Republic of the Philippines

BATANGAS STATE UNIVERSITY

BatStateU Alangilan
Alangilan, Batangas City

COLLEGE OF ENGINEERING, ARCHITECTURE and FINE ARTS

Civil and Sanitary Engineering Department

MODULE NO. 1

COURSE CODE: CEE 401

COURSE TITLE: Professional Course I
(Advanced Construction Methods and Equipment)
TOPICS: Construction Project Cycle
Preparing a Bid Package
Bidding Process and Requirements

1. Introduction

A construction project, sometimes just referred to as a “project”, is the organised process

of constructing, renovating, refurbishing, etc. a building, structure or infrastructure. The project
process typically starts with an overarching requirement which is developed through the creation
of a brief, feasibility studies, option studies, design, financing and construction.
Typically, a construction project comprises many smaller projects which require a wide
range of different disciplines working in collaboration. Large numbers of people are involved on
a typical construction project, with the structure and composition of the project team usually
changing through its duration. Projects may be coordinated by a project manager who is
supported by professionals such as an architect, engineer, cost consultant and so on.
The contribution of proficient knowledge can be very beneficial, mainly when it comes to
large and complicated projects, since experts in various specialties can offer valuable services.
On the other hand, it is very important and advantageous to understand how the different parts of
the process match together.
The poor coordination and communication between the specialists can result in waste,
excessive cost, and delays. It is chiefly the requirement of the owner to assure that such flaws do
not happen between them. And it owes all participants involved in the project to regard the
interests of owners, as at the end, it is the owners who provide the resources and make the
decisions.
Implementation of the owner's viewpoint will help the participants to focus on the
completion of the project by having proper attention in the process of project management for

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constructed facilities. This would minimize the old concept of bringing decisions based on the
historical roles of specialists involved in the project.
But the understanding of the entire process of project management will make them
respond more effectively to the owner’s desires. Hence, they can contribute their proficiency
through opinions in improving the productivity and quality of their work.
Enhancement of project management boosts the construction industry which in turn
facilitates the development of national and world economy. To have significant improvements,
know the construction industry, its working environment and the institutional constraints
affecting its activities and the nature of project management.

2. Construction Project Cycle

2.1 Conception & Initiation Phase

Here the project objective or need is identified; this can be a business problem or
opportunity. That’s why evaluation of the proposed project is created in order to determine if it is
feasible and if it should be undertaken. A suitable response to the need is documented in a
business case with recommended solution options. A feasibility study is conducted to examine
whether each option clearly identifies the project objective and a final recommended solution is
determined.
Many questions related to the issues of feasibility i.e. “can we do the project?” and
justification like “should we do the project?” are mentioned and faced.
When a solution is approved, a project is initiated to implement the approved solution.
For this, a project manager is appointed. At this stage, the major deliverables and the
participating work groups are identified. This is the time when the project team begins to take
shape. Approval is then required by the project manager to move onto the detailed planning
phase.

Project Identification
Design and construction projects progress through three phases: project definition,
design, and construction. It should be mentioned that for a total project there are business
planning steps that precede design and there is an operations and maintenance phase that follows
construction. Project definition sets the stage for design work, and design work sets the stage for
construction work. The project definition phase involves discovery to identify and analyze
project requirements and constraints. Although the initial focus is on the owner's requirements
and constraints, it must be recognized that the owner's requirements and constraints carry over to
both the designer and contractor. Integration of the owner's requirements and constraints
provides a description of the project and helps identify a plan for the time and cost of delivering
the project.

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Projects can generally be classified into three sectors: buildings, infrastructure, and
process. Examples of building-sector projects, as listed in Table 2.1, include commercial
buildings, schools, office buildings, and hospitals. For building-sector projects, where the
architect is the prime designer, the design follows three stages: schematic design, basic
appearance of the project, building elevations, layout of floors, room arrangements within the
building, and overall features of the project. At the conclusion of schematic design the owner can
review the design configuration and the estimated cost before giving approval to proceed into
design development. Design development defines the functional use and systems in the project in
order to produce the contract documents, the plans and specifications for constructing the
project.
Infrastructure-sector projects include transportation systems, such as city streets, county
roads, state and federal highways, airports, or navigational waterways. The infrastructure sector
also includes utility projects, such as water and sewer line systems, gas distribution lines,
electrical transmission and distribution, telephone, and cable lines. For these types of projects the
owner may be a private company or an agency of the government. The prime designer is the
engineer, who generally prepares a complete design before construction contracts are created.
Process-sector projects include chemical plants, oil refining, pharmaceuticals, pulp and
paper, and electrical generating. Engineers are the prime designers of process-sector projects.
The stages of design include preliminary engineering, detailed engineering, and development of
the contract documents. For example, preliminary engineering may involve designing the
process flow sheets and mechanical flow sheets for a chemical processing plant. The preliminary
engineering produces the major processes and major equipment required in the project. Detailed
engineering involves the actual sizing of pipes that will connect to the equipment and control
systems to operate the facility, such as piping and instrumentation drawings. The contract
documents are the final drawings and specifications for constructing the project.

