Construction Methods & Management

CIEG 486-010

Construction Methods & Management CIEG 486-010

Construction Management
Contractual arrangement: at-risk or management services for fee only or Act of managing the construction process

Construction Methods & Management CIEG 486-010

Construction Management
Contractual arrangement Construction management personnel can represent owner or contractor CM manages the basic resources of construction

Basic Resources
workforce subcontractors equipment construction plant material information time money

Construction Methods & Management CIEG 486-010

Project Management
Optimize the three attributes of: quality, cost, and time Principle objective of a construction manager is to complete each project on time and within budget, while maintaining acceptable levels of safety and risk

Construction Methods & Management CIEG 486-010

Method or System of Project Delivery Traditional design-bid-build Phased or Fast-track Design-build

Design Phase

Bid

Construction phase

Traditional Design-Bid-Build

Design Phase

Time Savings

Construction phase

Phased or Fast-Track Construction

Suspended Steel

Trusses/Framing

West Approach

East Approach

Main Cables

Bridge Deck

Anchorages

Test Piles

West Piers

East Piers

Lighting

Towers

Construction Methods & Management CIEG 486-010

Contract Types
Traditional vs. alternative Classification by method of award and method of pricing Model contracts have been developed by AIA, AGC, CEC, DBIA, CMAA, and Engineers Joint Contract Documents Committee (EJCDC)

Construction Methods & Management CIEG 486-010

Contract Types
Method of Award
1. Competitive bidding
formally advertised public work selective invitation for private work awarding of contracts by: Lowest responsible bid or Best value i.e.: technical score price or price + time(ft), and other variations

Construction Methods & Management CIEG 486-010

Contract Types

Method of Award
2. Negotiated contracts Generally private work Benefits include flexibility of pricing arrangement Often used on projects of large size and great complexity Owner may value expertise and integrity of a particular contractor and can award contract without competition that may otherwise exclude that contractor from the work

Construction Methods & Management CIEG 486-010

Method of Pricing Fixed-price

1. Lump sum Traditional, single fixed price Predetermined price that includes profit, overhead, and all other costs Greatest risk to contractor resulting in a higher markup (the greater the risk, the higher required rate of return ) Most common contract form

Construction Methods & Management CIEG 486-010

Method of Pricing Fixed-price

2. Unit-price contract Prices of specified units of work are fixed or predetermined Actual cost to the owner will vary with actual quantities placed Best used when details and general character of the work are known, but quantities are subject to variation Risk of unbalanced bids

Construction Methods & Management CIEG 486-010

Method of Pricing Cost-plus

Contractor agrees to perform the work for a fixed or variable fee covering profit and home office costs (general overhead) Field costs are reimbursable at actual cost Used when: nature of the work or physical conditions are unpredictable scope is unknown or difficult to define

Construction Methods & Management CIEG 486-010

Method of Pricing Cost-plus

All cost-plus contracts depend on cooperation among A/E, owner, and contractor Record keeping and timely evaluation are extremely critical Detail record of labor hours and salaries, material and equipment must be maintained Good application for professional CM services

Construction Methods & Management CIEG 486-010

Types of Cost-plus Contracts 3. Cost plus fixed %

Fixed % based on portion or all of reimbursable costs Used in construction involving new technology or extremely pressing needs Owner assumes risk Contractor cooperation very high Little or no incentive for cost savings

Construction Methods & Management CIEG 486-010

Types of Cost-plus Contracts

4. Cost plus fixed fee
More incentive for cost savings Incentive for timely completion Risk shared by owner and contractor Also called sliding scale % Keeps fee in line with type & volume of work Fee becomes progressively smaller on work that is repetitive, requires little or no re-engineering, replanning, or additional layout

5. Cost plus variable %

Construction Methods & Management CIEG 486-010

Types of Cost-plus Contracts

6. Target estimate
May be based on dollar amounts, man-hours, schedule, or combination Cost savings or overrun shared by owner and contractor at predetermined split Cost underrun increases contractor profit, overrun decreases profit Used with well defined scope of work Particularly suitable for turnkey operation Contractor or design-builder assumes all risk Provisions to share savings can be applied

