Construction Management Exam 3 - CH. 9

Decision to Bid

Constructors must evaluate several factors to decide whether it's worth the effort to pursue a project such as: - 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 our competition? - Does the estimating staff have the capacity to bid and the time? - What is our current company backlog...do we need this job?

Contracting Licensing

o Purpose of licensing is to protect the public from unqualified and unscrupulous contractors. Issuing licenses is also a means to generate revenue for municipalities such as cities, counties and states. o Stipulate that unlicensed contractors may not use the court system as a means for redress (resolution) for construction-related disputes. o Licensing process varies from state to state and among different municipalities. Obtaining a license may be a 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.

Bidding Period

o Refers to the time where Bidders prepare their pricing for the project based on the Bid Documents. In Design-Bid-Build projects, bidders will be preparing a lump sum bid, meaning one all-inclusive price for all direct and indirect costs necessary to successfully and profitably construct the project. o This single price for the entirety of the job is known as the Base Bid. o Project Bid Days should, ideally never be a Monday or a Friday and the bid time should not be set early in the morning. Owners and Designer should also be cognizant of other projects bidding and avoid setting their bid day on that date if possible.

Value Engineering

o Specific procedures carried out to critically analyze various aspects of the contract documents in relation to the Owner's objectives to determine if alternative methods or materials might be more appropriate. o DBB competitively bid projects, award of the contract is the incentive used by Owners and Designers to get Contractors to perform value engineering services for free. o Project is already under contract when value engineering is performed, the contractor commonly shares the saving with the Owner as incentive to find significant cost reduction ideas. o Progressive delivery methods and with cost plus fee or GMP contracts.

Accuracy of Bidding Information

o The Owner is responsible for any errors and omissions when the Design team is engaged as an Agent of the Owner such as DBB, CMA and CMaR. o Some Owners attempt to shift this responsibility onto the Constructor with exculpatory clauses on the plans or in the specifications. These types of problematic provisions would be another example of a "Killer Clause".

Multiple Bid Packages or Phased Approach

o The 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. o Bid Packages are created and managed by the CM who bundles all Bid Documents together that pertain to that specific package.

The Award

o There are three components that affect an Owner's decision to award a contract: - 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.?

Reverse Auction Bidding

o Used for publicly funded projects where bidders can see, on-line, the pricing of their competitors for the bid items. o Identities of the competitors are not displayed, only their prices o Not a common method of bid submission

Bid Rigging

o When bidders collaborate on their bids to manipulate pricing to control who wins a particular contract award, they are guilty of bid rigging which is an illegal activity. This is known as collusion or conspiracy.

Bid Form

o "Bid Tender Form" o To make sure your bid is considered "responsive" or "regular", the Bid Form must be completely and properly filled out. Leaving unanswered items or blanks may invalidate your bid -Our bid team company name, address, contact numbers etc. - Our company structure type...partnership, corporation etc. - Our State of business formation (Kansas) - Our lump sum total Base Bid - Alternate Bids as requested - Number of days for project completion (its more common to be told when to be done) - Addenda received and acknowledged - Signature(s) of authorized agent of our bid team company - Corporate seal - List of major Subcontractors

Constructability Review

o An assessment of the contract documents prior to the bidding phase to identify problem areas and suggest improvements. o Occur as a component of the collaboration between Constructors and Designers for negotiated projects. - Assemblies or systems on the project that exceed the skill level of available subcontractors or workers. - Excessive cost of certain materials or systems. - Availability of certain materials or systems (known as lead time). - Equipment limitations - Environmental and logistical concerns - Safety of workers and the general public - Clash detection involving overlaying the structure, MEP systems and finishes in the BIM model to identify spatial conflicts of these components.

Mistakes in Bidding: Mistake 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. Examples could be issues such as legitimate mathematical mistakes or some sort of software glitch that affected a bidders pricing.

Mistakes in Bidding: Mistake in Judgement:

This type of mistake is NOT grounds for relieving a bidder of their obligations. Examples could be failure to carefully "scope" a subcontractor's 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.