Table 2.1 Type of Construction Projects

Common Projects

Building-sector projects -include commercial buildings, schools, office buildings,

and hospitals
-the architect is the prime designer

Infrastructure-sector projects -include transportation systems, such as city streets, county

roads, state and federal highways, airports, or navigational
waterways
-the prime designer is the engineer,

Process-sector projects -include chemical plants, oil refining, pharmaceuticals, pulp

and paper, and electrical generating
-engineers are the prime designers

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Depending on the project delivery method, procurement may start during the design
phase. For example, as soon as the specification is completed for a major piece of equipment, a
purchase order may be issued to procure the equipment if it is a long lead-time item that must be
ordered in advance of construction to ensure that it can be installed without delaying the project.
Procurement is not restricted only to equipment. Procurement may also apply to long lead-time
acquisition of bulk material or procurement of construction contractors.
In the current practice of competitive-bid projects, contractors bid the project after the
contract documents are completed. After accepting the bid, the contractor must develop shop
drawings to build the project. Shop drawings are prepared by the contractor and submitted to the
designer for approval. The shop drawings show the detailed fabrication and installation that will
be used during construction. Thus, the contractor is also involved in design. The production of
shop drawings impacts the quality of fabrication of manufactured items that will be installed at
the job-site. Site construction involves labor, material, and construction equipment to physically
build the project.
For non-competitive-bid projects, the owner negotiates a contract with a firm to provide
engineering and/or construction services. Typically, the cost of the project is negotiated on some
type of cost-reimbursable basis. The agreement also specifies how the engineering design will be
integrated with the construction process.

Private vs Public Projects

Table 2.2 Brief Comparison of Private vs Public Projects

Criterion Private Projects Public Projects

Ownership Business entity Government agency

Examples Commercial retail stores, Include local school boards, state

manufacturing fa- highway departments, or the federal
cilities, industrial process plants, department of energy or defense
and entertainment facilities

Project Competitive or noncompetitive bid Competitive bid or

acquisition qualification-based selection (QBS)

2.2 Planning & Scope Definition

Planning Phase
The planning phase involves further development of the project in detail to meet the
project’s objective. The team identifies all of the work to be done. The project’s tasks and
resource requirements are identified, along with the strategy for producing them. In a broader
sense identification of each activity as well as their resource allocation is also carried out. A
project plan outlining the activities, tasks, dependencies, and timeframes is created.

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The project manager is the one who coordinates the preparation of a project budget by
providing cost estimates for the labor, equipment, and materials costs. This is mainly carried out
by project scheduling software like MS project or PRIMAVERA. These scheduling charts would
help track the stages of a project as time passes. This is also referred to as “scope management.”
The budget of the project already estimated is used to monitor and control cost
expenditures during project implementation.

Project Scope Definition

The purpose of project scope definition is to provide sufficient information to identify the
work to be performed, to allow the design to proceed without significant changes that may
adversely affect the project budget and schedule. Just to state that a project consists of three
buildings and an outside storage area is not enough information to start the design phase. To
assist the owner in this effort, a comprehensive checklist of items should be prepared.Table 2.3 is
an abbreviated checklist for project scope definition of a petrochemical project. The table is
provided for illustrative purposes only and does not include all the items that should be
considered. A similar checklist should be prepared for other types of projects. Experienced
design and construction personnel can provide valuable input to assist an owner in the
development of a checklist for project scope.

