MANAGEMENT EXAM 3

An example of a commonly used prime contract

AIA A101 Standard Form Agreement

General Conditions of the Contract

AKA "boilerplate" (standard, reusable) provisions that establish and define the rights, authority and obligations of the contracting parties The AIA A201 document is a common format of General Conditions used in commercial construction documents ConsensusDocs is another format of general condition

Advertisement for Bids on Public Works Projects

AKA Design-Bid-Build Process -Publicly funded agencies follow a more formal process for bidding out which includes a prescribed list. -Governed by local, state and federal laws depending on source of funding -"Notice of bids" or "Advertisement for bids" is posted on governmental procurement web portals, newspapers, etc. -Equal treatment of all bidders is a fundamental and often legally required objective

Project Manual

AKA SPECS collection of documents that include the bidding requirements, general conditions of the contract, supplemental conditions (if any) of the contract, the agreement form, bond forms and all of the technical specs sections that pertain to the project are intended to complement the drawings by defining the nature of the materials that are to be used and the description of the workmanship and procedures to be followed in construction the project

Bid Form

AKA bid tender form must be completely and properly filled out often completed under stressful circumstances and tight time contraints

Drawings

AKA plans or blueprints the tool used to convey the physical, quantitative or visual depictions of the project "the role is to define the geometry of a project, including dimensions, form and details" no absolute standard in industry

Pre-qualification

-Many public projects have no prequalifications other than common licensing, min. insurance limits and bond stipulations. Any contractor can bid if they have the above items -Larger complex projects can have them depending on awarding agency and nature of project -The prequalification requirement results in smaller pool of bidders who can meet requirements. -Private owners also often have these. The AIA A305 is one option both public and private owners can utilize.

Constructability Review

An assessment of the contract documents prior to the bidding phase to identify problem areas and suggest improvements Occur as a component of the collaboration between constructors and designers for negotiated projects

Advertisement for bids in the private sector

-No laws govern bid process (for private funded projects) -Owners that regularly undertake construction projects commonly develop their own formal procedures that have similarities to public bid processes -Private owners have nearly unlimited freedom in how they bid out their projects and decide to award their construction contracts -Private owner may negotiate with on contractor rather than solicit multiple bids

Reporting Services

-One of the many ways that contractors find jobs to bid -Utilize these services as one of the methods for finding projects to bid EX: public owner internet-based procurement portal sites Private owner internet based procurement portal sites virtual and physical plan rooms subscription based lists from private market research firms

ASI

Architects Supplemental Instructions

Change orders within lump sum contracts

Can be a huge aspect of managing or administering construction contract of a project. Without any construction collaboration during the design phase, change orders can more easily arise which will drive this initial cost upward and possibly lead to disputes and claimes

Alternates

Changes to bid documents priced for an owners consideration Can be an add or deduct to base bid bidders are required to quote these. Failure to do so may disqualify bid. Owners are not required to accept and of the alternate pricing

Value Engineering

-Specific procedures carried out to critically analyze various aspects of the contract documents in the relation to owners objectives to determine if alternative methods or materials might be more appropriate looking for ways to achieve the same end functionality and hopefully the same aesthetic appearance and quality for less cost while keeping the owners objectives in mind Comes into play when a projects estimate comes in over budget DBB - contractor doesnt get paid for this If already under contract owner may share profit Can also happen with cost plus and GMP contracts (contractor is hopefully being paid for consultation services

For a spec to serve its purpose, it should:

-be technically accurate and adequate -clearly define requirements -be fair and equitable -be in a format that is easy to use during bidding and construction -be legally enforceable.. designers should avoid ambiguous language (ex: install wall panels plumb, level and to the satisfaction of the architects representative"

Instructions to bidders

-included in bid documents -The rules the project will be bid -In order for bidders to have their bid be considered valid or responsive, they must comply with all requirements

Request for qualifications

-prequalification process that many public and private owners have their own -Often requires interested bidders to provide sensitive, internal company information to owners (similar to underwriting process used by sureties)

Competitively bid contracts

-require bidding documents to be 100% complete before requesting bids -Typically do not provide opportunity for the input and benefits of any construction expertise during design phase

To protect themselves, most owners include provisions in their contracts that allow the unit cost to be renegotiated in the event that the actual quantity varies more than what percent from the original estimate?