7. Guaranteed maximum price

Construction Methods & Management CIEG 486-010

Construction Contracts Prequalification of bidders

Evidence of satisfactory previous experience Financial stability Advanced or specialized prequalification may be required as dictated by the magnitude and nature of the work Bid bonds are often required

Construction Methods & Management CIEG 486-010

Elements of a legal contract offer acceptance consideration legal in every respect requires a meeting of the minds offer + acceptance = binding obligation

Construction Contract Documents

Advertisement for bids Information for bidders Bid form General notices Notice of award Notice to proceed Bid bond Performance bond Payment bond Contract form or agreement General conditions or provisions Supplemental and/or special conditions Plans Specifications

Construction Contract Documents

Characteristics of a good contract document:
1. 2. 3. 4. 5. 6. 7. Carefully considered Expressed clearly Time-tested Comprehensive Fair Balanced Applicable to the elements of a construction projects

Construction Methods & Management CIEG 486-010

Construction Contracts bidders are required to:

examine all portions of the contract documents examine the physical conditions of the site determine legal requirements affecting the work complete these investigations prior to bidding

Construction Methods & Management CIEG 486-010

Construction Contracts contract documents should:

Include a hierarchy to determine which documents govern in case of conflict, i.e.: DelDOTs hierarchy Not contain ambiguous language Not contain exculpatory clauses

Construction Contracts -- General Conditions

Contractors warranties Defective drawings Approval of contractors plans and equipment Approval of shop drawings other submittals Guarantee by the Contractor Conduct of the work Defective work Relations with other contractors and subcontractors Inspection of materials Inspection of field work Authority of the Engr. Duties of the inspector Permits and licenses Labor considerations Work done by the owner Lines and grades Order and discipline Performance Final inspection & acceptance

Construction Contracts -- General Conditions

Federal, state, and local government regulations Employment (EOE rules) Emergencies Minimum wage rate Domestic vs.foreign materials and labor Construction reports Payrolls and bills of material Cooperation among contractors Patents Retainage Bonding and insurance Guarantee of equipment Borings Spare parts

Risk Allocations -- General Conditions

Force majeure Indemnification Liens Labor laws Differing site conditions Delays and extension of time Liquidated damages Consequential damage Occupational safety, and health of workers Permits, licenses, and regulations Termination for default by contractor Suspension of work Warranties and guarantees

Construction Methods & Management CIEG 486-010

Specifications Standard, supplemental, and special provisions two types of specifications:

method specification dictates equipment and procedures performance spec specifies only the desired end result or product should include hierarchy

Construction Methods & Management CIEG 486-010

Hierarchy Governing ranking of contract components in case of a discrepancy (DelDOT)

General Notices Special Provisions Plans Supplemental Specifications Standard Construction Details Standard Specifications

Construction Methods & Management CIEG 486-010

Classification Coding System Architectural building and site development industry employees the CSI Format that includes 16 divisions of work. Public owners generally use a system of sections or divisions developed and employed for several decades

Construction Methods & Management CIEG 486-010

Codes, Standards, and Regulations Model Codes

Basic/National Building Code (BOCA Code) Uniform Building Code Standard Building Code National Electric Code (NEC) and Life Safety Code by the NFPA under ANSI The International Building Code 2000 (IBC) replaces the first three codes. Several subcodes of the IBC include Fire, Residential, Plumbing, Energy Conservation, Mechanical, & Private Sewage

Construction Methods & Management CIEG 486-010

Codes, Standards, and Regulations Model Codes

Model codes are adopted in whole or in part by the local municipality, and become enforceable under the law

Zoning Regulations
imposed by local zoning commissions

Environmental Regulations
imposed by the EPA, State DEP (DNREC), or local agency

Construction Methods & Management CIEG 486-010

Codes, Standards, and Regulations Standards

ASTM Underwriters Laboratories, Inc. (UL) AASHTO ACI AISC many, many others no enforcement by these agencies specifications generally refer back to these standards

Construction Methods & Management CIEG 486-010

Submittals required in the contract

copies of subcontracts shop drawings and support calculations catalog cuts material or equipment samples schedule(s) certified payrolls certificates of insurance environmental test reports material test reports & certifications

