Chapter 6.5 Construction Procurement RAIC PDF

10/24/21, 4:24 PM Chapter 6.5 - RAIC Chapter 6.5 Construction...

10/24/21, 4:24 PM Chapter 6.5 - RAIC Chapter 6.5 Construction Procurement Print this page Definitions Addendum: A change to the bid package (usually a modification of the drawings and specifications) issued during the bid period and before execution of the contract. Base Bid: The stipulated sum of money without any adjustment because of alternative prices or substitutions, etc., for which the bidder offers to perform the work called for in the bid documents. Bid or Tender: An offer in response to a bid or tender call; a price and/or time estimate in response to a bid or tender call; the offer forms a “bid contract” until the time period for acceptance is over. “Tender” and “bid” are used interchangeably; however, the CCDC formally abandoned the term “tender” in the early 1980s in favour of the term “bid.” Bond: A financial security for the performance of an obligation; usually a written document supported by a pledge of collateral. Guarantee: A promise to answer for payment of a debt or performance of an obligation if the person liable in the first instance fails to make payment or perform the obligation (to be enforceable, must be evidenced in writing) (Carson’s Construction Dictionary: Law and Usage in Canada). Pre-purchasing: A procedure for purchasing materials, equipment or services by the owner prior to award of the prime contract. Pre-selecting: A procedure used by an owner to pre-qualify and select a manufacturer or supplier before the tender or award of the total contract. Pre-tendering: A procedure for calling tenders by the owner prior to the prime contract tender call. The contractor may then be directed to include the amount of this pre-tender in their own tender. Surety: The party (surety company) that issues a bond which guarantees the performance of the person bonded (in construction, the contractor) to fulfill obligations under contract within the financial and time limitations stated in the bond. Warranty: A statement of fact or quality intended to be relied upon by another party, carrying with it an implied or express promise to make good any breach (Carson’s Construction Dictionary: Law and Usage in Canada). Preamble There are multiple methods for organizing the design team and construction team in the design-construction program and procuring the construction forces. This chapter predominantly discusses the procurement of a construction contractor using the design-bid- build method. This method is characterized by the following: https://chop.raic.ca/chapter-6.5 1/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC the architect is retained directly by the client to manage the design project, oversee procurement of the construction contractor and conduct construction contract administration; engineering consultants may be retained by either the architect or the client; following the completion of construction documents by the design team, a construction contractor is procured through a tendering process; the construction trades are retained by the construction contractor. The chapter does not address situations when the architect is retained by a design-builder and the procurement process takes place before the building’s design. It does not address public-private partnerships where proponent teams comprised of financiers, designers, constructors and operators form a single entity to compete for a project through a complex process of interviews, design iterations and detailed capital and operating cost analysis. Nor does it address variations of the integrated project delivery (IPD) where the design team and the construction team are both retained by the client at or near the project outset. The construction management method is not inconsistent with design-bid-build; however, there are variations, including the addition of constructability and cost estimating expertise during design, schedule compression, and multiple tender packages based on partial, trade-specific drawings sets. See Chapter 4.1 – Types of Design-Construction Program Delivery for a discussion of these methods. Introduction Calling bids and awarding the construction contract must follow strict rules. Deviation from accepted tendering practices can result in violations of the Canadian common law associated with tendering and bidding. The architect is advised to refer to Paul Sandori and William Pigott’s Bidding and Tendering: What Is the Law? 5th Edition for a detailed explanation of the procedures and case law for the uniquely Canadian approach to bidding and tendering. The architect should always be cognizant that construction contractors, trades and product suppliers invest significant resources in creating the bid. Ensuring a fair and transparent process for all who are competing for the work is paramount to maintaining a professional relationship and respect in the industry. This chapter discusses various methods of selecting contractors and awarding construction contracts. For a complete guide to the bid process, refer also to CCDC 23 – A Guide to Calling Bids and Awarding Construction Contracts. In brief, procuring a construction contractor involves the following steps: planning the method of procurement; prequalification of tenderers; conducting the tender; evaluating the tenders; awarding the construction contract. Planning the Method of Design-Construction Program Procurement Clients, with the help of architects, select a general contractor for construction projects by generally using one of the following common methods: open competitive bids (sometimes called public tender); invited competitive bids (sometimes called invited tender); direct selection. Two of the services provided by the architect listed in “Schedule A – Services of the Canadian Standard Form of Contract for Architectural Services” of Document Six 2018 are to “Assist Client with Pre-qualification of Bidders” and “Assist Client in Calling for Bids.” These services may be extensive. On the other hand, if the client is an expert in construction procurement, this assistance may be limited to providing only information and advice. Planning how to procure the construction contractor should start early in the project in order to avoid rework and schedule delay. Changing from a stipulated price contract with a single construction contractor to construction management towards the end of the document production phase can result in significant additional work and schedule delays. Considerations in the procurement approach include: balance of cost and price, schedule constraints, and quality; project complexity and/or innovation requiring specially qualified contractors; project uncertainty and risk. At the outset of the project, the architect and the client must determine: https://chop.raic.ca/chapter-6.5 2/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC the form of design-construction project delivery; the type of construction contract; the method for awarding the contract. These decisions affect: the architect’s scope of services and fees; the project schedule; the preparation of construction documents and bid documents; the bidding process. See Chapter 4.1 – Types of Design-Construction Program Delivery for a comparative discussion of the three common delivery methods. For example, a stipulated price contract, with a single bid call, is much simpler to manage than a contractual arrangement with multiple bid packages at various stages of the project as in construction management. To ensure that all contractors are bidding on a comparable finished product, bidding for stipulated price contracts with general contractors occurs after all construction documents (including drawings and specifications) have been completed. All criteria for the selection of the successful bidder and award of contract must be included in the bid documents. Conducting the Tender The three types of competitive tendering processes discussed in this chapter are: open competitive bids or public tender call; invited competitive bids or invited tender call; direct selection or sole sourcing. The process of conducting the tender, either open or invited, generally includes the following steps: notify prospective bidders of the opportunity to bid for the construction contract through public advertisements or direct contact; issue the tender documents to bidders; conduct a bidders’ conference in which all bidders have the opportunity to receive information, ask questions and, in the case of existing facilities, tour a site and building; respond to inquiries; receive and evaluate proposals; negotiate outstanding conditions to the contract; award the construction contract. Open Competitive Bids (or Public Tender Call) In this type of tender call, the bidders are not usually “screened” or otherwise pre-qualified, and the capability of the contractor may be uncertain. The contractor may be selected on price alone. This type of tender call is frequently used when the project involves public funds. A notice of tender is often prepared and is advertised on various websites or electronic tendering services and in daily newspapers and construction journals. The notice should contain the following information: name and location of project; name of the client and the architect; size and type of project; bid closing date; method for obtaining bid documents; bid security requirements (such as a bid bond or deposit); date and location of pre-bid meeting, if necessary; construction start and completion (if relevant); form of contract. The notice enables contractors to decide whether they are interested in the project opportunity. Invited Competitive Bids (or Invited Tender Call) https://chop.raic.ca/chapter-6.5 3/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC When inviting bidders, the client may select contractors with whom the architect or the client have had a satisfactory experience; alternatively, the client and the architect may select bidders by pre-qualification. Architects often assist the client in assessing the capacity and previous record of contractors and subtrades who might be invited to bid on the work. In a pre-qualification process, the owner, supported by the architect and consulting engineers, gathers information about a construction contractor to ascertain whether they have the capability and experience to undertake the client’s project. A pre- qualification may include: company information, including ownership, when established, construction capacity given in annual gross revenues; resumes for people proposed to be assigned to the project; demonstration of capability through the successful completion of similar projects; methodology used in managing construction projects; safety records (declaration of insurance claims/injuries claims); other company attributes, such as environmental policy, employment diversity, social responsibility policy, etc. At the outset, pre-qualification helps to eliminate candidates who do not demonstrate that they have the necessary financial capacity, relevant experience, and human resources for the project at hand. Refer to CCDC 11 – Contractor’s Qualification Statement. Once pre-qualified, bidders should generally be equal in competence and the contract should then be awarded to the lowest bidder. Pre-qualification can have its pitfalls, and architects may wish to establish and use clear and transparent criteria when selecting or eliminating contractors to avoid being accused of favoritism. Invited bids are typically used for the following projects: projects with private clients who prefer to select from a group of proven contractors; specialized projects that require particular expertise; small projects that might not attract the attention of contractors if they were advertised publicly. Direct Selection It is always possible for clients to negotiate a contract with a single contractor, especially