FACULTY OF ENGINEERING DEPARTMENT OF CIVIL ENGINEERING 2014-2015 SPRING SEMESTER

1. FACULTY OF ENGINEERINGDEPARTMENT OF CIVIL ENGINEERING2014-2015 SPRING SEMESTER CIVL 493 CONSTRUCTION MANAGEMENT ASSOC.PROF.DR. İBRAHİM YİTMEN

2. PROJECT DELIVERY SYSTEMS

3. Structure • Facility delivery process • Planning • Design • Construction • Startup and Commissioning • Operation and Maintenance

4. Structure • Market Sector Versions of Facility Delivery Process • Commercial • Industrial • Highway

5. Structure • Project delivery methods • Design-Bid-Build • Phased Construction • Design-Bid-Build-Warranty • Design-Build • Engineer-Procure-Construct • Indefinite Delivery/Indefinite Quantity

6. Structure • Commercial contract terms • Lump Sum • Cost-Plus-Fee • Unit Price • Alternate Methods for Contract Award • A+B (Time + Cost, Multiparameter) • Best Value (Price + Quality) • Bid Averaging Method • Optionally Combined Bidding

7. Structure • Examples • Financing options • Recommendations

8. Project Delivery Systems • General characteristics • Project-driven • Participants include owner, designer/arch./engineer, contractor, specialty contractors, vendors, and material suppliers

9. Parties to a Project Vendors Designer Insurance Contractor’s Insurance Owner’s Insurance Suppliers Owner Permanent Lender Architects Interim Lender Engineers PROJECT National Government Consultants Regional Government Attorneys Local Government Accountants Project Management Unions General Contractor Specialty Contractors

10. General Characteristics • Different ways to organize participants, to assign roles, responsibility, and risk  MANAGEMENT • Timing of participation • Relationships to other players • Linked to construction industry trend of shorter life cycles

11. Facility Delivery Process • Process in which ideas are transformed into useful facilities • Every construction project is completed with a Facility Delivery Process

12. Facility Delivery Process 5-15% High Planning 2-20% Design 65-93% Construction Ability to Influence Cost 0.5-5% Capital Investment Startup & Commissioning Operation & Maintenance Low Time

13. “Let me see those blueprints again”

14. Facility Delivery ProcesS • Planning • owner expresses a need for a new facility • concepts are worked out • feasibility studies are a must

15. Facility Delivery Process • Design • Where the majority of engineering takes place • Detailed plans and specifications are developed • Owner’s initial ideas are further refined • Owner gives go-ahead • Contract is bid and awarded

16. “All we do is put it on paper. It’s your job to build it.”

17. There Comes A Time in The History Of Every Project When It Becomes Necessary to Shoot the Engineers and Begin Production

18. Do you mean you want the revised revision of the original revised revision revised?

19. Facility Delivery Process • Construction • Where the physical manifestation of the design appears • Design often continues through construction • Startup and Commissioning • Verifying whether the constructed facility operates as designed

20. Facility Delivery Process • Operation and Maintenance • Owner accepts built facility • Facility continues in O&M until it is renovated or decommissioned

21. Facility Delivery Process - Commercial Building Construction

22. Facility Delivery Process - Industrial Construction

23. Facility Delivery Process - Highway Construction • Planning Phase A. Feasibility and needs assessment B. Scoping report • Design Phase A. Preliminary engineering B. Plans, specifications and estimate C. P.S. & E. review and approve • Construction Phase A.Pre-construction B. Construction C. Post construction

24. + + Cost Influence Cost of Change Time * Fixed Price Traditional SD DD CD B Construction Project Expenditures

25. Methods of Delivery • Selecting a project delivery system depends on: • Complexity of the project • Owner's resources and risk management • Past experience • Corporate policy • Value of time • Value of innovation • Owner assumes risk in selecting a project delivery system: losses occur if need is not met

26. Design-Bid-Build Contract • Also known as hard-money or competitively bid contract • Designer and contractor are usually different entities • 3 distinct phases • Cake mix analogy

27. Design-Bid-Build Contract • Design Phase • Arch./designer develops plans and specs to meet owner's needs • Engineers design building systems (structural, mechanical, electrical, etc.) • Decisions made about equipment, materials, and methods

28. Design-Bid-Build Contract • Bid Phase • Several general contractors bid on design documents • Owner receives firm price offers for work • Contract normally goes to the lowest bidder

29. Design-Bid-Build Contract • Build Phase • A fixed price contract is signed by the owner and contractor • Contractor assumes financial risk of project • Contractor wants to minimize costs and maximize profit • No incentive to increase quality beyond minimum standards

30. Advantages of Design-Bid-Build • Very familiar to industry participants • Large body of case law • Model contracts • Structures geared toward system

31. Disadvantages of Design-Bid-Build • Incentives to build cheap • Litigation: leads to cost and schedule overruns • No incentive for innovation • Owner assumes most of the risk beyond the contract

32. “He was the lowest bidder”

33. Phased (Fast-track) Construction • Form of design-build where all parties are brought in at the beginning • Stages of design and construction are overlapped • Time from conception to use is substantially reduced • A construction manager may be used to coordinate between all parties

34. Phased Construction • Design phase • Owner, designer, engineers, general contractors, and mechanical and electrical specialty contractors form a team to develop design • General contractor evaluates design's cost and time implications • This allows designer to maintain owner's goals within budget, sometimes leads to major design changes which could not be made later

35. Phased Construction • Construction phase • Project is being designed, bid, and built in stages • Excavation, foundations, and structure are bid and started before design work is finished • Mechanical and electrical are bid and built while finding and partition work are still being designed

36. Phased Construction • A construction manager (CM) can coordinate between parties in this arrangement • A pure construction manager will not guarantee a budget or schedule nor will they perform any work on site • A construction manager at risk will guarantee and perform work that is critical to control cost and schedule

37. *Fixed Price Project Delivery Systems + + Cost Influence Cost of Change Time * Fixed Price Traditional SD DD CD B Construction Construction Management (Phased Construction) SD DD CD B Construction CD B Construction CD B Construction CD B Construction

38. Design-Bid-Build-Warranty: Definition • Warranty:A guarantee of the integrity of a product and of the maker’s responsibility for the repair or replacement of deficiencies. A warranty is an absolute liability on the part of the Warrantor, and the contract is void unless it is strictly and literally performed. It usually is applied to manufactured products and their qualities, although it could apply to design and construction.Donn Hancher - NCHRP Synthesis of Highway Practice 195 - “Use of Warranties in Road Construction”

39. Distribution of the Completed Warranty Projects

40. Typical Warranty Specification • Product • Length of Warranty • Award of Contract • Bonds • Maintenance • Conflict Resolution Team

41. Typical Warranty Specification • Contractor Rights & Responsibilities • Owner Rights & Responsibilities • Performance Indicators • Requirements for Corrective Action • Basis of Payment

42. Design-build Contract • Designer and contractor can be separate entities or same organization • Top 100 Design-build firms generated $36.0B in 1995- up from $32.2B generated by the ENR Top 400 in 1994 • ENR estimates Design-build firms shares 31-32% of the non-residential market in 1997