Construction Test 1
types of surety bonds
-bid- contractor guarantees to do job on time and for the bid placed, if they dont- surety pays penal sum -performance- assures owner that gc will perform job according to contract and correctly, if they default- surety fixes problems or pays out of performance bond -payment- assures own that gc will pay other workers, protects against mechanics lien, if they default- surety pays damages to all demanding parties, cost bundled w performance bond
mediation
process: mediator reviews case in general prior to mediation session, mediator hears arguments of disputing parties, they are separated, mediator shuttles between the parties to try to resolve the dispute. -takes 1 d, fixed fee, split between parties, consensual, informal (whenever), need good mediator, disputing parties stay in control not mediator, no legal record, confidential, non-binding process unless parties come to final agreement, >90% success rate of resolve
contract- honestly do i even care
-An agreement that affects the legal relationships between 2+ ppl, law of contracts- "A promise or set of promises for the breach of which the law in some way recognizes a duty", uniform commercial code- total legal obligation which results from the parties' agreement." -intent- organize and doc thoughts on decisions, not to punish or serve as litigation tool -types- design, con maint, design-build, bond, ins, BOT, equip -terminating- do it by performance, agreement, frustration, and breach
modeling
contractors build product based on models drawings- graphical model specifications- verbal model schedules- time based estimates- cost based lean- production model BIM- integrates various models
corporation
legal entity (pub/priv, foreign/domestic, prof/non-prof), can own real and personal property, enter into contracts, sue and be sued, incur debts, act as an individ, do business per charter advantages: perpetual life, limited liability of owners/stockholders, easily get hella capital, employees can be owners (profit sharing), fringes and retirement benefits more avail foreign- operating in any place outside of its incorp, has to reg w sec of state- if they dont, contracts are unenforceable, no access to courts, limited liability of stockholders
project planning
plan- formal doc designed to guide the control and execution of a project, planning- procedural step, where required documentation is created to ensure success -elements- thorough understanding of project (type of work, contract), good team (expands), enough time, good location, risk analysis of final plan, utilization of effecting planning tools Steps: 1. determine general approach 2. break the project into manageable activities 3. determine sequential relationships of the activities 4. present the sequence of activities in a network 5. each stakeholder reviews and signs-off
why use systematic project management?
price and sched fixed, good for dynamic projects and complex final product, you HAVE to manage the project if you want to stick to sched/price, have safety, good customer relations, and continuous improvement
construction project characteristics
time/sched pressure, cost overrun, complexity, uncertainty/risk, safety, turnover, conflict/litigation, dynamic, fragmented
project success
when project is completed on time, within budget, and quality satisfies all; Overall success: the project achieves the technical performance specifications and missions, also a high level of satisfaction concerning the project outcome among organization, project team and users; -perspectives: everyone! onwner, gc, sub, bonding, vendor, supplier
alternative planning strategies
-beginning to end- sequential plan from mobilization to commissioning, most natural, bad bc sequencing decisions tend to be skewed by the scheduler, not enough adequate information, easy to become lost in detail or overlook operations -top down planning- WBS!! moving from a high level strategic view with few activities to a detailed view with many activities, tree structured project breakdown, advantages- evolves from concept, adds detail to big picture so its easy to change, critical elements less likely to be forgotten, focus can remain on easily handled parts -WBS- breaks the project down into construction elements It is a listing of the discrete activities that must be accomplished to finish the project, an activity is a continuous piece of work that has a well defined start, finish, and duration
business ownerships
-individual proprietorship- easiest and least expensive to establish, owns/operates all transactions in their name (personal assets at risk), max degree of freedom from gov reg, req: insurance, tax reg, business license -general partnership -limited partnership- partner invests cash but does not control business, aka silent, part owner so shares loss or profit, liable only to extent of contributed capital -corporation -joint venture- special purposed partnership, partners can be proprietors, partnerships, or corps; a separate legal entity, do it to pool resources and management, obtain special skills and spread risk -mostly individ, some corp, a few partner, but corps do most volume
production planning parts