20-25%

Notice to proceed

officially starts the clock on the projects completion schedule sometimes contract stipulates the start date or date of commencement of construction. Otherwise the NTP allows us to mobilize to the site and begin the project Ideally, we want the contracts to be signed before we get the NTP

Unbalanced bid

one where a contractor artificially alters (increases or decreases) the unit prices of certain items so they no longer reflect the true cost of the item disproportionate amount of the indirect costs, overhead costs and profit are added or removed to these items instead of evenly distributing the overhead and profit among all the bid items as done with a balanced bid

Balanced bid

one where the anticipated costs for various bid items are accurately reflected in the unit prices that are submitted unit price reflects all direct and incidental costs as well as the correct proportional share of field overhead, indirect cots, home office overhead costs, and profit.

BIM - Building Information Modeling

projects are created digitally as a 3D model inside the software with varying degrees of detail depending on what the design team has been hired to Will make visual communication easier and more efficient to all project parties. Also allows 4D and 5D

Design Specifications

provide the desired result and stipulate specifically how the result is to be achieved. Think of it as being told the destination and then being given a road map of how to get there Most current technical specs are design specs

Reference Specs

references found within a technical spec section that direct us to comply with a separate standard spec, an established procedure or a specialized testing method as part of the work to be performed

Standard Specs

refers to an entire set of technical specifications that have been fully developed for repeated use on multiple projects

Lump Sum

single all inclusive contract amount based on complete set of design documents.

Job order contracting is ideal for what?

small projects remodels emergency repairs where rapid completion is critical

General (in technical specs)

stipulates the ground rules for the work to be performed and defines the scope of the work within a particular spec section

Submittals

submittal submitted to owner or designated agent for approval as part of the submittal process shop drawings, color samples, physical samples, test data, certifications, installation narratives, schedules, calculations, warranties, or even photographs

Requirements for submittals are spelled out in the

technical specifications

The final contract amount would fluctuate up or down in a unit price contract based upon

the actual measured quantities of work put in place multiplied by the contract unit prices

ConsensusDocs

the collaborative result of over 20 trade associations such as the AGC along with various owner, subcontractor and surety associations who worked together to draft an alternative to the hotly-contested AIA A201-3007 which contained some language that was viewed to be problematic from the perspective of the parties performing the work

Cost Plus Contract

the contractor is reimbursed for the direct and indirect expenditures associated with the project plus a pre-agreed amount or percentage for overhead and profit. The contractor is almost assured to not lose money in this type of contractural agreement Owners expect to pay for the direct cost categories of materials, labor, equipment, equipment and sub work

Unit price contracts are used for projects where

the scope of work is fairly well defined but quantities may be difficult to fully estimate until construction is underway

The bidding (estimating) period

the time where the bidders prepare their pricing for the project base on the bid documents bidders will be preparing a lump sum bid (in DBB)

Commonly encountered drawing types could include:

title sheet site survey Civil sheets landscape & irrigation site Architectural Site electrical Structural Architectural Plumbing Mechanical Electrical Specialty (equipment, furniture, interior design)

Cost plus contracts are helpful for what

to phase or fast track a project as work can begin on the portions of the project with completed design while design development continues for the remaining portions of the work

Job Order Contracting

type of contract arrangement that is used by owners who have extensive facilities that require ongoing maintenance, expansion and reconfiguration in an urgent, often unplanned manner Gives owner an "on call" contractor who can quickly react to requests to perform work. Multi Year agreement with consistent, predictable levels of work per year or per month

Almost all unit price bids involve some level of

unbalancing Most owners will allow this to a reasonable extent as their design engineer has probably advised them that this may occur to cover the startup cost of the project

