University of the Cordilleras

College of Teacher Education

Elementary Education Department
1st Trimester, 2020 - 2021

CE 423 – CONSTRUCTION METHODS AND PROJECT MANAGEMENT

CONSTRUCTION CONTRACT
A typical Construction Contract is a document/s that includes an Agreement,
General Conditions, Drawings, Specifications, and other documents that includes:
•Agreement is used to describe the agreement signed by the Owner and the
Contractor, excluding the Contract Documents.
•Contract Documents are attached to the Agreement identified therein as Contract
Documents, including all additions, deletions and modifications which generally include
the following: Special Provisions or Conditions; General Conditions; Specifications;
Drawings; and other Bid Documents.
Types of Contracts (Private contracts)
1. Lump Sum or Fixed Price Contract Type: This type of contract involves a total
fixed priced for all construction-related activities. Lump sum contracts can
include incentives or benefits for early termination, or can also have penalties,
called liquidated damages, for a late termination. Lump Sum contracts are
preferred when a clear scope and a defined schedule has been reviewed and
agreed upon.
This contract shall be used when the risk needs to be transferred to the
builder and the owner wants to avoid change orders for unspecified work.
However, a contractor must also include some percentage cost associated with
carrying that risk. These costs will be hidden in the fixed price. On a lump sum
contract, it is harder to get credit back for work not completed, so consider that
when analyzing your options.
2. Cost Plus Contracts: This type of contract involves payment of the actual costs,
purchases or other expenses generated directly from the construction activity.
Cost Plus contracts must contain specific information about a certain pre-
negotiated amount (some percentage of the material and labor cost) covering
contractor’s overhead and profit. Costs must be detailed and should be
classified as direct or indirect costs. Be aware that cost-plus contracts are difficult
or harder to track and more supervision will be needed, normally do not put a lot
of risk in the contractor.

3. Time and Material Contracts When Scope is Not Clear: Time and material
contracts are usually preferred if the project scope is not clear, or has not been
defined. The owner and the contractor must establish an agreed hourly or daily
rate, including additional expenses that could arise in the construction process.
 The costs must be classified as direct, indirect, markup, and overhead and
should be included in the contract. Sometimes the owner might want to establish
a cap or specific project duration to the contractor that must be met, in order to
have the owner’s risk minimized. These contracts are useful for small scopes or
when you can make a realistic guess on how long it will take to complete the
scope.

4. UNIT PRICING CONTRACTS: Unit pricing contracts is probably another type of

contract commonly used by builders and in federal agencies. Unit prices can
also be set during the bidding process as the owner requests specific quantities
and pricing for a pre-determined amount of unitized items.

By providing unit prices, the owner can easily verify that he's being
charged with un-inflated prices for goods or services being acquired. Unit price
can easily be adjusted up and/or down during scope changes, making it easier
for the owner and the builder to reach into agreements during change orders.
Factors that influence Contracts Selection:
1. Complexity of the design
 Low Complexity... Fixed Price
 High Complexity ... Cost Reimbursable
2. Risk Assumed by the Contractor
 Low Risk ... Fixed Price
 High Risk ... Cost Reimbursable
3. Period of Contract : Contract period or duration can also be one of the factors is
selecting the suitable type of contract for a particular project. Some
consideration can be the following;
 Rate Changes
 Overhead Changes
 Technical Changes
4. Competition: Many bidders may change a cost reimbursable contract to a fixed
price. This is generally more desirable from the customer’s point of view.