Table 2.3 Abbreviated Checklist For Project Scope Definition of a Petrochemical Project
General
1. Size of plant capacity
2. Process units to be included
3. Type of plant feedstock
4. Products to be made, initial and future
5. Should plant be designed for minimum investment
6. Horizontal vs. stacked arrangement of equipment
7. Layout and provisions for future expansion
8. Any special relationships (e.g., involvements of other companies)

Site information
1. Access to transportation: air, waterway, highway, railway
2. Access to utilities: water, sewer, electrical, fire protection
3. Climate conditions: moisture, temperature, wind
4. Soil conditions: surface, subsurface, bearing capacity
5. Terrain: special precautions for adjacent property
6. Acquisition of land: purchase, lease, expansion potential
7. Space available for construction

Buildings
1. Number, types, and size of each
2. Occupancy: number of people, offices, laboratories
3. Intended usage: offices, conferences, storage, equipment

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4. Special heating and cooling requirements

5. Quality of finish work and furnishings
6. Landscaping requirements
7. Parking requirements

Regulatory requirements
1. Permits: construction, operation, environmental, municipal
2. Regulations and codes: local, state, federal
3. Safety: detection systems, fires, emergency power
4. Environmental: air, liquids, solids, wetlands
5. Preservations restrictions

A realistic budget and schedule cannot be determined for a project without a well-defined
scope of work. Thus, the project scope should be developed first, then a project budget and
schedule developed that matches the scope. It is the responsibility of all project managers to keep
all work within the approved scope, and all costs and schedules within approved limits.
Moreso, the documents showing the quality plan are required, which provide quality
targets, assurance, and control measures, along with an acceptance plan, listing the criteria to be
met to gain customer acceptance. At this point, the project would have been planned in detail and
is ready to be executed.

2.3.a Launch or Execution Phase

This is the implementation phase, where the project plan is put into motion and the work
of the project is performed practically on site. It is essential to maintain control and communicate
as needed during each implementation stage.
Progress should be continuously monitored and appropriate adjustments are made and
recorded as variances from the original plan. A project manager is the one who spends most of
the time in this step. Throughout the project implementation, people carry out the tasks, and
progress information is being reported through regular project team meetings.
The project manager uses this information to preserve control over the direction of the
project by comparing the progress reports with the project plan to measure the performance of
the project activities. If any deviation is found from the already defined plan, corrective measures
are made.
The first option of action should always be to bring the project back to the original plan.
If that cannot happen, the team should record variations from the original plan and record and
publish modifications to the plan. All through this step, project sponsors, and other key
stakeholders are kept informed about the project’s status as per the agreed rate and format of
communication. The plan should be updated and available on a regular basis.

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Status reports should always highlight the probable end point in terms of cost, schedule,
and quality of deliverables. Each project deliverable produced should be reviewed for quality and
measured against the acceptance criteria.
When deliverables have been produced and the customer has agreed on the final solution,
the project is said to be ready for closure.

2.3.b Performance & Control Phase

This stage is all related to the measurement of progress and performance to make sure
that items are tracking with the project management scheduling. This phase regularly happens at
the same time as the execution phase.

2.4 Construction Project Close-out

During the final closure, the importance is on providing the final deliverables to the
customer, that is:

● Handing over project documentation to the business

● Termination of supplier contracts
● Releasing project resources
● Communicate the closure of the project to all stakeholders
● Last and final is to conduct lessons-learned studies to examine what went well and what
didn’t.

By doing so, it would make the knowledge of experience to be transferred back to the
project organization, which will help future project teams.

3. BID : Preparation, Process and Requirements

Responding to bid solicitations or requests for proposals and winning construction

projects is an integral part of any successful contracting business. It is the way you acquire new
work and brings revenue to your company. Of course, the construction bidding process can be
costly and time-consuming. But done correctly, it's an excellent opportunity not only to increase
your profits but to expand your network of owners, general contractors, and construction
managers.
While most contractors have years of experience in their trade, many enter the bidding
process with little practical knowledge. To put your best foot forward, you must have a solid
grasp on the methods and contracts that make up the construction bidding processes, as well as
the common mistakes to avoid along the way.
Construction bidding is the process of submitting a tender by the contractor to the client
as a proposal to conduct or manage a particular construction project. The bidding process is an
incredibly important part of a construction project. This enables firms and companies to hire