When are cost plus contracts used

used in negotiated work mostly in the private sector

Licensing process

varies from state to state and among different municipalities obtaining a license may be as simple as filling out a form and paying a fee, while other governmental entities may require the applicant to complete an examination or provide proof of completing an equivalent certification exam

Lump Sum Contracts

very common, traditional contract type used most often for design bid build. Used in both public and private work

By signing and submitting the bid form with our pricing, along with bid bond, we are saying...

we have visited site, asked all questions, evaluated risks known and unknown and are agreeing to enter into a binding contract, furnish bonds and construct the project in accordance with the bid documents

Bid rigging

when bidders collaborate on their bids to manipulate pricing in an effort to control who wins a particular contract award, they are guilty of this which is an illegal activity. Known as conspiracy or collusion Penalties vary from state to state and at federal govmt level Contractors may be subject to fines, imprisonment, or both if convicted of this crime

All inclusive specs

when designers use spec language that is vague, subjective, and not legally enforceable, it creates problems for contractors in how to interpret the language for bidding purposes EX: finished work shall be aesthetically pleasing and of high quality

Cash negative position

when the contractor pays out of pock for costs during the 30-60-90 day period. They use their own money for paying the costs startup expenses like mobilization, bonds, insurance, permits and material procurement

Lowest bid

which bidder has the lowest combination of base bid and selected alternate bids

responsible bid

which bidders can furnish the required bonds and pass scrutiny regarding their capabilities, experience, personnel and financial stability

responsive or regular (valid) bid

which bidders properly complied with all requirements of the instructions to bidders? was the bid form fully filled out, bid bond included, all addenda acknowledged, subs listed, additional deliverables included, turned in on time, etc.

Unit price contracts

would involve submission of pricing for a list of multiple bid items. Pricing is given per whatever unit is requested bu the designer on behalf of the owner. Bid quantities for the bid items are typically provided by the designer (engineer)

Beyond submission of a competitive pricing to win a JOC contract, there is also typically what?

a prequalification process required to qualify for these types of contracts

2D drawings

aka orthographic projections drawn to scale

As-Built Drawings

aka record drawings during construction, the contractor is essentially working from two drawing sets. Theoretical and actual set. Deviations are invariably made from installing the work exactly as it was shown on the original contract drawings

Contractors must determine what to be included in the bid price for each bid item in a unit price contract?

all incidental quantities and costs

Reasons why an owner may elect to award separate bid packages

allowing participation by smaller, local contractors increase opportunity for open competition and best pricing with respect to using taxpayer funds for a project trying to shave time off project schedule

In a lump sum bid the overhead and profit is distributed how?

balanced OR unbalanced over the breakdown of costs

Information in bid form

bid team company name, address, contact numbers, etc. company structure type (partnership, etc.) state of business formation (Kansas) Lump sum total base bid alternate bids as requested number of days for project completion list of major subs

Modifications

bidders can turn in a price early to make sure they are considered for the award. The early price is set intentionally high. Used most often by out of town bidders who arent planning to send a live person to the bid letting. Bidders mail in their bid forms and bid bonds ahead of time already completely filled out. Later, just before the bid deadline, they will fax or email a modification to their bid as an add or deduct to the previously submitted base bid or alternate bid

Contract documents =

bidding documents-bidding requirements+contract modifications

Bidding documents =

bidding requirements + all contract documents except contract modifications

Unbalancing a bid can help a contractor get in a _________ by front loading the items of work that will be performed first and therefore invoiced first

cash positive position

What are cost plus contracts not suited for

competitive bids

Methods by which the contractor will be paid vary by

contract type but the other aspects of the contract are generally very similar from one contract type to another

5D modeling in BIM

cost

Disadvantages of Lump Sum

creates significant risk to contractor as we have to complete the work for this price no matter what actual costs we incur for performing the original contract scope of work

Construction Contract Documents

culmination of all the time, effort and communication expended by the owner and design team to define the entirety of the project in rems of form, function, materials, geometry and quality. The collective instrument we use to keep the many parties involved in a construction project all working towards the owners desired outcome

