Construction Contracts & Documents

• Course contents include introductions, project documents, owner-contractor relations, tenders, contracts, owner-consultant relations, specifications, conditions, bill of quantity, quantity surveying, technical specifications, variations, change management, claims, and notes on local and international laws.

Elements of a Legal Contract

• Offer
• Acceptance
• Consideration
• Legal compliance
• Meeting of the minds

Project and Tender Documents

• Contract Agreement
• Letter of Acceptance/Award
• Meeting Minutes
• Technical Drawings (Architectural, Structural, Sanitary, Plumbing, Electrical, Mechanical)
• Technical Specifications
• Bill of Quantities (BOQ)
• General Conditions
• Special Conditions
• Time Schedule
• Soil Report
• Safety, environmental, and traffic management plans

Characteristics of a "Good" Contract

• Carefully considered
• Clearly expressed
• Time-tested
• Comprehensive
• Fair and balanced
• Reasonable
• Applicable to construction elements

Priorities of Contract Documents

• In case of conflicting information among the contract documents, a hierarchy exists to resolve disputes.
• Document priorities, if explicitly stated in the contract, take precedence.
• Standard document priorities for construction contracts:
  • Project Contract Agreement
  • Letter of Acceptance
  • Pretender Meetings
  • Special Conditions
  • General Conditions
  • Drawings
  • Technical Specifications
  • Bill Of Quantity

Contents of Invitation to Tender

• Brief description of project or work
• Letter of invitation
• Tender form
• Contract form, including conditions and amendments
• Employer's information
• Tender pricing document
• Design drawings
• Project duration
• Specifications and conditions
• Instructions for tenderers
• Tender process timing, and address for tender submissions
• Explanation of how queries will be handled
• Evaluation process and criteria
• Submission methods
• Policies for non-compliant bids
• Procedures for unsuccessful bidders
• Appendices (templates, sample documents, etc.)

Key Stakeholders

• Main project parties: Owner/Client, Consultant/Engineer, and Contractor.
• Secondary parties include: Bank/Financing Agency, Vendors/Suppliers, Users, and Manufacturer.
• Conflicts of interest may arise due to differing objectives (e.g., Owner desires high quality, Contractor aims to minimize costs).

Owner Responsibilities

• The owner owns and finances the project
• Aims to finish the project promptly, within budget and with top quality
• Owners can be public or private entities, individuals, or enterprises

Consultant or Engineer Responsibilities

• May serve as a general or specialized consultant
• Must possess the skills and background to design, plan, and manage the project
• Assists owner in determining the project's scope, budget, timetable, and documentation
• Aims to fulfill the owner's requirements

General Contractor Responsibilities

• May construct the entire project or act as a subcontractor for a portion of it
• Responsible for project construction per the contract
• Main goal is to complete the project on time, at a minimal cost, and generate maximum profit., quality is secondary
• Prepare the tender, time schedule and cash flow
• May build the project or hire subcontractors following owner approval

Project life Cycle and Phases

• Projects undergo various stages, from initial concept to completion
• Project phases include:
  • Feasibility study/planning: Assessing project viability, including economic, environmental, and legal considerations.
  • Design: Detailed design phase that complies with local regulations and codes, performed either directly or through a competitive process.
  • Bidding & awarding/procurement: Contractor selection via direct assignment or tendering.
  • Construction: Project implementation according to the contract.
  • Turnover: Finalization and initial handover, involves all parties including the owner, contractor, and consultant.

Relationships between Project Phases

• Sequential: Phase begins after prior phase ends leading to extended overall project timeline
• Overlapping/Concurrent: Phase starts before prior ends, shortening overall timeline, requiring better coordination, and higher costs.

