Minnesota unit price changes: 25 percent limit

Key takeaways

• Confirm the signed contract uses unit prices.
• Read the resolution for the award deadline.
• Compare the estimate with the publication threshold.
• Track approved additions against the original contract price.
• Check the solicitation's award method before pricing.

If you are pricing a Minnesota street job that a council has let on unit prices, the bid is rarely the end of the story. Once crews are on site and the real quantities show up, cities often want more curb, another run of pavement, or a few extra utility cuts. Those changes can move the final payment a long way from the bid, so the rule that limits them deserves the same attention as the base bid price.

The five checks below follow the order you would use them: confirm the contract type, find the deadline, check the bid notice, work out how much added work is allowed, and confirm how the award will be made. This post covers the council route in that section. If your job was let under a different authority, check that authority before you rely on the figures here.

Confirm the job was let on a unit price basis

The added-work limit applies to one kind of contract. The statute describes a council contracting at one time on a unit price basis for part or all of the street improvements to be constructed by the municipality during the current year, including improvements that may be ordered later. Section 429.041 sets out that route, so your first job is to confirm your contract fits it.

Open the bid package and the signed contract, then look for three things:

• Bid items priced by unit, such as by foot or by item, with an estimated quantity beside each one.
• A final payment based on unit prices multiplied by the quantities actually installed.
• A scope that covers the street work as a set of priced items, not one fixed price for the whole project.

Check the addenda too. A revision that converts a unit item to a lump sum changes the contract type, and you need the signed version, not the first bid sheet you priced from.

Then compare the council resolution with the contract scope. The resolution describes what the council decided to build, and the contract describes what you agreed to build. If the resolution covers more streets or more work types than the contract does, the extra scope is not yet in your contract, and the contract unit prices do not automatically apply to it. Treat that scope as a separate question for the engineer rather than assuming it falls under the change route.

Note which items carry the largest estimated quantities as well. Those are the lines where a later change would move the total the most, so they are the first ones to watch once work starts.

If the contract is a lump sum, this unit price change route does not apply. Do not assume a unit rate carries over to extra work until you have confirmed the contract type.

Timing matters as well. The change authority is written for work that has already started: the council may authorize changes "after work has been commenced" on an improvement undertaken under a unit price award. A change request made before any work begins falls outside that wording. In that case, ask the city which procurement method it plans to use for the added scope, because the route in the change limit section will not be available as written.

Find the deadline to let the contract

The statute sets a clock on the city before any bid goes out. When the council decides to make an improvement, it must let the contract for all or part of the work, or order the work done by day labor or otherwise, no later than one year after the resolution ordering the improvement was adopted. A different time limit applies only if the resolution ordering the improvement specifically states one. Section 429.041

This is a deadline for the city to award the work, not a deadline for you to finish it. It still matters to a bidder, because it tells you how much schedule remains between the bid and the award, and whether a late award is likely to change the scope or the pricing you submitted.

To work out the date:

1. Get the adoption date of the resolution ordering the improvement. The council minutes or the resolution packet should show it.
2. Read the resolution for a stated time limit. If it names one, that date controls, and it may be shorter or longer than one year.
3. If it names none, count one year forward from the adoption date.
4. Compare the result with the planned bid opening and award. If the city's schedule runs past the date, find out how the city intends to meet it before you commit crews or bonding.

As a simple example, a resolution adopted on a given day, with no other limit stated, has a default deadline on the same calendar day one year later. The resolution wording is what you are checking, so read the actual text rather than relying on a memory of the council meeting.

Check the publication and bid-opening rules

The notice rules depend on the size of the estimate. The statute says that if the estimated cost is more than double the figure in subdivision 3 of Minnesota Statutes section 471.345, publication must happen no less than three weeks in advance of the bid due date. Section 429.041

To apply the rule to a specific job:

• Find the dollar figure. Look up subdivision 3 of section 471.345 for the current amount. Check the statute itself rather than a number from an older article.
• Double that figure and compare it with the engineer's estimate for the improvement.
• If the estimate is above double the figure, count back three weeks from the bid due date. The notice has to be published by that date in both required outlets.
• If the estimate is not above double, check the applicable notice requirements and the outlets and dates the city has published.

Bid opening is a separate rule. The council can direct that bids be opened publicly by two or more designated officers or agents of the municipality, and that the bids be tabulated before the meeting where the council considers them. Section 429.041 Watch for that language in the notice or the council packet. If a tabulation is posted before the meeting, you can see the field and where your bid sits before the council votes, which is useful when you are deciding whether to hold your price.

