1. Bidding & Negotiations Flashcards
What does CCDC stand for?
Canadian Construction Documents Committee
List the contract form & type of const. delivery for each:
CCDC 2
CCDC 3a
CCDC 3b
CCDC 4
CCDC 5
DOC 14
- CCDC 2
Stipulated Price Contract
Design-Bid-Build
- CCDC 3a
Cost Plus Contract (% or fixed fee)
Design-Bid-Build
- CCDC 3b
Cost Plus Contract (guaranteed max. price)
Time & Materials
- CCDC 4
Unit Price Contract
Max Upset Price
- CCDC 5
Canadian Standard CM Contract Form btwn Owner CM
Construction Management
- DOC 14
Design-Build Stipulated Price Contract
Design-Build
List the 4 main types of project delivery:
Design-Bid-Build
Construction Management
Design-Build
Public Private Partnership (p3)
The purpose of prequalification of bidders is …
…to select only those contractors who meet certain standards of reliabilty, experience, financial stability, and performance
List the advantages of a design-bid-build project: (5)
- Common/familiar
- Clear roles
- Transparent
- Design resolution prior to constr.
- Direct professional relationship w O & A
List the disadvantages of a design-bid-build project (4):
- No constr. input during design
- O see more ‘extras’
- GC unknown during design
- Contracts (Public - go to low bid)
What types of projects are best suited for a cost plus delivery method? (3)
- Fast projects (can start before design complete)
- High quality needed
- Unknowns
Use CCDC 3
What risks are associated with Cost Plus project delivery? (3)
- No incentive to avoid cost overrun
- project cost is unknown
- Not allowed for public proj.
What are 3 common ways to calculate the GC fee for Cost Plus projects?
- Agreed upon fixed sum
- % of cost of work
- % of cost of work to max upset
Why would an Owner add a CM to the team? To oversee (3)
to oversee:
- schedule
- cost
- construction method
What are the 3 possible roles for a CM and their corresponding contract forms?
- CM as Advisor - CCDC 5a
- O contracts each of the 3 parties separately (CM, Architect, Contractor)
- higher administrative costs
- can confuse roles & responsibilities
- CM as Agent - CCDC 5b
- O contract w CM who directly engages Prime and GC on behalf of O
- construction risk not known until end
- risk flows to owner
- CM as Constructor
- hired prior to completion of design
- shifts all risk to GC
- typ. more expensive
What project delivery method often takes the name ‘Project Management’?
CM as Agent (representing Owner)
What are the pros(2) and cons(2) of Project Management project delivery?
+ Well informed O better able to choose based on quality vs. cost.
+ Better quality design when architect can draw on PM experience
- not permitted by most provinces??
- unless arch has direct link w O, PM can implement cost savings changes that lower quality
What are the 2 phases of a Design-Build project delivery method.
- Phase 1 - Design Builder (DB) provides design within budget (may be in competition with other DBs)
- Phase 2 - Stip-Price Contract (may include a cost plus fee agreement, savings accrue to owner)
What does the organizational structure of Design-Build project w Bridging look like?
Who should seriously consider using a ‘bridging’ or ‘advocate’ architect on a design-build project?
Less sophisticated Owners, who do not have in-house architectural, engineering or
project management expertise
What are the advantages of a design-build project delivery method? (3)
- Single point of responsibility
- Faster than traditional method
- In DB competition, GC more motivated to provide cost savings /value
What are some disadvantages of the Design-Build project delivery method?
- Cost savings could be in conflict w building quality & maintenance costs
- More complex process than CM
- The owner is disconnected from the DB Architect & Engineers
- More risk than CM
- Too difficult / costly for one-off building types
*w bridging: CM is often faster
What other project delivery method is a ‘Turnkey’ development most like?
aka Design-Build by developer
In this contract the DB entity takes on added responsibility of acquiring land, dps and financing. The O does not take financial responsibility until the project is complete.
When & why is the P3 (Public Private Partnership) project delivery method used?
USE: Very large infrastructure projects or bundles of smaller projects of the same type
WHY: Private can administer more efficiently /quickly than public
What are the advantages of a P3 project delivery method? (5)
- Efficiencies & expertise of private sector
- Life cycle costs reduced if operated by private
- Single point of responsibility
- Reduced time /const. schedule
- Design is often the deciding factor in proposal selection
What are the disadvantages of a P3 project delivery method? (5)
- transfers risk to private sector
- ‘best value’ not always acheived (more like best $$)
- lack of communication btwn O and A
- building users have less control over outcome
- professional liability insurance hard to get (particularly for small firms)
What are the absolutely essential terms that must be included in a contract?
1) the project scope
2) the project time frame
3) project fees
What are the 7 steps of bidding & tendering?