a contractor with whom a relationship of trust has been established over time. Clients and architects (possibly with the assistance of a quantity surveyor) should ensure that detailed construction cost estimates have been prepared as the basis for beginning negotiations. During negotiations, the contractor may propose changes or alternatives which must be evaluated and agreed upon. Negotiated contracts are based on mutual trust and full disclosure of all estimates and quotations. Direct selection and negotiation often lead to the following forms of construction contract: stipulated price (such as CCDC 2 – Stipulated Price Contract); cost plus, or cost to a guaranteed maximum price (such as CCDC 3 – Cost Plus Contract); construction management contracts. Negotiated Contracts Contracts for construction procurement may be negotiated when: the client has established good relationships with one or more builders; risks are too high to obtain acceptable firm pricing; selection is made primarily based on qualifications; the client’s policies allow qualifications to be factored into contractor selection, with pricing to be negotiated. Negotiated contracts are mostly used in case of emergency when time is of the essence or when an owner values the benefits of established long-term relationships. A client may use both negotiated and bid approaches in a project. Bonds In the construction industry, a bond is an instrument which permits a contractor to provide an owner with a guarantee from a bonding company, known as a surety. The guarantee ensures that the contractor satisfactorily performs their obligations under a contract. Bonds are a “useful means of ensuring responsible contract performance and financial security and, consequently, are often an essential requirement in construction procurement today” (CCDC 22 – A Guide to Construction Surety Bonds). A bond is not an insurance policy but instead a three-party undertaking whereby the surety agrees to indemnify the owner against loss arising from the failure of the contractor to perform obligations under contract. The architect should be familiar with the various types and applications of bonds in the construction industry. Refer to CCDC 22 – A Guide to Construction Surety Bonds for further information. https://chop.raic.ca/chapter-6.5 4/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC In preparing the bid documents, the architect should seek the counsel of a construction insurance specialist before advising the client of the type and amount of bonds appropriate for the project. For construction contracts, three bonds are of importance: bid bond; performance bond; labour and material payment bond. Bid Bond The bid bond submitted by the contractor (bidder) guarantees that if the bid is accepted within the time stated, the contractor will enter into a formal contract with the owner. If the contractor fails to enter into a contract, the surety will guarantee — up to the amount of the bid bond — to pay the difference in money between the amount of the contractor’s bid and the amount for which the owner legally contracts with another contractor for the project. Bid bonds are usually between 5% and 10% of the estimated construction cost; on very large projects, 2.5% is considered an appropriate amount. The architect may wish to consider other forms of bid security: certified cheque; irrevocable letter of credit from a financial institution; negotiable securities (in rare instances). Frequently, smaller contractors, who do not have the financial capacity to obtain bid bonds, may be appropriately qualified for small or specialized projects. In these cases, other forms of bid security should be considered. If a bid bond is selected as the appropriate form of bid security, the use of CCDC 220 – Bid Bond is recommended. Performance Bond The function of a performance bond is to indemnify the owner up to the amount of the bond in the event of default (bankruptcy or insolvency) on the part of the contractor. In the event of a contractor’s default, the performance bond will cover the costs of completing the contract as well as other costs for which the surety is liable, up to the total amount of the bond. Frequently, the amount of a performance bond is based on a percentage of the contract amount, such as 50% or 100% of the contract amount. Bid bonds do not ensure that a surety will provide the necessary performance bond once the bid is accepted; therefore, it is prudent to request a separate undertaking signed by a surety company to issue a performance bond if the contractor is awarded the contract. This undertaking is usually in the form of a letter signed by the surety and may be called a “Consent of Surety” or “Agreement to Bond” or “Bid Letter.” A performance bond will not cover payment of labour and material claims. The use of CCDC 221 – Performance Bond is recommended for performance bonds; however, many sureties have their own type of documentation. Labour and Material Payment Bond A labour and material payment bond guarantees that claimants (subcontractors, subtrades and suppliers who have direct contracts with the contractor) will be paid for labour and materials provided to the contractor for use on the project identified in the bond. The use of CCDC 222 – Labour and Material Payment Bond is recommended; however, many sureties have their own type of documentation. Refer to CCDC 22 – A Guide to Construction Surety Bonds for further information. Preparing the Bid Package The package sent to bidders to prepare their bids is made up of the components outlined in Appendix A – Checklist – The Bid Package: A List of Information Required at the end of this chapter. In preparing the bid package, the architect should refer to CCDC 23 – A Guide to Calling Bids and Awarding Contracts. The excessive use of supplementary general conditions should be avoided in the preparation and use of CCDC documents. The CCDC will not endorse any supplementary