-personnel- safety, parking, training, HR, high morale, access to workplace and support facilities -safety (part of personnel) is everywhere! production, quality, cost, sched, rep, planning manages risk, it considers behavior, physical environment, material handling and storage, tools and equipment, personal attention like distractions or substance use/abuse -work quality- qual processes, product, workmanship, materials, culture/experience for all -supply chain management- starts w design (getting materials and equip), submittals/approvals, product purchasing, manufacture, delivery to site, onsite reception and storage -onsite management of materials- need creative management, prefab can minimize this, commodities can be managed my a distributor onsite, materials can be pre-packaged and palletized and delivered to the point of installation, security minimizes theft and breakage -equipment planning- key factor in heavy civil and commercial, consider selection, maint, op, sharing, and ownership (own vs rent) !!Though each project is unique, construction processes are repetitive from job to job, like Mobilization, Procurement, Managing change, Cash flow management. Repetitive processes can be managed and improved and tailored to project
construction project stages
-planning and definition- from owner need to definition of characteristics to meet that need -design- from design characteristics to con docs -procurement and con- con docs to physical reality W1P3S7 look mostly linear
mitigate problems
-pre construction conf- get everyone together, go over tech detail and look at pay estimates and comm protocols -submittals- drawings/samples from designer, assures that product complies w intent, will help comm -request for info- clarifies designers intent before contract is signed -change orders- scope and detail not defined in contract are changed by owner to create extra work which needs to be paid -documentation- written (ex. letters, meeting minutes), and non-written (ex. phone, drawings)
production planning
establishes the methods to be used, the assignment of personnel, movement of material and workforce, and the process of assembling sub-activities, concerned w how activities are going to be accomplished, off and on site management of materials and equipment, includes access to site and site layout (access roads for vehicles and equip, field offices layout, laydown areas) -technical challenges- providing unobstructed movement of heavy equipment and adequate services and utilities, efficient material and temporary support structures management, controlling access for safety and efficiency
surety bond
-assures owner of construction project that contractor will perform work specified in contract and pay certain subcontractors and suppliers -underwritng: considers contractors experience and work load, project nature, type of owner, bidding results, contract terms 3 Cs!!- capacity!- knowledge, experience, equipment and planning abilities; capital!- ability to finance project along w other projects in work program; character!-experience and reputation in fulfilling promises and obligations -involved: principal (constructor), obligee (owner), surety (bonding company) -benefits: for owners: provides pool of qualified bidders, reduce risk of liens/financial loss, increase likelihood of finishing on time, protect against defective materials and workmanship; for contractors: increase no of projects they can qual for, ensures payment for other workers, assistance can be made avail -NOT INSURANCE- three party instruments (ins is 2), presuppose no losses, its a fee not a premium, losses of any kind are covered, indemnification of surety by principal, duty to obligee (ins is insured), project specific (ins is term specific), surety pays penal sum (ins paid policy limits), both reg by state ins dept -federal public works mandates- heart act and miller act- req perf and pay bonds for public works contracts over 100k, for all of perf bond, and diff stuff for pay bonds, protects gc, supplier, subs and their supplies but not lower than that -if gc defaults, surety can rebid job for completion, arrange for replacement c, retain orig gc, or reimburse owner W2P5S28
types of construction claims
-contract docs- defective plans and specs, spearin doctrine- owner liable to contractor -negligent misinterp- contractor can sue engr, when professional performs duties improperly out of ignorance or carelessness
construction contract docs
-describe/convey design, describe work conditions, give instructed to interested bidders -gen conditions- establish the rights, authority, and obligations of the contracting parties, standard for all projects, -supplementary conditions- job specific conditions, change and add to gen -tech specs- describe material quality and product performance requirements, written descriptions of work, info that cant be shown on drawings, -docs made during con: submittals, rfis, ncns, as builts, o&m manuals, progress sched -designer makes plans- working drawings, show graphical rep of every item in the facility sized and located to the fraction of an inch
project delivery systems
-design-bid-build- tradish way -design-build- single point of responsibility for the owner -construction management, either agency cm- manages on behalf of owner, or cm at risk- combines acm and negotiated gc -turnkey/bot- minimize owner involvement -integrated project delivery- shared risk and reward among all stakeholders W1P4S25