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contractors. A construction bidding process involves the submission of a bid form or proposal to
either the owner, construction manager or general contractor. Typically, construction managers or
general contractors will solicit construction bids from subcontractors by sending out bid
invitations: documents that detail the construction project and scope of work. Subcontractors can
download the bid documents, review the project information to determine whether they will be a
good fit, then submit a detailed bid to the general contractor. From that, the general contractor
awards the bid to one subcontractor based on the best value, which in many cases is the lowest
price, but can include other variables like past performance, bid capacity, and experience in the
type of construction project. Long story short, the lowest bid price does not guarantee that you'll
win the project. In many cases, the general contractors will disqualify the lowest price contractor
and go with a middle number to reduce their risk.
"The lowest bid price does not guarantee that you'll win the project"
Although the terms "bid" and "estimate" are often used interchangeably, they have some
critical differences. An estimate is a ballpark number based on the scope of work and the
estimated total costs to complete the project. A bid is a hard number that you agree to complete
the job for and if selected during the competitive bidding process. By submitting a bid, you
typically don't leave yourself room to negotiate, and there are sometimes punitive damages for
pulling out. That's why it's crucial to thoroughly review the bid packages and accurately bid the
project so that you don't underbid and leave yourself without profit margins — or overbid and
risk losing construction projects. Keep in mind that requests for proposals can have different
delivery methods like design-bid-build or design-build. You need to understand those methods
and bid processes before submitting a proposal.
Construction Bidding Process

The basic construction bidding process involves:

1. The client or general contractors send bid invitations to the contractors or the
subcontractors.
2. The contractors or the subcontractors receive the invitation that includes:
○ Scope of Work
○ Time of Completion
○ Penalty
○ Pre-Qualification Details
3. Contractors or Subcontractors download the tender document and review the project
based on their respective cost codes.
4. Contractors or Subcontractors submit their bid to the client or general contractor.
5. The general contractor or client awards the bid to the subcontractors with a most
competitive bid and it is converted into a commitment.

Decisions in Construction Bidding Process

The three major decisions in the construction bidding process are:

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1. The Project Delivery Method

2. The Procurement Method
3. The Contract Model

1. The Project Delivery Method

There are four traditional project delivery methods. They are:

1. Design-Bid-Build or Design Tender

2. Construction Management at Risk
3. Design-Build D-B
4. Integrated Project Delivery (IPD)
The four major project delivery systems mentioned above share the common goal of
helping the owners build new structures on time and on budget. These methods also ensure
quality and performance requirements.

1. Design-Bid-Build or Design Tender

This is the traditional method and is commonly employed for the construction of
non-residential buildings, mainly under government projects. In a DBB method, the owner hires
a designer or an architect independently. This is performed by the contractor who is managing
the construction. Once the design is completed by the architect, bids are solicited from the
contractor by the owner so that the designs can be executed.

The bid covers:

● Total cost of the building structure

● Money for the subcontractors
● General contractor’s costs
● Overhead costs
● Profit

Important advantages of DBB are:

● The Owner has a great control over the design and construction
● A high ease of implementation
● The cost of construction is easily determined as the architect provides a design before
awarding the contract

Disadvantages of DBB are:

1. The Owner must have substantial expertise in the work

2. Availability of resources
3. High responsibility for project execution
4. Manage increasing costs due to the design errors

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2. Construction Management at Risk (CMAR Method)

The CMAR method is an alternative to the DBB method that helps in reducing the costs.
In this method, design and construction are handled by different firms. Here the construction
manager is involved in the project from the start of the project, even before the design of the
project. The CM can even help in choosing the architect for the project. Once this step is done,
the project is moved forward by the CM and the architect. They work together during the design
phase.

This method is mainly employed for complex projects. The CM is chosen by the owner
on the basis of his or her experience and qualifications and not on the basis of the lowest price
criterion. The bid of CM to the owner is a guaranteed maximum price (GMP). This cost
represents the:

● Pre-construction service
● Actual construction
● The Fee of Construction manager
● Possible Contingencies

After the completion of the design, the construction manager solicits the bids from the
contractors. If by chance, the actual costs exceed the GMP , the risk is on the CM. And this
burden won’t be taken by the owner. If the project is built below GMP, the savings received by
the owner may be shared with the CM as per the agreement made between them.

Advantages of CM at Risk Method are:

● Great Cost Control

● Reduced risk for Owners
● Superior Project Management

3. Design-Build D-B

In DB Method, the owner provides the contract to a single entity that can handle both the
design and construction. Here, one price covers both the phases of construction. This entity is
called a design-builder or design-build contractor. In DB, the design-builders is accountable to
the owner for all aspects of the project.

4. Integrated Project Delivery (IPD)

The IPD method is also called an Integrated team method. This is one of the newly
developed projects delivery methods. This method employs, owner, architect and contractor as a
team, and the risk is shared equally.

