Review Questions & Exercises

1. Name and briefly discuss the different phases in the construction project cycle.
There are 5 phases in the construction project cycle, namely conception & initiation phase, planning &
scope definition, launch or execution phase, performance & control phase, and construction project
close-out. In conception & initiation phase, the project’s feasibility is determined and the objective of
the project is considered as it can be an opportunity or a problem. Planning & scope definition involves
the development of the project in detail to meet its objectives and identifying all the work that needs to
be performed. The launch or execution phase is also known as the implementation phase since this
phase of the project is where the project plan is put into motion and the work of the project is
performed. In the performance & control phase, the performance and progress of the entire project is
measured to ensure that the project is running as per the schedule. In the construction project close-
out, the project team must provide the final deliverables and make sure that the project is free from any
type of legal burden.

2. Describe the different types of construction projects and cite some examples.
Building-sector project is a type of construction project where the architect is the prime designer,
and it can either be a residential or non-residential construction. Some examples of this type are
commercial buildings, schools, office buildings, and hospitals. Infrastructure-sector project’s
prime designer is the engineer, and the owner may be a private company or an agency of the
government. This type includes roads, bridges, canals, dams, tunnels, airports, water and
sewerage systems, pipelines, and railways. Lastly, process-sector project has engineers as the
prime designers, and it involves stages of design that include preliminary engineering, detailed
engineering, and development of the contract documents. This type includes chemical plants, oil
refining, pharmaceuticals, pulp and paper, and electrical generating.

3. The various phases for development of a project are discussed in this module. Review
each phase and identify the party that most likely would be involved in performing the
work of the phase, and the party whose work will be most influenced by the results of the
phase. Identify parties as one of the following: owner, consultant to the owner, designer,
construction manager, or construction contractor.

In the conception & initiation phase, the party that most likely would be involved are the owner and
construction manager since the owner is needed to provide a description of the project and help
identify a plan for the time and cost of delivering. The approval is then required by the
construction manager to be able to continue to the planning phase. Planning & scope definition
requires the construction manager who will coordinate the preparation of a project budget by
providing cost estimates for the labor, equipment, and materials costs. Moreover, the designer
and construction personnel are also needed to assist the owner in the development of a checklist
for project scope. For the execution, performance, and control phase, the construction manager and
contractor are responsible in these phases. The construction manager controls over the direction
of the project by comparing the progress reports with the project plan and he/she should work
in close collaboration with the contractor and the project team as they are
responsible for visiting the field to complete a site examination and project
execution. In the construction project close-out, the whole construction management team and
the owner are involved since all the final change orders are completed, all documentation related to
the project is organized and turned over to the owner, and any necessary inspections are completed.

4. Much of the day-to-day work on a project is accomplished by informal exchanges of

information between team members. Examples are phone calls and informal meetings
between two or more individuals. How should a project manager handle informal
exchanges that may have an important impact on a project?

Successful project managers should handle informal exchanges of information by first

determining the best channel and form of communication for whatever audience he/she
is speaking to. By using simple language, sticking to relevant topics, keeping messages
concise, and including all information in one place, the chances of communication failure will be
reduced. The project manager should also have communication management skills such as active
listening skills, asking questions, probing for more information, motivating people to become
and stay engaged, and conflict resolution skills to increase a project manager’s chances of
success in communication even it is done informally.

5. Describe the importance of identifying project lessons-learned during execution to final

stages of the construction project.

Identifying project lessons-learned are necessary to examine what went well and what didn’t
during execution to final stages of the construction project. By doing this, it would make the
knowledge of experience to be transferred back to the project organization, which will help
future project teams.