clauses
-incorp- subcontractor is obliged to the gc -merger- makes up entire agreement, supersedes everything else made before -indemnify- protects from loss, repay damages -hold harmless- other party will not be blamed for your own wrongdoing
stakeholders
-public- boards, commissions, authorities; financed w bonds and taxes, has to be very open, in interest of public -private- partnerships, corps, individs; make profit or satisfy need, financed by lenders, regulate interests by contract -public-private: private coop parter w gov, private builds and operates then hands off?, financing tool for major infrastructural projects -architect/engineer- designs project -prime contractor- gc, coordinates effort, direct contact w owner -subcontractor- hired by gc for specialty, no owner involvement, gc has responsibility still -venders and suppliers
segments of industry
-residential- single family houses/apts, has designers, subcontractors do most -commercial- office, warehouses, retail, architects, specialty contractors -mixed use- combo res and com, architects, specialty contractors -heavy civil- gov owned (publically financed), gc, horiz projects like canals/highways/subways -industrial- permanent, highly technical, privately funded, most expensive -1/2 res, 1/3 com, 1/10 industrial, 1/5 heavy civil
elements of contract
1. offer and acceptance- agreement is when offer is accepted, both must be must be clear, complete, and unconditional in either oral, writing, or implied by conduct, mirror image- acceptance must be same as offer, offer is terminated if there is a counter offer, rejection or revocation 2. consideration- exchange between parties, must have some measurable value 3. meeting of the minds- must agree on fundie terms, mistakes of fact happen when you dont (ex. mutual error, innocent misrep, fraud- false rep or deliberate failure to give info, duress, subject matter does not exist 4. lawful subject matter- dont break laws, legally binding contracts must be for legal transactions! 5. competent parties- persons entering contract must have legal ability to do so (aka under 18, high/drunk, bankrupt, company director acting ultra vires- beyond authority)
construction life cycle- more in depth
1.1 Front End Planning- business planning and scope def, 1.2 feasibility study- programming 2 Planning, design, engr- drawings and specs, initial cost and spec estimates, bid prep 3 Procurement- gc, sub, suppliers 4 Construct 5 Occupancy, operation, maintenance, given to owner 6 Salvage- demo, reuse -its harder and more expensive to change or fix things later on in the project!
lean vs. tradish
Lean -control- making things happen, with a measured and improved planning process to assure reliable workflow and predictable project outcomes. -optimize: Maximizing value and minimizing waste at the project level -value: to the customer is defined, created and delivered throughout the life of the project -coordinating action: pulling and continuous flow -decision making: Decentralized decision-making through transparency and empowerment provides project participants with information on the state of the production systems and empowering them to take action. Tradish -control- monitoring results -optimize: attempting to optimize each individual activity -value: defining requirements at the outset for delivery at the end, despite changing markets, technology and business practices -coordinating action: schedule-driven push which places an over-reliance on central authority and project schedules to manage resources and coordinate work. =fragmented, sched uncertainty
When a local cement supplier ran out of stock, a contractor ordered 850 bags to be delivered by a source upriver at a higher price. Shortly after placing the order, the local supplier's cement shipment came in. The contractor decided to buy from the local supplier and pay damages for returning the cement upriver. Two days later a shipment of 1,000 bags from upriver arrived. Since 850 bags had been ordered, the contractor said he refused the entire shipment of 1,000 bags. Must the contractor buy any upriver cement?
No. A seller who "knowingly sends more or less than the quantity ordered is guilty of an intentional violation of the contract..." The seller got greedy and padded the order. The contractor owed nothing.
A contractor entered an agreement with a landowner to erect a building on a given plot of land. The contractor agreed to lease the building when it was complete and to lease the land for a given sum until the building was completed. It was discovered that the land consisted of a burial ground and that the building could not be built. The landowner sued to receive payment for the lease of the land. Is the landowner entitled to any payment?
No. Law forbids building over a burial ground so the contract is illegal and void. The land lease agreement was part of the illegal contract. Payment cannot be enforced.
A sixteen year old boy went to a car dealer. The boy paid $600 down on a new car. The boy signed an agreement to pay the balance on an installment basis. Within an hour of driving away from the showroom, the car ran over an embankment. The boy was not hurt, but the car was totaled. The boy sought to have the contract voided. The car dealer filed suit. Must the boy fulfill the contract?
