Chp2: Construction Contracting Methods

Question 1

What are the 5 Pure types of contracting methods?

Answer 1

1) General Contract (aka Design-Bid-Build)
2) Separate Contract
3) Self-performance Method
4) Design-build method
5) Professional CM Method

Question 2

1) What is a general contract?

Answer 2

• 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)

Question 3

An alternative name for general contract?

Answer 3

Design-Bid-Build (DBB)

Question 4

Explain Brokerage from the General Contract POV

Answer 4

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.

Question 5

What can the owner do to prevent brokerage?

Answer 5

Owner can place contractual limits on the amount of work that can be sub-contracted.

Question 6

Adv of General Contract

Answer 6

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

Question 7

Disadv of General Contract

Answer 7

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.

Question 8

Suitable Applications for General Contract (DBB)

Answer 8

• Public Projects (Competitive Bidding)
• Projects should have no due time constraint, design must be completed before the award
• Not suitable for complex buildings

Question 9

2) What is a Separate Contract?

Answer 9

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.

Question 10

Adv of Separate Contract?

Answer 10

• 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.

Question 11

Disadv of Separate Contract?

Answer 11

• 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.

Question 12

Suitable Applications for Separate Contract

Answer 12

• 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)

Question 13

3) What is Self Performance Method?

Answer 13

Known as force account work, no contracts are written for a construction project. Owner’s own gang of workers solely assigned to the task.

Question 14

Adv / Disadv of Self Performance Method?

Answer 14

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)

Question 15

Suitable applications for self performance method?

Answer 15

• Work that requires a fixed amounts of labour
• Work that are simple, not complex
• Work that is under emergency (FAST)

Question 16

4) What is Design-Build Method?

Answer 16

Owner lets a single contract for both design and construction team for the same project.

Question 17

Adv of Design-Build Method?

Answer 17

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

Question 18

Disadv of Design-Build Method?

Answer 18

1) More expensive ad DB contractor takes more risk

2) Guaranteed maximum price (GMP) needs to be established

Question 19

Suitable applications for Design-Build Method?

Answer 19

1) Proj that needs a fast delivery

2) Large industrial-type projects (plants)

Question 20

5) What is Professional CM Method?

Answer 20

A professional CM firm will be hired by owner prior to any substantial design work and construction work.

Question 21

Adv of Professional CM Method?

Answer 21

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

Question 22

Suitable Applications for Professional CM Method?

Answer 22

1) Large or complex Projects where Construction expertise is needed early in design phase
2) Owner has full confidence in CM capabilities