Principles of construction Exam 1

Emerging trends in construction

* 3d printing * drones * Augmented reality

Designer

* Architects and engineers are the principal designers of construction projects

Owner

* Identify the needs * provide financing for the project * select designer and constructor * determine project delivery method

Types of Owners

* Public owners - colleges, towns, tax payers * Private owners - singular people (build a house) * Public Private Partnership (PPP) - public wants to build something but they cant afford it. so the private company handles everything. Public gets ownership once it is over

Stake holders in the construction industry

* community * surveyors * gov't agencies * material supplies * trades * banks (financing)

Major subcategories in building construction

* residential - you live in * non-residential - everything else

General Contractor

* responsible for the day-to-day oversight of a construction site * hires specialized subcontractors to perform all or portions of the construction work

Process of bidding

- A/E completes the bid package - Owner solicits bids - Contractor review bid information - Contractor develop and submit bids - Owner analyzes bids and award contract

Advantages to DB

- Allows for fast-tracking - Close coordination within team - Construction input early in the design phase - Single source of accountability • Owner sits outside the direct dayto-day communication between designer and constructor • Designer/contractor conflicts not exposed to owner - Easier incorporation of changes caused by field conditions

Value Engineering

- Approach for obtaining optimum value for every dollar spent - Value = Function / Cost - Function: Purpose or use - Cost: Money required to obtain use function -can help lower life-cycle cost by considering alternative materials and methods

Detail Design

- Architect: interior finishes, which includes walls, floors, ceilings etc. - Civil and structural engineer: detailed design of structural members and connections - Mechanical and electrical engineer: precise location and layout of electrical and mechanical systems

Disposal

- Closed down or simply abandoned - Disassembled or removed - Renovated or overhauled - Remodeled and converted to another use

CM at Risk

- Contractual relationship with trade contractors - No longer impartial - More incentive to reduce time and cost

Disadvantages to DBB

- Design not reviewed before construction - No opportunity to overlap design and construction tasks and thus reduce overall time and save money - Few interaction and team building among the participants - Difficult to make changes due to unforeseen conditions and events

Name the 3 most commonly used delivery methods

- Design-Bid-Build - Design-Build - Construction Management • CM Agency • CM At-risk

Lump sum on the side of the contractor

- High risk on contractor - High incentive for contractor to finish - Early (so can move on to other jobs) - Low cost (so can make a profit)

Unit Price on the side of the contractor

- Low risk - Need for reputable contractors • A cost-plus-a-fee contract makes sense when the scope of the project is difficult to define or when it is important to fast track the project. • For large and complex projects which have durations from 2 to 3 years up to 10 years, cost-plus-a-fee contracts are the only feasible way to proceed.

Three basic types of contracts in construction

- Lump Sum - Unit Price - Cost Plus a Fee

Prebid Conference

- Meeting facilitated by the owner or the A/E as owner's representative before bids to answer any questions that contractors may have - It gives the designer a forum to explain the intent of the project and any nonstandard provisions. - All the answers at the time of the conference should be documented and sent out to all bidders, whether they were present at the conference or not. - Held early can be valuable to the owner

CMa

- No contractual relationship with trade contractors - More objective - Less conflict - Lower incentive to reduce time and cost

Construction Management Delivery Method Advantages

- One common reference point: the CM - Early involvement of construction professional • Good value engineering • Fast track - Changes during the course of construction is not as difficult as it is in DBB

Negotiation Advantages

- Owner has flexibility in selecting preferred contractor - Time and cost saving in removing the bidding process - Early involvement of contractor - Less "unexpected" cost

Bidding Disadvantages

- Plans and specifications be totally complete prior to bid advertisement - Low bidders can be unrealistic - Pressure for lowest bid can create issues (low quality personnel, try to make up with change orders etc.)

Disadvantages to DB

- Pricing is not possible at the beginning - Fewer checks and balance • Problems may be hidden until late • May take a direction that the owner does not want • Firm can give high quote for changes - Package: cannot pick or get rid of individual team member

Projects typically used for DBB

- Projects that are not technically complicated or have been built before are candidates for DBB. - Projects with political, technical, or schedule constraints, DBB should be examined more closely

Unbalanced bidding for Unit Price

- Put high unit price on items whose quantities are expected to increase - Put low unit price on items whose quantities are expected to decrease • Significant unbalanced bids border on being unethical and in some cases can be rejected

Construction Management Delivery Method Disadvantages

- Requirement for sophisticated owner • The owner holds multiple contracts - If any of the players become inflexible, uncooperative, or uncommunicative, all the advantages of CM can quickly become disadvantages.

Lump sum on the side of the owner

- Risk is minimum if the project is well defined - If the scope of the project changes or if errors exist in the documentation, the contract will need to be renegotiated.