No. The contract was declared void, plus the $600 was returned to the boy
A contractor agreed to erect a building and the owner agreed to pay $200,000. This price was negotiated after some landscaping items were deleted. The contract was signed and work was begun. Two weeks later, the contractor called the owner and told him "the concrete costs are much lower than anticipated and I will include the landscape work as part of the original contract at no additional cost". As the project neared completion, the landscape work remained undone. Must the contractor do the landscaping?
No. There was no consideration for the promise to do the landscaping.
dispute resolution techniques
Prevention, Negotiation, Mediation, Arbitration, -Dispute Review Board- project specific 3 person panel, created at start of project, considers disputes as they happen, stays current on project progress, makes reccs, not decisions, disputes can be further reviewed/litigated -Mini-trial- simulated trial w less formal procedures, before it starts parties must agree to procedures (ex location, timing, witnesses, allowable evidence), if outcome is binding, party who will hear case (judge/jury), no public record -Litigation- tradish method of suing!, judge and jury, in public, expensive, bind decisions, can appeal sometimes !! put DRB before mediation, then escalating time and money!!! W3P3S17 -stakeholders introduce clauses to shift risk downstream
The GSA advertised for bids on fire doors for a government warehouse. The low bid of $4,342 was accepted. The low bidder (Pennington) was unable to provide the performance bond as required. The job was re-bid and awarded for $5,160. The government asked Pennington for $818, the difference. Pennington said that the Miller Act says, "Before any contract ... is awarded, ... (the contractor) shall furnish ... bonds." Pennington claimed that since no bond was furnished, there was no contract. Must Pennington pay the $818?
Yes!! The Miller act was not designed to help contractors get out of their contracts. The amount requested was also deemed to be reasonable.
A roofing contractor entered a purchase agreement with a supplier of roofing materials for a set price. The contract could be altered due to "strikes, fires, transportation, and business conditions that render performance commercially impracticable". Both parties were beneficiaries of the clause. The price of roofing materials spiraled up (+25%). The supplier refused to deliver at the agreed price contending it was "commercially impracticable". Was the supplier obligated to deliver?
Yes. Although it may be "commercially unprofitable", the clause in the agreement did not apply. The contractor bought the supplies from another firm and successfully sued the original supplier for the difference in the prices
A performance bond stated, "Notice of default to the said surety shall be a condition precedent to any right of action against the surety." The project was not completed by the contracted completion date and liquidated damages were being assessed, but the surety was not notified. The contractor went into default, and abandoned the project. The owner notified the surety of the default. The surety said it was not liable since no earlier notice was given. Is the surety liable for the project?
Yes. Failure to notify earlier may mean that liquidated damages cannot be applied against the surety, but the surety is liable for the contractor's default.
A contractor sublet the foundation to a subcontractor, who in turn sublet the excavation to a sub-subcontractor. The subcontractor did not pay the sub-subcontractor so the sub-subcontractor quit. The contractor told the subsubcontractor to finish the work and he would pay him $3/yard extra. When the sub-subcontractor finished the work, the contractor refused to pay since there was no consideration. He had simply asked the subsubcontractor to do what he had already contracted to do. Must the contractor pay for the work?
Yes. The contractor received the benefit of the sub-subcontractor's work, sufficient benefit to qualify as consideration.
A contractor was invited to submit a bid on a project to construct 300 foundations. The work included scheduling, ordering, and delivering all materials, including those paid for by the owner, and was to be completed in 90 days. The job took over 8 months to complete and the contractor incurred additional costs which the owner did not pay. The contractor sued the owner for reimbursement of the costs. The owner admitted that it scheduled contractors to work in the same area at the same time; relied on its superior economic position to offer far less than the fair value for requested delay damages; and changed its contract 2 weeks before signing without notifying the contractor to allow the owner to order the concrete. Should the owner pay the additional costs?
