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Construction Project Management, 3rd ed.Fred Gould and Nancy Joyce
© 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Bidding and ProcurementChapter 7
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Presentation Overview Bidder Prequalification Bidding process Bidding strategies Work breakdown packages Analysis of bids Award of contract
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Bidder PrequalificationBidders should be put through a qualification process to verify that if selected they will have both the resources and expertise to successfully perform the work they have been contracted to complete.
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Work Packages “Work Packaging” establishes the
breakdown of the overall project into smaller, manageable, subcontract pieces.
All project work needs to be covered and each package must clearly articulate the work to be accomplished
On a “fast-track” project the A/E and CM must coordinate the design and release of each package
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Bidding Information
Invitation to bid Instruction to the bidders Bid form Alternates Addenda
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Invitation to Bid Project Description Project Location Bid Due Date Project Start and Completion Dates Bonding Requirements Document Location Legal Requirements
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Instruction to Bidders Bid Due Date Bid Form Instructions
Place to indicate fee of additional work Unit Prices
Location to Deliver Bid Method of Awarding Contract Expected Date of Award and Project
Start
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Bid Form Name of
Contractor Price in #’s and
words Price Breakdown
by major trades Amount of bond Alternates Fees for
additional work Unit Prices
Time required to complete job
Bidder acknowledgement of receipt of addenda
Key Subcontractors
Bidder legal status: ie. Corporation
Signature, title and date
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Alternates
An alternate is a request for a price for substituting one material for another, for adding to the scope of work, or for deducting from the scope.
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Addenda An addenda is a change in the documents
made during the bidding phase, before contract award
Bidders often identify inconsistencies that must be corrected
Bid documents may also be released prior to design completion such that the addenda complete the remaining design.
Acknowledgement of all addenda releases occurs on the bid form
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Study the Contract! Identification of
parties to contract
Description of project and work to be performed
Start Date Date of
Substantial Completion
Liquidated Damages
Contract Sum Progress
Payments Interest Rate Retainage Final Payment Enumeration of
Contract Documents
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Contractual Information Agreement General Conditions Special Conditions Bonding Requirements Insurance Requirements Technical Requirements
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Bonds Bid Bond – guarantees that the
selected contractor will enter into a contract with the owner for the bid price
Performance Bond – guarantees the contractor will perform the work in accordance with the terms of the agreement
Payment Bond – guarantees the contractor will pay all bills
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Insurance Workers' Compensation - this insurance
covers disability and medical insurance for the workforce
Comprehensive Liability – provides protection for 3rd party claims – injuries to non-workers even after completion
Builder’s Risk – Property insurance for the building while it is under the control of the contractor: fire, water, explosion, vandalism and theft.
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Technical Requirements
Project technical information is delineated in two forms: graphic (drawings) and narrative (specifications). Information is usually only shown in one of the two places.
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Types of Specifications Design – Descriptive specification
which the contractor follows and the owner takes responsibility for
Performance – Expectations identified the contractor determines how to meet
Proprietary – the exact product or method is specified to ensure a preferred product
Open – very nonrestrictive allowing a number of choices
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
ABC Project
ElectricalSiteworkGeneral
Level 1: Project
Level 2: CSI Concrete
SOG ElevatedColumnsFootings
Spread Strip Caissons
Level 3: Category
Level 4: Subcategory
Work Breakdown Structure
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Note the CSI Switch to MFormat 2004MasterFormat 1995 MasterFormat 2004
Facility Construction Subgroup
2 Site Construction 02 Existing Conditions3 Concrete 03 Concrete4 Masonry 04 Masonry5 Metals 05 Metals6 Wood and Plastics 06 Wood, Plastics, and
Composites7 Thermal and Moisture Protection
07 Thermal and Moisture Protection
8 Doors and Windows 08 Openings
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Work Breakdown Structure (WBS) “A labeling system that arranges
project components into divisions with a number of subdivisions”
CSI divisions
DOT divisions
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Keys to Winning a Bid Ability to achieve a responsible
profit based on company investment and risk What will be the risks for this project? How will you mitigate the risks? Ability to be bonded for this job (must
make initial judgment as to project size vs. bonding capacity)
Challenges with doing public work
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Bid Strategy Matching the company’s
position & strength against the competition’s weakness What sets you apart from the
competition? Consider local competition: looking
for work at any price, economy, relationship with owner, architect
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Responsiveness to owner’s needs What is more important: cost, time,
or quality? Does the owner have the resources
to complete the project if changes occur (tight vs. loose budget)
Quality & reputation of the owner: fair & knowledgeable
Bid Strategy
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Subcontractors Materials Equipment Project Staffing
Procurement Process
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Subcontract or Self-Perform? Considerations
‘Estimated’ Cost & Risk of Delivery @ that $
Availability of: Supervisory personnel Skilled labor
Location (remoteness) of the project Long-term liability (leaks, maintenance,
…) POOR REASON
‘All the sub bids are over the estimate/budget’
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Preparation for Buyout Review Contract Documents Prepare Preliminary Project
Schedule Prepare Contract ‘Boilerplate’ Review Subcontractor Scope Review Estimate & Scope Sheets Review Subcontractor Quotation Prepare ‘Subcontractor Interview
Form’
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Important Subcontract Provisions Bind to the terms of the Owner-GC Contract Performance reqm’ts that give the GC control Non-performance clause / procedure Procedures for Changes Cleanup Subcontracting / assigning the subcontract Payment terms and conditions (inc. pay-when-
paid) No ‘Damages for Delay’
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Analysis of BidsIs the low bid the best bid?
Check Base Bid Alternates Addenda Unit Prices Exclusions Qualifications Value Engineering Suggestions
Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Project Cleanup “Maintaining a clean job can be an expensive
proposition and at certain times during construction becomes a continuous operation.”
Project Cleanliness has a direct effect on:
Quality of the work Productivity Safety
Often a ‘struggle’ (finger pointing, excuses,..)
Make a Requirement of Subcontract Establish ‘Back Charge’ Procedures