Construction Project Delivery Methods Quiz

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Questions and Answers

What is a key advantage of the Design-Bid-Build method?

Allows construction to begin before design completion

Owner has defined cost at the start (correct)

Promotes high interaction between participants

Minimizes owner involvement in construction (correct)

Which statement is true regarding Pure Construction Management?

Requires open communication among all participants (correct)

Involves a high financial risk for the owner

Allows for multiple points of communication with contractors

Reduces the amount of committed parties needed

What is a disadvantage of Construction Management at Risk?

Loss of communication between owner and CM

Owner retains full control over contractual changes

Owner assumes responsibility for design defects and omissions (correct)

Owner benefits from a fixed fee payment structure

What is NOT a characteristic of the Design-Bid-Build process?

Increased interaction among project participants Signup and view all the answers

Which of the following is a primary benefit of using Construction Management?

One trusted point of contact Signup and view all the answers

In Pure Construction Management, which factor is crucial for success?

Open communication among participants Signup and view all the answers

What is a significant risk in the Construction Management at Risk method?

Loss of owner control over the construction schedule Signup and view all the answers

What main challenge does the Design-Bid-Build method face?

Slow process that prevents construction overlap Signup and view all the answers

What is the primary basis for a preliminary estimate in construction?

All-up historical rates Signup and view all the answers

Which type of estimate has the widest margin of error?

Conceptual estimate Signup and view all the answers

What should be included in the overhead costs for a project?

Insurance and benefits Signup and view all the answers

What method is primarily used for calculating approximate estimates?

Unit costs and required amounts of work Signup and view all the answers

Which of the following costs is usually calculated as a percentage of direct labor costs?

Indirect cost Signup and view all the answers

What is a common range for the markup on project costs?

7-20% Signup and view all the answers

What is the first step in the approach to cost estimation?

Organize work items by trade Signup and view all the answers

Which component is typically included in the direct costs of a project?

Subcontractor costs Signup and view all the answers

What is a disadvantage of a Time-and-Materials Contract?

It has a low incentive to reduce costs. Signup and view all the answers

In a Guaranteed-Maximum-Price Contract, how are savings treated?

Savings are typically shared between the owner and the contractor. Signup and view all the answers

Which of the following bidding methods is traditionally most associated with the lowest cost option?

Competitive Bidding Signup and view all the answers

What is a key feature of the Best Value selection method?

It is primarily used by federal government contracts. Signup and view all the answers

Which aspect is not a part of the bidding process as outlined?

A specified project timeline. Signup and view all the answers

What characteristic distinguishes open bidding from closed bidding?

Closed bidding restricts access to the bidding process. Signup and view all the answers

In competitive bidding, who is primarily responsible for absorbing any losses that occur?

The contractor providing the bid. Signup and view all the answers

What is a common practice in negotiation styles of contract awarding?

Pre-selecting contractors based on reputation. Signup and view all the answers

What expenses are included in the Guaranteed-Maximum-Price Contract structure?

Cost of work plus the contractor's potential profit. Signup and view all the answers

Which of the following is a major benefit of a Time-and-Materials Contract?

It promotes collaboration among stakeholders. Signup and view all the answers

What is the Preliminary Estimate obtained by calculating C2 x Q2 with a unit cost of $103.96 per square foot and an area of 5000 square feet?

$519,800 Signup and view all the answers

Which factor is used to adjust the base cost in the calculation of total costs?

Cost Multiplier (x) Signup and view all the answers

What is the first cost multiplier listed in the content?

0.92 Signup and view all the answers

How many times is the cost multiplier of 0.8 listed in the content?

8 Signup and view all the answers

Which of the following is the size factor mentioned in the provided data?

2.38 Signup and view all the answers

What value is associated with the Cost Modifier Curve in the data?

1.15 Signup and view all the answers

What is the area conversion scale indicated in the cost factors?

0.92 Signup and view all the answers

Which values are repeated multiple times in the cost multiplier list?

0.8 and 0.9 Signup and view all the answers

What is a significant disadvantage of a Time-and-Materials Contract?

High risk for the owner Signup and view all the answers

Which of the following is considered a pro of a Time-and-Materials Contract?

Facilitates early-stage collaboration Signup and view all the answers

In a Time-and-Materials Contract, which of the following statements regarding the contractor's profit sharing is true?

