclosed is a draft of the Construction Management Agreement for the Southern Intertie. While not entirely different in concepts from the draft for the Northern Intertie, you will note some variation. This draft emphasizes that the Construction Manager (CM) acts solely as the agent for the Participants so as to minimize "us versus them" issues. The draft provides substantial review and approval authority for the Participants acting through the IPG on budget, scope, and major construction contracts, but once the approval is given, the CM may operate freely within the scope of the approvals already given by the Participants. We have also provided for a different leeway for the CM in approving change orders. A rolling six month working capital account and time constraints for decisions by the Participants are key components in the draft. It also provides for a dispute resolution panel to resolve any disputes between the Participants and the CM. We have tried at all times to be fair to Participants while setting up a structure within which Chugach could act as the Construction Manager of the Southern Intertie. I hope the Participants will find this approach acceptable so we can clear the way to begin work on this project. ieee Bio . Bjornstad General Manager Sincerely, 5601 Minnesota Drive ¢ P.O. Box 196300 « Anchorage, Alaska 99519-6300 Phone 907-563-7494 * FAX 907-562-0027 CONSTRUCTION MANAGEMENT AGREEMENT This Construction Management Agreement is entered into this) === day of , 1994, by and between Chugach Electric Association, hereinafter referred to as Construction Manager or Chugach, and the Municipality of Anchorage d/b/a Municipal Light & Power, the Municipality of Fairbanks d/b/a Fairbanks Municipal Utility System, Golden Valley Electric Association, Inc., the City of Seward d/b/a Seward Electric System, Alaska Electric Generation and Transmission Cooperative, Inc., Homer Electric Association, Inc., Matanuska Electric Association, Inc., and Chugach Electric Association, Inc., hereinafter referred to as Participants or Participating Utilities. PREAMBLE WHEREAS, effective August 11, 1993, the Legislature of the State of Alaska enacted 18 Ch. SLA 1993 relating to, among other things, the financing of certain electric power projects within the State of Alaska; and WHEREAS, effective the same day, the State of Alaska enacted Ch. 19 SLA 1993 which, among other things, appropriated $46,800,000 to the Department of Administration for payment of a grant under AS 37.05.316 to Chugach Electric Association for the benefit of all utilities participating in the design, construction, and operation of a power transmission intertie of at least 138 kilovolts between Anchorage and the Kenai Peninsula (hereinafter the Project); and WHEREAS, pursuant to Ch. 19 SLA 1993, the above referenced parties executed an INTERTIE GRANT AGREEMENT dated October 26, 1993, the purpose of which was to satisfy the conditions stated in §§ 2(b) and (c), Ch. 19 SLA 1993; and WHEREAS, effective November 5, 1993, the above referenced parties, the Department of Administration, and the Alaska Industrial Development and Export Authority entered a GRANT TRANSFER AND DELEGATION AGREEMENT under which the duties, responsibilities, and control of the above referenced grant were transferred from the Department of Administration to the Alaska Industrial Development and Export Authority, and under which the above referenced grant was made to Chugach Electric Association pursuant to the statute; and WHEREAS, effective January 24, 1994, the above described Participants entered a PARTICIPANTS' AGREEMENT under which they agreed to carry out the terms of the statutes and prior agreements with respect to the Project; and WHEREAS, effective August 30, 1994, the Alaska Industrial Development and Export Authority ("AIDEA") and the above referenced Participants executed a GRANT ADMINISTRATION AGREEMENT under which the above referenced parties and AIDEA agreed on the manner in which the grant would be administered by AIDEA; and WHEREAS, in order to carry out the obligations of the above referenced parties under the above referenced statutes and agreements, the parties now desire to enter into a CONSTRUCTION MANAGEMENT AGREEMENT between Chugach and the other Participants providing for Chugach's construction management responsibilities, rights, and authorities for accomplishing, on behalf of the Participating Utilities, the design and construction of the Project; and WHEREAS, currently the parties contemplate, but have not finally decided, that the Project shall be divided into the following phases, subphases, and segments after the development and approval of a Project Design Team: Phase I - Route selection & preliminary design (a) Preliminary environmental assessment (b) Preliminary geotechnical and archaeological investigation (c) Preliminary easement investigation (d) Identification of corridors and alternate route alignments (e) Route selection report (£) Investigation of design alternatives (g) Approval of line route end points and preliminary design (h) Development of Phase II budget, schedules, and cash flow projections for IPG approval Phase II - Final design and construction A. Phase IIA Final Design (a) Final environmental, geotechnical, and archaeological investigations (b) Selection of specific locations of facilities (c) Procurement of easements (d) Preparation of final design drawings and specifications for (i) Modifications to Bernice Lake Substation, if any (ii) Submarine cable termination stations, if any =O (iii) Submarine cable crossing, if any (iv) Transmission line materials, equipment, and construction (e) Preparation of construction and material and equipment acquisition contracts (£) Development of Phase IIB budgets, schedules and cash flow projections for IPG approval B. Phase IIB Clearing, Materials and Equipment isiti ic baal (a) Right-of-way clearing (b) Modification of Bernice Lake Substation (c) Submarine cable terminal stations (d) Submarine cable crossing (e) Transmission line construction (i) South Kenai line (ii) North Kenai line (iii) Anchorage line (£) Commissioning and project closeout NOW, THEREFORE, the parties agree that: I. GENERAL A. Chugach agrees to perform the construction Management duties described herein as agent for the Participants identified above, subject to the terms and conditions of this Contract. The Participants hereby authorize Chugach to perform the construction management duties described herein as their agent according to the terms and conditions of this Contract. All contracts, obligations, liabilities, and duties entered, incurred, undertaken, or suffered by Chugach in carrying out the terms of this Contract, shall be entered, incurred, undertaken, or suffered solely as agent for the Participants and not for its own account. All contracts shall be entered in the name of the Participants acting by and through their agent Chugach. Chugach shall carry out its duties hereunder in the best interests of the Participants and in accordance with Prudent Utility Practices. The Participants shall timely and definitively decide all requests for approvals and authorizations so as to avoid (1) delaying the Project, (2) unnecessarily increasing its costs, and (3) exposing Chugach to unreasonable and unanticipated demands on its management personnel with respect to carrying out the terms of this Contract. Be As between Chugach, as the Construction Manager, and the Participants, the ultimate financial responsibility for all amounts incurred, obligated, or suffered, arising out of the Project shall be that of the Participants. The Participants shall also have the ultimate responsibility to secure the approval of AIDEA for any necessary authorizations to proceed with the Project and for payments of all amounts available under the above referenced legislative grants; provided that Chugach, on behalf of the Participants, may communicate directly with and provide information directly to AIDEA in order to facilitate such approvals and grant disbursements. (ee In accordance with section 6 of the Intertie Grant Agreement dated October 26, 1993 and section 6 of the PARTICIPANTS' AGREEMENT dated January 24, 1994, the Participants hereby designate and authorize the Intertie Participants Group (IPG) to carry out their powers and exercise their rights, responsibilities, and duties under this agreement. The Participants shall be bound by all actions, inactions, decisions, and conduct of the IPG in carrying out their powers and exercising their responsibilities and duties under this agreement. De Subject to all of the provisions of the this contract regarding approvals necessary for the entering of contracts, Chugach is hereby authorized to perform any of its duties described in this contract through its own forces or through independent contractors specifically retained for that purpose. The determination of whether a particular function shall be performed by Chugach's employees or through an independent contractor shall be in the sole discretion of Chugach. II. DEVELOPMENT AND APPROVAL OF DESIGN TEAM A. Chugach shall develop a contract form for design services, including a description of the scope of the design work to be performed for the Project, which scope of work shall be structured according to the phases and segments of the design and construction of the Project. The contract with its description of the scope of work shall be submitted to the IPG for approval in accordance with Article VII below. Chugach shall also submit for approval by the IPG a plan for acquisition of the necessary design and study services for preliminary and final design of the Project. B. Upon approval by the IPG of a design services contract, including a description of the scope of work and the plan for acquisition of design services, Chugach shall select a =4= design engineering firm in accordance with the approved plan. At the conclusion of the selection process, Chugach shall submit to IPG for approval in accordance with Article VII below a report of the process conducted and the recommended design engineering firm. Upon approval by the IPG of a design engineering firm and the contract to be entered with said firm, Chugach shall be authorized to enter said contract on behalf of the Participants. as Chugach shall prepare, as it deems appropriate in the best interests of the Participants, a scope of work for one Or more subconsultants necessary to assist Chugach, as Construction Manager, and the design engineer. Chugach shall submit for approval by the IPG in accordance with Article VII below proposed contracts including descriptions of the scope of work for such subconsultants as Chugach deems appropriate. Upon approval by the IPG, Chugach shall be authorized to retain such subconsultants as are approved on contracts approved by the IPG. III. OVERALL PLAN FOR DESIGN AND CONSTRUCTION OF PROJECT A. Plan. With the assistance of the design engineer and other subconsultants as needed, Chugach shall develop an initial overall plan for the design and construction of the Project. This plan shall include a budget, a schedule, and cash flow projections for the overall Project. The plan shall address the appropriate sequencing of the various segments and tasks as well as appropriate lead times for the orderly design and construction of the Project in accordance with Prudent Utility Practices. The plan need not conform exactly to the task descriptions and sequencing currently set out in the Schedule A-2. of the GRANT ADMINISTRATION AGREEMENT. The purpose of the initial overall Project plan shall be to establish basic Project order of sequence and ranges of magnitude upon which Chugach will be able to rely in carrying out the subsequent steps of the Project. B. Schedules. The initial overall Project plan shall include a schedule dividing the Project into phases, subphases, and