general conditions; the modification of CCDC contracts by way of addition, deletion or revision should be kept to a minimum and only considered after thorough review. Users are cautioned to avoid arbitrary revisions which may weaken the documents’ provisions and create serious problems. The addition of supplemental conditions to a standard form of agreement should be limited to ensuring that the contract aligns with the context of the project. For example, a project may require the contractor and trades to obtain a high level of security clearance or assume responsibility for safety measures beyond usual site safety protocols. Supplemental conditions should not be used to change the nature of the owner-contractor relationship or transfer undue or unmanageable risk from one party to another. https://chop.raic.ca/chapter-6.5 5/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC Occasionally, special circumstances require special bid packages and additional information for the bidders. Architects may need to provide bidders with information on the details of pre-awards, pre-purchased materials, and the responsibilities which the successful bidder must assume. (See “Definitions” at the beginning of this chapter.) Some examples include: there are special insurance and indemnification requirements; the client decides to advance construction by awarding construction contract(s) for a portion of the work, such as foundations; some materials, products or systems are pre-purchased for incorporation into the project; pre-award contracts have been issued for structural steel or certain mechanical and electrical components; some equipment has been purchased directly for future installation in the building (this is typical for hospital equipment, which must be installed under subcontract to the general contract). See also Chapter 6.4 – Construction Documents, Appendix E – Specifications, Preparing Specifications, The Bid Package. Privilege Clauses In the past, it was customary for owners and architects to exercise some control over the tendering process by inserting a “privilege clause” in the bid package. A typical privilege clause read as follows: “The lowest or any tender shall not necessarily be accepted.” This type of clause is no longer appropriate. It was believed that this clause allowed owners to justify a decision to award a contract to someone other than the lowest bidder. A decision issued by the Supreme Court of Canada in April 1999 has provided a final interpretation on this part of the law of tendering. Owners are expected to award a contract in accordance with the terms and conditions of the tender call and not to provide an unfair advantage to one bidder. Accepting a non-conforming bid is considered a breach of the duty of fairness to all other bidders. A privilege clause does not permit the owner to accept a non-compliant bid. Architects should review Section 2.0, Principles of the Law of Competitive Bidding of CCDC 23 – A Guide to Calling Bids and Awarding Contracts. In preparing tender documents, it is essential to indicate the following in the instructions to bidders: the requirements for a compliant bid; whether or not bids may be withdrawn and under what circumstances; whether or not, and the extent to which, pre-award negotiations will be permitted; all criteria for selection of the successful bidder. It may be prudent to look for direction from construction lawyers and from the provincial or territorial association of architects for advice on the preparation of bid packages. Distribution of Bid Documents Usually, the notice of tender indicates where and under what conditions contractors can obtain the bid documents. The administration and distribution of the bid documents can be a service provided by the architect or alternatively, in the case of an experienced or sophisticated client, it may be the client’s responsibility. Number of Sets of Bid Documents Clients, consultants, contractors, and subcontractors all have vested interests in having easy access to the drawings and specifications during the bid period. Limited electronic access or too few printed sets may reduce exposure of documents to subtrades and suppliers, and perhaps reduce the number of competitive prices. When determining how to distribute bid documents electronically and how many sets of hard or paper copies to print, architects should consider the following factors: requirements of the client and consultants; requirements of authorities having jurisdiction; type and number of electronic tendering services, such as Biddingo.com, Merx.com, the federal government’s procurement website http://buyandsell.gc.ca, or bidsandtenders.ca; sets for construction association plan rooms; size and complexity of projects (number of trades involved); number of contractors and subcontractors expected to bid; sets required for execution of the contract. https://chop.raic.ca/chapter-6.5 6/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC It is important to always issue complete, and not partial, sets of the bid documents. Client-architect agreements should not stipulate the number of sets to be included in the fee. Printing drawings and specifications is a reimbursable expense. If clients insist that a minimum number of sets be included in the fee, the architect should adjust the fee accordingly. Fee arrangements should also be made for the formatting, dissemination, and distribution of electronic data. Tracking the distribution of bid documents and addenda is important. A typical “Bid Documents Distribution List” is provided in Chapter 6.8 – Sample Forms for the Management of the Project. Deposit Contractors customarily obtain bid documents by providing a deposit to ensure their safe return. The deposit amount is generally the cost to reproduce a full set of documents plus a nominal handling charge. The deposit is refunded when bid documents are returned within a specified time, provided that the documents are complete and