Section 4 Flashcards
Tendering/Contracting
What is the role of Government in Construction Law?
Regulations, Ordinances, and Bylaws
What is the role of Courts in Construction Law?
Charged with interpreting statues, regulations, and local ordinances.
What are the key ingredient (features) of a legally binding contract? Explain each.
Offer: Proposal from one party to another.
Acceptance: Undeniable agreement to an offer.
Consideration: Something of value given or promised by each party.
Capacity: legally having the ability to enter into a contract.
Rightful Purpose: contract for legally acceptable purpose.
What are the types of damages?
Direct: cost of repair
Consequential: Damages indirectly as a result.
Liquidated: parties agree prior the cost if rhere is a contract breach.
Punitive
What types of Dispute Resolution are there?
Courts Litigation Arbitration Mediation Negotiation
Draw the Tendering diagram
Offer: Call for Tender
Acceptance:Submission of Tenders, Contract A & Bid Bond
Award of Contract, Termination of Contract A, Contract B & Performance Bond.
Completion of Contract.
What is Bidder Pre-qualification?
To assess the capacity of potential tenderers to perform the requirements of a forthcoming contract and is carried out before the commencement of negotiations or bidding process.
What is an Alternate?
A request for a price for substituting one material for another, or adding or subtracting from the scope of the project.
What is an Addenda?
A change in the documents made during the bidding phase, before contract acceptance.
Design documents can be released prior to completion and the Addenda completes them.
What is in the Invitation to Bid?
Project Description Location Bid due date Start and completion dates Bonding requirements legal requirements
What are the key steps during bidding procedures?
Offer to Tender by Owner (Tender Call) Amendments to Tender Call (Addenda) Pre-Tender Meeting with Contractors Receipt and Opening of Tenders Tender Review Contractor's Evaluation Contract Awarded
What do you do if lowest tender is ‘too low’?
Review your estimate/budget Compare to other bids Request bidder to review his bid If he insists its right then; get it in writing, warn him, consider taking next best, consult legal Bidder cannot raise price.
What do you do if the lowest bid is ‘too high’?
First; Review bidder’s estimate
Second; Negotiate on minor changes in scope
Third; Invite 3 lowest bidders to re submit
Fourth; Re-invite all bidders, when changes to scope are substantial.
Fifth; Recall the public tender
What is a BOOT Contract?
Build Own Operate Transfer
What is a Turnkey Contract?
The project is completed and necessary operators trained by Contractor so that the product is ready for use upon contract completion.
What is a Bond?
An agreement between 3 parties: The Principal (Contractor) The Surety (Bonding Company) The Obligee (Owner) The Surety becomes liable to the Obligee if the Principal defaults. The Surety guarantees the Obligee payment of losses up to the Bond value.
What are the main types of Bonds?
Bid Bonds
Performance Bonds
Labour and Material Payment Bonds
What is a Bid Bond?
Guarantees the selected contractor will enter into a contract with the owner for the bid price.
It is security required to submit with tender.
What is a Performance Bond?
Guarantees the contractor will perform the work in accordance with the terms of the agreement.
If the contractor cannot complete then the Surety will.
What is a Payment Bond?
Guarantees the contractor will pay all the bills
Before a claim can be made on a performance bond…
The Principal must be in default under the contract.
The Principal must be declared to be in default under the contract by the Obligee.
The Obligee must have performed its obligations under the contract.
How can the Surety complete the contract?
Complete the contract its self
Obtain bids from other contractors to submit to the Obligee for completing the work.
What is a Labour and Material Bond?
Required on Gov. contracts
The Principal will pay all claimants defined in the bond for labour and materials used in the performance of the bonded contract.
What is the Bid Bond limits?
5% or 10% of the tender price
What is the Performance Bond limits?
50% or 100% of the contract price
What is the L&M Bond limits?
50% or 100% of the contract price
What are some examples of property exposure?
Fire
Windstorm, hail, flood, earthquake
Theft, vandalism, malicious damages
Transportation accident
What are some Project Insurances?
Builder's Risk Insurance (construction insurance) Installation Floater (covers subcontractor's work)
What does Builder’s Risk Insurance cover?
Fire Lightning Explosion Vandalism Smoke Theft Collapse
What does Builder’s Risk Insurance generally NOT cover?
Cost of bad workmanship, faulty material Mech. or Elec. breakdown Dishonesty of employees wear and tear freezing
What is an Installation Floater?
Covers subcontractors
Issued annually and covers all projects that year.
What are the Owner’s Contractual Obligations?
Make site available Owner-supplied materials Design Responsibly Timely approvals not to interfere with method of execution issue change orders
What are the Engineer’s contractual obligations?
prepare design specs and drawings
prepare bid documents
assist in procurements
oversee execution and maybe inspection
What are the Contractor’s contractual obligations?
Build the project according to specs, time, budget
comply with laws and regulations
What are the main roles of Contracts, Drawings, and Specifications?
Define roles and responsibilities Assign risks Specify work to be done Basis for performance measurement and payment Define working relations
What should NOT be on drawings?
Who does work
specifications
references to building codes
What are the specifications for?
Defining the qualitative and quantitative requirements of the project.
Designed to compliment the drawings.
What if the drawings are inconsistent?
Find out what was the intent
Determine ‘reasonableness’ of situation
Clarify intent in writing
Which takes precedence: Specs over drawings? large scale over small scale drawings? recent over older documents? general conditions over specs?
Specs
Large scale
Recent
General conditions