segments as shall best facilitate the orderly design and construction of the Project, including appropriate points where approval of the IPG will be sought. The schedule shall include the initial preliminary estimates of starting dates, ending dates, and durations for the various phases, subphases, segments, tasks, and resources; and shall also identify major milestones to facilitate evaluating progress of the Project. Se c. Budget. The initial overall Project plan shall include a budget broken down by phase, subphase, and segment, which budget shall state the then best estimates of all Project costs. D. Cash Flow Projections. Chugach shall develop as part of the initial overall Project plan a cash flow projection broken down by phase, segment, and to the extent reasonably feasible, by quarterly or monthly increments based upon the initial overall Project schedule and budget. E. Approval of IPG. Upon development of the initial overall Project plan, schedule, budget, and cash flow projections, Chugach shall submit them to the IPG for approval in accordance with Article VII below. Upon approval by IPG of the overall Project plan, schedule, budget, and cash flow projections, or upon approval as they may be revised by IPG, Chugach shall proceed with Phase I route selection and preliminary design as described in Article IV below. IV. PHASE I - ROUTE SELECTION & PRELIMINARY DESIGN A. Development and Approval of Phase I Plan, Budget, Lis Chugach, with the assistance of the design engineer and other subconsultants as needed, shall develop a Plan for Phase I route selection and preliminary design. The Plan shall identify and describe each of the major segments with subsegments and tasks in as much detail as is appropriate and feasible. The Plan shall include a description of the work for each segment and the method of acquisition of services for the described work. In conjunction with the development of the Plan, Chugach shall also develop a budget, time schedules, and cash flow projections for Phase I broken down by segment and such smaller increments as may be reasonably feasible. The schedule shall include calendar start and end dates and shall reflect the proposed sequencing of the various segments of Phase I. The cash flow projections shall be broken down by segment and such smaller increments as may be reasonably feasible and shall also show total cash requirements on a quarterly or monthly basis for the duration of the Phase I as scheduled. ye Chugach shall submit to the IPG the Phase I Plan, budget, schedules, and cash flow projections for approval in accordance with the procedures of Article VII below. Upon approval of the Plan, budget, schedules, and cash flow projections, or upon approval as they may be revised by the IPG, Chugach shall proceed to execute the Plan as approved. B. Execution of Plan. 1. Upon approval of the Phase I Plan, budget, schedule, and cash flow projections by the IPG in accordance with procedures in Article VII below, Chugach, in conjunction with the advice of the design engineer and other subconsultants as needed, shall enter contracts, on behalf of the Participants, for the acquisition of the necessary services and work to be performed under Phase I. As long as the contracts are within the approved budget and the scope of services of each contract is reflected in the description of the work of the approved Plan, Chugach may, but is not required to, obtain additional authorization to enter each contract for executing Phase I. 2. Under Phase I, Chugach shall cause to be prepared a route selection report and a report exploring alternative design criteria, all of which criteria shall be feasible and in accordance with Prudent Utility Practices. The route selection report shall recommend a specific line route, including end points, and shall provide appropriate substantiation for the recommendation, including an explanation of the choice of the line route recommended over alternate routes. The report on alternative design criteria shall recommend preliminary design criteria and provide appropriate substantiation for the recommended design criteria, including the basis for their choice over alternatives. 3. Under Phase I, Chugach shall cause to be prepared a budget, schedule, and cash flow projections for Phase II based upon the information developed under Phase I, including the recommended line route, and preliminary design criteria. The budget, schedule, and cash flow projections shall be broken down between Phase IIA and Phase IIB, as outlined herein. The parties acknowledge that the estimated budget, schedule, and cash flow projections for Phase IIA are likely to be more precise than those for Phase IIB. The budget, schedule, and cash flow projections shall be broken down by segment within each phase and by such smaller increments as may be reasonably feasible. The schedule shall reflect sequencing of the various segments, start dates, end dates, and durations of all planned tasks. The cash flow projections shall be broken into quarterly or monthly increments in addition to increments by -7- segment. Chugach shall also prepare a Phase IIA Plan which shall describe the organization of the work to be accomplished under Phase IIA including a description of the method of selecting the contractors and vendors necessary to complete Phase IIA, a description of each of the segments and sub-tasks to be accomplished in achieving the final design, their relative sequencing, and a description of the nature of the contracts proposed to be used. 4. Upon completion of Phase I, Chugach shall submit to the IPG for approval in accordance with the procedures in Article VII below, the Phase IIA Plan, budgets, schedules, and cash flow projections for both Phase II in total and, separately, for Phase IIA, as well as the route selection report, and the report on alternative design criteria. Chugach shall also submit to IPG for its approval a