SPECIFICATIONS
Specifications are the written or printed description of the work to be done
describing qualities of the material to be used, the equipment to be installed and the
mode of construction, these includes:
•Drawings are graphical presentations of the Work, including supplementary details
and shop drawings.
•General Conditions of Contract pertain to the roles, rights and obligations of the
contracting parties, and the rules and procedures by which the parties and everyone
concerned will be able to meet their obligations and perform the Works covered under
the Contract.
***CIAP Document 102 (please read using the link:
https://ciap.dti.gov.ph/sites/default/files/CIAP%20Document%20102.pdf): or the
“Uniform General Conditions of Contract for Private Construction” contains terms and
conditions ordinarily established in construction contracts. It is intended for use in
contracts for private construction in the Philippines.
• CIAP Document 102 was formulated to provide the procedures, guidelines, and
criteria to be used by parties in a construction Contract, or reference to the Contract to
address deficiencies and/or any ambiguity.
• The CIAP Document 102 will contribute to the enhancement of fair contractual
relationships in the construction industry.
Conditions for the release of payment to the Contractor:
•Art. 22.01(of CIAP) provides that the Contractor shall submit to the Owner the
breakdown of Work and Corresponding Value of the Contract Amount showing the
value assigned to each part of the Work.
What is Progress Payment?
 The Contractor may submit periodically but not more than once each month a
Request for Payment for work done.
 Each request for progress payment shall be computed from the work completed
on all items listed in the Breakdown of Work and Corresponding Value, less a
retention of 10% of the progress payment to the Contractor.
What is Retention Money?
 Progress payments are subject to retention of ten percent (10% or as agreed
upon). The purpose of retention is to cover uncorrected discovered defects and
third party liabilities.
What are the documents to be submitted by the Contractor to the Owner before final
payment?
1. Certificate of Final Building Occupancy;
2. Certificate of Final Inspection of electrical, telephone, sanitary, mechanical, water,
gas, safety and other utilities;
3. Original and three (3) sets of prints of “As-Built Drawings” of electrical, sanitary, gas,
telephone, and mechanical works;
4. Three (3) copies of Directory of Panel Boards and list of circuits;
5. Three (3) copies of Instructions and Manual for operating and maintaining of fixtures
and equipment;
6. Three (3) copies of Keying Schedule; and
7. Release of liens arising under the Contract (Sworn Statement or Indemnity Bond).
ESTIMATING CONSTRUCTION COSTS
The two most important requisites for success in the construction business are efficient
management of work in progress and correct estimating .Costs cannot be forecast
exactly .But the contractor who can approach most nearly an accurate forecast of
cost will bid intelligently a high percentage of the time and will be most successful over
a period of years.
Construction estimates are prepared to determine the probable cost of construction a
project . Such estimates are almost universally prepared by contractor prior to
submitting bids or entering into contracts for important project. To be of value an
estimate must be based on a detailed mental picture of the necessary to plan a job
and picture just how it is going to be done. Accordingly , it is wise to have the general
construction superintendent or project manager who will be in charge of the job take
part in the preparation of the job estimate.
STEP IN PREPARATION OF AN ESTIMATE
1.Examine the contract document for completeness of plans and specifications , and
for the probable accuracy that an estimate will yield from the information being
furnished.
2.Prepare a tentative progress schedule
3.Prepare a top sheet based on an examination of the specifications table of contents.
If there are no specifications , then the contractor should use as a guide top sheets
(summary sheets showing each trade ) from previous estimates for jobs of a similar
nature or checklists.
4.Decide on which trade subcontractor bids will be obtained , and calculate prices on
work of those trades where the work will be done by the contractor’s own forces. Then
prepare a detailed estimate of labor and material of those trades.
5.Use unit prices arrived at from the contractor’s own past records, from estimates
made by the members of the contractor’s organization, or various reference books that
list typical unit prices. It is advantageous to maintain a computerized database of unit
prices derived from previously completed work. The data can be updates with new
wage and materials cost , depending on the software used, so that prices can be
adjusted almost nearly automatically.
6.Carefully examine the general conditions of the contract and visit the site , so as to
have a full knowledge of all the possible hidden costs, such as special insurance
requirements, portions of site not yet available, and complicated logistics.
7.Receive and record prices for materials and subcontracts. Compute the total
process.
8.Review the estimate and carefully note exclusions and exceptions in each
subcontract bid and in materials quotations . Fill in with allowances or budgets those
items or trades for which no prices are available.
9.Decide on the markup , weighing factors such as the amount of extras that may be
expected , the reputation of the owner , the need for work on the part of the
contractor , and the contractor’s overhead.
10.Submit the estimate to the owner in the form requested by the owner. It should be
filled in completely , without any qualifying language or exceptions and submitted at
the time and place specified in the invitation to bid.

CONSTITUENTS OF COST ESTIMATE

Direct Cost are the labor , materials and equipment cost of project constructions.
Contingency Cost are those that should be added to the costs initially calculated to
take into account events , such as rain or storm , or probable increase in the cost of
materials or labor if the job duration is lengthly.
Margin ( sometimes called markup ) has three components : indirect , or distributable ,
costs ; companywide , or general and administrative , costs ; and profit.
Indirect Cost are project specific costs that are not associated with a specific physical
item. They include such items as cost of project management , payroll preparations ,
receiving , accounts payable , waste disposal , and building permits.
Companywide Cost include the following (1) cost that are incurred during the course
of a project but are not project related ; (2) cost that are incurred before or after a
project.

TYPES OF ESTIMATE
Feasibility Estimates provides rough approximations of the cost of the project. They
usually enable the owner to determine whether to proceed with construction. The
estimate is made before design starts and may be based on a specific design for the
project under consideration . Such estimated are not very accurate.
Order-of –magnitude Estimate are more detailed than feasibility estimates, because
more information is available.
Preliminary Estimate reflect the basic design parameter, For the purpose , a site plan
and schematic design are required .Preliminary estimates can reflect solutions, identify
unique construction conditions , and take into account constructions alternatives.
Baseline Estimate and preliminary estimates . Identifying all cost components , the
estimate provides enough detail to permit price comparisons of materials options and is
sufficiently detailed to allow equipment quotations to be obtained.
Definitive Estimates enable the owner to learn what the total project cost would be.
The estimate is based on plane vies, elevations, sections and outline specifications.
Fixed- price Estimates or bids are prepared by a general contractor and represent a
firm commitment by the contractor to build the project.
Claim and changes Estimates are prepared when a difference arises between actual
constructions and the requirements of the contract.

