CE 371

MasterFormat

Organized in two groups: Procurement and Contracting Requirements Group Specifications Group

Project Procurement (Different methods of hiring service provider)

Procurement is an approach an owner follows to select a team that provides services (design, construction, material, etc) under the chosen project delivery method Common Items for Qualifications: Completeness of document safety record Reputation Financial strength Licensing Technical Experience Experience in local are/Labor market **Have worked on similar projects before *Can be disqualified for NOT meeting a simple qualificaion

Project Delivery System

Project Delivery Method (PDM) to Procurement Method to Contact Format

"Balancing the triple constraints of project"

Project Goals: -On Schedule -Within Budget -Meet Agreed Scope -Best Quality -Zero Accident Golden Triangle "Balancing the triple constraints of the project" 1. Cost 2. Scope 3.Time (Factoring in Safety!)

Construction Contract 2. B Cost plus Fixed Fee

(Contractor cost + $ fixed fee) A cost-plus fixed fee contract is a specific type of contract wherein the contractor is paid for the normal expenses for a project, plus an additional fixed fee for their services. These allow the contractor to collect a profit on the project, and they encourage economic production in various industries (Ex: Price fixed contract = $10,300 and $700 Fixed Fee) If the final const for the contractor is $10,500 his profit is still $700

Construction Contract 2. C Cost Plus with Guarantee mac Price Fixed Fee

(Price = cost of work plus a fixed fee of $500 with a max price of $10,500) a = If inal cost is $9,500, contractor profit is $500 (5.26%) b = If inal cost is $10,000, contractor profit is $500 (5%) c = If inal cost is $10,500, contractor profit is 0

PDM 5. Public Private Partnership (PPP or P3)

*Big Project Airports, Bridges, Subways To Create a successful PPP? Principle 1- Put people first- Assess needs Principle 2- Competent and stable government -Negotiation -Long term management and collaboration -Transparent Principle3- Assess all risk and allocate them between public and private sectors Different Version of PPP -Design-Build_Operate-Maintain (DBOM) -Design-Build-Finance (DBF) -Build-Transfer-Operate (BOT)

Construction Contract 1. Lump Sum Contracts

*Use when 90% of the design is complete* a single 'lump sum' price for all the works is agreed upon before the works begin -Benefits Contractors

Good Project Managers/ Construction Engineers?

-Confront Problems -Are Organized -Are Enthusiastic -Communicate Well -Motivate Well Are Flexible -Delegate Well -Multi-task -Have strong Moral Grounding

PDM 6. Integrated Project Delivery (IPD)

-Contractual agreement between a minimum of the owner, design professional, and builder -Risk and reward are shared and stakeholder success us dependent on project success -A comprehensive process Mutual Respect and trust Mutual Benefit and Reward Collaborative Innovation and Decision Making Early Involvement of Key Participants Early Goal Definition Intensified Planning Open Communication Appropriate Technology Organization and Leadership

Project objectives

-Has established objective - Temporary: Has defined life span with a beginning and an end -Unique: involves doing something never been done before -Has specific time, cost, and performance requirements

Common Estimating Mistakes:

-Misread or misinterpretation of contract document -Takeoff omission -Missing quotes -Crumbling under the pressure to produce work -Cutting prices to win bids -Underestimate project complexity and aggressive schedule

Roles of Specs:

-Serve as a legal basis for the construction contract -Define process and material grade (quality) -Workmanship standard -Guideline for resolving disputes *providing basis for cost estimate*

How to improve project estimate:

-Skills, knowledge, experience, and tools -Used a systematic process (Start - Feedbacks - End) -Involve all project parties -Estimate based on what information you have -Get enough time to complete the estimate -Use historical data with caution -Use computerizes process and software -Account for construction risks -Review, Review, Review

Change Orders

-added/deleted scope to original scope -Changes contract (cost/schedule/scope/etc.) -Impact labor performance -Anticipated costs incorporated in "contingency" Normally 1-10% on top of the agreed-upon price Sometimes it reaches over 50% -Source of very high risk

To Build a Structure, you need:

1. Construction Plans/blueprints/working drawings - Quantitative in Nature. Show you geometry, layout, and location. 2. Specification - Qualitative in Nature Focus on material, installation, procedures, labor certification, and the end quality of the product

Basic Elements in Contract Drawings

1. Cover Sheet (List all information such as project name, owner, A/E, etc, drawing list, list of abbreviation) 2. Title Block (Prefixed sheet#, sheet name date, initial of draftsperson, revision Engineers Stamp, scale)

Deigning and Drafting of Construction Plans (AIA)

1. Deciding What to Build (The Idea) 2. Schematic Design 3. Design Development (preliminary to detailed) 4. Preparation of Construction Plans & Specifications 5. Plans and Specifications stamping Depending on the engineering discipline, the plans can be varying degrees in terms of numbers and details. At a minimum, the following plans should be developed -Architectural -Structural -Mechanical -Civil (IFI, IFR, IFA, IFC, as-built) Issue for review Issue for information Issue for constructions

What is project cost estimation?