Here is how the count works on a calendar. If the bid due date falls on a Thursday, the publication that meets the three-week rule is the Thursday three weeks earlier or an earlier day. Count on the calendar rather than in your head, and mark the publication date on your bid schedule so the whole team sees it. If the notice runs in a trade journal, confirm the publication date you are relying on, since a print date and a web date can differ.

For planning, read the notice against the bid documents before you start pricing. Confirm the bid due date, the scope the notice describes, and any quantity estimates, and compare them with the drawings. If the notice describes the work differently from the package you received, raise that before the due date, while there is still time to ask for clarification in writing. Use the sealed bid submission checklist alongside this notice review.

Work out how much added work the city can authorize

This is the central limit. After work has started on a unit price improvement, the council may authorize changes that include additional units at the same unit price, without advertising for bids, as long as the cost of the added work does not exceed 25 percent of the original price of the contract. Section 429.041

Two things follow from that wording. First, added units are priced at the unit prices already in your contract, so you do not re-price them at today's market rate. Second, the cap is a dollar cap, not a unit cap, so the number of units the city can add depends on how much has already been approved and what each unit costs.

The four values you need are set out in this table.

Illustrative example: calculate the room left

For an illustrative original contract price of 4 dollars, the 25 percent ceiling is 1 dollar. An illustrative proposed addition costing 2 dollars exceeds that ceiling before any earlier additions are counted. These small illustrative amounts show the calculation; use the signed award and approved changes for your own check.

Suppose the council then authorizes a second addition costing A2 after a first one costing A1. The room left after both is C - A1 - A2, and the test for a third addition is the same: its cost must fit inside what remains. Each approved change reduces the room for the next one, so the second request has to be checked against the first.

To turn the room left into a quantity, divide it by the unit price. If the unit price in the contract is u dollars for each unit, the most additional units the room left can cover is R divided by u. This is the figure to give the engineer when they ask how much more can be added in a given area.

For your pricing check, count every approved addition against the ceiling and ask the city to confirm the running total in writing.

Keep your own dated log of each approved change, with its cost and the running total of A, and recalculate R after every change. The room left shrinks each time, and you will need the running total when the next request arrives. The city's log may not be complete or current when you need it. Share the running figure with the engineer at each change, so that both sides are working from the same R. For the payment follow-through, see change order pay steps.

Here is how the check runs in a meeting. The engineer asks whether a new block can be added. You take the original price P, work out the ceiling C, subtract the approved additions A to get R, then estimate the new block's cost X at the contract unit prices. If X is no more than R, the request is inside the route.

Confirm how the award will be made

The statute's default award rule is short. The council awards the contract to the lowest responsible bidder, or it may reject all bids. Section 429.041 Price is the starting point, not the whole test. Read the bid documents for what the city says it will check before you assume the lowest number wins.

The statute also allows an alternative route. As an alternative to the procurement method in subdivision 2, the council may issue a request for proposals and award the contract to the vendor offering the best value, as described in section 16C.28, subdivision 1, paragraph (a), clause (2), and paragraph (c). Section 429.041 If the solicitation is a request for proposals, the evaluation criteria decide the result, and a low price alone may not win. Your bid then needs to show value, not only a competitive unit price.

Day labor is the third case. The council may have the work supervised by the city engineer or another qualified person. But if the work is done by day labor and the entire cost of all work and materials will be more than the lowest amount in subdivision 4 of section 471.345, a registered engineer must supervise it. Section 429.041 If the city is considering its own crews for part of the scope, compare the threshold with the entire cost of all work and materials for the improvement, not just that part.

For each route, the practical question is the same: which document tells you how the award will be judged? The contract documents, the notice, and any solicitation should be read together. If they disagree about how the award works, ask for clarification in writing before the bid due date, so the answer is on record for everyone who bid.

The table below compares the three routes.

Because the council may reject all bids, treat your bid as an offer the city can decline. Plan crew scheduling and material orders for the possibility that the award takes longer than the bid schedule suggests.

Today, open the signed contract and the approved change log, then calculate the room left for any added work.

Check common questions

Does the ceiling use the original contract price?

Yes, the ceiling is tied to the original contract price. Use the signed award amount for your calculation.

Should the day labor check use only the city crews' portion?

No, compare the threshold with the entire cost of all work and materials for the improvement.

General information, not legal or tax advice.