in good condition. Sometimes, documents are provided at cost plus an administrative charge to any general contractor, trade contractor, supplier, etc., without the return of any funds. Construction Associations and Bid Depositories Access to information is critical and should be easily obtainable to ensure the best bids. A complex or large project may require the distribution of extra or additional sets of bid documents or the use of an electronic tendering service. All bid documents may be provided to construction associations, particularly for large projects and for projects that have significant subtrade components. A bid depository is a facility operated by the local construction association to collect and register bids from subcontractors and suppliers, and then transmit these subtrade bids to general contractors. Usually, these quotations for the general contractors’ use must be submitted within a specified time before the bid closing. The rules may be confirmed with the local bid depository. See Chapter 2.1 – The Construction Industry for a summary of the role of bid depositories. Addenda A detailed analysis of the documents by contractors, subtrades and manufacturers in the preparation of their bid may reveal omissions or contradictions in the project documents or items which need clarification or correction. The architect and engineers may also discover inconsistencies or omissions. Additional products which are approved as alternatives may have been identified. Moreover, the client may wish to make minor changes to the project. When questioned about the documents, the architect should be careful to issue new information only in writing to all bidders and others, including construction associations, bid depositories, the client, consultants and authorities. In the cases described above, the architect should prepare “addenda” to the bid documents. The addenda modify or interpret the bid documents. The addenda may include both text and drawings, or text only. Each addendum should be numbered and dated and becomes part of the contract documents when the construction contract is executed. Engineering addenda should be forwarded to bidders through the architect, and the numbering of these addenda should be integrated with the architect’s system. The new information should be set out very precisely so that bidders know exactly what is original and what has been added, deleted, or changed. All bidders should base their bid on the same information. When organizing addenda, architects can assist bidders and contract administrators by following these procedures: identify all addenda by project name and project number; provide a date of issue for each addendum; number addenda consecutively; record the information in a logical order (following the sequence established in the drawings and specifications); use simple, clear instructions such as “Delete:” and “Add:” and “Revise to Read:”; reference all attachments to the addendum, providing a drawing and detail number, as well as the specification section followed by the article and paragraph number; refer to the attachment in the addendum. A sample addendum is provided in Chapter 6.8 – Sample Forms for the Management of the Project. The last opportunity for issuing an addendum should be no later than four working days before bid closing. The same written instructions should be received in a timely manner by all bidders. If this is not possible, consideration should be given to extending the bid period. Bid Period and Bid Closing https://chop.raic.ca/chapter-6.5 7/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC To ensure that clients receive competitive prices, contractors must have adequate time to review the bid documents and to prepare a bid. The length of the bid period will vary, based on the project size and complexity. A large, complex project “out for public tender” may require four to six weeks for bidding, whereas a simple, small project by invited bid may only require two weeks. Market conditions can affect the bid period; for example, several projects being bid at the same time may require a longer bid period. It is not recommended to receive bids in more than one location. It is increasingly common for bids to be received electronically, and architects are advised to refer to Section 7.8 of CCDC 23 – A Guide to Calling Bids and Awarding Contracts for information on principles which apply when receiving bids electronically. It is not recommended that bids close on a Friday or a Monday, nor immediately following or preceding a statutory holiday. Usually, the time for closing bids is mid- to late-afternoon. It is important to specify the time as “before” the hour, not “on” or “at” the hour. Here is an example of a well-worded instruction: Bids must be received before 3:00 P.M. on Thursday, November 26, 2020. The person receiving the bid should time-stamp, date-stamp, and initial the bids on receipt at the designated place of closing. Bids received after the designated bid closing time should be returned unopened to the bidder, indicating that it was a late bid. No reasons for the lateness (such as accident or traffic jam) can be accepted. On the other hand, if an external cause such as a snowstorm has prevented the majority of expected bidders from tendering their bids, the closing of the bid call may be postponed, in which case the bids that were received should be returned to their senders unopened. Ideally, bids should be opened soon after the bid closing time. Frequently, bids for public and for some private projects are opened with the bidders, or their representatives, present. Only the following information should be announced: bidder’s name; the base bid amount; the required bid security or bid bond. Alternative prices and unsolicited prices should not be reported. Alternative prices require analysis; reporting them at this time could mislead bidders. A form entitled “Summary of Bids” is provided in Chapter 6.8 – Sample