Construction Methods & Management CIEG 486-010

Shop Drawings
structural steel details & erection plan erection procedures (safety) PS/PC concrete items shoring & underpinning details jacking plans and calculations scaffolding and falsework concrete formwork design and details construction sequencing diagrams

Construction Methods & Management CIEG 486-010

Shop Drawings
cofferdam design & details dewatering procedure stream diversions pipe and ductwork fabrication details reinforcing steel bending diagrams and bar lists structural timber elements ornamental iron or steel maintenance of traffic plans (alternates)

Construction Methods & Management CIEG 486-010

Payments and related issues

mobilization and initial costs retainage progress payments and partial payments material payments change orders substantial completion punchlist final acceptance and payment

Construction Methods & Management CIEG 486-010

Changes in plans and specs

clarification, correction, modifications prior to bid are referred to as addenda
owner must maintain a system of distributing and acknowledging receipt of addendum

plan and spec changes after award are referred to as revisions, and generally require issuance of a change order(s)

Construction Methods & Management CIEG 486-010

Change Orders
a written order issued by the owner to the contractor for a change to the contract within the scope of work change orders are written for:
extra work increasing or decreasing the contract quantities alterations

change orders state the basis and amount of payment and time extensions

Construction Methods & Management CIEG 486-010

Contracts
Liquidated damages Incentive/Disincentive (bonus/penalty) Acceleration Increase crew levels, crew size Add shifts and/or extend work hours CPM schedule is an extremely valuable tool in analyzing delay claims

Construction Methods & Management CIEG 486-010

Claims and Disputes

a claim is a request by a contractor for additional compensation or time extension for occurrences beyond the contractors control including: differing or unexpected site conditions change in scope delays caused by the owner owner has duty to provide adequate, accurate data to the bidders

Construction Methods & Management CIEG 486-010

Claims and Disputes

Owner is liable to contractor when: inaccurate data are given extras develop because of improper design design is significantly changed after the contract is signed (constructive change) Contractor must prove entitlement and the associated damages Contractor must provide timely notice of claim upon discovering impact

Construction Methods & Management CIEG 486-010

Types of Claims
delay or disruption claim extra work claim acceleration impossibility-of-performance claim defective design claim (error or omission) interference claim superior knowledge claim

Construction Methods & Management CIEG 486-010

Dispute Resolution
Early settlement between parties Alternative depute resolution (ADR) negotiation arbitration (1 or 3 members) mediation neutral advisors Dispute Review Board (DRB)
3 or more odd number of board members selected evenly by both sides

Litigation
sometimes unavoidable; usually undesirable; but sometimes best method

Construction Methods & Management CIEG 486-010

Credits
Credits reimbursement from contractor to owner for work eliminated (lump sum contract or item) Credit may also be given when specified performance criteria is not met

Construction Methods & Management CIEG 486-010

Claims Avoidance
producing comprehensive, accurate, contract documents constructibility review clear understanding of contract requirements prior to bidding having good administrative procedures in place open and honest communication timely troubleshooting

Construction Methods & Management CIEG 486-010

Claims Avoidance
Claims avoidance begins in the preconstruction phase Contract documents need to be clear, accurate, comprehensive, and fairly distribute risk

Construction Methods & Management CIEG 486-010

Ability to influence cost over time

Greatest potential to influence cost is during the pre-construction design phase Claims avoidance begins during pre-construction Design phase Intensive preparation and review of contract documents Careful consideration of methods and equipment = consider overall constructibility

100%

Level of Influence on Cost

0%

Concept & Feasibility

Design and Engineering

Procurement and Construction

Startup Oper.

Ability to Influence Construction Costs over Time

Construction Methods & Management CIEG 486-010

Design Professionals should:

Specify locally available material Allow substitution of equal quality material Avoid one-ofa-kind or non-standard items where possibly Design structures with as many redundant elements as possible Design should allow construction using the prevailing methods and equipment

Construction Methods & Management CIEG 486-010

Design Professionals should:

Design to minimize required labor Specify a quality of workmanship consistent with the quality of the project Do not require the contractor to assume responsibility for information that should be furnished by the design engineer/architect Produce simple, straight-forward specs = clearly state what is expected

Construction Methods & Management

CIEG 486-010