Yes. The owner made representations with no intention of performing as represented in order to induce the contractor to enter into this contract at a low bid price.
general partnership
agreement between 2+ ppl, co-owners, written articles of partnership, pooling of equip, facilities, talent, assets, share management respons, profit and loss shared in proportion to degree of ownership**, normally not a legal entity, partners just pay taxes for themselves, partners not considered employees, (but sometimes they are legal entities- own property, have employees, sue and be sued), risks: partners are individ liable for all debts of partnership, injured partner can claim against others, if one withdraws they are responsible for obligations made until then reasons for breakup: bankruptcy, withdraw/insanity/death of partner, court of equity degree, mutual consent, duration in the articles of partnership is over?
procuring contractors
competitive bidding- based on price negotiation- qualifications best value- mix of both
impact of subcontracting contracting significant portion of work?
complicated scheduling, weaker gc authority, fragmented responsibility, harder coordination, weaker management, difficulty mitigating disputes, detrimental to job efficiency
construction vs manufacturing
con- temp worksites, unique product, needs highly skilled craftsmen, capital is locked so more risk, operators are subject to weather, owner is hella involved manu- products designed and produced w/o intended purchaser, smaller units, larger batches, easy to advertise con cant convert to manu!
construction drawings
define the physical and quantitative description of the project, organized by discipline into building (civil architectural, structural, !! mech, electric, plumbing !!) and roadway, has plans/elevations/cross sections/details/scheds -civil- site plan, layout of completed structure and site within property lines (finished grades, buildings, landscaping) -architectural- floor plans, elevs, sections, detail -structural- foundations, plans and cross sections -mechanical- HVAC, ductwork, radiators, piping, fire protection, plumbing->kitchen/bathroom, sprinklers -electrical- floor plans, lighting/power, systems like phone and fire alarm, scheds for lighting, details like switches, panel boxes
lean construction
new production model! Lean construction is set principles and tools to facilitate planning and control, MAX VALUE and MIN WASTE throughout the construction process. waste could be in time, material, money, rework, underutilized talent -principles- waste (7+1 types), [5S- sort, straighten, shine (keep clean), standardize, sustain], visual work place (clear and owner signage, boards/lists, color coding) reliable promises (pull planning- project alignment and schedule buy in with subcontractors), electronic docs (provide the most current information to entire project team, BIM)
project management perspectives& procedures
perspectives- GC, subcontractor, designer, owner procedures- common process of mobilization, change management, and procurement; • Unique project outcomes are achieved by varying the inputs to the standard processes!!!!!
arbitration
process: dispute presented to 1-3 arbitrators for review, follows rules -hearing at arb's convenience, fixed fee or hourly, can be binding (arbitrator's judgement is final) or non-binding, rules of evidence are relaxed, arb selected on experience, no public record, can be expensive, ARBs do NOT have to be right on facts or the law
construction spec formats
sectioned according to type of trade or sub-contractor, main sections are standardized w CSI master format (6 digits to organize), select specs to have best price competition, incorp advantage contractors experience/expertise/innovation, yield best product w skill and efficiency -descriptive (method)- gives the properties of a material, product, or equipment without mentioning a brand name or without specifying the end result, specifies method, design engr is responsible for end product -performance- req performance or service of finished product, includes reqs, criteria, and testing, contractor can use whatever method and responsible for product passing tests -standard ref- references publications that contain established standards of material and product quality, design standards, quality of work and installation, test methods, and codes, becomes part of construction doc!, has name or org like astm, designation of standard, and title of standard, WONT HAVE PERFORMANCE STUFF LIKE TESTING RESULTS, "conform to astm 90" -proprietary- names brand, model number, manufacturer of a product or method of construction that is usually patented, use when design engr likes product, owner likes that product more than generic, compatible w existing components
activity
single continuous work step that has a recognizable beginning and end and takes time, need proper activity breakdown bc too few activities limits the ability for close analysis but too many activities can overload the system and cause a breakdown in analysis -job logic- logical sequence of activities, can be situational by planner and current sitch, some activities are inde -finish-start- A finishes, so start B -start-start- A starts, so start B -finish-finish- A finish, so B can finish look at pics W3P2S16
construction project
temporary (definite start and end) organized effort to create a unique building, tailored to suit environment, arranged to perform own function, designed to reflect personal tastes/prefs
