[CE413] CONSTRUCTION METHODS & PROJECT MANAGEMENT
Work schedule a work schedule shows site
Erich John Y. De La Torre BSCE 3H
Basic contract documents every construction
contract must include contract management is an
extensive process that leads from the initiation to
the completion of a project the main purpose of
contract management is to make sure the
objectives are met and the value is earned there
are several types of contacts used in various
industrial projects construction contracts are the
most complex ones what are the basic contract
documents contract documents include both
written and graphic elements to define the basis of
the contract including both parties roles
responsibilities and detailed description of the
work here we will talk about nine basic contract
documents every construction contract must
include
1. Contract agreement a contract agreement
defines the agreement between the client and the
contractor in which the parties are specified and
their responsibilities are defined in the
construction process.
2. Scope of work definition scope of work should
describe the project the project deliverables and
the statement of work it must specify all tasks
duties and limitations to get anticipated results in
accordance with the project objective.
3. General conditions general conditions define all
general terms and items such as utilities vehicles
organizational structure mobilization and
demobilization but these items are not directly
related to the construction activities obligations of
both parties general conditions overhead costs
bonuses and some other conditions are included in
this portion.
4. Special conditions special conditions describe
specific requirements and instructions for the work
mostly they are addendums to the general
conditions.
5. Bill of quantities bill of quantities is a document
used for tendering that lists all work to allow the
contractor to price the work for which he or she is
bidding it includes quantity and price for each work
and after the bidding phase it will be an attachment
of the contract document.
6.
delivery date start and finish milestones project
duration and other useful information tasks are
listed and grouped under specific work breakdown
structure levels such as civil electrical and
mechanical works in a work schedule.
7. Drawings drawing illustrate quantities locations
dimensions sizes shapes and forms of the elements
these drawings can be architectural electrical
mechanical landscape they must include adequate
information for the entire project that's being
contracted.
8. Technical specifications technical specifications
describe the materials workmanship and
equipment required for a task typically technical
specifications describe the end product therefore
the client should describe them clearly before the
tendering stage.
9. List of common types of construction insurance
construction insurance provides coverage for
material risks natural disasters employees
performance bonds specific types of coverages and
all risk insurance should be determined clearly in
the contract in order to protect both parties and
avoid disputes because contract documents often
create the basis of any claim additional documents
such as master format outline can be added to the
main contract document depending on trade
specification the purpose of these documents is to
develop a system to solve claims and potential
problems in the case of any legal action.
2ND VIDEO: What do you know about contracts?
How about bid solicitation—submission—
selection?
What about negotiation? And how about the
delivery process?
If you plan on winning projects, these are just some
of the factors you need to master if you plan on
landing the projects that pay. But, don’t worry,
we’re going to cover just about everything you
need to know, including a list of 10 tips to help you
become a pro.
Before we begin this video, we strongly
recommend that you watch our Building a Multi-
Million Dollar Construction Business: The Ultimate
Guide For Contractors video, because it covers the
basics and fundamentals to running a profitable
business—which, of course, are essential when
bidding on projects.
Now, let’s get started.
Construction Bidding Process
There are generally 5 phases to the construction
bidding process…
Phase 1: Bid Solicitation
- The project owner solicits bids for a construction
project. Relevant documents and details, such as
drawings and specifications, are made available to
so-called “interested parties” – including
contractors, construction managers, and the
general public. The process is often called a
Request for Proposal (RFP), Request to Tender
(RTT), or Request for Quote (RFQ). Bid solicitations
typically include a formal Request for Proposal
document that has all the details and instructions
for the bidding process.
Phase 2: Bid Submission
- Bids are submitted before the deadline along with
all requested documents and information. In some
cases, the project owner has a qualifying round
before final bid submission. This creates a 2-step
submission process, where those selected in the
qualifying round will submit their bids for review.
Phase 3: Bid Selection
- The project owner selects the winning bid
typically using one of three procurement
methodologies:
Best Value - The Best Value procurement
methodology allows the project owner to award a
construction contract on more than just price. A
set of selection is developed that will add value to
a bid. Examples include proven past
performance on a similar project, strong
management approach, a highly qualified team,
etc.
