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CHAPTER 6

Professional Construction Management. CHAPTER 6. Prepared By: Atef Al- Bahry Adel Abu- Ikmeil Ahmad Matar. BIDDING AND AWARD. Table Of Contents. 6.1 DEVELOPPING CM CONSTRUCTION PACKAGES 6.1.1 Standard Drawings And Specifications 6.1.2 Individually Developed Drawings And Specifications

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CHAPTER 6

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  1. Professional Construction Management CHAPTER 6 Prepared By: Atef Al-Bahry Adel Abu-Ikmeil Ahmad Matar BIDDING AND AWARD

  2. Table Of Contents 6.1 DEVELOPPING CM CONSTRUCTION PACKAGES 6.1.1 Standard Drawings And Specifications 6.1.2 Individually Developed Drawings And Specifications 6.2 PREPARATION OF BIDDING DOCUMENTS 6.3 CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD 6.3.1 Development Of Bidders List 6.3.2 Fair-Cost Estimates 6.3.3 Analyses Of Bids And Value Engineering 6.3.4 Recommendation For Award 6.3.5 Negotiating Contracts 6.4 APPLICATION OF CONTROLS 6.4.1 Procurement Schedule Control 6.4.2 Construction Cost Control 6.5 BIDDING AND AWARD TO GENERAL CONTRACTROS 6.6 SUMMARY

  3. Basic Requirements For Construction Project Basic Requirements that must be met for construction project to be successful from the owner’s standpoint include: • Project within budget. • Completed on schedule. • Constructed in accordance within plans and specifications.

  4. The Importance of Bidding & Award Phase • Establishes the foundation for the project. • Offers an opportunity for designer, owner, and PCM to learn to work together. • Enhancing their mutual respect and confidence.

  5. Construction Management Approach • CM approach has evolved from atypical approach to general contractor selection through the addition of individual work packages under construction manager control, rather than leaving these duties to a general contractor acting in the traditional manner.

  6. Developing CM Construction Packages • Proposed contract packages outlines in the overall plan can be developed in detail by either the PCM with designer review and vice versa . • The choice will depend in part upon the requirement of the owner and location and procedures of both the designer and the PCM. • The paramount importance is the bidder understands what is required.

  7. Developing CM Construction Packages • Ambiguities or alternative interpretations in the scope of the work are the forerunners of misunderstandings, claims and litigation. • So the qualified PCM will avoid such problems. • For purpose of scoping construction contract packages, all plans and specifications are prepared by the designer. • No change to plans and specifications can be made by the PCM without the prior consent and approval of the designer.

  8. Methods of Preparing Construction Contract Packages Tow different and distinct Methods of preparing construction contract packages are commonly applied by an experienced manager: • Prepare individual contract packages from relatively standard specifications and drawings. • Prepare individual contract packages from individual specifications and drawings.

  9. Methods of Preparing Construction Contract Packages Standard Drawings And Specifications • Many design firms update or modify standard specifications they have developed over many years. • Many design firms also standardize construction details in similar manner. • In routine design office use such standard. • In this situation, it is preferable that the PCM prepare detailed scope sections.

  10. Methods of Preparing Construction Contract Packages • Standard Drawings And Specifications • Designate those drawings to be included as contract drawings and those to be included for reference and general information. • Properly handled, assumption of this responsibility by the manager will avoid additional difficulties and possible added costs for the designer, and will contribute greatly to the partnership philosophy.

  11. Outlining the Detailed Scope Methods of Preparing Construction Contract Packages • Standard Drawings And Specifications Neglecting for the moment the standard documents common to each work package, one method found to be successful in outlining the detailed scope is summarized thus: • The manager adopts all the specification sections pertinent to the work package in question and includes them in that package. • The manager writes a general scope of the work to be included, describing in general terms the work to be performed under the contract.

  12. Outlining the Detailed Scope Methods of Preparing Construction Contract Packages • Standard Drawings And Specifications • The manager prepares two summary schedules, setting forth each item by specification number and subnumber under “work included in contract” or “work not included in contract”. • In the event of conflict between the standard specification provisions and the requirements of the work package, an addendum, written jointly with the designer, makes the required modifications.

  13. Outlining the Detailed Scope Methods of Preparing Construction Contract Packages • Standard Drawings And Specifications • The manager lists by number all drawings to be included as contract drawings and identifies drawings to be included as reference drawings. • Before the manager incorporates the package into the bidding documents, the designer reviews the entire scope of the work package as just described. Owner review is also performed at this time if desired

  14. Methods of Preparing Construction Contract Packages Individually Developed Drawings And Specifications • Designer develop plans and specifications to fit phased construction programs. One method found to be successful is outlined here: • In additional to the preliminary scope for each contract package, the manager prepares a detailed scope of individual items and describes the overall intent covering the scope of each work package.