recommended Phase II ceiling that IPG may submit to AIDEA. Chugach shall not be obligated to proceed with Phase II unless and until IPG has approved, the Phase IIA Plan, the respective budgets, schedules, and cash flow projections for both Phase II in total and, separately, for Phase IIA, the line selection report and recommendation, and the preliminary design criteria. v. PHASE II FINAL DESIGN AND CONSTRUCTION A. Phase IJA Final Design. A Upon approval by the IPG of the Phase IIA Plan, the respctive budgets, schedules, and cash flow projections, for both Phase II in total and, separately, for Phase IIA the route selection report and recommendation, and preliminary design criteria, Chugach shall proceed to execute the Phase IIA Plan in accordance with the approved budget, schedules, and cash flow projections. Chugach shall prepare final design contracts in accordance with the Plan, _and select professionals and contractors in accordance with the selection process outlined in the approved Plan. As long as the scope of work, amount, and duration of each contract, are within the approved Plan, budget, schedule, and cash flow projections for Phase IIA, Chugach may, but is not required to, obtain specific approval for each such contract. 2 The segments to be completed under Phase IIA shall include the final environmental, geotechnical, and archaeological investigations, selection of specific locations of facilities, procurement of easements, the final design of (1) the modifications to the Bernice Lake Substation, if any; (2) the submarine cable terminal stations, if any; and (3) the submarine cable crossing specifications, if any; and the preparation of the drawings, specifications and contract =85 documents for right-of-way clearing, construction, and material and equipment acquisition contracts. Se Based upon the information gathered in Phase IIA, the location of the facilities, and the preparation of all final design documents, Chugach shall, in conjunction with the design engineer and other subconsultants as needed, prepare for Phase IIB (1) a plan of procurement for acquisition of all material and equipment, right-of-way clearing, and construction required for the Project; (2) a budget for the material and equipment acquisition and the construction, (3) a schedule for the same; and (4) cash flow projections for the same. Chugach shall submit for approval to the IPG in accordance with the procedures of Article VII below, the Plan for Phase IIB construction and acquisition of equipment and materials, the proposed budget, schedule, and cash flow projections. Chugach shall not be obligated to proceed with Phase IIB unless and until IPG has (1) approved the Phase II Plan, budget, schedule, and cash flow projections for Phase IIB; and (2) obtained all approvals which the Participating Utilities may be obligated to obtain under any governing agreement, law, or regulation before proceeding with Phase IIB. Chugach shall also not be obligated to proceed with Phase IIB unless and until arrangements satisfactory to Chugach have been reached that assure it that the Participating Utilities can and will make timely payment for all Phase IIB Project costs, including the costs of commissioning of the Project and its transition to operational status. 4. The limited automatic rights of withdrawal described in section 4(b)(3) of the PARTICIPANTS' AGREEMENT dated January 24, 1994, shall be exercised in conjunction with the IPG's approval of the Phase IIB Plan, budget, schedule, and cash flow projections. As between the Participating Utilities and Chugach as Construction Manager under this agreement, it shall be the sole responsibility of the Participating Utilities to assure that all requirements of section 4(b)(3) of the PARTICIPANTS' AGREEMENT dated January 24, 1994, with respect to the exercise of rights of withdrawal have been met by the time the IPG approves the Phase IIB Plan, estimated budget, estimated schedule, and estimated cash flow projections for Phase IIB. VI. PHASE IIB CONSTRUCTION A. Upon Chugach's receipt of satisfactory assurances of timely payment of Phase IIB costs, and upon approval by the IPG of the Phase IIB Plan, budget, schedule, and cash flow projections, and receipt by Chugach of the IPG's advices that (1) it has received the approval of any other agencies whose =9= approval the Participating Utilities may be obligated to obtain, and (2) all issues regarding the exercise of rights of withdrawal have been resolved, Chugach shall be authorized to execute the approved Phase IIB Plan in accordance with the approved budget, schedules, and cash flow projections and the terms of this agreement. Chugach shall be authorized to enter into the various construction contracts and the acquisition of materials and equipment contracts in accordance with the approved Plan subject to the requirement that upon Chugach's selection of a proposed contractor, that contractor shall be submitted to IPG for approval in accordance with the provisions of Article VII below. In conjunction with the submittal for approval of the contractor, Chugach shall also submit the contract amount, schedules, and cash flow projections pertinent to that particular contract. Upon IPG's approval, Chugach shall be authorized to enter into the contract as agent for the then Participating Utilities. Chugach shall not be obligated to proceed with any contract unless and until the IPG has approved the identity of the contractor, scope of work, the contract amount, the contract schedule, and the cash flow projections based thereon. As each contract under Phase IIB is submitted to IPG for approval, Chugach shall also submit an updated overall Project budget, schedule, and cash flow projection, reflecting the effect of the proposed contract on the overall Project budget, schedules, and cash flow projections. B. Upon approval of each contract, Chugach shall manage and perform the approved contracts in accordance