Hinze Chapter 11-14 Flashcards
Balanced bid
a bid which the anticipated costs for the various items are accurately reflected in the unit prices that are submitted
Unbalancing a bid
is a method used by some contractors in which the unit prices of the various bid items are altered so they do not reflect the true cost of the item
Can an owner reject an unbalanced bid?
Can be rejected as being irregular
What are the disadvantages of a unit price contract?
Owner won’t be certain of actual cost until the project is complete. The extent of this shortcoming is directly related to the accuracy of the estimate
When is an unit price contract appropriate?
Unit price contracts are appropriate for when the project is well defined but the actual quantities are impossible to estimate with accuracy until after construction has started
Cost-Plus Contract
A contractor is reimbursed for most of the direct expenditures associated with a particular project plus an allowance for overhead and profit. Can be used with a guaranteed maximum. Savings in this case can be shared between the owner and the contractor
When is a cost-plus contract appropriate?
This contract is appropriate when the actual costs of the project are difficult to measure with accuracy. This could be due to incomplete plans, the project cannot be accurately portrayed or if a short time period. Can be useful if a lot of changes are anticipated throughout the project.
What categories of reimbursements are there in a cost-plus contractor
Contractor’s reimbursement will fall into the categories of Labour, Materials and Equipment, and subcontractor costs
Lump Sum Contract
- Most common type of contract used in the construction industry
- On most of these contracts the contractor will be made out monthly
- Value of ind. Items is ideally set out before the start of construction
Job Order Contracting (JOC)
- An ‘on call’ contractor for work relating to renovation, repair and construction projects
- Ensures quick contractor response for work that arises without notice
Cardinal Changes
Changes not within the general scope
What are the risks to a contractor who performs work required by a cardinal change
May not be able to force payment
What are the risks to the owner’s rep in authorizing a cardinal change?
Forcing the contractor to do this change would be a breach of contract
It is common for contracts to stipulate that changes in the work be authorized in writing by someone in authority. Under what conditions might a verbal change be considered valid?
If the new work initiated a new contract or in the case of emergency situations
When does the owner has an inherent or implied right to make reasonable changes to the project
Changes within the general scope of the project
How does a field change differ from a change order?
If the change has no impact on the contract’s duration or amount, it is a field change
What is the difference between additional work and extra work?
Extra work consists of work outside of the contract
Additional work consists of work that must be undertaken to meet the contract requirements, w/o this work, the work requested in the original contract will not be able to be completed
What must the change satisfy in order to be considered additional
- Should not have been anticipated
- Was not open to observation, and
- Could not be readily discovered until work under the contract was undertaken
One of two possible situations must generally exist for a differing site condition or changed contention to be valid. What are they?
1) The actual conditions differ materially or are at variance with the conditions indicated in the contract documents
2) The actual conditions are of unusual nature and differ materially or are at variance with that the contract should not have reasonably anticipated.
Constructive acceleration
not a direct order, is construed as acceleration b/c of the owner’s refusal to permit or grant time extensions for an excusable delay
Describe the implications of compensation (in terms of time extensions and money) for delays caused by the owner/owner’s agents.
When a contractor anticipates added compensation for owner-caused delays they should:
- Ensure an up-to-date progress report approved by owner
- Maintain an accurate job diary outlining the relevant facts about the delay
- Give written notice to the owner indicating that a delay has been incurred
- Request a written notification from the owner that a time extension has been granted
Describe the implications of compensation (in terms of time extensions and money) for delays caused by the contractor/contract’s agents
Delays by contractor may give the owner just cause to terminate the contract
Describe the implications of compensation (in terms of time extensions and money) for delays caused by acts of god
As a general rule, neither party can seek damages incurred
What basic exceptions in no damage for delay clauses permit the contractor to be awarded damages?
- If a delay were not contemplated at the time of contract negotiation, commonly denial of access to site
- Acts of interference, acts or omissions by the owner which actively interfere with work progress (ex. Delayed completed plans)
- Unreasonably long delays
- Fraud or bad faith
What are the implications of not having a liquidated damages provision in a contract and the contractor does not finish in the allotted time?
The owner is entitled to damages as the contractor breached the contract. This can lead to long and expensive court battles
What is the significance of substantial completion?
Substantial completion is triggered by owner occupancy. After substantial completion, the only funds left would be the ones withheld from contractor payments.
What distinguishes substantial completion from final completion as far as the construction progress is concerned
Substantial completion will still have a punch list of items to complete prior to final completion