Last and final is to conduct lessons-learned

Lessons –learned (LL) are elements of both organizational learning and knowledge management
(Carrillo, 2005). A lesson learned is defined as knowledge gained from experience, successful or
otherwise, for the purpose of improving future performance (Construction Industry Institute, 2007). In
this regard, having LL programs have become critical for construction companies, given the globalization
of project execution, and the fact that a considerable number of employees are approaching retirement
(Caldas et al., 2009). In this regard, what has motivated construction companies to conduct LLs is
(Paranagamage et al., 2012): (1) to learn from similar past projects to avoid repeating mistakes, (2) to
ensure that past successes are replicated in future projects, (3) to gain competitive edge over
companies, (4) to avoid corporate “brain drain”, and (5) to encourage innovation. About lessons
recorded by construction professionals, there are three important phenomena to considered (Fong &
Yip, 2006): (1) professionals sometimes record good/bad practices during the running of projects and
upon their completion; (2) the frequency of recording bad practices or failures is much lower than that
of recording good ones; and (3) most of the recorded good/bad practices are for individual use, but not
for the team or organizational use. The leading reasons for this behavior are lack of employees’ time,
lack of management support, and lack of incentives, resources or guidelines

6. As bidding is one that dictates if the project will be executed by the bidder, what is your
point of view with this quote, "The lowest bid price does not guarantee that you'll win the
project?”
Here are a few points to take into consideration when it comes to low-bid
pricing for construction projects:

A low bid doesn’t mean the company is the most capable

Make a bid comparison to see where the differences lie between contractors

Some lower-priced contractors may hire illegal or unqualified workers

A contractor company may be unable to comply with the associated legal or

regulatory requirements

Another aspect to keep in mind when evaluating lower bids is something

called “suicide bidding.” This happens when a company intentionally submits
a bid for less than it costs to do the work. The rationale is that it will be an
easy bid to win and will help maintain skilled labor while also allow the
contractor to attempt to make money back during the contract.  Unfortunately,
when this type of bidding backfires, everyone involved is affected by negative
results such as poor building quality, poor service, multiple disputes, and a
contractor who may not be able to pay their debts.

Going with the most realistic bid can help ensure you receive a higher quality
of work with a longer lifespan and avoids taking any risks that might be
detrimental to the integrity of the project. At Seacoast, not only do we pride
ourselves on our outstanding work quality, we provide honest bid prices for
exceptional service and on-time project delivery.  Our goal is your satisfaction,
not your frustration.
From that, the general contractor
awards the bid to one subcontractor based on the best value, which in many cases is the lowest
price, but can include other variables like past performance, bid capacity, and experience in the
type of construction project. Long story short, the lowest bid price does not guarantee that you'll
win the project. In many cases, the general contractors will disqualify the lowest price contractor
and go with a middle number to reduce their risk.

"The lowest bid price does not guarantee that you'll win the project"

7. Explain the bidding process/ flow.

The basic construction bidding process involves:

1. The client or general contractors send bid invitations to the contractors or the
subcontractors.
2. The contractors or the subcontractors receive the invitation that includes:
○ Scope of Work
○ Time of Completion
○ Penalty
○ Pre-Qualification Details
3. Contractors or Subcontractors download the tender document and review the project
based on their respective cost codes.
4. Contractors or Subcontractors submit their bid to the client or general contractor.
5. The general contractor or client awards the bid to the subcontractors with a most
competitive bid and it is converted into a commitment.

Basic Construction Bidding Procedure

Government jobs are highly regulated, but bidding and procurement for
private projects will be less formal, and owners have broad discretion to use
whatever procedure best suits them. Still, most bidding procedures follow the
same basic format…

Bid Solicitation
This is when the owner sends out an Invitation For Bid (IFB) or a Request for
Proposals (RFP). Unlike public projects, these aren’t usually large, open
invitations. Rather, they’re sent to a smaller group of contractors. This phase
will lay out all the specifications, requirements, contract type, and delivery
method.
Generally, the contract will most likely be awarded based heavily on the bid
price. Still, the bid solicitation phase of the procurement process will require
other information beyond the price – like a request for qualifications (RFQs)
asking for more information on the prospective contractor’s company history.

Bid Submission
A bid submission should include all of the bidder’s relevant business
information. This will be a list of the contractor’s past projects, plans for
management, and their track record of staying on schedule and under budget.
When calculating a bid, it should be as accurate as possible.