  15. Methods of Preparing Construction Contract Packages • Individually Developed Drawings And Specifications • The manager careful reviews this overall intent and detailed scope with the designer and modifies it as required. The designer is encouraged to offer additional suggestions or modification to fit his design schedules better as the design work progresses. • Prior to requesting bids, the manager blocks out a definite period for a detailed review of the completed packages. Owner review is accomplished simultaneously.

  16. Invitation to bid. • Bid form. • Bid breakdown. • Construction contract. • General conditions. • Special conditions. • Specifications, addenda and drawings • Work included in contract. • Work not included in contract. • Supplemental provisions. • Owner-furnished items. • Construction schedule. PREPARATION OF BIDDING DOCUMENTS

  17. PREPARATION OF BIDDING DOCUMENTS Bid form is completed and signed by the bidder and include: • Job-site location & specification. • The amount of compensation to be received for the work performed or offered by the bidder. • The amount of liquidated damages. • A statement that the bidder agrees to execute a contract if his bid is accepted. • Submit a performance & payment bond. • Overhead & profit percentages applicable for extra work • Period. • Brief description of the work.

  18. PREPARATION OF BIDDING DOCUMENTS Supplemental Provisions may include additional items not suited for inclusion in the special condition, such as a definition of the status of the PCM, and prevailing wage rate, if applicable.

  19. Owner-furnished items PREPARATION OF BIDDING DOCUMENTS • This section describes all items to be furnished to the contractor by the other. • It may include varied items such as materials and equipment, temporary utilities, storage area, water and sanitation facilities and survey controls.

  20. CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Development Of Bidders List • Construction Program success depends on Utilizing of reputable skilled and financially sound contractors. So prequalification is the best way to achieve this objective. • Prequalification methods are vary but they should include evidence for Capability and Financial strength to handle the project. • Best way to have fair price and performance by competitive bids from reasonable number of prescreened and pre-qualified bidders.

  21. <6 >8 6-8 bidders CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Development Of Bidders List Increased Low Competition Prices

  22. CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Development Of Bidders List • Example: • Sample • Bid • Tabulation Award

  23. CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Fair-Cost Estimates • Shows a fair price of the work • Gave a Chance for the CM to spot inconsistencies or conflict in Tender documents, and to issue addendum before bid date. • Discussion with lowest bidder in case of widespread difference between estimate and bids. • Comparison between estimated man-power and recorded actual one, for quantitative productivity measurements.

  24. CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Fair-Cost Estimates • Spotting alternative materials or methods, that enable for exploration with the lowest bidder before awarding, that can add to savings developed in the VEP. • CM on a par with the successful bidder. • Preparation of detailed schedule that enable CM to deal with successful contractor from a position of knowledge, strength and mutual respect.

  25. CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Analyses Of Bids And Value Engineering • Always reviewed jointly with the designer and a joint recommendation made to the owner

  26. CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Analyses Of Bids And Value Engineering • Guidelines for fairly evaluating volunteered alternates: • 1- When a bidder who is not low under the basic volunteers an alternate judged by the designer to be equal to the specified requirements, and thus become the new low bidder, the award will be made to that bidder. • 2- When a bidder submits an alternate that represents a sizeable monetary saving but is not equal to the specified product (to be accepted by owner) all bidders should be given an opportunity to quote on the acceptable but low-quality alternate. Award should be made to the subsequent low bidder.

  27. CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Analyses Of Bids And Value Engineering • 3- When an alternate is volunteered by a high bidder who would not be low after taking the alternate into account (being accepted by owner) the low bidder may be contacted to quote on the proposed modification. • PCM must apply fairness and good judgment to avoid any practices on unethical “bid shopping”. • Where alternates will be accepted the alike guidelines must be clearly stated in the bidding documents.

  28. Bids Evaluation Recommendation For Award Owner Approval Awarding CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Recommendation For Award • In case award recommendation to other than the lowest bidder, a full explanation to reasons should be made to the owner for his approval. • Under an invited, pre-qualified bid list, the award normally for the lowest bidder. • Opening all bids in the presence of the bidders. Others will advise the bidders with the results.

