CEIE370 Week 2.pptx PDF

The Bid Package 1 Project Development Cycle  Project Development Cycle Establishing a Need – Feasibility Conceptual Design Preliminary Design - Detailed Design Produce Bid Documents Bidding Bid Evaluation and Contract Award Construction Close-u...

The Bid Package 1 Project Development Cycle  Project Development Cycle Establishing a Need – Feasibility Conceptual Design Preliminary Design - Detailed Design Produce Bid Documents Bidding Bid Evaluation and Contract Award Construction Close-up  Project Concept & Need First step of the project development cycle Need is recognized by owner Submit a project brief to the designers or evaluators Outline the specific requirements  Establishing a need Conceptual definition of the need Market analysis Demand for the project Commercial projects- profit - tangible Community projects- services - intangible Public projects- public needs - intangible  Project Feasibility Prepare cost analysis – Cost / benefit analysis Conceptual level of sketches and cost estimates Examine market trends for commercial projects  Cost/Benefit Analysis Commercial projects- Comparison of cost of the project against the revenue Public, non-profit projects- Cost vs development Involves tangible (cost) and intangible (quality of life) measures.  Conceptual Drawing and Estimates Very early design and cost estimate Present to potential funding sources Architect’s sketch drawings Preliminary cost plan – Cost per unit, cost per square footage, etc.. Use standard published cost data Preliminary and Final Design A/E and the design team design the project End product is plans and specifications Preliminary design (40%) - review before final design is made and owner must approve Final designs are time consuming Every possible detail is defined Prepare owners estimate (should achieve a reasonable accuracy within  Produce Bid Documents Owner advertises the project to receive bids- competitive The prospective bidders may need to be pre-qualified to bid for the project Contains – Information regarding the general type and size – The availability of plans and specs for review – Time, place and date of bid opening – Refundable and nonrefundable bid fees  Pre-qualification Technical competence and experience Current financial position Bonding capacity Current amount of work underway Post project litigation history Default on contracts  Bidding A bid is an offer to do work upon certain terms A formal offer duly made by one party to another. “Bid” and “Tender” are used interchangeably Bid call - invitation to make an offer Also, quotation is usually an offer. Especially used with purchasing materials.  Purpose of Tendering System To provide competition---and thereby reduce costs Lowest tender/ bid will not necessarily provide the lowest cost Prudent owner will consider not only the amount of the bid but also such factors as experience and capability of the contractor, and whether the bid is realistic.  Obtaining Bids Methods for obtaining: – Competitively bid- in part or in total – Negotiated- in part or in total  Bidding Process (& Awarding) Request for bids – Notice to bidders Obtain bid documents- and make decision whether to bid or not Make estimate and assemble the bid Submit bid Bid opening Award – Notice to proceed  Request for Bids Bid call – Notice to bidders Invitation to bid – Allow prospective/prequalified bidders to determine if they are interested Public bids- government, public authorities – Basis for award is usually lowest bid price Closed bids- private individuals & organizations – Basis for award is not necessarily the lowest bid price  Methods to Request Bids Advertisements: Online - newspapers – trade journals Trade association bulletins Letters of invitation Oral requests- followed up with a memo Request for pre-qualification  Bid Package Documents Generally consist of: Notice (Instructions) to bidders Bid Proposal form (Agreement) General Conditions Special (Supplementary) Conditions Specifications Plans and Drawings Addendum  Notice (Instruction) to Bidders To provide information and guidance to bidders so that all are on identical basis Includes: – Project title and location – Owner/client name and address – Consultants/designers names and addresses – Time and place for receiving bids – Type and amount of surety bonding Bid Bond Contract (Performance and Payment) Bond  Notice (Instruction) to Bidders Bid document source and cost Agreement Period that bid will remain open Procedure for pre-bid communication Pre-bid meeting Special requirements, site visit, etc.  Proposal Form Intent on the part of the contractor to enter into a contract to complete the work specified ONLY an offer – Lump Sum Price – Unit Price Price Duration to complete the project (Sometimes) Important Steps in Preparing Bid Proposals Analyze the contract documents for items to be included in the bid Schedule site visits to investigate potential problems Order bid bond early Develop and use uniform estimating standards  General Conditions Read the contract….the whole contract thoroughly!!!  General Conditions A document called the “General Condition” is used to define the responsibilities of the parties affected by the contract and describe the guidelines that will be used in the administration of the contract. A committee has been formed jointly by the American Consulting Engineers Council, the National Society of Professional Engineers, and the American Society of Civil Engineers to prepare standard contract documents. The committee is called the Engineers Joint Contract Documents Committee (EJCDC). These documents have been endorsed by the Associated General Contractors (AGC) of America and the Construction Specifications Institute (CSI). General Conditions 1. Definitions 2. Preliminary matters 3. Contract documents 4. Bonds and insurance 5. Contractor’s responsibilities 6. Owner’s responsibilities 7. Engineer’s responsibilities 8. Changes in the work 9. Change of contract price 10. Change of contract times 11. Tests and inspections 12. Payments to contractor and completion 13. Suspension of work and termination 14. Dispute resolution Supplementary Conditions Also called the “Special Conditions” Are extension of the General Conditions Contain the special legal requirements of the contract, that apply solely to the project at hand Used to: – Modify the General Conditions – To effect deletions from the General Conditions – To make additions to the General Conditions Supplementary Conditions The provision of the Supplementary Conditions shall govern over the General Conditions when conflicts arise.  