ESTIMATING TECHNIQUES
Parametric estimating takes into account the strong correlation of project cost and
project components that because of size , quality , installation expense or purchase
price represent a very large portion of project cost . For example , an office building
may be estimated on the basis of floor area . This technique requires the most
experience.
Unit price estimating is based on data contained in the contract documents . The
project cost estimate is obtained by adding the product obtained by multiplying the
unit cost of each item by quantity required.
Crew- development estimating is based on the costs for personal and equipment
required for each item during each construction phase. Employment of these resources
varies with project status , site conditions , and availability of labor , materials and
equipment.
Indirect Cost. When parametric estimating is used, indirect costs may be determined
as a percentage of the direct cost of the project or as a percentage of the labor cost ,
or they may be based on the distance of the volume of materials that must be moved
from source to site.
Margin , or Profit The amount that a contractor includes for profit in the cost estimated
for a project depends on many factors. These include capital required and capital risks
involved , anticipated troublesome conditions during construction , locale state of the
industry , estimated competition for the job , general economic conditions , need of the
firm for additional work , and disciplines requires such as structural , mechanical , and
electrical.
Quantity Surveys . A quantity survey is a listing of all the materials and items of works
required for a construction project by the contract documents. Together with prices for
these components , the quantities taken off from these documents are the basis for
calculation of the direct cost of the project.
1. ESTIMATING CONCRETE WORKS:
Proportioning concrete mixture is done in two different ways: by weight or by
volume method. The most common and convenient was is by volume method using
the empty bag of cement, or by a measuring box for sand and gravel. Measuring the
aggregates and water by weight is sometimes used in concrete batching plant for
ready-mix concrete or as a specified in the plan specifications.

CLASS CEMENT IN BAG SAND, GRAVEL,

PROPORTION
MIXTURE
40 kg 50 kg
AA 1 : 1.5 : 3 12.00 9.50 0.50 1.00
A 1 : 2 : 4 9.00 7.00 0.50 1.00
B 1 : 2.5 : 5 7.50 6.00 0.50 1.00
C 1 : 3 : 6 6.50 5.00 0.50 1.00

* proportion simply means 1 bag of cement is to 1.5 box (the measuring box in figure 1)
of cement is to 3 box of gravel

SAMPLE APPLICATION: given the proposed pavement. Determine the quantity of

cement in bags, sand and gravel in cubic meters required using a CLASS A mixture.
SOLUTION:
1. Determine the volume of the proposed concrete pavement:
Volume = 6.0m x 3.0m x 0.10m
Volume = 1.80 cubic meters

2. Using the table for a 40-kg cement at class A mixture

CLASS CEMENT IN BAG SAND, GRAVEL,

PROPORTION
MIXTURE
40 kg 50 kg
AA 1 : 1.5 : 3 12.00 9.50 0.50 1.00
A 1 : 2 : 4 9.00 7.00 0.50 1.00
B 1 : 2.5 : 5 7.50 6.00 0.50 1.00
C 1 : 3 : 6 6.50 5.00 0.50 1.00

Cement = 1.80 x 9.0 = 16.20 bags or 17 bags

Sand = 1.80 x 0.50 = 0.90 m3 or 1 m2 (normally this is rounded by 0.50 m3)
Gravel = 1.80 x 1.0 = 1.80 m3 (normally this is rounded by 0.50 m3)

*for estimation purposed we will use 6 liters of water per bag of cement (40 or 50kg)
it is your own prerogative if you will include it or not.

Water = 17 bags x 6 = 426 liters

SAMPLE BILL OF MATERIALS of the answers:

Description of Material Quantity Unit Unit Cost Total Cost

Portland Cement (40-kg) 17 bag 230 3,910.00
Sand (river sand) 0.9 bag 1000 900.00
Gravel 1.8 bag 1000 1,800.00
Water 102 liters 5 510.00

TOTAL: 7,120.00

ACTIVITY: FROM THE ACTIVITY LAST MEETING ON THE SEPTIC TANK THAT YOU HAVE
DESIGNED. (20 points)

ASSUMING THE SEPTIC VAULT WILL ALL BE CONCRETE, PREPARE A SIMPLE BILL OF
MATERIALS OF THE MATERIALS USED. SUBMIT IT TWICE IN THE LECTURE AND IN THE
LABORATORY, IF YOU DON’T HAVE A LABORATORY THEN THEN SUBMIT IT ONLY ON THE
LECTURE.