Chp2: Construction Contracting Methods Flashcards
What are the 5 Pure types of contracting methods?
1) General Contract (aka Design-Bid-Build)
2) Separate Contract
3) Self-performance Method
4) Design-build method
5) Professional CM Method
1) What is a general contract?
- Contract drawn up between Owner and General Contractor
- Owner responsible for drawing up contract documents
- Architect is usually the owner’s representative
- Owner enters 2 separate contracts (Designer and Constructor respectively)
An alternative name for general contract?
Design-Bid-Build (DBB)
Explain Brokerage from the General Contract POV
An extreme situation is when the general contractor subcontracts all the work on a project. It is not beneficial to the owner, GC service bought at a low price but payment throughout is High.
What can the owner do to prevent brokerage?
Owner can place contractual limits on the amount of work that can be sub-contracted.
Adv of General Contract
Adv:
- General Contractor has unique skills that can reduce costs of construction to owner
- Roles for contracting party all clearly defined
- Minimize the contractural liability for cost overruns
- Minimize the risk of late delivery
Disadv of General Contract
Dis:
- Due to the Bidding phase, there is a long porject duration overall
- Owner does not have a ‘middle-man’ involved in the contractural arrangements
- Creates adversarial r/s between parties, exposing the owner to a greater probability of claims from contractor.
Suitable Applications for General Contract (DBB)
- Public Projects (Competitive Bidding)
- Projects should have no due time constraint, design must be completed before the award
- Not suitable for complex buildings
2) What is a Separate Contract?
An arrangement where the owner contracts the sub-contractor directly without a general contractor. However, the owner must take charge of project management and assume the general contractor’s role.
Adv of Separate Contract?
- Profit that would have been earned by a general contractor, now is kept by the owner.
- If the owner does not have the ability to take charge of the project management role, the owner can create another separate contract with a firm to take charge.
Disadv of Separate Contract?
- Complex contractural r/s, as owner has high pressure to manage various contracts simultaneously
- Difficulty in investment control, final price can’t be determined at early stage.
Suitable Applications for Separate Contract
- Availability of in-house personnel to coordinate amongst the sub-con’s work
- Work done by sub-cons has to be indpt (Eg. diff segment of tunnel line)
3) What is Self Performance Method?
Known as force account work, no contracts are written for a construction project. Owner’s own gang of workers solely assigned to the task.
Adv / Disadv of Self Performance Method?
Prerequisite: Owner should have the in-house construction capacities, such as building permits, equipment, and labor.
Adv: Save much time and money (No bid plus salary is all yours)
Disadv: Lack of competitivness (bad for public proj)
Suitable applications for self performance method?
- Work that requires a fixed amounts of labour
- Work that are simple, not complex
- Work that is under emergency (FAST)
4) What is Design-Build Method?
Owner lets a single contract for both design and construction team for the same project.
Adv of Design-Build Method?
1) Constructability: DB contractor can apply his constructing experiemce during the design phase
2) Fast-tracking: Overlap of design and construction, no need to have a bid for extensive design.
3) Low-Risk: Less contractural involvement
Disadv of Design-Build Method?
1) More expensive ad DB contractor takes more risk
2) Guaranteed maximum price (GMP) needs to be established
Suitable applications for Design-Build Method?
1) Proj that needs a fast delivery
2) Large industrial-type projects (plants)
5) What is Professional CM Method?
A professional CM firm will be hired by owner prior to any substantial design work and construction work.
Adv of Professional CM Method?
1) Owner has an ally to oversee construction process
2) CM able to monitor design with their knowledge
3) Final design will have increased constructability at a reduced expense
Suitable Applications for Professional CM Method?
1) Large or complex Projects where Construction expertise is needed early in design phase
2) Owner has full confidence in CM capabilities