Sample Contents of the Supplementary Conditions Scope (of the entire project) Project Scheduling Legal address of the A/E and owner Amounts of Bonds Amounts of Liquidated Damages  Sample Contents of the Supplementary Conditions Permits and Inspections Costs (who pays) Complete list, by number and title, of the contract drawings Applicable Laws and Regulations Amounts and types of Insurance Coverage (not specified in the General Conditions)  Specifications Specifications are written instructions to be used in conjunction with the plans/drawings so that together they fully describe and define the work that is to be accomplished along with the methods and quality that will be required. They are supplements to the plans/drawings and show information that cannot be easily shown in graphic forms. PURPOSE OF SPECIFICATIONS Guide bidders in cost estimates for their proposals Guide contractors during the : – Construction Phase Methods and installations Ordering of materials Performance and quality of work  RELATIONSHIP TO THE PLANS/DRAWINGS Normally the plans/drawings provide a visual description of the project. Specifications provide information regarding: – Quality of materials – Quality of workmanship – Installation methods – Tests and inspections  Specifications in STANDARD FORMS Specifications should be presented: – In standard forms: The American Concrete Institute (ACI), the American Welding Society (AWS), the American Association of State Highway and Transportation Officials (AASHTO), the American Society for Testing and Materials (ASTM), etc.. – In understandable language – 4 C’s Clear Concise Correct Complete  Masterformat A typical index of specifications Sections for a heavy construction project might appear as follows: 1. Clearing and grubbing 2. Removal of existing structures 3. Excavation and fill 4. Sheet steel piling 5. Stone protection 6. Concrete 7. Miscellaneous items of work 8. Metal work fabrication 9. Water supply facilities 10. Painting 11. Seeding  Addenda To correct errors in other contract documents To respond to queries from bidders To authorize design changes to approve material substitutions Takes precedence over original documents Bids should clearly record which addenda have been considered  Attached Documents A number of other documents are often required to be attached to the proposal These includes: – Pre-qualification statements – Bond forms – Listing of subcontractors and suppliers  Lump-Sum Proposals Proposals under the competitive bidding system are usually submitted as a Lump- Sum or Unit-Price Bid Lump-sum are used for most building projects and other works where the scope and requirements of the projects are well defined. The Proposal form for a lump-sum bid must provide spaces for only one amount to be given in words and figures.  Unit-Price Proposals Requested when the scope of the work cannot be well-defined The project consists of a relatively small number of activities Bidders are given estimated quantities and asked to supply unit- price  Decision to Bid Bid OR not to Bid????? Major finance and operational decision – Each bid preparation Costs ~ 0.25% of project cost If decides to bid: – Take-off quantities and estimate – Call for subcontractors bids and suppliers quotations – Apply overheads and markup  Last Hour Drama Last minute sub-bids and vendor quotations Adjustments to the final Bid Mobile Phone communications with head Office Right on time….Close the Bids  Receiving Bids Opening Notification to both successful and unsuccessful bids  Opening, Acceptance, and Documentation of Bids Private sector- No rigid procedures Public Sector- Following “inflexible” rules: – Receipt of sealed bids at the designed time and place – Acceptance and logging of name and amount for all bidders  To Withdraw a Bid A contractor must satisfactorily establish all of the following: – A mistake was made – Written notice given to agency – Specify how the mistake occurred – Mistake made bid materially different than intended – Mistake was made in filling out the bid and was not due to an error in judgment or carelessness in inspecting the site of the work or in reading the plans and specifications  Low Bidder Determination Under a lump sum price process a direct comparison of the base bids is all that is required Under the unit price proposal system, the method used is that of “equivalent lump sum”  Rejection of Bids Usually bid requests state that owner is not bound to accept lowest or any bid Person cannot be forced into contract against another person’s will Some reasons for rejecting bids: – Too few bids – Substantially over budget – Irregularities – Qualifications to the bid – Obvious errors  What is a Construction Bond? A construction surety bond is a three- party instrument under which the surety (bonding company) joins with the contractor (Principal) to guarantee to the owner (Obligee), that the contractor will comply with the terms and conditions of the contract.  Bonds A bond is a three party instrument that protects one party from default of a second party. In the event of a default occurring the third party is legally bound to offset any damages resulting from the default Parties Involved: – Principal: Party in position to default (Contractor) – Obligee: Party in a position to be damaged (Owner) – Surety: Bonding company  Types of Bonds Bid Bond Performance Bond Payment (Labor & Material) Bond  Bid Bond Protect against default in entering into contract by principal Damages: Owner selects next lowest bidder (Loss = Next Lowest Bid – Lowest Bid Price) Surety issues Bid Bond for a low fee - pay damages if lowest bidder defaults Amount of bond is usually 5-10% of the Bid Amount  Payment and Performance Bonds Issued at a cost of between 0.5 and 3% of bid price. Typically about 1%. Usually same surety is selected for providing Bid, Performance and Payment Bonds Payment Bonds: – Protect owners against failure by contractor to pay vendors and subs. – Protect the interest of the subcontractors, suppliers and laborers, if the construction firm/general contractor fails to make payments Performance Bonds: – Protect owners against poor quality and unacceptable work by contractors. – Must cover 100% on Federal Contracts- Miller Act  Liens and Holdbacks Lien is an action to recover the value of the losses Mechanics lien: – Legislation is to assist those who provide services or materials on a construction project to obtain payment.  Mechanics Lien First statute in USA- 1791 Mechanics liens create rights of two types: – Right to be paid for work done or goods provided – Owner is empowered to holdback a small percentage of the money owing to the contractor until the end of the contract or some prescribed time