Podcast
Questions and Answers
What is a key advantage of the Design-Bid-Build method?
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?
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?
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?
What is NOT a characteristic of the Design-Bid-Build process?
Which of the following is a primary benefit of using Construction Management?
Which of the following is a primary benefit of using Construction Management?
In Pure Construction Management, which factor is crucial for success?
In Pure Construction Management, which factor is crucial for success?
What is a significant risk in the Construction Management at Risk method?
What is a significant risk in the Construction Management at Risk method?
What main challenge does the Design-Bid-Build method face?
What main challenge does the Design-Bid-Build method face?
What is the primary basis for a preliminary estimate in construction?
What is the primary basis for a preliminary estimate in construction?
Which type of estimate has the widest margin of error?
Which type of estimate has the widest margin of error?
What should be included in the overhead costs for a project?
What should be included in the overhead costs for a project?
What method is primarily used for calculating approximate estimates?
What method is primarily used for calculating approximate estimates?
Which of the following costs is usually calculated as a percentage of direct labor costs?
Which of the following costs is usually calculated as a percentage of direct labor costs?
What is a common range for the markup on project costs?
What is a common range for the markup on project costs?
What is the first step in the approach to cost estimation?
What is the first step in the approach to cost estimation?
Which component is typically included in the direct costs of a project?
Which component is typically included in the direct costs of a project?
What is a disadvantage of a Time-and-Materials Contract?
What is a disadvantage of a Time-and-Materials Contract?
In a Guaranteed-Maximum-Price Contract, how are savings treated?
In a Guaranteed-Maximum-Price Contract, how are savings treated?
Which of the following bidding methods is traditionally most associated with the lowest cost option?
Which of the following bidding methods is traditionally most associated with the lowest cost option?
What is a key feature of the Best Value selection method?
What is a key feature of the Best Value selection method?
Which aspect is not a part of the bidding process as outlined?
Which aspect is not a part of the bidding process as outlined?
What characteristic distinguishes open bidding from closed bidding?
What characteristic distinguishes open bidding from closed bidding?
In competitive bidding, who is primarily responsible for absorbing any losses that occur?
In competitive bidding, who is primarily responsible for absorbing any losses that occur?
What is a common practice in negotiation styles of contract awarding?
What is a common practice in negotiation styles of contract awarding?
What expenses are included in the Guaranteed-Maximum-Price Contract structure?
What expenses are included in the Guaranteed-Maximum-Price Contract structure?
Which of the following is a major benefit of a Time-and-Materials Contract?
Which of the following is a major benefit of a Time-and-Materials Contract?
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?
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?
Which factor is used to adjust the base cost in the calculation of total costs?
Which factor is used to adjust the base cost in the calculation of total costs?
What is the first cost multiplier listed in the content?
What is the first cost multiplier listed in the content?
How many times is the cost multiplier of 0.8 listed in the content?
How many times is the cost multiplier of 0.8 listed in the content?
Which of the following is the size factor mentioned in the provided data?
Which of the following is the size factor mentioned in the provided data?
What value is associated with the Cost Modifier Curve in the data?
What value is associated with the Cost Modifier Curve in the data?
What is the area conversion scale indicated in the cost factors?
What is the area conversion scale indicated in the cost factors?
Which values are repeated multiple times in the cost multiplier list?
Which values are repeated multiple times in the cost multiplier list?
What is a significant disadvantage of a Time-and-Materials Contract?
What is a significant disadvantage of a Time-and-Materials Contract?
Which of the following is considered a pro of a Time-and-Materials Contract?
Which of the following is considered a pro of a Time-and-Materials Contract?
In a Time-and-Materials Contract, which of the following statements regarding the contractor's profit sharing is true?
In a Time-and-Materials Contract, which of the following statements regarding the contractor's profit sharing is true?
What is a primary reason for choosing a Time-and-Materials Contract over a fixed-price contract?
What is a primary reason for choosing a Time-and-Materials Contract over a fixed-price contract?
Which of the following best illustrates a limitation of a Time-and-Materials Contract?
Which of the following best illustrates a limitation of a Time-and-Materials Contract?
Flashcards
Design-Bid-Build
Design-Bid-Build
A traditional construction method where the owner hires designers, then contractors bid, and the owner selects one.
Pure Construction Management
Pure Construction Management
A method using a project manager who facilitates estimates and contracts.
Construction Management at Risk
Construction Management at Risk
The construction manager takes project budget/schedule risk.
Cost + Percentage Fee
Cost + Percentage Fee
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Cost + Fixed Fee
Cost + Fixed Fee
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Guaranteed-Maximum-Price (GMP)
Guaranteed-Maximum-Price (GMP)
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Competitive Bidding
Competitive Bidding
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Negotiation
Negotiation
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Best Value
Best Value
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Bidding Process
Bidding Process
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Cost Estimation
Cost Estimation
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Quantity Takeoff
Quantity Takeoff
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Cost Multiplier
Cost Multiplier
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Preliminary Estimate
Preliminary Estimate
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Approximate Estimate
Approximate Estimate
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Cost Classification
Cost Classification
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Direct Costs
Direct Costs
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Project Overhead
Project Overhead
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Markup
Markup
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Subcontractor Cost
Subcontractor Cost
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Labor Cost
Labor Cost
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Material Cost
Material Cost
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Equipment Cost
Equipment Cost
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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.
