Owners shall be responsible for maintaining a contract administration system to monitor the contractors' performance and compliance with the terms, conditions, and specifications of the contracts.

Preconstruction conference. Prior to beginning construction, the owner will schedule a preconstruction conference where the consulting engineer will review the planned development with the Agency, owner, resident inspector, attorney, contractor, and other interested parties. The conference will thoroughly cover applicable items included in Form RD 1924-16, “Record of Pre-construction Conference,” and the discussions and agreements will be documented.

Monitoring reports. The owner is required to monitor construction and provide a report to the Agency giving a full explanation under the following circumstances:

Reasons why approved construction schedules were not met;

Analysis and explanation of cost overruns and how payment is to be made for the same; and

If events occur which have a significant impact upon the project.

Inspection. Full-time resident inspection is required for all construction unless a written exception is made by the Agency upon written request of the owner. Unless otherwise agreed, the resident inspector will be provided by the consulting engineer. Prior to the preconstruction conference, the consulting engineer will submit a resume of qualifications of the resident inspector to the owner and to the Agency for acceptance in writing. If the owner provides the resident inspector, it must submit a resume of the inspector's qualifications to the project engineer for comments and the Agency for acceptance in writing prior to the preconstruction conference. The resident inspector will work under the technical supervision of the project engineer and the role and responsibilities will be defined in writing.

Inspector's daily diary. The resident inspector will maintain a record of the daily construction progress in the form of a daily diary and daily inspection reports. The daily entries shall be made available to the Agency personnel and will be reviewed during project inspections. The original complete set will be furnished to the owner upon completion of construction. RUS Bulletin 1780-18 is available from the Agency for preparing daily inspection reports or the reports can be provided in other formats approved by the State staff engineer.

Payment for Construction. Form RD 1924-18, “Partial Payment Estimate,” or other similar form may be used for construction payments. If Form 1924-18 is not used, prior concurrence by the State staff engineer must be obtained.

Payment of contract retainage will not be made until such retainage is due and payable under the terms of the contact.

Invoices for the payment of construction costs must be approved by the owner, project engineer and concurred in by the Agency.

The review and acceptance of project costs, including construction payment estimates by the Agency shall not attest to the correctness of the amounts, the quantities shown, or that the work has been performed under the terms of agreements or contracts.

Prefinal inspections. A prefinal inspection will be made by the owner, resident inspector, project engineer, contractor, representatives of other agencies involved, and Agency representative (preferably the State staff engineer or designee). The inspection results will be recorded by the project engineer and a copy provided to all interested parties.

Final inspection. A final inspection will be made by the Agency before final payment is made.

Changes in development plans. (1) Changes in development plans shall be reviewed and approved by the Agency provided:

Funds are available to cover any additional costs; and

The change is for an authorized loan or grant purpose; and

It will not adversely affect the soundness of the facility operation or the Agency's security; and

The change is within the scope of the contract,

Changes will be recorded on Form RD 1924-7, “Contract Change Order,” or other similar form if approved by the State program official or designee. Regardless of the form, change orders must be approved by the State program official or designee.

Changes should be accomplished only after Agency approval and shall be authorized only by means of contract change order. The change order will include items such as:

Any changes in labor and material;

Changes in facility design;

Any decrease or increase in quantities based on final measurements that are different from those shown in the bidding schedule; and

Any increase or decrease in the time to complete the project.

All changes shall be recorded on chronologically numbered contract change orders as they occur. Change orders will not be included in payment estimates until approved by all parties.