Ch 10: Getting a Contract

Question 1

Getting a contract:

1. Define the scope of the Project (4 parts)

Answer 1

Goals
Deliverables
Timelines
Budgets

Question 2

Getting a contract:

2. Choosing ways to complete project
Factors:
Cost and efficiency, nature of owner, duties of the decision maker

Answer 2

1. Designer &; Contractor
2. Method of delivery
3. Method of Payment

Question 3

Contract Awarding:

Answer 3

• Sole Sourcing - use a known contractor
• Tendering / RFP - Project parameters clearly known
• Specify then request for bid to Design/Build

Question 4

Tendering steps

Answer 4

Spec parameters
Tender
Receive bids
Open Bids
Evaluate
Award Contract

Question 5

Contract Payment types

Answer 5

Fixed Cost: set amount to work with

Cost Plus: (lowest cost of labour/work + a % of overall project cost)

Public-Private Partnership:
Public provides land
Private builds and operates the facility

Question 6

Obligation to operate in Fairness and Good Faith?

Answer 6

No real obligation

Question 7

Tendering: Contract Formation

Answer 7

Call for tenders contract (Contract A)

Acceptance of the bid by the owner (Contract B)

Question 8

Tender is the offer

Answer 8

Submission is the acceptance by the contractor

**Buyers are not required to accept non-compliant bids

Question 9

Delivery of a Project:

Name 5 stages

Answer 9

• Conceptualize

• Design
• Finance
• Construct
• Inspect

• Put into service

Question 10

Transfer of Risk and Obligation

Answer 10

A key aspect of contract negotiation is distributing risks ($$ increases) and obligations between the parties
`
• Risks can be assigned to a party, shared between the parties, or transferred to a third party
• costs are minimized when risks are optimally distributed

Question 11

Procurement Process types

Name 5

Answer 11

• Request for Qualifications:
Select a service provider based on qualifications rather than on the price quoted for the particular project
• Invitation to tender:
Call for bids from numerous sellers. Used when a low price is required and design is complete before call for bids is made. Generally precludes negotiation
• Request for quotation:
Informal; allows negotiation
• Request for standing offers:
Prearranged contract for frequently ordered goods or services to be provided if and when needed
• Request for proposals: Owner defines the problem and sellers propose solutions; seller chosen based on price and quality of solution; more formal than a request for qualifications; buyer negotiates with the chosen seller
• Letter of interest or pre-qualification:
Screening process through which sellers submit qualifications; limits the number of participants to tender or submit proposals
• Hybrid methods:
Buyers can combine different delivery systems to suit their needs, e.g., allowing for negotiation as part of the tender process

Question 12

Fairness and Good Faith

Answer 12

Generally no obligation of fairness in pre- contractual negotiations

Question 13

Openness and Transparency

Answer 13

There is no legal requirement to reveal the reasons and results of the procurement process. However, public buyers usually reveal the results publicly

Question 14

Fairness and Transparency
Buyers, especially public buyers, may employ various mechanisms to maximize fairness and transparency:
Name 3:

Answer 14

• Fairness monitor: person or firm ensures that the process run fairly, openly, and transparently
•  Professional evaluators: members of the evaluation society, which is a society that promotes understanding and fairness in procurement
•  Fairness commissioner: assists in resolving complaints in a fair and transparent way
•  Appeal or contestability procedures: provides an alternative to litigation for resolving disputes

Question 15

Tendering: Contract Formation

Answer 15

Call for tenders = an offer to enter into a “Contract A,” – the Bidding Contract. Bidder accepts this offer by submitting bid.

Question 16

Stages of the Bidding Process

Answer 16

• preparation of documents
•  invitation extended by owner – the tender 
• pricing by sellers
•  Submission (bid deposit may be required) 
• evaluation by owner
• award contract

Question 17

Bid Shopping

Answer 17

Bid shopping is using the price of one party to negotiate a lower price from another party

 Although improper, bid shopping is not illegal

Question 18

Bidding Mistakes

Answer 18

A mistake may make a bid incapable of acceptance, but it must be:
• obvious
• material

Errors in judgment are not mistakes

Question 19

Bid Depositories

Answer 19

• Designed to prevent bid shopping
•  Allows trade contractors to submit sealed bids to contractors they are prepared to work with, and contractors to take the bids from the subcontractors they are prepared to work with

Question 20

Project Delivery:

Name 3 types

Answer 20

Design-Build:

Design-Build-Operate:

Design-Build-Operate-Finance:

Construction Management:

Question 21

Project Delivery: Design-Build:

Answer 21

The buyer conceptualizes the project and then hires a single party to design and build it the buyer pays for the project and puts it into service

Question 22

Project Delivery: Design-Build-Operate

Answer 22

the design- builder also operates the project for a specified period

Question 23

Project Delivery: Design-Build-Operate-Finance:

Answer 23

the contractor is required to invest in the project which increases the contractor’s risk

Question 24

Construction Management

Answer 24

The owner contracts directly with the trades instead of

hiring a main contractor

Question 25

International and Interprovincial Trade Agreements

Answer 25

Set rules for the transfer of goods and services
May influence procurement and dispute resolution
processes.

Ex: NAFTA (1994) , WTO (1995) , AIT (1995)