Negotiated - In negotiated procurements, the
project owner reaches out to potential builders
directly (rather than soliciting openly for bids). The
project owner negotiates terms and price with one
or more builders. A broad agreement is reached,
and final details are negotiated before the project
begins.
Low Bid - Often used for government contracts, the
lowest bid is selected. A qualifying round may be
required before bid submission.
Phase 4: Construction Contract
- The contract for the project is drawn up and
signed by all parties. There are four common types
of construction contracts.
Lump Sum / Fixed Price - The contractor will be
paid the agreed sum in one payment at the end of
the project. Sometimes incentives are built-in
if the project is completed early – or penalties if it
is not. Obviously, this is the highest risk to the
contractor. You’ll want to ensure that
all deliverables are clearly defined in the contract.
Cost Plus - The contractor is paid for all
actual expenditures – plus overhead and profit.
This type of contract can reduce risk to both
parties. However, it requires detailed and
accurate bookkeeping. Which you should be doing
anyway.
Time and Materials - This type of contract is
often used when the project deliverables are not
well defined. An hourly or daily rate is
specified, plus the cost of materials and
other expenses as defined in the contract.
Unit Pricing - In this type of contract, a unit
represents a chunk of work, or materials, or a
combination of work and materials. It is not
usually known how many units are required
exactly, but an estimate is typically provided. What
makes up a unit and the price per unit are defined
in the contract.
Guaranteed Maximum Price (GMP) - A GMP
contract guarantees that the project owner will not
pay more than the agreed upon maximum price.
Meaning that cost overruns on the project are the
responsibility of the contractor. Some protection
can be available by building the cost of
contingencies into the price.
Phase 5: Project Delivery
- The contracts have been signed and the
work begins on the project. This is also the
phase where all your estimates are confirmed – or
not.
The Project Delivery Method - The project delivery
method is determined by the project owner prior
to bid solicitation.
There are four major methods.
1. Design-Bid-Build Design-Bid-Build (DBB) – also
known as “design tender” – is the traditional
project delivery method. An architect is hired by
the project owner to develop designs. The bid
solicitation is for the execution of those designs. A
Design-Bid-Build bid includes all material and labor
costs needed for construction and project
management, plus overhead and profits. A major
advantage is that it is easier to calculate
construction costs from a completed design. The
disadvantage for the contractor is that they were
not involved in the design process. This could
present as design flaws in the field that increase
building costs.
2. Design-Build (D-B) In Design-Build (D-B) - the bid
solicitation goes out for both the design and the
execution of that design. The two phases are
priced together. In Design-Build, the contractor
takes on responsibility for the whole project.
Meaning any design flaws discovered in the field
that increase construction costs would be borne by
the contractor.
3. Construction Management at Risk (CMAR) -
CMAR, like the Design-Bid-Build method, separates
out the design and construction phases. However,
the construction manager is brought on board
prior to design and acts as a consultant to the
project owner. They may assist in selecting an
architect. The construction manager may or
may not handle construction but does work with
the designer. So, at the end of the design
phase, either the construction manager
transitions to the role of a general contractor, or
the bid solicitation goes out to select one. CMAR is
most often used for complex projects. Selection
criteria is usually based on the construction
manager’s qualifications rather than the lowest
price.
Guaranteed Maximum Price (GMP) - contracts are
typical for CMAR projects.
4. Integrated Project Delivery (IPD) IPD is also
known as the Integrated Team Method. So called
because the project owner, designer, and
contractor form a contractual partnership (the
terms of which are negotiated). With IPD, cost
savings and early delivery of project components
are incentivized within the contract. The value of
the IPD method is that the project owner, designer,
and contractor bear full responsibility of the
project together. The team often is assembled
as early as the concept and feasibility phases.
Top 10 Construction Bidding Tips
Here’s our list of tips to avoid common pitfalls and
land those projects…
#1 - Bid on the Right Projects Conventional thinking
says that it’s a numbers game and that you should
bid on as many construction projects as
possible. However, this is a luxury that large
companies can afford—companies that are large
enough to have their own bidding department. For
most construction business owners, they and
their small team are preparing these bids while
trying to work on existing projects. For that
reason, we recommend that you focus on projects
where you have the highest chance of winning the
bid.