Instructions to Bidders

o Bidders must carefully comply with all requirements of the Instructions to Bidders in order to have their bid be considered valid or "responsive". o Common items found in most Instructions to Bidders include examples such as: - Date, time and place for submitting the bid - Whether closed or public bid opening - Acceptable methods for submission of bids - How the Owner will handle discrepancies and bid irregularities - Acceptable methods for bid modification - Requirements for Bidder's list of relevant project experience - Requirements for resumes of Contractor key personnel - Required project construction schedule - Bid Bond requirements - Bidder insurance requirements - Performance and Payment bond requirements - Notice of a pre-bid conference and attendance requirements

Modification and Withdrawal of Bids

o Bidders turn in a price early to make sure they are considered for the award. When this is done, the early price is set intentionally high. This practice is used most often by out-of-town bidders who aren't planning to send a live person to the bid letting. These bidders mail in their bid forms and bid bonds ahead of time, already fully filled out with pricing and signatures. o 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 bids. o Bidders that identify mistakes in their estimate or change their mind about the project may withdraw their bid without forfeiture of their bid bond if this is done before the time bids close.

Addenda

o Bidding Constructors and their subcontractors can submit questions and issues for clarification by addenda if they comply with whatever deadline has been established by the Design team. o Formal changes or clarifications issued by the Owner or Owner's representative to all identified bidders during the bidding period. o Contain a narrative portion which describes the changes to the Bid Documents in words and a drawings portions which graphically depicts the changes with updated details or entire revised plan sheets. o Addenda must be issued with sufficient time remaining before the bid date to allow all bidding parties to review the information contained in the addenda and to incorporate the new information into their pricing.

Bid Lettings or Bid Openings

o Both terms describe the event where bidding Contractors physically turn in their bids at a specified location, on a specified date and required time. o Bid runners (people delivering the bid) must allow time to complete their Bid Form and get to the designated location on time. The Owner's clock always governs.

Alternates

o Changes to the Bid Documents priced for an Owner's consideration. o Alternates can be an ADD or a DEDUCT to the Base Bid. o Bidders are required to quote them. Failure to do so, may disqualify your bid. Owners, however, are not required to accept any of the alternate pricing. o Some Bid Documents and Instructions to Bidders may prohibit voluntary alternates, especially on publicly-funded projects.

Competitive Bid vs. Negotiated Contracts

o Competitive bid requires bidding document to be 100% before requesting bid. - Typically, do not provide opportunity for input and benefits of CM expertise o Negotiated allows phasing and fast tracking, more progressive delivery methods such as cost plus fee or GMP - Allow overlapping of project phases, saving overall time. - Negotiated commonly costs the Owner more than competitive bid, but tradeoff is a better design. - Result in less issues during construction, less change orders

Electronic Bidding

o Constructors must register and establish an account to receive login credentials. Bidders log-in, enter their prices in whatever format the Owner has requested and then "submit" when finished. Even using e-bidding, bid deadlines must still be adhered to. o Bidders should always print a confirmation that their bid submission was successfully entered in case proof is later needed that the process was completed by the deadline.

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o Includes information: - Nature and location of project - Type of contract; lump sum, unit cost, cost plus, or GMP - Bonding requirements - Required schedule - Payment terms - Wage requirements - MBE, WBE, and DBE participation requirements - Where to obtain bid - Budget - Prequalification requirements o No laws govern the bid process for privately funded projects o Private owner may negotiate directly with one preferred contractor rather than solicit multiple bids

Contracts, Insurance, Bonds, Permits and NTP

o Insurance certificates and bonds are ordered by the winning bidder. Building permit fees are paid. Subcontracts and Purchase Orders are drafted to the winning bidder's construction team. This is how the construction process begins. o Owners then issue a document called the Notice to Proceed which officially starts the clock on the project's completion schedule. Sometimes the contract may stipulate the start date or date of commencement of construction. Otherwise the NTP allows us to mobilize to the site and begin the project.

Typical Phases of a Construction Project

o Planning or Programming o Schematic Design o Design Development o Construction Documents o Bidding o Construction o Occupancy & O&M o Renovation or Re-purpose o Demolition & Recycling

Reporting Services

o Public Owner internet-based procurement portal sites...like State of Kansas o Private Owner internet-based procurement portal sites...like Target Corporation o Subscription-based lists from private market research firms o Virtual and physical plan rooms

Prequalification

o Public projects have no prequalification requirements other than common licensing, minimum insurance limits and bond stipulations. - Large complex public projects can, depending on awarding agency and nature of project. o Private Owners often have prequalification's. AIA A305 Contractors Qualifications Statement. - Many public and private owners have a Request for Qualification (RFQ)

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o Publicly funded agencies follow a more formal process for bidding out their projects which typically includes a prescribed list of steps. o The process is governed by local state and federal laws depending on the source of the project's funding. o NOTICE OF BIDs is posted on governmental procurement web portals, newspapers and other publications where bidders are likely to learn of the project o Design-Bid-Build- traditional way projects have been bid and awarded