Execution (in technical specs)

describes the preparation, workmanship, installation, erection and application procedures to be employed along with quality requirements and performance criteria that must be satisfied

Products (in technical specs)

describes the products, materials, equipment, accessories etc. and the development or manufacturing processes to be used in producing them

Phased Approach

design is completed sequentially by focusing the design team on the work that needs to happen first as well as any materials or systems with long lead times. This allows construction to begin before design is completed, resulting in a shorter overall project schedule Bid packages are created by CM Bidders are then invited and allowed time to prepare their proposals for a bid date established for each particular package

If there was no bid item for mobilization, in a balanced bid we would

divide the mobilization costs evenly among all the bid items

Bid Lettings or Bid Openings

Describe the event where bidding contractors physically turn in their bids at a specified location, on a specified date and required time

What are the most commonly encountered project types that use unit price bids and contracts?

Engineered or civil projects Can be either public or private owners

Examples where you would include the unit price contracts

earthwork soil stabilization rock excavation

Spearin Doctrine

established that contractors are not responsible for performance failures of project components or entire systems if they were installed in compliance with the design specs

O&M Manuals

for all of the equipment in a project and some of the systems of the project, the contractor is required to provide info for use by the owner during the occupation and operations of their project Also includes warranties

When are cost plus contracts commonly used

for projects with incomplete design documents and partially defined scope

Unbalancing is sometime referred to as

front loading a bid

Advantages of the Lump Sum Contracts

getting a competitive price and knowing the total initial cost of the project up front

Mistakes in Fact

if a bidder can show proof, this type of mistake is generally grounds for relieving a bidder of their obligation to honor the bid and enter into a binding agreement EX: legitimate mathematical mistakes or some sort of software glitch that affected a bidders pricing

Electronic Bidding

in e-bidding, constructors must register and establich an account to receive login credentials. Bidders should always print a confirmation that their bid submission was successfully entered in case proof is later needed

a severely unbalanced bid may classified as

irregular

Purpose of Contractor Licensing

is to protect the public from unqualified and unscrupulous contractors. A means to generate revenue for municipalities such as cities, countries and states

Supplemental Conditions of the contract

like an "addendum" to the general conditions. Make changes to the boiler plate provisions by amending provisions, adding new provisions or entirely deleting provisions from the General conditions of the contract contractors should be very careful when reviewing the changes to fully comprehend the impacts to their rights, authority and responsibilites

if there was no bid item for mobilization in an unbalanced bid we would

likely determine which of the bid items would happen first during construction and include our mobilization costs in those items Doing this would make some of our unit costs overpriced and some underpriced which makes our bid unbalanced

Schedule of values

listing all the scopes of work for the project breakdown most commonly follows the CSI's MasterFormat used to organize the project.

4 basic types of contracts

lump sum unit price cost plus fee guaranteed maximum price

Unit price contracts would usually include what costs

material labor equipment plus a portion of filed overhead costs (direct cost) Div 1 indirect costs (tax, burden, bonds, permit) Home office overhead contractors profit

Open Specs

non-restrictive in that they permit a wide variety of choices Public projects should be bid using this type of specs where at least 3 options are stipulated for each type of material or equipment Support fair competition in pricing

Cost plus disadvantages

none for contractors. Very little risk for contractors. For owners, there is a risk in not knowing the true total cost of the project until it is completed, and there is risk in that the contractor may not work hard at controlling costs since they get reimbursed for whatever they spend.

Reverse Auction Bidding

Has been used for publicly funded projects where bidders are allowed to see, on-line, the pricing of their competitors for the bid items. Identities of competitors are not displayed, only prices bidders can then decide if they want to undercut their competitors by submitting a lower price not common method for bid submission, but may be used by some owners

Contract types should be drafted to ensure that specific fundamental information is addressed such as: (4)

Identification of the parties to the agreement Define the scope of work Establish the time for performance establish the consideration

Among contract types, what is it that differentiates between the types

It is the basis of payment that is the essential aspect

The total of all the scope in the schedule of values equals what?