1. Finding total project cost $$$ -Material quantities -Labor Hours -Equipment Hours -Subcontractors -Indirect Labor 2. Time *Time is Money* -To know project costs - (Owner, Contractor, Gov)

Common Methods of Procurement:

1. Low Bid Selection -Cost represents 90% of the selection decision *Design must be completed 2. Sole Source Selection - Without proposals -Shorter procurement time *Lack of price competiveness -Not for public projects Use When there are no other options 3. Qualifications - Bases Selection (QBS) **Anyone can Bid** -Owner selects the most qualified - RFG (First Clean up list) -Selection is based qualitative criteria (Past performance, reputation, technical competence, financial, safety, ec.) **Need Experience** -Negotiation with on entity on "fair reasonable price" 4. Best Value Selection "Best Cost" -Selection primarily based on cost and technical aspects 5. Predetermined Fixed Budget "Best Design/Construction Selection" -Bidders compete by placing as much scope as they can in their submitted proposals. The bidders are selected based on qualities and technical aspects, taking into consideration that the project cost is fixed for all competing bidders.

Contract Types

1. Lump Sun *Fixed Price* (fixed price, all risk on contractor, owner knows the cost, high incentives for contractors to finish early) -Most of DBB projects use LC contracts 2. Cost Plus Contract A. Cost Fixed Percentage ( Contractor cost + % as profit) B. Cost Fixed Fee (Contractor cost + $ fixed fee) C. Cost Fixed Fee with Guaranteed Max Price D. Cost Plus Fixed Fee with Guaranteed Max Price -Bouns Contract 3. Unit Price Contracts ($2000/SF of concrete) 4. Time & Material Contracts (L,M,E)

Tools used to Organize Project Information:

1. MasterFormat - Construction Specifications Institute (CSI) 2. UniFormat - CSI and Canadian Specification Institute (CSI) Both are international standards

Construction Specifications (Two Types)

1. Prescriptive: "recipies" do this, then do this, then do this 2.Performance: They Do Not tell the contractor how to do the work

Project Lifecycle

1. Project feasibility (is it possible? economic, budget) 2. Project Funding ( secure the money) 3. Permits and Environmental Study 4. Design ( preliminary - Detail ) 5. Bidding (selecting who will build the project) 6. Procurement and preconstruction ( material and Logistics) 7. Construction (feet on ground) 8. Commissioning (Verification) 9. Owner Occupancy (happy owner) 10. Project Closeout ( most important stage)

Types of Construction Projects:

1. Residential 35% 2. Institutional and commercial building 35% 3. Infrastructure (heavy highway, subway, etc.) 15% 4. Industrial 15%

Summary of the discussed steps

1. Review the scope of the project (location, security, storage) 2. Organize info (MasterFormat/UniFormat/WBS) 3. Perform material takeoffs 4. Obtain material supplier bids 5. Price material - Material Cost = Quantity x unit price 6. Price Labor - Labor cost = (Quantity/Labor productivity rate) x Labor rate 7. Price Equipment - (Quantity/Equip productivity rate) x Equip. rate 8. Obtain specialty subcontractor bids 9. Calc taxes, bonds, and insurances 10. Determine Job office overhead (% of direct labor) 11. Determine home office overhead 12. Determine Risk Cost ($) 13. Add contingency costs (%) 14. Add profit costs (%) sometime you will see "markeups" this includes - Risk, Contingency, and profits