with the approved budgets, schedules, and cash flow projections and the terms of this agreement. ’ VII. IPG APPROVAL A. General Procedure. Whenever the approval of the IPG is required hereunder or otherwise sought by Chugach, Chugach shall submit in writing to the IPG the request for approval along with all documentation reasonably required for the IPG to act upon the request. The writing shall include a specific and definitively stated recommendation, and shall specify a date by which a decision of the IPG is required in the judgment of Chugach. Copies of the written request and supporting materials shall be mailed to each member of the IPG no less than 10 days before the time when a decision is required; subject to the provisions below regarding an emergency decision in paragraph B. Upon receipt of a written request for an approval or authorization, the IPG shall meet and reach a decision in accordance with section 6(d) and (e) of the PARTICIPANTS' AGREEMENT dated January 24, 1994. 105 B. Emergency Decision. If an approval or decision of the IPG is required, and either to maintain the schedule or to avoid substantial extra costs from being incurred a decision is needed in less than 10 days, Chugach is authorized to communicate with the chairman of the IPG advising of the nature of the emergency, the decision needed, the date by which it is needed, and the reason it is needed by that date. Chugach shall cooperate with any reasonable request of the chairman of the IPG to disseminate the necessary information to the members of the IPG. The Chairman of the IPG shall convene the IPG which shall meet and reach a decision in accordance with section 6(d) and (e) of the PARTICIPANTS AGREEMENT dated January 24, 1994. Cy Approval. Provided that Chugach has followed the procedures stated above in paragraph A or in paragraph B, as the case may be, if the IPG has not affirmatively rejected the recommendation in accordance with the procedures of section 6(e)(3) of the PARTICIPANTS' AGREEMENT by the date designated in the request, the IPG shall be deemed to have approved Chugach's recommendation. If the IPG rejects the recommendation as submitted by Chugach, Chugach may, but shall not be required to, revise the recommendation and resubmit it as revised for approval. The IPG shall not, without the consent of Chugach, modify the recommendation. D. Binding Effect. As between the Participating Utilities and Chugach as Construction Manager under this agreement, once the IPG has approved or is deemed to have approved the recommendation or requested action, said approval shall be binding as among the Participating Utilities, the IPG, and Chugach, and may not be revised, modified, or amended without the consent of Chugach. VIII. IPG APPROVAL OF DISBURSEMENT OF DESIGN AND CONSTRUCTION FUNDS -- WORKING CAPITAL ACCOUNT A. Pursuant to the PARTICIPANTS' AGREEMENT of January 24, 1994, the GRANT ADMINISTRATION AGREEMENT of August 30, 1994, and other applicable agreements previously entered and governing the disbursement of grant funds for this Project, upon approval by the IPG of the Overall Project Plan, budget, schedule, and cash flow projections pursuant to Article III above, the IPG shall authorize and direct AIDEA to disburse, pursuant to section 8 of the PARTICIPANTS’ AGREEMENT of January 24, 1994, funds to a WORKING CAPITAL ACCOUNT sufficient to meet the first six months cash flow requirements as provided in the then approved cash flow projections. The WORKING CAPITAL ACCOUNT thus established shall be an account or accounts with financial institutions approved by IPG, the Sie balance of which shall be available for disbursement to meet contract obligations and permitted project expenses upon approval by Chugach, in accordance with the procedures stated herein. B. When Chugach receives a pay request from the project engineer, or subconsultants, or during Phase IIB, from contractors and vendors, Chugach shall determine whether the request is in accordance with all applicable contractual requirements. Provided the pay request is in accordance with all applicable contractual requirements, within the IPG approved budget, the contractor is on schedule according to the approved schedule, and the pay request is within the approved cash flow projection for that contract, Chugach shall be authorized to disburse from the WORKING CAPITAL ACCOUNT sufficient funds to pay the pay request. Chugach shall submit all such pay requests covered by this paragraph with all substantiating documentation supporting Chugach's action with respect to each such pay request to the IPG for transmittal to AIDEA. Cs If the pay request is deemed By Chugach to be in accordance with contract documents and is otherwise earned, but for any reason payment of the amount would exceed the approved budget or cash flow projections for the work involved, Chugach shall submit to the IPG for approval, a recommendation regarding that portion of the pay request that would exceed the approved budget or cash flow projection. Upon approval by the IPG of the excess amount, Chugach shall pay the excess amount from the WORKING CAPITAL ACCOUNT. Chugach shall in any event be authorized to pay from the WORKING CAPITAL ACCOUNT that portion of the pay request which is in accordance with all applicable contract requirements and which does not exceed the applicable budget or cash flow projection. D. If Chugach determines for any reason that a question exists as to whether any pay request is in accordance with the respective contract documents or is otherwise due the contractor or vendor, Chugach shall submit to the IPG for approval a recommendation regarding the pay request. Upon approval by the IPG of the pay request or any portion thereof, Chugach shall pay the approved amount, if any, from the WORKING CAPITAL ACCOUNT. Eis With respect to any pay request submitted to the IPG by Chugach under paragraph B above, IPG shall be deemed to