Lump Sum Bid

Mistake in Judgement

NOT grounds for relieving a bidder of their obligations EX: failure to carefully "scope" a subs bid which resulted in using a price that was too low for that work. Another example could be failing to get quantities correct when doing takeoff

Information included in "Advertisement for Bids"

Nature and location of project type of contract bonding requirements (if any) required schedule for construction and completion payment terms mandated wage requirements (if any) Where to obtain bid documents Projects anticipated budget if known pre qualification requirements

Plan reading

Owners, contractors, subs and suppliers have to possess the mental skills to look at these 2D plan views and 2D section views and put these views together in their minds

3 components of the technical specs

Part 1 - General Part 2 - Products Part 3 - Execution

Bid runners

People delivering the bid

Killer Clause

Problematic provision When owners attempt to shift accuracy of bidding information of their responsibility onto the constructor with exculpatory clauses on the plans or in the specs

Project Bid Days

Should ideally never be on a Monday or Friday and the bid time should not be set early in the morning

Larger bid quantities result in .... Smaller bid quantities result in... This is because....

Smaller unit costs Higher unit costs The indirect costs are also included in the unit prices. The more quantity you have to spread these indirect costs over, the less of these costs are applied to each "unit" of work.

Performance Specs

Stipulate the desired result but do not mandate the process for achieving that result. Think of this as being told a destination but we have to create our own map of how to get there. Common scope for this would be irrigation sprinklers and fire protection sprinklers EX: wall shall be contsructed to support a vertical load of 300 lbs/LF

Who is responsible for any errors and omissions in the bid documents when the design team is engages as and agent of the owner

The owner

Disadvantages to using a unit price contract

The owner is not certain of the actual total cost of the project until is completed. However, if the design engineers did their job correctly, the final total should be reasonably close to the original bid total.

Monthly payments in a lump sum contract are based on what?

The percentage completed for each scope of work as listed on the schedule of values

Base Bid

The single price for the entirety of the job

Withdrawal of bids

Bidders that identify mistakes in their estimate or change their mind about the project may withdraw their bid without forfeiture of their bid bond as long as this is done BEFORE the time bids close

Addenda

Bidding constructors and their subs can submit questions and issues for clarification as long as they comply with whatever deadline has been established Changes to the bid documents after they are issued Formal changes or clarifications issued by the owner or owners rep to all identified bidders during the bidding period

Technical Specifications

(CSI Div 01-50) Div 1 - general requirements - contains administrative provisions related to performance of the contract. aka front end specs SPECS WILL NORMALLY GOVERN BETWEEN DRAWINGS

Guaranteed Maximum Price Contracts

Budgets are established for all known scopes of work and contingencies are established for undefined scopes A price cap is established and the savings, if any, at the end of the project are either returned to the owner or shared by owner and constructor based on whatever division has been stipulated in the agreement

Proprietary Specs

Type of closed specification that requires a specific item or specific system such as a particular piece of equipment or particular product by a particular manufacturer Used more in private than public

Negotiated Contracts

-Allow phasing or fast tracking a project -Often using more progressive delivery methods and contract types such as cost plus fee or GMP -involve the same project phases but delivery method and contract type allow overlapping of project phases which reduces overall time -Usually cost owner more but better design because the constructor and designers collaborate

Factors that constructors must evaluate to decide whether its worth the effort to pursue a particular project

-Available bonding capacity -Location of the project -Who is the owner? -Status of project financing -who is the design team? -nature, complexity and size of project -Who is the competition

Request for Proposal

-Constructors that pass the RFQ process will then be invited to participate in this process -Where constructors or construction managers spell out the services they can provide including their fees for consultation and actual construction

Common items found in most instructions to bidders

-Date, time and place for submitting bid -Whether closer or public bid opening -Acceptable methods for submitting the bid -Acceptable methods for bid modifications -Bid bond requirements -bidder insurance requirements -notice of prebid conference and attendance requirements

3 components that affect owners decision to award a contract

1. lowest bid 2. responsible bid 3. responsive or regular (valid) bid

4D modeling in BIM

Scheduling