- Decide how Owner will Obtain Bids
- Preparing Bid Package
- Distribution of Bid Docs
- Addenda
- Bid Period & Bid Closing
- Analysis of Bids
- Contract Award
Prequalification of contractors is based on…
…information submitted by contractos concerning their:
- financial qualifications,
- personnel,
- experience,
- references,
- size bonding capability,
- special qualities that make them partcularly suited for the project
The two primary ways to notify proespective bidders…
1) advertising in newspapers or trade journals
2) invitation to bid
With and advertisement for bids, the following information is published in one or more newspapers… (12)
- A call for bids is being made
- Project name and location
- Owner & Architect’s name and address
- Description of the project, including building type, size, principal construction materials and systems, and other pertinent info
- Date, time, and location bids are due
- How and where bidding documents can be obtained / viewed, and deposit if required
- Security requirements
- Type and amount of bid bonds required
- Procedure for submitting bids
- Construction start & end dates
- Form of contract
- Other info, such as owner’s right to waive irregularities of bidding process or to accept bids other than lowest
What is an addendum?
- A written or graphic document issued by the architect prior to the execution of the contract that modifies or interprets the bidding documents by addition, deletion, clarification, or correction
- It is sent to all registered bidders not later than 4 - 5 days before receipt of bids to give all bidders ample opportunity to study the document and modify their proposals accordingly
When distributing bids and addenda to contractors, it is important to track what?
Who is being provided with the documents.
An addendum should be issued NO LATER than this time.
4 working days prior to bid close
What is a good rule of thumb for the length of a bid period?
- large/complex project (open bid)
- small (invited)
- 4-6 weeks
- 2 weeks
When is the ideal time/day to close a bid? (3)
- Not on a Mon, Fri, or following a holiday
- Mid-afternoon
- Best to indicate ‘before’ 2pm rather than ‘on’ or ‘at’
What is the function of a bid depository?
These are operated by local construction associations. They collect and register bids from subs/suppliers and supply them to GCs.
What is a pre-bid conference?
- Meeting with archtiect, owner, and bidders during which bidders can ask questions and the architect and owner can emphasize particularly impostant conditions of the project
- Notes of conference should be sent to all bidders, whether or not they were in attandance
After bids have been closed, a decision of awade is typically made after…
…10 days
if all the bids exceed the project budget and the Owner-Architect Agreement fixes a limit on constriction, the owner has one of four options…
1) to rebid (or renegotiate if a negotiated contract)
2) to authorize an increase in the construction cost and proceed with the project
3) to work with the architect in revising the scope of the project to reduce construction cost
4) to abandon the project
What do bidding documents include?
- Advertisement to bid
- Instruction to bidders
- Supplementary instructions to bidders (if any)
- Bid forms
- Bid security information
- Performance bond (if required)
- Labor and material payment bond (if required)
After the award of the bid, the contractor must submit what to the archtiect
- contractor’s qualification statement, unless it has already been submitted as part of the bidding process
- designation of the work to be performed with the contractor’s own forces
- names of the manufacturer’s, the products, and the supplier of the principal items proposed for the project
- the names of the persons or companies proposed to perform major portions of the work
What is Bid security?
- required to ensure that the successful bidder will enter into a contract with the owner
- certified check, cashier’s check, or bid bond
If the successful bidder does not enter into an agreement…
the bid security may be retained to compensate for the difference between the low bid and the next lowest bidder
What is a performance bind?
- Statement by a surety company that obligates the surety company to complete construction on the project should the contractor default on his or her obligations
- If contractor defaults, the surety company may hire another contractor or supply additional money to defaulting contractor to allow construction to proceed
- Cost of performance bond is paid by owner and is usually included in amount of the construction price
- It only includes completion of project, not payment of labour & materials
What is the usefulness of a bond?
It guarantees that the GC will stisfactorily perform the work outlined in the contract.
What are the 3 main types of bonds?
- Bid Bond (CCDC 220)
- Performance Bond (CCDC 221)
- Labour & Materials Bond (CCDC 222)
What is a good rule of thumb when estimating an appropriate performance bond value?
50% or 100% of contract amount
**does not cover costs of labour & material
What is announced at the bid opening?
- Bidder’s Name
- Base Bid Amount only
- Rqrd bid/security bond
What must an owner obatin in addition to a perofrmance bond?
Labor and material bonds
Advantages of alternates in bids? (2)
- Flexibility in modifying the cost of the project when the bids are in by varying the quantity / quality of the project
- Allow owner to select certain options based on firm prices rather than on preliminary estimates
Add alternates = increase base bid
Deduct alternates = reduce base bid
What are unit prices?
- Set costs for certain portions of work based on individual quantities
- They are listed on the bid form and provide a basis for determining changes to the contract
Example: a square foot costs for asphalt paving may be requested if the full extent of paving is unknown when bids are received
What type of bidding is required for government funded projects?
Public bidding
Which of the following project delivery methods always requires preparation of several individual bid-document packages?
