Midterm Practice.pdf

# Midterm Practice ## Unit 2 - **Construction:** the process of building something **4 types of construction projects:** 1. Residential / Housing Construction (40-45%) 2. Building / Commercial Construction (25-30%) 3. Eng / Infrastructure construction (20-25%) 4. Industrial Construction (5-10%) *...

# Midterm Practice ## Unit 2 - **Construction:** the process of building something **4 types of construction projects:** 1. Residential / Housing Construction (40-45%) 2. Building / Commercial Construction (25-30%) 3. Eng / Infrastructure construction (20-25%) 4. Industrial Construction (5-10%) **Construction Project stages:** 1. Project feasibility 2. Programming / Design 3. Bidding / Award of contract 4. Pre-construction / Mobilization 5. Construction 6. Close-out / Occupancy **Construction Industry challenges:** 1. Fragmentation 2. Slow adoption of technology + less automation 3. Unstructured workspaces + Physically demanding tasks 4. Easy entry but high failure rate ## Unit 3 - **Project Participants:** 1. **Owner:** public + private owners - PAY + OWN - ↳ interest: quality + value product, delivery schedule, site safety 2. **Designers:** architects + engineers - ↳ selected by owner based on demonstrated abilities - ↳ prepare construction documents (plans, blueprints, specifications, and contracts) to owner - ↳ interests: aesthetic, relationships, quality, and recognition 3. **General Contractor:** LEAD CONSTRUCTION - ↳ interests: profit, construction time, relationship, and reputation 4. **Construction Management Firms:** MANAGE - ↳ only providing service to owner - ↳ essentially a GC but usually subcontract 100% of the work 5. **Subcontractors:** CONSTRUCT - ↳ do the work 6. **Trade Unions:** WHERE THE WORKERS COME FROM 7. **Suppliers:** MATERIALS - ↳ assist designers in selection AND contractors preparing bids 8. **Insurance + Surety Companies:** INSURANCE - ↳ Insurance company: provide liability + property insurance - ↳ Surety company: provide bid bonds, performance bonds, + payment bonds - ★ bonds are a financial guarantee to compensate affected parties in case of non-performance, contract breach, etc. 9. **Banks:** LOANS / FINANCING 10. **Permitting Agencies + Building Authorities:** PERMISSIONS + APPROVALS ## Unit 5 - **Project Delivery System:** framework relating project participants and establishment of formal/informal relationships between these participants/organizations - based on relationships (and responsibilities) of contracting parties and their timing of engagement in the project - **PDSs:** 1. **Design-Bid-Build (Traditional method)** - usually bid/negotiation w/ contractors - **trust-based relationship** | | | | | | | OWNER | A/E | GC |Sub. Con.| | | | | | | Sub. Con. | | | | | | Sub. Con. | | | | | | | | in charge of | | | | project delivery | | | | | | | - **Pros:** - defined cost at start - owner has contractual protection - owner not involved in construction process - **Cons:** - Slow; sequential not allowing overlap and construction can't start until design is completed - Few interactions between participants 2. **Pure Construction Management** - **Team concept** | | | | | | | CM | OWNER | A/E | Trade Con. | Trade Con. | | | | | | Trade Con. | - **Pros:** - one trusted poc (CM) - flexible schedule - small financial risk - **Cons:** - participants must have open communication - must have committed parties from beginning - small incentive for CM - high risk of loss of reputation - **CM:** Facilitator, predesign estimate, cost constructability input during design process, award of contract, paid a fixed fee 3. **Construction Management at Risk** | | | | | | | CM | OWNER | A/E | Trade Con. | Trade Con. | | | | | | Trade Con. | - **Pros:** - reduced risk for owner - **Cons:** - owner responsible for design defects / omissions - loss of control for owner over contractual changes 4. **Design-Build (Turnkey)** | | | | | | | OWNER | Construction | Design | D/B entity | | | | Function | Function | ONE contractual | | | | | | team responsible | Sub. Con. | | | | | for D/B | Sub. Con. | | | | | | Sub. Con. | - **Pros:** - Fast-track possible - good interactions between D/B teams - easy incorporation for changes - good for complex projects - **Cons:** - pricing not available at start - quality at risk for profit - may take a direction against owner's will 5. **Variation #1: Modified CM Design-Build** | | | | | | | OWNER | CN | D/B | A/E | | | | | | | Sub. Con. | | | | | | Sub. Con. | | | | | | Sub. Con. | - **full project responsibility** 6. **CM Oversight Design-Build** | | | | | | | | OWNER | D/B | | handles design + | CM | | | | | | construction | | | | | | | | | Sub. Con. | | | | | | | Sub. Con. | | | | | | | Sub. Con. | - **provides management + oversight** 7. **Integrated Project Delivery** | | | | | | Owner | A/E | CM/GC | SC | | | | | | | | SC | | | - **Multi-party contract** - **Shared risk, shared reward** - **Joined goals** - **Fiscal transparency** ## Unit 6 - **Cost = Price = Profit** → The right contract structure is important: - contractor can handle go to owner, and the risks not handled, so they manage - contractor can handle go to contractor (contractor loses $ if not handled, so they manage these risks, so to stay competitive) - **Balance:** - impose high enough risk incentive, so contractor works efficiently - impose low enough risk to have reasonably low bid - impose according to contractor ability - **Result of Risk on Timing:** - higher risk = longer construction delay - uncertainty (risk) = contractor charges higher upfront price - owner can expedite by shouldering risk or paying risk premium (higher price) - **Choice of contract type depends on:** 1. Estimation Accuracy 2. Ultimate Cost known 3. Desired risk 4. Priority of goals - **Financial Contracts:** 1. **Lump-Sum:** - **Pros:** - owner knows price at start - if well-estimated, clearly defined project, accurate contractual documents, low risk for owner - high incentive to finish early at low cost - **Cons:** - high risk for contractor in case of unforeseen circumstances - not possible w/ fast track 2. **Unit Price (QTY x Unit Price)** - Approximate quantities usually provided by owner - Payment based on final measured quantities (installed) - Used because of uncertainty in Field quantities - Cont. overhead included in unit price - Lowest bidder usually selected - Owner must be onsite to measure actual quantities - Highly dependant on accuracy of estimation - Total price can be greater than owner planned - **Cost Reimbursable Contracts 3+4** 3. **Cost + Percentage Fee:** - **Time-and-Materials Contract** | | | | | | | Price cost plus 5% | | Con profit | | | | | | | $525 (5%) | | | | | | $10,500 | Con profit | | | | | | | $500 (5%) | | | | | | $9,975 | Con profit | | | | | | | $475 (5%) | Owner has to pay | | | | | | | | $10,000 | | | | Final cost | | | | | | $11,025 | | | | | | | $10,500 | | | | | | | $9,975 | | | | | - **Pros:** - Permits collaboration at early stages - Useful if pricing can't be calculated or it is urgent - **Cons:** - Low incentive to finish early / reduce costs - High risk for owner - No insurance of final cost - Same reward (%) regardless of work quality 4. **Cost + Fixed Fee:** - **Time-and-Materials Contract** | | | | | | | Price cost plus 5% | | Con profit | | | | | | $10,500 | $500 | | | | | | $9,975 | | Owner has to pay | | | | | | | | $10,000 | | | | Final cost | | | | | | $11,025 | | | | | | | $10,500 | | | | | | | $9,975 | | | | | - **Pros:** - High incentive to finish early - Promotes collaboration - Useful when price can't be determined alternatively - **Cons:** - Low incentive to reduce costs - No insurance of final cost - **GENERAL:** - Cost varies but fixed fee is firm 5. **GMP - Variation of cost + fixed fee** - Usually savings below gm are shared between owner and contractor - **Guaranteed-Maximum-Price Contract** | | | | | | | Price = cost of work | | Con profit | | | | plus fixed fee of $500 | | $0 (0%) | | | | with a maximum price | | Con profit | | | | of $10,500 | | $500 (5%) | | | | | $10,500 | | Con profit | Owner has to pay | | | | | | $500 (5.26%) | | | | | $10,000 | | | | $10,000 | | | $9,500 | | | | | | | | Final cost | | | | | | $10,500 | | | | | | | $10,000 | | | | | | | $9,500 | | | | | ## Unit 7 - **Competitive Bidding:** - awarded to lowest bidder - traditional + widely used - time consuming: bid period, bid evaluation, review period before notice to proceed - specified quality at lowest price - open + closed bidding - contractor estimates project cost + profit (lump-sum, unit price) - loss absorbed by contractor - **Negotiation:** - pre-selected contractor - common practice for private owners - need for acceleration - owner picks con based on reputation + overall qualification - **Best Value:** - Federal government - Request for Proposal (RFP) - ↳ Price - ↳ other qualifications / owner expectations - ↳ Their evaluation criteria