(CE) Pre Construction

Payment Bond (Labor and Materials Bond)

Guarantees payment for labor and materials to suppliers, employees, or subcontractors by the defaulting contractor. Without this, if the GC defaults, subcontractors and suppliers could file liens against the property or sue the owner for compensation. Payment bond and performance bond are usually required to protect the owner against these possibilities.

Instruction to bidders

Outline the procedures and requirements that the bidders must follow submitting bids, how the bids will be considered, and submittal required of the successful bidder. AIA 701 - instruction to bidders is often used.

What is the purpose of "prequalification of bidders"?

The owner considers proposals from ONLY those contractors who meet certain standards of reliability, experience, financial stability, & performance. Once contractors are pre qualified, the owner is better able to review the contractors bids based primarily on price, personal, and completion date.

Negotiation Process

The process in which the owner with the assistance of the Architect, work out a final contract price with one contractor.

Advertisement for bids

Usually required for public work (open to all contractors). These clients have specific guidelines for the number of times the advertisement must run, publications to which it is to be submitted, and other administrative guidelines.

Alternates

a request included in the bidding documents asking the contractor to supply a price for some type of variation from the base bid. Allow the owner some flexibility in modifying the cost of a project when the bids are submitted by varying the quantity or quality of protions of the job. add- add to the base bid deduct- reduce the base amount

Bid form

a standard form that all contractors use to enter the required information & submit their bids Bid form contains space for the amount of the base bid, prices of any alternates or substitutions, proposed unit prices(if any), number of calendar work days in which the bidder proposed to complete the project, space for the bidder to list and acknowledge receipt of any addenda.

Bid Alternates

bid item that is separate from the base bid, that maybe added to or subtracted from the base bid based upon owner preference

Invitation to Bid

invitaton issued to prospective, prequalified bidders. When the list of bidders is limited to prequalified firms, enough bidders should be invited to encourage price competition.

Pre-bid conference

- A meeting during which the bidders can ask questions and the Architect and owner can emphasize important conditions of the project. - particularly useful for renovation or addition projects - bidders have the opportunity to see the existing conditions.

Allowance

- A set amount of money estimated by the architect to cover a particular material or piece of equipment when the cost for it cannot be determined precisely at the time of the bid or negotiated proposal - for bidding, an allowance provides a way to allocate some amount of money for an item in the bid, even if the exact quantity of quality of the item is unknown. - the allowance is stated in the specifications so all bidders are using the correct numbers

Substitutions

- During bidding, contractors may request that substitutions be considered for some of the specified materials. Common when a project had proprietary specifications (demand for only one specific product be used for a given installation) or a very limited list of acceptable manufacturers. - factors such as product availability, volume purchasing, & LEED certification can make a proposed substitution for cause worthwhile (AHOPP 727). - contractors are allowed to "substitute for cause" due to unavailability of product, regulatory changes, or prohibitive warranty conditions. - substitutions are to be equal to or better than the product replaced, has the same warranty and maintenance requirements, will work in size and function, and any additional costs will be accommodated.

What do the bidding documents usually consist of?

- advertisement or invitation to bid - instructions to bidders - supplementary instructions to bidders - bid forms - performance bond (if required) - payment bond (if required) Other documents sometimes added, - qualification forms - proposed subcontractor list form - certificates of insurance - certificates of compliance with applicable laws & regulations - additional information - geo tech data

What are the two ways a contractor can be selected for negotiation?

1.) The owner may already know which contractor they want to have complete the project - either having worked with the contractor before, through a referral, or by the contractors reputation. 2.) The owner may select possible contractors to be considered for the job. Each contractor is then interviewed and one contractor is selected based on qualifications (& possibly a fee proposal)

What are the two ways to notify prospective bidders?

1.) advertisement for bids (open to all contractors) 2.) invitation to bid (when contractors must be pre qualified, the owner sends selected contractors an invitation to bed)

What are the 4 courses of action that an owner may take if ALL bids exceed the project budget?

1.) owner may rebid the project - Architect is required to assist in the process a second time with no additional compensation. - rebidding without revising the scope or details rarely results in any significant reduction in cost- unless the bidding marketplace is changing rapidly. 2.) owner may authorize an increase in the construction cost and proceed with the project. 3.) owner may work with the Architect in revising the scope to reduce construction cost. Requires the Architect to redesign & revise the documents and then rebid the project with NO additional compensation. 4.) owner may abandon the project.

Performance Bond

A statement by a surety company that obligates complete construction of the project in the event that the contractor defaults on his/her obligations Surety may complete construction by hiring another contractor or supply additional money to the defaulting contractor to allow construction to proceed Usually mandatory on public work and advisable on private work Cost of the bond is paid by the owner & usually included in the amount of the construction price.

Addenda

Addendum: a written or graphic document, issued by the Architect during the bid period prior to the execution of a contract, that modified or interprets the bidding documents by addition, deletion, clarification, or correction. Addenda are issued to ALL bidders.

Bid Security

Required to ensure that the successful bidder will enter into a contract with the owner. Bid security may come in the form of a certified check, cashiers check, or bid bond. If the successful bidder DOES NOT enter into an agreement, the bid security may be retained to compensate for the difference between the low bid & the next lowest bidder. Usually about 5% of the estimated cost of construction or the bid price.

Unit Prices

Set costs for certain portions of work based on an individual quantity.