Construction Administration Flashcards
The general contract method
Design- bid- build/ Design - estimating - construction
Brokerage
When the general contractor subcontracts all the work on a project. It’s not beneficial to the owner.
Many owners place contractual limits on the amount of work that can be sub-contracted. Contract statement
“ The contractor shall perform with his or her own organization not less than 25 percent of the work”.
The methods of construction contracting
- General contract method
- Separate contracts method
- Self -performance method
- Design- build method
- Professional constuction management method
- CM at risk
The pros and cons of GC method
Gives the owner a firm idea of the final cost of the total project prior to construction phase. Clearly defined roles for each of the contracting parties. Minimizes the contractual liability for cost overruns and late project delivery.
Often extends the project duration. The owner doesn’t have an agent involved in the contractual arrangements. Leads to tight bids and small profit margins. Might lead to bad performance. Inflexible.
Separate contracts method
Owner as GC with multiple prime contracts.
Pros and cons of Separate contracts method
Save money,
Require in-house capabilities to manage a construction project. Or hire a management firm, but the power of this firm won’t be as great as GC. Greater risk for owner.
The profit earned by the GC is usually
Less than 3%
Self-performance method/ force account work
Owner do the construction work in-house
The pros and cons of self-performance method
Save time and money
Unfair in public works.
Self- performance is common for
The maintenance of county roads, maintenance of railroad tracks… small scope, ongoing projects.
When the contractor defaults on the contract and the owner must step in to finish the project.
Design-build/ design-construction/ turnkey
Single contract for both design and construction of a project.
Pros and Cons of design build
Higher degree of constructability; fewer changes due to design error. Possible for construction to begin before finishing design. Usually the lowest cost, 20-30% faster
The dispute can still arise between design and construction firm. Less checks and balances in the process. Less control by the owner. On public projects, there are usually restrictions on the process.
Design build method is popular in projects
Large, industrial- type projects. When project is large and technically complicated.
Professional construction management method
Owner hires a professional construction management firm (CM)
The contract for design build is generally established as
fixed fee+ cost with GMP
The pros and cons of CM
CM works for the owner’s benefit. Allow flexibility for changing the project as the design evolves. Save time.
Owner need to trust CM
The payment for the CM
Flat fee/ shared cost savings/ cost+ percentage.
Cost: service + stated multiplier to cover other items like travel expenses, training, inspections…
The CM often gives the owner a GMP
CM is usually used when
The project is large or complex when construction expertise is needed during design phase. E.g. hospitals.
CM at risk
CM as independent contractor. or CM/GC
Contract for CM at risk
Cost + fixed fee with GMP
Difference between CM at risk and GC
CM at risk enters the contract prior to design completion.
“Execute a contract”
A contract has been signed
Bilateral contract
Promises exchanged between the two parties. Most construction contracts are bilateral
Unilateral
Promise on one side in exchange for something other than promise.
Express contract
Clear, concise terms of the agreement, whether verbal or written.
Implied contract
The term established through inference and deduction.
Sometimes an express contract may be altered by an implied contract
Joint agreement
One in which the individuals are “joined” as one party in the action
“Several, separate or severed” parties
Each party has a liability that is separate from that of any of the other parties
“Joint and several” parties
Binding the individuals as a unit and also of having each individual accept separate accountability. If individuals defaulted, the suit would then be either joint or several. Often for the benefit of the “other party entering the agreement.
Basic elements of a contract
Offer and Acceptance; Meeting of the minds; Consideration; Lawful subject matter; competent parties
The offer and acceptance may be express or implied
Acceptance creates the contract
In construction contracts, the offer is
The bid submitted to the owner
Meeting of the minds
The contracting parties agree on the basic meaning and legal implications of the contract.
The accuracy of the plans is primarily the responsibility of the owner.
Consideration in contract
Something of value
Lawful subject matter
The subject must be definite and clearly defined. And the subject cannot violate any fundamental dictates of common law.
Competent parties
If one of the two contracting parties is judged to be incompetent, the contract can be nullified. (Infants, insane persons, or drunken persons)
Estoppel
Implied agreement. A contract may be created by what a party does or says, without a written document, and that party is then “ estopped” from denying that a contract exists.
The intent of the contract
The presumption of what one party wanted to have done when entering the contract
Assignment of contracts
Transfer
Sovereign immunity
The government entity cannot be sued without its consent.
Tax lien
The right of the government to retain possession of property until the tax on it has been paid
Eminent domain
The right of the federal government or a state or other public agency to take possession of private property and appropriate it for public use.
Condemnation
Eminent domain
Quasipublic firms
Private firms have occasionally ben given the power of eminent domain
Once eminent domain proceedings begin, the most viable means of stopping condemnation may be
To show that the land seizure is not for the public good.
Highway property can be obtained from private landowners by several means, including
- Outright or direct purchase
- Eminent domain
- Prescription
- Dedication
Right of way
Land used for the operation of a highway or public utility.
Easement
Grants a specific right of use to nonowners
Zoning requirements are
The master plan of a city to regulate the use of the land in each area or community
Mechanic’s lien
Workers and materials suppliers who provide improvements to real property, are permitted to place a claim on that land if they are not paid
“Notice to owner” or “notice of intent to lien”
Many states require that some official notification be provided to the owner about the work or materials that are being provided by these parties.
Public property is usually not subject to liens. Instead, subcontractor can use “stop notice”
“Stop notice”
Subcontractor to notify owner to stop paying GC.
Notice to bidders should include
- nature or type of project
- location of the project
- type of contract for construction
- bonding requirements
- dates in which to perform work
- terms of payment
- estimated construction cost
- time, manner, and place to submit bids
- location to obtain bid documents
- deposit required on bid documents
- owner’s right to reject any and all bids
- requirements regarding wage rates