Estimation Process

A good estimate should address: -Include project manager for better results What (Scope of work) How (Method of execution) When (Market Condition Currency) Where (Location) 1. Establish Estimate Requirements (kick-off meeting) - Estimate class, PDS, accuracy, deliverables, subcontractors, labor, time, competitors, material, experience, start date 2. Planning and Structuring the Estimate *How well you organize your estimate info?* You have thousands of line items that need to be organized, sorted, and reported *How to structure the estimate?* MaterFormat, UnitFormat, Workbreadown structure 3. Quantification and coasting - Material, labor hrs, equipment hrs, and subs - Apply cost - Benchmark with other projects and historical info 4. Risk assessment, analysis, and Contingency Known risk - $ estimated and added to bid Unknown Risks - amount of money added to the base estimate (pricing, schedule, Commission, error) 5. Document the estimate basis and prepare reports -Basis of estimate document explains the used assumption (How do you come up with your numbers?) *Essential for project monitoring and controls *It increases credibility, and avoid confusion - Basis of estimate should include: (codes, accuracy, labor rates, schedule, exclusions, assumptions, taxes, currency rates) 6. Estimate review and benchmarking -Review the estimate with the project team (backup material, quote, schedule, unit prices, labor rate, constructions methods) 7. Issue the cost estimate - Issue estimate to establish project control - For contractor bids add mark ups and overhead

Project Delivery System

A project delivery system defines the structure of relationships of the parties, their roles and responsibilities, and the general sequence of activates required to deliver the project PDS Selection Consideration: cost, time, risk allocation, complexity of project, uniqueness of design

Project Management Process

An approach to developing new products and services) According to the Project Management Institute (PMI), there are five project management processes: -Initiation Process Group -Planning Process Group (estimation, scheduling, risk) -Executing Process Group -Monitoring and Controlling Process Group -Closing Process Group

Stakeholders (Individual or organizations)

Anyone has interest in the project and might be affected by the outcome ( community, city, government, local authorities, etc.) Types: 1. Internal to the project: sponsors-owners, designers, contractors, workers, suppliers, subcontractors, etc 2. External to the project: Government, community, customer, media, end-user, etc.

Construction Plans

Architectural -Demolition -Floor Plans -Sections -Details -Schedules Structural -Notes & design criteria -Plan view -Details -Sections Civil -Site Plan -Drainage & utilities -Grading -Site improvement -Landscaping -Paving/Curbing Layout -Existing Condition Site Drawings Mechanical -notes and requirements -Mechanical plan views -Equipment -Ductwork -Schedules -Diagrams Plumbing Electrical

Cost Estimate Classes

As per the AACE, five classes of cost estimate: 1. Class 1 - Concept, Screening, or ROM Estimate "65% to 100% design" Based in very limited information 2. Class 2- Study or feasibility Estimate "30% to 75%" 3. Class 3- Budget Authorization Estimate "10% to 40%" 4. Class 4 - Control Estimate "1% to 15%" 5. Class 5 - Bid Estimate "0% to 2%" *Maturity Level of Project Definition Deliverables (%)*

Procurement - Bidding Process

Bid Type (Public vs Private) Public -Must be publicly advertised -Qualification occurs after submission of bids -*typically 60-day period inn which can submit bids Private Bidding -May be by invitation only -Qualificaitonoccurs before submission of bids The Biding Process: -Bid advertisement OR invitation to Bid -Prequalification -Bid document distribution -Agenda notification and distribution -Submission of the final bids -bids tabulation and evaluation -Recommendation and awarding In response to the requester (Owner), you include in your bid: -Answer t questions in the bid -Addenda (a list of clarification during the bidding) -Project cost -Schedule -Quality, safety, and risk plans -Bid Bond (for bid not honored by contractors, if contractors submit they need to commit or will have to pay for wasting time insurrance) *Owner and Contractor relationship* -Performance bond (complete the contract as per terms ~ 1 yr warranty", a general contractor will request a performance bond -Payment bond ( payment to contractors) *Contractor and Subcontractor relationship* -Addenda (changes on original bid docs)

What is the main difference between CPLC and PMP?

CPLC varies from project to project PMP is similar from project to project

PDM 2. Design-Build (DB)

Characteristics -Combine design and construction -single point of contact/responsibility -Often is the Fastest delivery -Nee a well-defined scop -Project benefits from innovation -Must effectively administer the design-build process Disadvantages -Owner responsible for changes and gaps in scope *Less owner control over the design -Potential to compromise quality -Higher Cost

PDM 1. Design-Bid-Build

Characteristics -Linear sequence of work (longest delivery) Primary Reason to Choose -Retain control of design -Procurement laws are well defined -Low first cost (Bidding) Disadvantages -Final cost changes: Owner Responsible -Most litigious (suitable to lawsuit) -Contractor has no input to projects