Fast track
In developing a list of bidders for a private project, the architect’s role is to
Recommened qualified contractors
After considering all bids, the owner favors a bid with irregularities. The owner:
a) has the right to waive irregularities and accept the bid
b) has the right to extend the bidding period for corrections
c) must informally request corrections from the bidder
d) must only consider bids without irregularities
a) has the right to waive irregularities and accept the bid
. Which of the following is an appropriate agenda item for the prebid conference?
a) Occupancy-permit procedures
b) Notification of future addenda
c) Pre-commissioning procedures
d) Status of change orders
b) Notification of future addenda
Architect estimates of construction costs based on final documents should consider which of the following?
a) Known change order sums
b) The bidding climate
c) The amount of monthly certificate of payment
d) The amount of retainage
b) The bidding climate
A preconstruction conference is generally held in order to
a) review bonds and affidavits
b) determine whether a performance bond and a payment bond are required
c) discuss changes to completed work
d) clarify responsibilities and operating procedures
d) clarify responsibilities and operating procedures
Which of the following are considered security for a project? Check the two that apply.
A. Bid Bond
B. Payment Bond
C. Completion Bond
D. Performance Bond
E. Certified check
A. Bid Bond
E. Certified check
Which of the following methods of contractor compensation would an owner be more likely to choose when the construction time is limited and the design criteria or construction cost is secondary to meeting the deadline for completion?
o Cost-plus-fee
o Cost-plus-fee with a guaranteed maximum price
o Stipulated sum
o Unit price
Cost-plus-fee
Addenda are issued :
a. prior to receipt of bids
b. after receipt of bids but before work commences
c. after the award of the contract
d. during construction
a. prior to receipt of bids
- may be issued in response to errors discovered in the building documents, changes the client wants to make, questions from bidders, or additiona or deletions needed
- sent to all bidders at least 4 days prior to the bid date
- usually asks bidders to acknowledge receipt of addenda
an architect’s signature on a certificate of payment indicates that the architect has:
a. inspected and accepted the work performed
b. reviewed the invoices submitted to the contractor by subcontractors
c. verified that the contractor is entitled to payment for work performed to date
d. received payment for work performed to date
c. verified that the contractor is entitled to payment for work performed to date
- Receiving an application for payment from the contractor, the architect has 7 days to review the work performed and determine whether the level of quality of the work matches that defined by the contract documents
- If both attribtues are present, the archtiect will issue a Certificate of payment to the Owner for the amount requested by the Contractor
- Architect has the option of rejecting the application or cerifying a lesser amount
- Does not mean the architect has inspected the work
According to Instructions to Bidders, bids must be submitted on:
a. standard bid forms
b. the contractors standard bid form
c. forms provided with the bidding documents
d. forms provided by the owner
c. forms provided with the bidding documents
Forms may be tailored to the project including a listing of alternates and unit prices, and by asking for acknowledgement of any addenda issued during the bid phase
During the bidding, a contractor wants to propose a substitution of a material specified in the contract documents. The request for substitution must be received by the architect ___ days prior to the receipt of bids
10 days
- No subs can be considered unless a written request for such approval has been received by the architect on time
- If subs are approved, architect must issue an addendum for the sub approval no later than 4 days prior to the date of receipt of bids.
Bid documents for an elementary school indicate an area of exterior concrete paving with an indtermediate limit because the owner has not made a final decision concerning the amount of paved area required. In order to fairly compare bid prices for the paving, the architect may request on the bid form that the contractors include
a. individual quotes
b. unit prices
c. fixed prices
d. contingencies
b. unit prices
Price based on cost per unit of measurement
Which of the following would be used to formally incorporate a substitution into the work prior to award of the contract?
a. change order
b. addendum
c. alternate listing
d. construction change directive
b. addendum
which of the following may be part of the bidding documents
a. specs
b. invitation to bid
c. list of approved subcontractors
d. owner-contractor agreement
e. performance bond
ABCDE
All items listed can be included
What is an open bidding?
- Anyone can bid, regardless of experience
- Encourages a variety of contractors to participate
- Can be difficult to evaluate qualified bidders
- Cost and complexity of advertising and administering the bidding process may increase
What is a performance bond?
a. ensures that subcontractors complete their work
b. guarantees that the contractor will finish on time
c. covers any possible liens that may be filed on the building
d. protects the owner having a third party responsible for completing the work if the contractor does not
d. protects the owner having a third party responsible for completing the work if the contractor does not
which of the following variable has the greatest impact on a bid?
a. the contractor’s profit margin
b. the influences of the construction marketplace
c. labor and materials
d. subcontractor bids
c. labor and materials
Represent about 80% of cost, influence the amount of subcontractor bids
Procedures a bidder must follow to propose a substitution will be found in the…
…instructions to bidders
If it is in the architect’s services to perform an analysis of bids, what 8 aspect of the bid should be compared?
- COMPLETENESS inclusion of all addenda
- BID AMOUNT
- PROPOSED CONST. START/END
- SUB-CONTRACTORS LISTED inc. follow up of references
- MANUFACTURERS / SUPPLIERS inc. follow up of references
- ALTERNATIVES
- UNIT PRICES
If the architect has prepared an analysis of the bids for the client what 3 letters/notifications should follow the analysis?
- Letter to Client reporting on bids
- List price of each compliant bid
- Describe recommended bid: const. time, bid $ + alternates
- Letter of Acceptance (***not letter of intent = bad practice)
- to successful GC
- allows GC to start work ASAP while contract drafted
-
Notification to unsuccessful bidders
* must be done promptly so they can arrange bonds and bid on other work