Professional relationship models

• Closed Model (conventional)
• Open Model (management contract model)
• Design and Management Model
• Design and Build Model

Closed Model Characteristics

• Traditional approach where contract separate from designer & consultant
• The design firm create complete design documents, like DWG & BOQ
• The owner then ask for contractors to select the best one
• Designers and contractors bear no contractual obligation to one another and typically do not cooperate on the project

Design-Bid-Built Model Properties

• Medium size, simple projects
• Allows the client to choose consultants and contractors
• Allows clients to manage requirements (time, cost, quality, etc)
• Moderate risk
• Most popular
• Fixed cost with limited variations

Open Model Characteristics

• Owner hires a single project manager who controls consultants & contractors
• Best for the largest projects, offers best kuality, has the most responsibility, more expensive
• Minimizing the risks
• One way relationship between the client and project manager
• Greater responsibility
• Max control

Types of Tenders

• Open: Anyone can submit offer, attracting many suppliers, need for pre-qualification.
• Selective/Closed: Suppliers submit offers by invitation only, ensuring suitability by assessing performance..
• Limited: Allows specific parties with defined qualifications to submit by invitation.
• Negotiated: Involves negotiation with single or multiple contracts but early involvement.

Key conditions determined by local laws in Egypt

• The Local Administrate Law in Egypt governs tenders
• It includes law 182 of 2018 and its enforcing resolutions.

Documents to include in the invitation to tender

• Form of the tender
• Contract form, conditions and amendments
• Employer's Information requirements, Tender pricing, and other data

Steps for selecting a contractor for the tender

• Jury identification to create a list of qualified individuals
• Announce the tender for further instructions and other conditions
• Queries and ensure potential and real applications are up to spec
• Offer technical ability and the financial background

Key steps include

• An internal application committee may consider the data presented
• Negotiation with all involved parties that have agreed on terms from evaluation
• Sign the winning applicant into a final contract

Tender Evaluation using Two Envelopes

• Contractors subitt technical and financial envelops
• Review the technical bids first this way the applicants are up to spec
• Must indicate technical criteria such as experience
• May be rejected if the technical applications are poor
• Any applicants may pull their envelops
• Envelops with the 7 accepted applicants in the new face of the evaluation
• The meeting gets turned into a final application
• They choose who has a higher application point standing

Contents for Technical envelop

• The general information, point of contact for legal reasons and more
• CV
• Background of similar projects
• Company chart
• Company ranking
• More than 5 years of experience
• What construction processes are going to be used
• Initial staff, and team construction details
• General equipment
• What subcontractors and vendors are going to be used
• Insurance and other guarantee documents
• Initial time schedule

General steps in the technical evaluation process

• Check documentation
• Calculate points from applications
• Rank and select to move forward

Key steps in the financial reviewing

• Extract content
• Check price averages
• Look for illogical offers
• Negotiate deals and be transparent

Guidelines to avoid a single point of failure

• All individuals involved with the company
• Prevent related problems with company policies

Ways in which a municipality might apply

• By improving an aspect of the project
• Make suggestions so you can complete the job
• Prevent related incidents

Fixed Price contract terms

• Lump Sum (Fixed Fee)
• Unit Price (Bill of Quantities)
• Unit Price with Cost Adjustments

Fixed-price Contracts

• Fixed price contracts involve the seller agreeing to a fixed price with the buyer.
• These are most effective when the project's work is well-defined, with little expectation of change, thereby minimizing risk for the contractor.

Cost Plus Reimbursement

• Cost + Fixed Fee
• Cost + Percentage
• Target Cost
• Cost + Variable Fee
• GMP (Guaranteed Maximum Price)

Contract Types

• Cost-plus contracts, where the seller is paid all expenditures + additional fee.
• Cost-plus types offer greater flexibility, but need to be governed by incentives or GMPs.

Non-Traditional

• Design-Build
• BOT
• PPP
• Turnkey

Consultant selection.

• Involves direct awarding or competition with either sealed or friendly
• For high value items, should ensure and make a detailed note
• Avoid problems by following all steps

Competitions:

• Open (anyone may apply)
• Limited number of people apply)
• Closed (limited to 6 and sent by mail)

Typical components include

• A jury member list for transparency
• Explanation of the reference terms
• Provide details in the announcement
• Inquiries and good answers to these inquiries
• How to properly conduct and present a Project submission

How the submittals and members will be viewed and verified

• By an individual who will take responsibility if its not up to spec
• A document for the subcontracts that will be applied
• All members agree with their signature

Factors

• General information
• Provide contact for representative
• CV's from multiple staff

The owners responsibility is to provide and ensure

- The structure

• Verify the list of the applicants in the plan
• Make solid contacts