It is fixed regardless of the project outcome Signup and view all the answers

What is a primary reason for choosing a Time-and-Materials Contract over a fixed-price contract?

The urgency of the project Signup and view all the answers

Which of the following best illustrates a limitation of a Time-and-Materials Contract?

There is no guarantee of final costs for the owner. Signup and view all the answers

Study Notes

Design-Bid-Build

Traditional construction method where the project is broken down into stages
Owner is responsible for project delivery
Contractors are typically selected through bidding or negotiation
This method creates a trust-based relationship among the parties involved
Pros:
- Defined cost at the beginning of the project
- Owner has contractual protection
- Owner is not involved in the construction process
Cons:
- Slow due to the sequential nature of the process
- Limited interaction between participants

Pure Construction Management

Project delivery method using a team concept
Construction Manager (CM) acts as a facilitator, providing estimates, constructability input, and managing contracts
CM is paid a fixed fee
Pros:
- Single point of contact (CM)
- Flexible schedule
- Reduced financial risk for the owner
Cons:
- Requires open communication between all parties
- Requires committed parties from the beginning
- Limited incentive for the CM
- High risk of reputational damage

Construction Management at Risk

Similar to pure construction management, but the CM takes on more risk
CM assumes responsibility for the project's budget and schedule
Pros:
- Reduced risk for the owner
Cons:
- Owner is responsible for design defects or omissions
- Owner loses control over contractual changes

Cost + Percentage Fee

Time-and-materials contract where the contractor is paid a percentage of the project cost
Contractor's profit is calculated based on a fixed percentage of the actual cost
Pros:
- Encourages collaboration in early stages
- Useful when pricing is difficult to determine or when time is a pressing factor
Cons:
- Limited incentive to finish early or reduce costs
- High risk for the owner
- No guarantee of the final cost
- Same reward (percentage) regardless of work quality

Cost + Fixed Fee

Time-and-materials contract where the contractor is paid a fixed fee in addition to the actual cost
Pros:
- High incentive to finish early
- Promotes collaboration
- Useful when price cannot be determined using other methods
Cons:
- Limited incentive to reduce costs
- No guarantee of the final cost
General:
- Cost varies, but the fixed fee is firm

Guaranteed-Maximum-Price (GMP) Contract

Variation of Cost + Fixed Fee
Contractor guarantees a maximum price for the project
Savings below the GMP are typically shared between the owner and the contractor

Competitive Bidding

Awarding project to the lowest bidder
Traditional and widely used method
Time-consuming due to bid period, evaluation, and review process
Focuses on achieving specified quality at the lowest price
Includes open and closed bidding
Contractors estimate project cost and profit using lump-sum or unit price methods
Contractor absorbs any losses

Negotiation

Pre-selected contractor
Common practice for private owners
Useful for accelerating projects
Owner selects contractor based on reputation and qualifications

Best Value

Common practice for federal government projects
Request for Proposal (RFP) is used to evaluate bids
Evaluation criteria are based on price, qualifications, and owner expectations
Criteria are weighted based on their importance

Bidding Process

Owner opens bids after receiving preliminary estimates, conceptual estimates, and approximate estimates
Preliminary estimate: Calculated based on historical rates
Approximate estimate: Calculated using unit costs and quantities of work
Cost classification:
- Payroll taxes, insurance, benefits
- Labor cost
- Material cost (includes delivery, storage, and inspection)
- Equipment cost
- Subcontractor cost
- Direct cost (65-90% of total cost)
- Project overhead
- Markup (additional 7-20% of project cost)

Cost Estimation

Organize work items by trade
Quantity takeoff: Determine the amount of work required for each item
Cost estimation of each item: Calculate the cost of labor, materials, and equipment
Preliminaries:
- Prelim estimate: Calculated by multiplying cost per unit by the quantity of work
- Cost multipliers: Used to adjust cost estimates based on factors such as size, complexity, and location
- Cost modifier curve: Used to adjust cost estimates based on the project's scope and duration

Subheadings

Cost Multiplier (x): Adjusts the base cost estimate. Multiply the original cost by the correct multiplier depending on the factor.

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Description

Test your knowledge on traditional and modern construction project delivery methods. Explore the pros and cons of Design-Bid-Build and Pure Construction Management. Understand the roles of owners and managers in these processes.