have approved such pay requests. With respect to any pay requests submitted to the IPG under paragraph C or paragraph D above, Chugach shall submit such pay requests with all substantiating documentation supporting Chugach recommendation with respect to each such pay request to the IPG for approval. -12- The IPG shall promptly, and in any event no later than 30 days after submittal to it, act on such request for approval. The IPG shall be deemed to have approved such recommendation submitted under paragraph C or paragraph D above upon the earlier of an affirmative approval by the IPG or the expiration of 30 days after submittal without any action taken by the IPG. Upon the IPG's approval of pay requests or recommendations, either by such approval being so deemed, by affirmative action, or by failure to act, AIDEA shall be and hereby is authorized by the IPG to disburse from the grant funds into the WORKING CAPITAL ACCOUNT, pursuant to section 8(a) of the PARTICIPANTS' AGREEMENT dated January 24, 1994, and § 4.03 of the GRANT ADMINISTRATION AGREEMENT, sufficient funds to meet the pay requests or recommended amounts. Chugach as Construction Manager is hereby authorized to coordinate directly with AIDEA all documentation, information, or other assistance helpful to AIDEA to facilitate disbursement of the Grant Funds into the WORKING CAPITAL ACCOUNT. Article VII regarding IPG approval shall apply to the submittal of pay requests and recommendations by Chugach to IPG under this article. With respect to a recommendation regarding a pay request submitted to the IPG by Chugach under paragraph C Or paragraph D above, if the IPG rejects the recommendation, Chugach shall not pay the pay request. Chugach may, but is not required to, submit a revised recommendation with respect to any such pay request or recommendation rejected by the IPG. F. In the event that additional financing for the Project is required pursuant to section 8(b) of the PARTICIPANTS' AGREEMENT, the Participants, pursuant to section 8(b)(4) of that agreement, shall pay into the WORKING CAPITAL ACCOUNT sufficient funds to meet the approved pay request, pro rata based on project shares. Said payments shall be made sufficiently timely to permit the orderly meeting of all obligations of the Participating Utilities with respect to the Project. - G. The IPG and Chugach anticipate that at all times the WORKING CAPITAL ACCOUNT will have a balance sufficient to cover anticipated disbursements for the following six months. The parties anticipate that the period of six months will be adequate to obtain the necessary approvals, pursuant to the Grant Administration Agreement of August 30, 1994, the PARTICIPANTS' AGREEMENT of January 24, 1994, and all other contracts and agreements governing the disbursement of design and construction funds for the Anchorage Kenai Intertie Project. In the event that those approvals take longer and thus require a greater balance in the WORKING CAPITAL ACCOUNT, the Participating Utilities shall cause sufficient additional funds to be deposited into the WORKING CAPITAL ACCOUNT, pro -13- rata based on project shares, to cover the anticipated cash flow needs of the Project in accordance with approved budgets, schedules, and cash flow schedules in order to accommodate the longer than anticipated approval time. Chugach shall not be required to expend at any time for any purpose any of its own funds in carrying out its obligations hereunder except those amounts that it expends for its own personnel costs incurred pursuant to section 7(c) of the PARTICIPANTS' AGREEMENT, which costs are reimbursable under said provision. IX. MANAGEMENT OF PROJECT DESIGN AND CONSTRUCTION Chugach as Construction Manager shall develop, implement, administer, and manage the Anchorage Kenai Intertie Project as Construction Manager on behalf of the Participating Utilities, which construction management services’ shall include, but not be limited to: i Administer and manage the procurement of all Project needs including but not limited to all design and professional services, equipment, materials, and construction services required. 2 Administer and manage all Project activities including but not limited to all design and professional service contracts, all equipment and material acquisition contracts, and all construction services contracts for the Project. i Prepare, evaluate, and update schedules in sufficient detail to adequately and effectively evaluate progress on the Project, and to identify delays in sufficient time to minimize their effect. 4. Prepare such financial cast accounting records as may be necessary and appropriate, including the above referenced budgets and cash flow projections, to appropriately track costs, evaluate whether the Project is within budget, and to identify costs that exceed the budget in sufficient time to permit adequate procedures to minimize and eliminate to the extent possible costs greater than those budgeted. Sr Prepare monthly reports updating all information concerning progress on the Project, including comparisons between the cost incurred to date and the budget and cash flow projections to date as well as to the overall budget and cash flow projections, comparisons between the progress of the work accomplished to date and the then approved schedule; and comparisons between cash flow needs and those projected according to the then approved cash flow projections. These -14- monthly reports shall include projections of work progress and cash flow requirements at the next month, next three months, and next six month intervals, all in accordance with section 7(g) of the PARTICIPANTS' AGREEMENT dated January 24, 1994. 6. Develop, implement, and enforce effective quality control/quality assurance procedures through its own personnel or through appropriate subconsultants, to assure that all services, materials, equipment, and construction work are in accordance with the respective applicable contracts, including providing for appropriate inspection services where appropriate. 