Construction has to manage

- Scheduling the crews in the proper sequence - Choosing the most efficient and safe construction techniques and methods - Ensuring the adequate supply of materials and equipment - Monitoring schedule, cost, and quality - Contract administration

Negotiation Disadvantages

- The costs may be driven up by the lack of competitive bidding - Require relatively savvy owner to evaluate proposals and monitor performance - It can be seen as anti-competitive and exclusive, with the potential for "cozy" relationships to develop between the owner and contractor

What does the delivery method establish?

- The formal (i.e., contractual) and the informal (e.g., communication) relationships between these organizations. - Assigns responsibilities and risks

Innovative bidding method

Consider non-price items (time, quality, qualification, safety, life-cycle-cost)

What is the US's report card grade?

D+

Construction Management Delivery Method Projects

For organizations that periodically build complex structures but do not intent to maintain a full-time construction staff to supervise projects on a recurring basis

Unit Price typically used on projects like:

Heavy engineering projects such as earth dams, dredging operations, and underground utility work are often accomplished with a unit price contract since the quality of the work can be defined but the actual quantities are difficult to determine in advance

When are Lump sum contracts are usually used?

In building constriction in which detailed plans and specifications requiring little or no modification can be developed. It is usually used with DBB delivery method

Procurement phase

It is the owner's task to find the best and least costly contracting firm to do the work in the field

Turnover

Legal process during which the facility becomes the legal property and responsibility of the owner

Cost plus a fee disadvantages

Little incentive to be efficient and economical in the construction of the project.

When did construction start?

New stone age

Cost-plus-time bidding

Price + ($/day)*days

Multi-parameter bidding

Price + qualification + design rank; price + safety + life-cycle-cost rank...

Contractor(s) role and motives

Role: build facility Common Motives: make money, finish quick, happy client

Owner role and motives

Role: commission project, arrange financing Common Motives: quality and value product, save money, finish quick

Designer (Architects/Engineers) role and motives

Role: design facility, frequently oversee construction Common Motives: make money, recognition, happy client

Initiation

Someone (corporation or government) recognizes that there is a need

Bid Package

The collection of documents used to make and obtain bids and to define the requirements of the work and the process that the contractor must follow when submitting a bid.

cost plus a fee contract arrangement

The contractor is reimbursed by the owner for his or her work costs and receives an additional agreed-upon fee

Notice to Bidder/Invitation to Bid

The document announcing to prospective bidders that design documents are available for consideration and that the owner is ready to receive bids

Preconstruction

The overall planning, coordination, and control of a project from inception to completion aimed at meeting a client's requirements in order to produce a functionally and financially viable project

Negotiation

The owner negotiates a price for services with a contractor

project delivery method

The owner's approach to organizing the project team that will manage the entire design and construction process

Operation

The period in which the facility is put to the use for which it was intended

Bidding/Competitive bidding

The process of selecting a contractor that is based on several contractors competing against each other to be awarded a contract to do work

Cost plus a fee advantages

This form gives the contractor an incentive to get the job done as quickly as possible to collect his fee over the shortest time frame.

Performance Bond

To guarantee the owner that the contract work will be completed and that it will comply with project specification

Payments Bond

To guarantee the owner that the contractor will pay all bills

Bid Bond

To offset a "damage" occurring in the event that the contractor selected fails to begin the project as directed

Guaranteed maximum price

Used in cost plus a fee • Contractor is reimbursed at cost + fixed fee up to the GMP as a cap • Any overrun must be absorbed by the contractor

Financing

Usually the initial investor needs to borrow money to construct the project * banks * insurance companies * outside investors

Constructor

a general term used to define the professional responsible for all construction activities

Conceptual design

architects renderings or sketches as well as layout drawings and 3D computer models that assist the potential investors and other parties in better understanding the project

Feasibility analysis

before investment, the owner wants to be reasonably sure that he or she will see an adequate return on the specific project. (GO/NO-GO)

Preliminary Design

extends the conceptual documentation. - Architect: floor plans and general layout drawings - Civil and structural engineer: preliminary design of the structural frame and the subsurface foundation support - Mechanical engineer: size and location of air-conditioning and heating units as well as primary water distribution components

Building Construction

includes facilities build for habitational, institutional, educational, light industrial (warehouse), commercial, social, and recreational purposes

Industrial construction

involves highly technical projects in manufacturing and processing of products

What problem can you face due to the work force?

low work force due to the recession, so workers had to find other jobs and now we need more people for those roles

Most common bid to be awarded

lowest price

Life-cycle cost analysis

methodology to determine the most cost-effective option among different competing alternatives to purchase, own, operate, maintain and, finally, dispose of an object or process, when each is equally appropriate to be implemented on technical grounds

