Design-Builder Agreement Term Sheet
Key Performance Indicators (KPIs)
KPI Overview
| KPI Metric | Target |
|---|---|
Build Velocity |
Minimum of X miles/km per day |
Defects per Mile/Kilometer |
Less than Y defects per mile/km |
Change Request Frequency |
No more than Z change requests per quarter |
On-Time Delivery |
100% of network segments delivered as per schedule |
As-Built Accuracy |
99% accuracy when compared to approved designs |
Risk Transfer and Bonding Requirements
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Performance Bond: A performance bond of 15% of the total contract value to ensure the fulfillment of the Design-Builder’s obligations under the terms of this agreement.
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Insurance: Comprehensive general liability and professional indemnity insurance to cover potential risks and damages associated with construction performance.
Fixed-Price Performance Contract
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Fixed-Price Agreement: The total cost of the project is fixed and agreed upon in advance, based on the detailed designs and specifications provided.
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Minimized Change Requests: A rigorous initial project scope review is to be conducted to minimize the need for change requests. A clear process for handling necessary change requests will be outlined, aiming to limit their frequency and associated costs.
Pricing and Payment Schedule
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Pricing Structure: The Design-Builder will be paid a fixed price per Network Segment, adjusted for the complexity and size of the Service Area.
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Progress Payments: Payments will be made upon the successful completion of stages as per the agreed-upon milestones, with a holdback of 10% until final project completion and audit.
Pricing and Progress Payment Schedule
The progress payments are directly aligned with the achievement of defined states of the NetworkSegment assets. Payments will be released upon verification and approval of the asset state transition, ensuring a clear, objective measure for progress.
| Asset State Transition | Payment Percentage of Segment Cost | Conditions |
|---|---|---|
Preliminary Design Approval |
10% |
Upon approval of the preliminary design by the Project Owner. |
Final Design Approval |
15% |
Upon approval of the final design and material allocation by the Project Owner. |
Commencement of Construction |
10% |
Upon verified start of construction activities on site. |
Mid-Construction Milestone |
20% |
Upon completion of 50% of the construction as per project timeline and KPIs. |
Construction Completion |
20% |
Upon completion of construction, prior to as-built documentation and initial quality audit. |
As-Built Documentation and Audit |
15% |
Upon submission and verification of as-built documentation against the digital twin scans. |
Operational Handover |
10% |
Upon successful commissioning and handover of the NetworkSegment to operations. |
Incentive for Performance
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Early Completion Bonus: For each week the project is completed ahead of schedule, the Design-Builder will receive a bonus of 1% of the project’s value, capped at 5%.
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Quality Bonus: A bonus of 2% of the project’s value for achieving a defect rate that is 50% lower than the targeted KPI metric.
Change Request and Change Order Management
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Change Order Cap: The total cost of change orders will not exceed 5% of the total fixed price without prior approval from the Project Owner.
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Change Request Process: All change requests must be submitted and approved electronically through a standardized form, reviewed by the Project Owner within a 5-day period.