7. Develop, implement, and enforce adequate procedures to assure proper review of all design "deliverables," to assure the reliability of the work product of the design professionals and other professional service contracts, and to properly evaluate all contractor and vendor submittals. 8. Develop, implement, and enforce effective controls for assuring that design and other professionals meet the time and work product requirements of their respective contracts, and that the clearing and construction work performed by construction contractors is performed according to the contract specifications including schedules and budgets. 9. Implement such procedures and take such steps as is necessary and appropriate to assure the reasonable reliability of all cost estimates prepared for project planning and execution purposes, but Chugach shall bear no liability towards the IPG or the Participating Utilities for the failure of actual costs as incurred to fall within approved cost estimates, budgets, or cash flow projections. 10. Organize and maintain sufficient record keeping systems for the route selection, preliminary design, final design, and construction of the Project to assure adequate control and substantiation for all decisions made and actions taken. 11. Establish and implement procedures under which all changes proposed by contractors, the design engineers, IPG, or Chugach are properly evaluated and resolved, either in appropriate contract modifications or otherwise as may be appropriate. Chugach shall evaluate all requests for additional compensation or additional time from any contractor for the purpose of determining whether the contractor is entitled to either the additional time or the additional money under the contract documents and applicable legal principles. a1S= Chugach shall have authority to determine on behalf of the Participating Utilities all proposed change orders or claims for extra time or money that (1) do not exceed, in the aggregate, 5% of the respective original contract amount; (2) once the threshold of 5% of the respective original contract amount in the aggregate is reached, do not exceed individually the amount of $100,000 per contract; (3) do not materially, in the judgment of Chugach, affect the overall Project schedule; (4) do not result in the increase of any budget previously approved by the IPG; and (5) do not result in any changes to design criteria, line routes, end points, or other material aspects of the previously-approved scope of the Project. Any requested change orders or claims for extra money or time for amounts exceeding these limits of Chugach's authority shall be submitted to the IPG for approval in accordance with the provisions of Article VII above. All change orders, whether prior IPG approval is required or not, shall be reported and explained to the IPG in the next regular monthly report to the IPG following the finalization of the change order. 12. Develop and maintain a current set of contract specifications and drawings which reflect all changes from the original design as drawn and specified. The current set of contract specifications and drawings shall reflect accurately all construction details as performed by the contractors. 13. Appear at all meetings of the IPG to brief the IPG on progress, schedules, financial aspects, and other issues that may be appropriate for IPG consideration and review. 14. Plan, provide for, and manage all pre-commissioning and commissioning activities. 15. Provide for appropriate programs to train permanent Project operating and maintenance personnel. 16. Prepare final Project completion documentation and such other reports and procedures for transitioning the Project from construction to operation. x. INDEMNITY The Participants shall indemnify and hold Chugach harmless from all claims, liabilities, damages, and costs which arise out of or in connection with the Project excepting only ~16- any judgments that are based exclusively and solely upon Chugach's intentional misconduct or "gross negligence." If any claims are made against Chugach, the IPG, or the Participating Utilities arising out of or in connection with the Project, Chugach shall arrange for defense of all parties as their interests may require and all such defense costs, regardless of the allegations made by the claimants, shall be considered Project costs for which the Participating Utilities shall indemnify Chugach. Chugach shall not be obligated to expend or advance any of its own funds on such defense costs. XI. DISPUTE RESOLUTION A. Among Other Parties. Chugach may insert in all contracts entered with respect to the Project provisions to allow for alternate dispute resolution methods to be used to resolve disputes among the design engineer, other consultants, material or equipment vendors, and construction contractors, or between any of them and Chugach, the IPG, or the Participating Utilities. Such methods may, but are not required to, include a Project Dispute Resolution Panel, the costs for which would be a Project cost. Chugach may establish other appropriate provisions within the contracts and other procedures to achieve resolutions of disputes in the least expensive and time consuming manner. In the event that any claims by other parties are made against Chugach, the IPG, or the Participating Utilities, or any combination of them, arising out of the Project, Chugach shall defend itself, the IPG, or the Participating Utilities or any combination of them. Chugach shall have the responsibility to resolve all claims against itself, the IPG, or the Participants asserted by others and arising out of the Project, either by alternate dispute resolution, settlement or judgment, and shall have the responsibility to solely control the defense of any such claims. However, subject to Article X, any and all defense