Lecture 5: Construction Management Flashcards
Means by which a person or persons can
let someone else do something for
them. These agreements are similar to contracts.Consists of a principal being represented by an agent in business dealings with a third party.
Agency
A ________ is an agent of the
Owner.
The ____ is hired and paid by the Owner to represent the latter in matters of contract
administration.
Construction manager
- Projects exceeding budget (Cost overruns)
- Projects consistently fell behind schedule (Delays)
- Construction quality was not as expected
- Design efforts fell short of expectations
- Owners had limited participation
- Contracting flexibility was minimal
- Contract disputes were common and costly
- Fair value was not being produced
The need for a construction manager
This term was introduced to remind A/E’s that satisfying the Owner’s needs
in a practical and economic way is the Owner’s main priority. The balance between form, function, and
budget has to be reached.
Designability
- Late involvement of the contractor in the project does not allow for the Contactor’s input to be incorporated in design at its earlier phases.
- This term was introduced in response to the repeated observation that some designs can not be economically or safely built.
- It describes the level of cost-related features designed in the project.
- It requires a sound knowledge of construction methods, tools and techniques
Constructability
Should be performed while design is
being developed to maximize its benefit and avoid major design changes or late and costly construction changes.
Constructability review
Is the term used for the economic
optimization of the contracting aspects of a
project.
It references contract structures, contract
documents, and general and special contract conditions.
May also be referred to as contract administration or contract management.
Contractability
- A contracting approach involving a “Construction
Manager” as an owner’s agent. - The Construction Manager (CM) may be involved as early
as the planning phase or as late as the Procurement phase
or anywhere in between.
Construction
Management
- Responsible for coordination, supervision, evaluation, overseeing the tests performed by the GC, reviewing and authorizing the interim and final payment requisitions submitted by the GC.
- Does not have labor, material, or equipment involved in construction (other than management team)
- Has no contracted responsibilities to the owner as an independent contractor or as the A/E.
- Has a service contract with the owner.
Agency Construction Manager (ACM)
- When the bidding process results in costs within the budget.
- When owner occupancy (Project completion) occurs on schedule.
- When specified quality is met.
- When no claims are brought against the owner by contractors.
Measuring ACM Performance
- Has the same main duties as the ACM, with the addition of guaranteeing a schedule (Completion date) and a budget (Completion cost).
- Is liable to the owner in case of deviation from the set goals.
- Rate of compensation much higher than ACM (To offset the risks involved)
- Is somewhere between an ACM and aGC
Construction Manager at risk (CM at Risk)
Five basic schedules
- Program schedule
- Detailed construction schedule
- Milestone schedule
- Short-term contractors activity plan (CAP)
- Completion schedule
Drives the project from start to finish
Program Schedule:
(a.k.a. Master Schedule):
Determines the time needed for construction (Prepared by
Contractor)
Detailed Construction Schedule:
Drives the project during construction
providing the start and finish dates of major milestones
Milestone Schedule:
Plans contractor’s activities to meet milestones. Usually 6 to 8
weeks period.
Short Term Contractor’s Activity Plan (CAP):
Coordinates construction completion and occupancy.
Completion Schedule:
CM keeps the positive
attributes of GC
- Firm commitment to cost, time, and quality
- Competitive bidding of prescribed scope of work.
- Accommodation of Fast Track
- Construction expertise available during design
- Continuity between design and construction
- Uses existing industry participants
- Contractors can act as CM
- A/E’s can act as CM
- Insufficient construction expertise available during design
- Insufficient contracting expertise available to the Owner
- Lack of Owner decision making involvement during
construction - No measure of bidders’ management ability prior to
contract award - Limits on Owner’s involvement in the selection of trade
contractors - Insufficient continuity between design and construction
- Adversarial relationship between Owner and Contractor
- Post bid shopping
- Inequitable risk allocation
CM eliminates GC system
Negatives
CM eliminates negatives of Design-build
- Design quality directly affects contractor’s profit
- Owner must have high level construction
expertise otherwise hires bridging consultant - No decision-making checks and balances
- Cannot be used in public sector without
modification
1. Professional party assisting in preparation of schedule and budget. 2. Complements A/E’s effort and offers a new eye for VE and Constructability issues. 3. Can consolidate the risks for construction and supervision (CM at risk)
Advantages of having a CM.
Disadvantages: 1. Extra cost to the owner 2. Unclear lines of responsibility/coordination problems with A/E.
Disadvantages of a CM.
- Method usually used for the purchase of
material/equipment. - Does not cover labor for installation.
- Becomes a valid contract only upon signing by both parties (Vendor and buyer).
- May use boiler plates or tailor-made forms
- May have flow-down language from original contract.
- May include cash discounts for immediate or short –term payment, as well as for large
quantities.
Purchase Orders
What information should purchase orders contain?
1. Construction project for which the prime construction contract is held by the buyer 2. Owner for that project 3. Architect/engineer 4. Contractor/ buyer 5. Seller/supplier 6. Complete description of material ordered 7. Price to be paid (Sales tax, customs, delivery charges, etc.) 8. Delivery conditions (Schedules, On- site, FOB, etc.) 9. Inspection provisions 10. Signatures
- One of the contractual remedies for delays
- Sometimes the damages suffered due to delays in
project completion are very hard, or impossible, to
determine at the time the contract was signed.
Liquidated damages
The owner will try to evaluate, in anticipation, the value
of such losses and determine an equitable
compensation for the resulting damages.
The ____ usually has no input into the
determination of the value of the liquidated damages.
contractor
_________ are not a penalty. Current judicial attitude toward liquidated damages is to enforce such provisions in the event of unexcused late completion by the contractor.
Liquidated damages
Defenses against Liquidated damages:
- Proving the project is substantially complete
- Excusable or compensable delays
- Concurrent delays
What does Amount of damages mean when talking about liquidated damages?
Actual damages not punitive damages
Substantiating documents when dealing with liquidated damages are?
- Schedule
- Weather reports
- Change and variation ordersEtc.
- Milestones
