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22 <br /> Orange County, NC I CONSTRUCTION MANAGER AT RISK CONTRACT I CONFIDENTIAL DRAFT <br /> component; include signed proposals from performing Subcontractors; and include the CMAR's estimate <br /> of schedule impact. <br /> 18.3 Pricing Methods. Changes shall be priced using, in order of preference: (a) lump sum; (b) unit prices; <br /> (c) cost plus a maximum mark-up of fifteen percent (15%) for CMAR's own Work (overhead and profit <br /> combined) and a maximum mark-up of fifteen percent (15%) by Subcontractors plus ten percent (10%) by <br /> the CMAR on Subcontractor costs. No mark-up shall be applied to sales tax, permits, fees, or Owner- <br /> designated allowances. <br /> 18.4 Deductive Change Orders. For deductive change orders, the CMAR shall deduct no less than five <br /> percent (5%) profit (but no overhead) for Subcontractors. All subcontract savings from scope reductions <br /> revert to the Owner in full. <br /> 18.5 CMAR Fee on Changes. An increase in the CMAR Fee on Change Orders shall be calculated <br /> separately from individual changes, subject to the limits in Article 6. No CMAR Fee increase is warranted <br /> unless Owner-directed changes cumulatively exceed five percent(5%) of the total Cost of the Work. <br /> 18.6 Emergency Changes. In an emergency endangering life or property, the CMAR may take necessary <br /> action without prior written authorization, subject to prompt notification to the Owner and Project Designer <br /> and subsequent formalization as a Change Order. <br /> 18.7 Construction Change Directives. In the absence of agreement on the terms of a Change Order, the <br /> Owner may issue a Construction Change Directive ("CCD") — a written instruction signed by the Owner <br /> and Project Designer directing a change in the Work without the CMAR's prior agreement on price or time. <br /> The CCD shall describe the change, the Owner's initial estimate of cost impact, and the time within which <br /> the CMAR shall respond. <br /> 18.7.1 CMAR's Obligation to Proceed. Upon receipt of a CCD, the CMAR shall proceed promptly with the <br /> directed change and shall advise the Project Designer and Owner in writing within five (5) working days <br /> whether the CMAR agrees or disagrees with the proposed method of adjustment. Refusal to proceed with <br /> properly issued CCD Work constitutes a material breach. The CMAR expressly reserves all rights to claim <br /> an equitable adjustment under Article 23 while proceeding. <br /> 18.7.2 Interim Payment. Pending final determination of cost, the CMAR may request payment for CCD <br /> Work completed in its monthly Applications for Payment. The Project Designer will make an interim <br /> determination and certify for payment the amount the Project Designer determines reasonably justified. <br /> This interim determination does not constitute a final resolution and is subject to the dispute resolution <br /> process in Article 23. <br /> 18.7.3 Resolution of CCD. Upon agreement between the Owner and CMAR on the cost and time <br /> adjustment for CCD Work, a Change Order shall be issued incorporating the agreed terms. If the parties <br /> cannot reach agreement within sixty (60) days of the CCD issuance, either party may submit the dispute <br /> under Article 23 without waiting for completion of the CCD Work. The CMAR shall maintain detailed cost <br /> records for all CCD Work as a condition of any equitable adjustment claim. <br /> 18.8 Disputes on Changes. If the CMAR and Owner cannot agree on the cost or time for a Change Order <br /> (and no CCD has been issued), the Owner may issue a unilateral direction to proceed. The CMAR shall <br /> proceed as directed, preserving all rights to pursue a claim under Article 23. Failure to proceed shall <br /> constitute a material breach. <br /> 18.9 Upon signing each Change Order, the CMAR shall notify its surety and certify that the surety has <br /> been notified of the change. <br /> ARTICLE 19: QUALITY CONTROL AND INSPECTIONS <br /> 19.1 Quality Control Program. The CMAR shall establish and maintain a formal Quality Control Program <br /> approved by the Owner and Project Designer before construction commences. The program shall include: <br /> inspection procedures by trade; testing protocols; non-conformance reporting and corrective action; and <br /> documentation requirements. <br /> Page 19 of 35 <br />