The estimate, based off of blueprints and the bill of quantities, should include
all costs. That includes things like overhead, labor, materials, equipment, and
of course, profit margin. To win a bid, this number should represent the best
quality at the most reasonable price.

The bid should be as clean and organized as possible. A bid sheet serves as
the face of the bidder’s company. Be sure it has a professional touch, and that
it is submitted to the right place at the right time.

Bid Selection
On government construction projects, rules are in place to make sure the
government selects the low bidder (or, one of the low bidders). Meaning, the
lowest contract price wins out. The reason behind this is to prevent any fraud,
abuses, or favoritism. By mandating that the lowest responsible bid be
accepted, the idea is that price will be the ultimate equalizer.

On private projects, owners have much more leeway to pick a bid for reasons
beyond price. Don’t get us wrong – price is almost always among the
determining factors when it comes to bid selection. But, if two contractors
have comparable bids, factors other than price might matter a lot more than
they do with public projects.
Contract Formation
When the owner selects which bid or proposal best suits their needs, the
contract must still be formed and signed. If your company wins the bid, this is
an opportunity to negotiate. At this point in the process, the type of contract
has already been established, but there’s still an opportunity to set out the
final pricing and terms of the contract itself.

8. In your own words, differentiate the four traditional project delivery methods.

The four major project delivery systems mentioned above share the common goal of
helping the owners build new structures on time and on budget. These methods also ensure
quality and performance requirements.
1. Design-Bid-Build or Design Tender
This is the traditional method and is commonly employed for the construction of
non-residential buildings, mainly under government projects. In a DBB method, the owner hires
a designer or an architect independently. This is performed by the contractor who is managing
the construction. Once the design is completed by the architect, bids are solicited from the
contractor by the owner so that the designs can be executed.
The bid covers:
● Total cost of the building structure
● Money for the subcontractors
● General contractor’s costs
● Overhead costs
● Profit
Important advantages of DBB are:
● The Owner has a great control over the design and construction
● A high ease of implementation
● The cost of construction is easily determined as the architect provides a design before
awarding the contract
Disadvantages of DBB are:
1. The Owner must have substantial expertise in the work
2. Availability of resources
3. High responsibility for project execution
4. Manage increasing costs due to the design errors
2. Construction Management at Risk (CMAR Method)
The CMAR method is an alternative to the DBB method that helps in reducing the costs.
In this method, design and construction are handled by different firms. Here the construction
manager is involved in the project from the start of the project, even before the design of the
project. The CM can even help in choosing the architect for the project. Once this step is done,
the project is moved forward by the CM and the architect. They work together during the design
phase.
This method is mainly employed for complex projects. The CM is chosen by the owner
on the basis of his or her experience and qualifications and not on the basis of the lowest price
criterion. The bid of CM to the owner is a guaranteed maximum price (GMP). This cost
represents the:
● Pre-construction service
● Actual construction
● The Fee of Construction manager
● Possible Contingencies
After the completion of the design, the construction manager solicits the bids from the
contractors. If by chance, the actual costs exceed the GMP , the risk is on the CM. And this
burden won’t be taken by the owner. If the project is built below GMP, the savings received by
the owner may be shared with the CM as per the agreement made between them.
Advantages of CM at Risk Method are:
● Great Cost Control
● Reduced risk for Owners
● Superior Project Management
3. Design-Build D-B
In DB Method, the owner provides the contract to a single entity that can handle both the
design and construction. Here, one price covers both the phases of construction. This entity is
called a design-builder or design-build contractor. In DB, the design-builders is accountable to
the owner for all aspects of the project.
4. Integrated Project Delivery (IPD)
The IPD method is also called an Integrated team method. This is one of the newly
developed projects delivery methods. This method employs, owner, architect and contractor as a
team, and the risk is shared equally.

9. Enumerate and discuss the three major decisions in the construction bidding process.

10. Enumerate the bidding documents and, as a future professional, cite the importance of the
documents.