costs including attorney's fees, as well as any agreed settlements or judgments rendered against any of them, shall be Sli satisfied by the Participating Utilities according to their respective interests in the Project. c. , a Blom f ili ee Za Any disputes arising out of the performance of this Construction Management Agreement between Chugach on the one hand as the Construction Manager and the IPG or Participating Utilities on the other hand, shall be resolved by submission of the dispute to a panel of three persons whose identities shall be agreed upon by Chugach on the one hand and the IPG on the other simultaneously with the signing of this contract. One of the three persons shall be an attorney licensed to practice law in the State of Alaska experienced in construction litigation, one shall be a person experienced in the design and construction of transmission lines of the size and nature involved in this Project; and one shall be experienced in the financing of electrical utility operations and construction, including the financing of construction of transmission lines similar in size and nature as this Project. None of the three persons shall have any economic or professional relationship with any of the Participating Utilities at the time this document is signed nor at any time thereafter for the duration of the Project including the rendition of any decisions by the panel after the completion of the Project. None of the three persons shall have participated in any way on behalf of any of the Participating Utilities with respect to this Project or the Northern Intertie Project being managed by GVEA. The intent of the parties is that the individuals selected shall be free of any bias towards or against any of the Participating Utilities including Chugach; and that the stature of each of them in their respective profession is accepted by each of the Participating Utilities. a Also simultaneously with the signing of this contract, the IPG and Chugach as the Construction Manager shall jointly agree on the identities of three additional persons to serve as alternates. Each of the three alternates, respectively, shall have the same qualifications as each person or the panel of three persons selected under paragraph C.1l. above. If at any time one or more of the original three panel members is unable or unwilling to serve, or becomes for any reason disqualified from serving as a panel member, the =19= alternate whose qualifications match the original person whose service on the panel is ending will replace the original panel member. The alternates shall not be consulted or become involved in any disputes unless and until they replace one of the original panel members. Sie In the event any disputes covered by this paragraph arise, Chugach and IPG shall each respectively prepare a written statement of their position of the dispute indicating what facts are not disputed and which facts or conclusions are disputed. The panel of five shall hold at least one conference in which Chugach and the IPG shall present orally their respective positions along with any witnesses or documents desired by either. The panel may hold more than one conference if in its discretion it determines such would be productive to reaching a decision. After reviewing all written comments and oral presentations, the panel shall meet out of the presence of the parties and render a written decision resolving the dispute in its entirety. The panel may secure consultation from those disinterested and impartial professionals that it, in its discretion, deems appropriate in order to assist it to reach a decision. The decision shall be rendered in accordance with (1) Prudent Utility Practice, (2) the terms of the statutes and various contracts applying to the project, and (3) in general with Alaska law. The decision thus rendered by the panel shall be binding on both Chugach and the Participating Utilities. All costs incurred by the parties and the panel itself shall be considered Project costs. XII. ADMINISTRATIVE PROVISIONS A. This Contract shall be interpreted and enforced pursuant to the laws of the State of Alaska. BF The parties hereto do not intend to create any rights, interests, immunities, or privileges with respect to any entity not a party signing this Contract. Cr If any portion of this agreement is deemed unenforceable for any reason, the remaining provisions of the Contract shall remain in effect. D. This Contract may not be modified or amended other than by a written document signed by all parties hereto. -19- Ex Terms defined in any of the agreements identified in the Preamble above shall have the same meaning when used in this Contract, unless such terms are defined differently in this Contract. Fa With respect to the construction management rights and duties of Chugach hereunder, where the terms of this Contract differ from any other prior contracts between the Participating Utilities and Chugach, the terms of this Contract shall govern with respect to the parties hereto. This agreement is intended to constitute the full agreement between the parties relative to the construction management rights and duties of Chugach for the Anchorage Kenai Intertie Project and all prior oral negotiations between the Participating Utilities, the IPG, and Chugach relative to the construction management activities of the Anchorage Kenai Intertie are hereby merged herein. CHUGACH ELECTRIC ASSOCIATION By. Its “CONSTRUCTION MANAGER” ALASKA ELECTRIC GENERATION HOMER ELECTRIC ASSOCIATION AND TRANSMISSION COOPERATIVE, INC. By. By. Its Its MATANUSKA ELECTRIC ASSOCIATION CHUGACH ELECTRIC ASSOCIATION By. By. Its Its -20- MUNICIPALITY OF FAIRBANKS GOLDEN VALLEY ELECTRIC d/b/a FAIRBANKS MUNICIPAL ASSOCIATION, INC. UTILITY SYSTEM By. By. Its Its THE CITY OF SEWARD THE MUNICIPALITY OF ANCHORAGE d/b/a SEWARD ELECTRIC SYSTEM d/b/a MUNICIPAL LIGHT & POWER By. By. Its Its “PARTICIPANTS” PSA94:477/4343.19 -21l-