#2 - Takeoff Right In order to develop a precise
construction material takeoff, you must
thoroughly review the project plans to calculate
measurements and quantities. You are aiming to
be the lowest bidder – but not at the expense of
your bottom line. Takeoff software automates
much of the process. Popular takeoff software
programs include Stack (STACK | Construction
Takeoff & Estimating Software (stackct.com)) and
Plan Swift (Quantity Takeoff Software
(planswift.com)).
#3 - Visit the Site in Person Photos and videos of
the proposed construction site may help, and the
authors of the Request for Proposal may have
provided many details about the site. But none of
these are a substitute for viewing the site with your
own two eyes and walking it with your own two
feet. Document your observations about the
size, terrain, road access, surrounding
buildings, power lines, etc. We recommend
walking the site before you spend any time on
paperwork. After one look, you may even decide
to pass.
#4 - Just ask when it comes to bidding, there are no
stupid questions. We would argue that it’s “stupid”
not to ask for clarification on anything that can
impact your estimate or your ability to follow the
construction bid instructions. When in doubt, just
ask. The bid solicitation should include
contact information. It is best to get your answers
in writing to avoid miscommunication down the
road.
#5 - Double Check the Numbers Math errors can
cost you big time. Sometimes, your bid ends up
higher than need be – or lower than it should be. If
you are using an Excel template for calculations,
ensure that subtotals and totals are being
calculated properly. We hate to state the
obvious—but you should be using a calculator.
Consider investing in construction estimation
software to streamline the process. Procore
(Procore | Construction Management Software)
and Clear Estimates (Clear Estimates |
Construction Estimating Software) are just two of
many available construction cost estimating
software programs.
#6 - Equipment Requirements You don’t have to
own every piece of equipment required for the
project, but you do need to determine cost – and
availability to rent or buy – all the needed
equipment. Don’t forget to include repair and
maintenance costs.
#7 - Prequalifying Subcontractors If you plan on
regularly bidding on construction projects, you
want to start building a database of
subcontractors. You should consider having your
own prequalification process to identify and screen
prospective subcontractors. Even subs who have
worked for you in the past should still go through
the prequalification process. This is to ensure that
your estimates are based on subcontractors who
are qualified and available.
#8 - Building Materials It is imperative that you
don’t make assumptions about the required
building materials. For example, there can be a
huge difference in price between different types of
lumber. When in doubt, contact the project owner
for clarification.
#9 - Complete Bid Forms and Documents Yet
another reason you should be selective—
maybe even picky at times—when it comes to
reviewing and bidding on projects—You don’t
want to rush the process. Triple check all the
documents. Make sure that you have included
everything requested and that each item is
properly completed. If possible, multiple people
should review and signoff on the bid package
before submission.
#10 - Past Projects You may have done a
similar project in the past— Maybe multiple
times. That is never a substitute for due
diligence. Consider each project as a new
experience. You can use historical data from past
projects to help in the estimation process but we
wouldn’t recommend making too many
assumptions.
Bonus Tip - Risk Mitigation Planning
You don’t know if a risk is worth taking if you have
not identified and evaluated it. Jot down potential
risks as you are reviewing the bid solicitation. Jot
down some more as you are walking the
site. Brainstorm with your team to identify other
risks you may have overlooked. Then document
the ones that could realistically happen and rate
them. A low-medium-high scale is typically used.
You are rating each risk on its likelihood of
happening and its impact to the project. Any risk
with a “high” rating should have a documented risk
mitigation plan. A risk assessment may lead you to
conclude that the project is too risky to take on at
all. Or you may only be willing to take it on for the
right price.
Where to Bid Where can you find projects?
Here are some sources that we recommend:
• BidClerk
• Dodge Construction Central
• Construction Bid Source
• Construction Wire
• Construction Market Data
• GovernmentBids.com
• BidCentral
Well, that’s all we’ve got for now. Like we
mentioned before, we recommend that you watch
our Building a Multi-Million Dollar Construction
Business:
The Ultimate Guide for Contractorsvideo, which
covers more fundamentals about running a
construction business.