2021 Updated OPSS 127 Rates
May 10, 2021
The MEA wishes to advise that OPSS 127 SCHEDULE OF RENTAL RATES FOR CONSTRUCTION EQUIPMENT, INCLUDING MODEL AND SPECIFICATION REFERENCE was re-published on January 19, 2021.
The rates contained in OPSS 127 now include an updated calculation formula. Moving forward, OPSS 127 will again be updated annually.
Why is this Important?
The formula previously used to calculate equipment rental rates was last updated in 1996 and it only used the most recent equipment price. Where municipalities are using the OPSS 127 rates, and to ensure appropriate compensation aligned to the OPSS 127 Rates, interim changes should be considered for OPSS MUNI 100 OPS GENERAL CONDITIONS OF CONTRACT.
The OPS MUNI General Conditions Committee and the OPS Advisory Board were recently advised of the changes.
In consideration of these changes, it is recommended that the OPS MUNI General Conditions mirror the PROV Non-Standard Special Provision (NSSP). The OPS Advisory Board agrees that it is beneficial to continue with one set of OPS 127 Rates, rather than creating a separate rate list for OPS PROV and OPS MUNI.
The new formula used in OPSS 127 is more comprehensive and dynamic. Whereas the old rates were calculated using only the most recent equipment price, the new rates take into account the average price of all data that the MTO has over the equipment’s useful lifespan and the calculation utilizes updated information sources. The MTO believes the new calculation better reflects the cost of owning and operating equipment on a short-term basis.
The January 19, 2021 republishing included the addition of 2020 equipment purchase costs for one-third of the rates. The specification will update the next one-third of additional purchase price data later this spring. The final one-third will be updated in April 2022. .
The remaining two-thirds of the costs are based on current variable factors such as (e.g. fuel costs, interest rates etc.) and include all data on costs within the equipment’s current life span.
How Does it Work?
For MTO contracts a Non-Standard Special Provision (NSSP) CONS0001 was issued addressing changes to the Time and Material (T&M) provisions unique to MTO contracts (refer to changes to OPSS.PROV GC 8.03.06.01 and .04). These changes have been introduced into all new MTO contracts.
For MTO contracts, the OPSS 127 Rate for T&M, as per the previous PROV General Conditions, applied a discount factor of 0.75 to the published rates. A mark-up of 1.15 was then applied to these rates. The NSSP changes payment on a T&M basis for contractor-owned equipment to 100% of the OPSS 127 Rate. However, as a result of these changes the rates will not be further marked up, as the markup is now included in the rate formula.
- Old formula: Rate X 0.75 Discount X 1.15 Markup = 0.8625 X Rate
- New formula: Rate X 1.00 = 1.000 X Rate
Approximately 70% of the initial one-third of rates reviewed increased under the new formula.
Municipalities need to be aware of the new calculation and how to apply the rates going forward.
Current OPS MUNI General Conditions state:
“GC 8.02.05.06 Payment for Equipment
GC 8.02.05.06.01 Working Time
.01 The Owner shall pay the Contractor for the Working Time of all Equipment, other than Rented Equipment and Operated Rented Equipment, used on the Work on a Time and Material basis at the 127 Rates with a cost adjustment as follows:
- Cost $12,000 or less - no adjustment;
- Cost greater than $12,000 but not exceeding $24,000 - payment $12,000 plus 90% of the portion in excess of $12,000; and
- Cost greater than $24,000 - $22,800 plus 80% of the portion in excess of $24,000.”
To mirror the MTO change noted in Non-Standard Special Provision (NSSP) CONS0001 above, the portion in bold above would need to be deleted from the MUNI General Conditions as an interim measure. The OPS General Conditions Committee will be meeting to review this in the near future.