  29. CONTRACTOR QUALIFICATIONS, BIDDING AND AWARD Negotiating Contracts • Contact bidders to obtain clarification for proper evaluation. • Price changes due to revised drawings received after the bidding. • CM conducting discussions or negotiations in an ethical manner. • CM should avoid any taint of “bid shopping”

  30. APPLICATION OF CONTROLS • Controls during the bidding and award phase will include :

  31. APPLICATION OF CONTROLS Procurement Schedule Control • The initial planning schedule specified the design, review, bidding, and award periods for each construction package. • Actual progress can be monitored against the planning schedule ,so that: • Current status is immediately apparent. • Planning can be revised where required to take care of delays.

  32. APPLICATION OF CONTROLS Procurement Schedule Control … cont • Construction contracts must be awarded as required by the overall construction schedule. • This simple updated control schedule showing actual accomplishments compared with programmed accomplishments for assuring timely procurement.

  33. APPLICATION OF CONTROLS Updated Design and Procurement Schedule

  34. Construction Cost Control APPLICATION OF CONTROLS • The actual cost at completion becomes more certain when contracts for a phased construction program are awarded. • Control process is implemented by comparing actual award prices with the preliminary and with fair cost estimates. • Cumulative comparison of all awards to date will indicate the current status of the project.

  35. Construction Cost Control….cont APPLICATION OF CONTROLS • On individual contracts, any significant difference between the fair-cost estimate and the bids is cause for further investigation, through: • Review of the cost estimate. • Discussions with the low bidder. • After the “buy out” is complete, the sum of the individual contract costs becomes a committed cost to the owner.

  36. Construction Cost Control….cont APPLICATION OF CONTROLS • Due to the required changes , drawing errors and other modifications or minor omissions, a percentage about (2-5)% should be added as “contingency allowance”. • This Percentage depends on: [ nature of project, owner’s requirements, accuracy of the designer] • After this addition, the overall estimated cost at completion can be determined.

  37. Bidding & Award To General Contractor

  38. BIDDING AND AWARD TO GENERAL CONTRACTROS • Difference between general contract & PCM lies in the treatment of the specialty or trade contractors. • The specifications are prepared in accordance with the Master-Format published by the “Construction Specification Institute”, where the practice is widespread and understood by G.C & S.C. • The G.C determine which portion of work will be executed by its own workforce like concrete works,...

  39. BIDDING AND AWARD TO GENERAL CONTRACTROS • The G.C prepares a detailed estimate for the work . • He advertises in trade publications and/or contacts a number of other specialty contractors individually to advise that he is interested in receiving sub-bids for a particular project. • Potential subcontractors can review the plans and specifications and even make takeoffs on smaller projects at the “builders' exchanges” or in similar places.

  40. BIDDING AND AWARD TO GENERAL CONTRACTROS • The successful G.C.s will try to agree in advance regarding the scope of individual subcontractors and will assign an approximate amount called “plug number” (project value & reviewing quotations). • Quotations for material and equipment are also solicited early in the bid period. • As bid time nears, the G.C has completed his estimate including his “own markup”, also he received preliminary prices from S.C & major equipment supplier.

  41. BIDDING AND AWARD TO GENERAL CONTRACTROS • On competitive jobs, the G. C will add a little or no markup on major equipment and subcontracts. “break even” • One of the major problem in bidding fixed price work that subcontractors lowering their price significantly in the last hour before bid time. • “Right of first refusal” between G.C & S.C , or some of G. C may use the price of one S.C to negotiate with others.

  42. BIDDING AND AWARD TO GENERAL CONTRACTROS • Some of S.C delays their best bid until just before bid time hoping that the G.C have no time to “peddle” or “bid shop”. . • Another Problems when brand X subcontractor who is unknown to the general comes in with a last minute verbal quotation significantly lower than other quotes .

  43. BIDDING AND AWARD TO GENERAL CONTRACTROS • The bids received by fax that have long lists of modifications and exclusions is also a problem. • Does the G.C accept offers from unknowns without a detailed understanding ?

  44. BIDDING AND AWARD TO GENERAL CONTRACTROS How the G.C can be successful? • The G.C formalizes the estimate in advance of bid time. • It then prepares separate tabulations of overs and unders due to the last minutes compared to its “plug number” or previous quotation.

  45. BIDDING AND AWARD TO GENERAL CONTRACTROS • How the G.C can be successful? …. cont • On unit-price bids the contractor will finalize almost all of its units except for one or two which it will leave open to take care of last minute adjustments. • Leaving lump-sum item open to be easy adding and subtracting the approximate difference quickly and with minimum chance of errors.

  46. Thank YouQuestions!

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