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 number of defects
- Adjustment Factor
Defect rate =
number of services sampled
The Maximum Allowable Defect Rate (MADR) does not represent a threshold above
which deductions are taken. Deductions are taken for all defects (with
appropriate allowance for rework) irrespective of whether the MADR was
exceeded or not.
Sample Payment Calculation
for Extrapolated Deductions
(RSED)
The following data, obtained from the Performance Summary (PRS)
and the Schedule of Deductions or the PRS and the Schedule of Indefinite
Quantity work, is used to illustrate a typical payment calculation when
surveillance is by RSED.
When RSED is used, the defect rate is calculated based on the defect rate
&served in the sample. An adjustment factor is applied to the observed
defect rate and the adjusted rate is used for extrapolation. Liquidated
damages are assessed for all observed defects including those outside the
sample. Liquidated damages are not extrapolated. The attached payment
calculation shows the step in the calculation.
When random sampling is used, defects are established within a given sample
by visual observation and the results extrapolated for the entire population
of services to determine the number of total defects. This means that only a
limited number of the defects for which deductions are taken are individually
identified to the, contractor when random sampling is used. The contractor is
responsible for identifying the additional defects if he wishes to rework
them. Credit is given for defects reworked, both within and without the
sample, up to the maximum number of defects for which deductions were
originally taken.
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The sample payment calculation below is an example only. The specification
writer must develop a sample calculation which reflects the nature of the
actual contract work, e.g., grounds maintenance, transportation operations,
etc.
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CONTRACT REQUIREMENT: 002. Routine Service Calls
Price from Schedule of Deductions: $l2,OOO/mnth.
WORK
% OF CONTRACT
PRICE OF WORK
MADR
REQUIREMENT
REQUIREMENT
REQUIREMENT
$3,600 (30% of $12,000)
A.
Response time
3%
30%
$ 600 (5% of $12,000)
B.
Classification
5%
3%
$ 600 (5% of $12,000)
C.
Cost accounting
5%
3%
$7,200 (60% of $12,000)
60%
3%
D.
Quality work
D-2
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