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2. Construction Procurement Methods

After the selection of the project delivery method, the next step is to bother about the
procurement method through which the construction services are obtained. Construction
procurement is generally classified into:

1. Best Value Method (BVS). In this method, the buyers and the contractors are awarded the
contract based on price and performance. These records taken into consideration are past
performance, robust management approach, qualifications of the staff and other specific
factors.
2. Negotiated method. In this method, the contactors are selected without any form of
advertising or competitive bidding. A potential builder is chosen and negotiated with
reference to the price and the technical requirements. The contractor who makes a
favorable proposal is taken into consideration by the government. This proposal is not
opened publicly.
3. Sole Source or Direct Select. In this procurement method, a single source procurement
method. This is a non-competitive method that only uses a single provider who can fulfill
all the requirements of the project.
4. Low Bid. Competitive bidding with the lowest bidder is the principle behind the low bid
procurement method. This is one of the traditional procurement methods. Government
and public construction entities are built as per this procurement method

3. Contract Model

The contract format that is presented in the construction bidding process must be
carefully developed. The owner is supposed to suggest the type of contract he is willing to make.
The type of contract developed determines how cost and the profit are covered. Top used
contract types are:

1. Cost Plus Fee Contract

2. GMP Contract
3. Time and Material Contract
4. Fixed Price Contract
5. Lease Leaseback

Bidding Documents

The Bidding Documents shall be prepared by the Procuring Entity following the standard
forms and manuals prescribed. The documents shall include:

-Instructions to Bidders - including criteria for eligibility, bid evaluation and post-
qualification, as well as the date, time and place of the pre-bid Conference (where
applicable), submission of bids and opening of bids. The Instruction to Bidders provide
the procedures and requirements for the preparation and submission of Qualification

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Documents and Bid Proposals by Bidders and the evaluation criteria and rules to be
followed by the Procuring Entity in the selection of a Winning Bidder to undertake the
Project.

-Terms of Reference - are a strategy-level document that defines the tasks and duties
required of a project contractor, and highlights project background and objectives at high
level. The document also states the planned activities, expected inputs and outputs,
project budget, working schedules, and job descriptions. It is used to judge about the
performance of contractors, consultants, experts, and other project stakeholders.

-Eligibility Requirements - bidders’ tract record, licences and the like to be evaluated by
the procuring entity

-Plans and Technical Specifications - comprehensive design drawings (or plans) are
created along with detailed written specifications (or specs) to further describe the
equipment and parts shown in the drawings.

-Form of Bid, Price Form, and List of Goods or Bill of Quantities - documents and
informations detailing the scope & cost of a project

-Delivery Time or Completion Schedule - determination of the project timetable

-Form and Amount of Bid Security (if applicable);

-Form and Amount of Performance Security and Warranty; and,

-Form of Contract, and General and Special Conditions of Contract.

REFERENCES:
1. Halpin, Daniel W. and Woodhead, Ronald W., Construction Management, 4th Edition, Wiley, Hoboken, NJ, 2012.
2. Pratt, David J., Fundamentals of Construction Estimating, 3rd Edition, Delmar Cengage Learning, Clifton Park, N.Y.,
2011.
3. Oberlender, Garold D., Project Management for Engineering and Construction, 2nd Edition, McGraw-Hill, Boston,
2000.
4. Lee, Chris, A Guide to Construction Bidding Process, https://www.esticom.com/, 2020.

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Review Questions & Exercises

1. Name and briefly discuss the different phases in the construction project cycle.
2. Describe the different types of construction projects and cite some examples.
3. The various phases for development of a project are discussed in this module. Review
each phase and identify the party that most likely would be involved in performing the
work of the phase, and the party whose work will be most influenced by the results of the
phase. Identify parties as one of the following: owner, consultant to the owner, designer,
construction manager, or construction contractor.
4. Much of the day-to-day work on a project is accomplished by informal exchanges of
information between team members. Examples are phone calls and informal meetings
between two or more individuals. How should a project manager handle informal
exchanges that may have an important impact on a project?
5. Describe the importance of identifying project lessons-learned during execution to final
stages of the construction project.
6. As bidding is one that dictates if the project will be executed by the bidder, what is your
point of view with this quote, "The lowest bid price does not guarantee that you'll win the
project?”
7. Explain the bidding process/ flow.
8. In your own words, differentiate the four traditional project delivery methods.
9. Enumerate and discuss the three major decisions in the construction bidding process.
10. Enumerate the bidding documents and, as a future professional, cite the importance of the
documents.

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