PDM 3. Construction Management/General Contractor

Characteristics -Many Contracts (Architect, Contractor, Subcontractor) -Linear Design -CM is selected on qualifications Primary reason to choose *Retain control of the design *Contractor involved early - innovation and less errors -Combine fast track and lowest bids Disadvantages -Owner responsible for changes in scope -Open Budget (What do??? Use CMAR) The owner engages a construction manager to act as a construction advisor during the pre-construction phase and a general contractor during the construction Selection criteria include qualification, experience, strategic approach, and cost

PRM 4. Construction Manager at-Risk (CMAR)

Commitment by the Construction Manager to deliver the project within a Guaranteed Maximum Price (GMP) -Some constructions risks are transferred to CM -Open book on costs

Construction Contract 2. A Cost Plus fixed % Contract

Design in early stages less than 50% -Benefits Contractor Contractor compensation is based on a fixed sum independent of the final project cost. The customer agrees to reimburse the contractor's actual costs, regardless of amount, and in addition, pay a negotiated fee independent of the amount of the actual costs

Common Project Delivery Methods:

Design-Bid-Build (traditional) Design-Build Construction management Constriction Management @ Risk Public-Private Partnership (PPP) Integrated Project Delivery (IPD) **Selection of project delivery method should be based on specific projects requirements, specific characteristics and circumstances of the owner, and the successful formulation of the project team Three Key Areas of Consideration for PDM selection: 1. Project: SCope, schedule, cost, innovation, and uniqueness 2.Ower: Ability, experience, and desire for involvement and. or control, risk appetite, funding, etc. 3. Team selection: Laws, availability and experience, relationships, team building, and rolls

Typical project cost can be broken down as

Direct Costs (Hard Costs) -Material -Labor -Equipment -Subcontractors Indirect Costs (Soft Costs) 1. Overhead 2. Profit 3. Taxes 4. Bonds (bid, performance, payment, etc.) 5. Insurance 6. Permits 7. Contingency ($ added to account for uncertainty)

UniFormat

Division A: Substructure Division B: Shell Division C: Interior Construction Division D: Services Division E: Equipment and Furnishings Division F: Special Construction & Demolition Division G: Site Work Division H: General Conditions Project Description

Construction Documents

Drawings, plans, specifications, etc. associated with a construction project. -writing that defines the roles, responsibilities, and "work" under the construction contract, and is legally binding on the parties (Owner and Contractor) Contract Document Includes: -Agreement terms -Standard General conditions -Construction Special Conditions -Specifications ( Perscriptivee o performance) -Drawings -Safety Manual -Project Maual -Addenda

One of the main reasons Projects Fail

Incorrect and unrealistic estimation Why -You gain less than what you pay -Contractors are in business to make money not to win bids -Conflict between owners, contractors and suppliers -Poor budget control and tracking

How to determine if a bid is worth the investment?

Is it worth the time? Profit? In general, 3 major elements helps you decide Project Delivery Method; Procurement Method; Contract Type Other factors: Availability of skilled labor and equipment, Experience in similar jobs, Finacial strength, Geographical location, Complexity

Facts about cost estimation:

It's not an exact science Requires knowledge of construction engineering Quantifying material is relatively easy estimating labor and equipment hours is difficult Involve great risks, good estimate minimize risk *If the estimate fails, the project will FAIL* 54% of projects finish over budget

Construction Project Life Cycle

Sequence of phases that a project goes through from initiation to its closure

Project Management

The application of knowledge, skills, tools, and techniques to project activities to meet project requirements

Construction Engineering

The blending of fundamental principles of engineering with new and emerging technologies for executing, planning, design, and management of the construction process

Construction Management

The planning, scheduling, evaluation, and controlling of the construction process from beginning to completion

Request For Information (RFI)

Types of RFIs: 1. Design Clarifications (Incomplete plans) 2. Requests for a design change (Sequencing problems) 3. Requests for substitutions (Material availability) 4. Constructability issues 5. Differing site conditions

Program defined

a group of related projects designed to accomplish a common goal over an extended period of time

Project defined

a temporary endeavor undertaken to create a unique product, service or result

Main Parties Involved in a designing a Construction Project:

owner (public or private) Role: Commissions a project, arranges to finance, etc. Main Goals: Good design, save $, and finis quickly Designer (A/E) Role: Design facility (typically w/owner) Main Goals: Recognition, happy client, and $ Contractor Role: Build facility as per standards Main Goal: Make $, finish quickly, happy client Stakeholders