and weights ## Unit 8 - **Bidding Process** 1. **Owner:** issues request for bid - ↳ "Notice to bidders" or "Invitation to Bid" 2. **Contractor:** views / obtains bid documents 3. **Contractor:** decides to bid or not 4. **Contractor:** prepares estimate and bid submission - ↳ visit site - ↳ prepare estimate by calling subcontracts and supply contracts - ↳ assemble bid 5. **Contractor:** submits bid 6. **Owner:** opens bid and awards contract - **Issues with bidding:** 1. **Too many bids:** - In the case of too many bids, require pre-qualifications 2. **Not enough bids** 3. **Mistakes in bids:** - ↳ unintentional mistake (arithmetic, transcription error, etc) - ↳ clerical mistake (cosmetic, bad judgement, not visiting site, incorrect estimates) - ↳ Inexcusable errors 4. **Bid Rigging:** - **Bid shopping:** owner/contractor using a bid to drive down/ negotiate other contractor/sub-contractor bids - **Bid peddling:** contractors/subcontractors attempt to lower their bids/offer discounts after the bidding process has begun, usually in response to other bids ## Unit 9 - **Who Needs the Cost Estimation and When?** 1. Owner initiates a project 2. Owner completes the conceptual design 3. A/E finalizes the design 4. Owner issues request for bids 5. General contractors submit a bid 6. Owner opens the bids | | | | | Preliminary estimate | ±2-5% | (General Contractors) | | Conceptual estimate | ±5% | (Owner) | | Approximate estimate | ±30% | (owner) | - **Prelim, estimate**: calculated based on all-up historical rates - Building: area of building m² x cost/m² - Bridge: length of bridge m x cost/m - Auditorium: # people to be admitted x cost/head - **Approx.** - Owner hires cost engineers / quantity surveyors - Calculated using unit costs and required amounts of work - **Cost Classification** | | | | | | | Payroll taxes | Labor cost | Material cost | Direct cost | Indirect cost (10-35%) | | Insurance, benefits | | | 65-90% | | | usually calculated | | Equipment cost | | | | as a % of direct | | | | | | labor cost | | | | Project overhead | | | | Subcontractor | | | | | | cost | | | | | | | | Markup | | | | | | Not pertaining to any | | | | | | construction works | | | | | | | | | | | | Additional 7-20%, | | | | | | between S-20% | | | | | | of project cost | **Includes:** delivery, storage, and inspection - **Cost rates:** - cost/hr - cost/unit installed - cost / week or month - **Accuracy of cost estimation is dependant on equipment importance** - **Approach to cost estimation:** 1. Organize work items by trade 2. Quantity takeoff 3. Cost estimation of each item 4. Make summary sheet of each work item 5. Combine into Recap sheet 6. Ready to bid! ## Unit 10 - **Estimation Uncertainties (Risk Factors):** 1. Delay in delivery 2. Delay in schedule 3. Changes in monetary value 4. Uncertainty in estimated productivity 5. Unexpected geological (soil conditions 6. Act of THE DEVIL - **How to assess risk**: 1. Put price on uncertainties 2. Based on experience - RSMeans: Data: most widely used cost reference - **City Cost Index:** - **Cost in Toronto = National average cost x cost index (Toronto)/ 100** - **Crew table:** - **Total bare cost = A labourers x hourly bare cost + labourers x daily bare cost** - **Square foot project size modifier:** - X = project size modifier, function of - Q1 = typical given size of facility ft² - Q2 = size of new facility ft² - C1 = known median cost of facility per ft² ($/s.f.) - C2 = size adjusted cost of new facility per ft² ($/s.f.) - **Prelim Estimation using RSMeans table:** - **C1 = $113/ft², Q1 = 2,100 ft²** 1. **Find C1 and Q1** 2. **Calculate size factor, Q2/Q1:** Q2/01 = 5000 ft²/2,100 ft² = 2.38 3. **Find X from graph:** X = 0.92 4. **Calculate C2 : C2 = Xx.C1 = 0.92 x $113 = $103.96/ft²** 5. **Calculate Prelim Estimate, C2 x Q2:** 103.96 $/ft² x 5000 ft² = $519,800 <start_of_image> Costs are as follows: - **Cost Multiplier (x):** 0.92 - **Size Factor:** 2.38 - **Cost Modifier Curve:** 1.15 - **Area Conversion Scale:** 0.92 - **Cost Multiplier (x):** 1.15 - **Cost Multiplier (x):** 1.1 - **Cost Multiplier (x):** 1.05 - **Cost Multiplier (x):** 1.05 - **Cost Multiplier (x):** 1.0 - **Cost Multiplier (x):** 1.0 - **Cost Multiplier (x):** 0.95 - **Cost Multiplier (x):** 0.95 - **Cost Multiplier (x):** 0.9 - **Cost Multiplier (x):** 0.9 - **Cost Multiplier (x):** 0.85 - **Cost Multiplier (x):** 0.85 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8 - **Cost Multiplier (x):** 0.8