Negotiation is usually a common practice for . . .

private owners

Engineering construction

provides facilities that have a public function relating to the infrastructure.

contracted picked on ____ and ____ for negotiation

reputation and qualifications

engineers

responsible for the design of a projects structural, electrical, mechanical, and civil components

Construction is _____________ and __________________ end produce

single & unique

Construction

the process of constructing a building or infrastructure * largest product-based industry in the US

architects

translates and develops an owner's requirements and graphically present them

Lump Sum

• A contractor agrees to provide a specific amount of work for a specific sum • Both parties try to fix the conditions of the project as precisely as possible because once the contract is signed, both parties must live with its terms. • The contractor receives monthly progress payments based on the estimated percentage of the total job that has been completed.

Types of Bonds

• Bid bond • Performance bond • Payment bond

What are included in the lump sum amount?

• Direct cost: labor, materials, equipment • Indirect cost: field office, secretarial support, equipment maintenance • Profit

Design-Build (DB)

• Hired by the owner will perform both design and construction. • May be design/build firms with in-house employees or joint venture firms that come together contractually to perform a single project. • Can hire subcontractors who perform the actual construction in the field.

Design-Bid-Build (DBB)

• Owner first hires a design professional in charge of the preparation of design and contract documents. • Competitive bid or negotiate with contractor after design completes • GC may choose to subcontract the work. But GC is the only responsible for the execution of work

other aspects to take into account when awarding a bid

• Responsive: bid submitted meets all bidding requirements as outlined in the bid package • Responsible: a contractor who meets the bid requirements regarding qualifications, experience, and any other criteria deemed necessary by the owner

Projects typically used for DB

• Suitable for highly technical projects - Manufacturing plants; refineries; offshore oil drilling platforms etc. • Turnkey projects - Owner signs a single contract and says "call me when you have the project complete and you want me to turn the key to start it up.

Unit Price

• The owner and the contractor agree on the price that will be charged per unit for the major elements of the project • The owner/designer typically provides estimated quantities for the project, asking contractors to bid on the job by figuring unit prices for these items and calculating a final price. • Indirect cost and profit must be included within the unit prices. • Progress payment for the contractor are based on precise measurement of the field quantities placed.

Construction Management Delivery Method

• The owner hires both a design firm and a construction management firm before the beginning of the construction • Firm represents the owner in all construction management activities from conceptual design through acceptance of the facility

Notice to Bidder/Invitation to Bid includes

• Type, size, and location of the project • The availability of plans and specifications for review • Start and completion dates • The time, place, and date of the bid opening • Bonds • Legal requirements

2 cases for negotiation

• Very simple: use trusted, familiar contractor • Very complex: get contractor involved in design early

Contractors' Considerations in Deciding to Bid (Company Status)

• bonding capacity • potential for becoming involved in prestigious projects that might enhance the contractor's reputation • the opportunity that the project might provide for working in new markets

Contractors' Considerations in Deciding to Bid (External Conditions)

• probable competition • labor conditions and supply

Negotiation process

- The owner invites selected contractors to review the project documentation available at the time of negotiation. - The contractor is invited to present his qualifications to perform the work and to indicate the projected costs and fees. - The owner evaluates the experience, reputation, facilities, staff availability, charge rates, and fee structures of the contractors participating. - Based on the evaluation, the field is reduced to two or three contractors, and negotiations are opened regarding actual contract form and methods for reimbursement. - Owner enters into contract with a contractor by negotiating the price and method of reimbursement.

Unit Price on the side of the owner

- Undertake most of the risks

Unit Price on the side of the contractor

- Undertake the risk for unit price (efficiency, procurement) • Work can begin before the design is complete.

Unit Price on the side of the owner

- Undertake the risk in quantity - Necessity of owner's presence on site to measure actual quantity - Potential risk of unbalanced bids

Advantages to DBB

- Well known method (companies, courts) - Cost defined early - Good protection for the owner - Owner does not have to be heavily involved in the construction process

Bidding Advantages

- Well-understood method - Can get good price - All bidders are treated equally and there are not favorites

5 step process of value engineering

- information gathering and function analysis -brainstorming -Analysis/Evaluation -Development -Presentation

Which category of construction has the largest market share? a) building construction b) engineering construction c) industrial construction

A

Bonds

A surety bond or surety is a promise by a surety or guarantor to pay one party (the obligee) a certain amount if a second party (the principal) fails to meet some obligation, such as fulfilling the terms of a contract.

Contract

An agreement between two or more people in which a person agrees to perform or provide a specific task or service to another person in exchange for something in return

Building vs Manufacturing

Building: * one project * catered to client * design/constructed after sale * unique product / process * safety is more important Manufacturing * mass produced * catered to the public * design/construction before sale