Forms for the Management of the Project. Both the architect and the client may find this form useful for recording bids during the bid opening. Infrequently, after the bid closing, a bidder may notify the architect or the client that a serious mistake has been made in the bid, and this contractor should be permitted to withdraw without penalty. However, the submission of a bid is a legally enforceable contract between the bidder and the owner. Based on the conditions of the “bid contract,” bidders are unable to withdraw their bids during the period of irrevocability (usually the period provided for in the bid bond). To do so would permit the forfeiture of the bid deposit or bond. Legal advice is required in such an instance. CCDC 23 indicates that if “the bid-calling authority is satisfied as to the existence of a genuine and significant mistake, the bid should not be accepted and the bidder should not be penalized even though the Owner may have the legal right to accept the bid.” If only one bid is submitted, the architect should advise the client to consider returning the bid unopened or negotiating with the sole bidder. Refer to CCDC 23 – A Guide to Calling Bids and Awarding Contracts for more information on bidding. Analysis of Bids If part of the agreed-to services, the architect may assist the client in analyzing the bids and reporting. However, it is the client who will select the successful bidder. The architect will carefully review each bid. Prior to reporting to the client, the architect should analyze and research: the completeness of each bid; the bid amount and the amount of value-added taxes such as GST, HST or QST; the proposed construction start date and schedule; inclusion of all addenda; subcontractors listed, including follow-up of the references; manufacturers and suppliers listed with follow-up as required; alternatives; unit prices. It may be helpful to follow up with the architects involved on previous projects given as references by the low bidders. Finally, the architect will carefully review and compare the financial impact of any alternatives or substitutions or unit prices. https://chop.raic.ca/chapter-6.5 8/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC The architect should report in writing the findings of the bid analysis, including a comparison of all price and bid information, and recommend a course of action (that is, usually the selection of a contractor that most closely meets the applicable criteria) to the client. Bid Types Bids are described in the following two terms: compliant bid; non-compliant bid – that is, any irregular bid that might be considered informal, non- responsive, incomplete, improperly qualified, or conditional. Any bid is considered non-compliant if: it does not meet the basic requirements concerning confidentiality (for example, being in a sealed envelope); it does not indicate that the correct number of addenda were received and included in the bid amount; it is not accompanied by the requested bid bond or bid security; it is not properly signed or sealed; bonding requirements are not submitted (for example, “Consent of Surety” or “Agreement to Bond”). Refer also to CCDC 22 – A Guide to Construction Surety Bonds. Any bid deemed non-compliant should be rejected. The architect should limit advice to a client indicating that a bid is or is not compliant, the amounts of the bid, and that on the face of the bid documents provided, there is no obvious reason that the bid be accepted or rejected. A recommendation to a client that they should enter a contract with a particular contractor is legal advice that should be provided by the client’s legal counsel, not the architect. Over Budget When the lowest of the formal bids is higher than the most recent construction cost estimates and the client does not wish to revise the budget or abandon the project, there are two possible solutions: if the difference is more than an amount stated in the client-architect agreement of the latest approved construction cost estimate, the Canadian Standard Form of Contract for Architectural Services – RAIC Document Six states that the architect, if requested by the client, will revise the construction documents and administer a new tender call, at no additional fee; if the difference is less than the amount stated in the agreement of the latest approved cost estimate, it is generally possible to propose alternatives and to negotiate an acceptable price with the lowest bidder. Contract Award Letter of Acceptance The award of a contract is usually accomplished by issuing a letter of acceptance from the client. This letter allows the contractor to start work immediately while a formal contract is drafted and executed. Bids must be accepted or rejected as submitted. The architect frequently assists the client in the preparation of the letter of acceptance; however, it is prudent to advise the client to have the letter of acceptance and the subsequent construction contract reviewed by the client’s lawyer. Chapter 6.8 – Sample Forms for the Management of the Project provides a sample Letter of Acceptance. Some clients request that the architect assist them in issuing a letter of intent to the contractor to advise the contractor of the intention to award a contract. A letter of intent, which is issued with the intention of binding the contractor to the project with no real commitment, can be misleading. Letters of Intent should be avoided in favour of a Letter of Acceptance. Notification of Unsuccessful Bidders Unsuccessful bidders should be notified promptly of the contract award; this permits contractors to make arrangements with bonding companies, staff, and subcontractors to bid on other projects. A sample Letter to Unsuccessful Bidders is provided in Chapter 6.8 – Sample Forms for the Management of the Project. Preparation of the Construction Contract The architect usually prepares the construction contract. It is recommended that the standard Canadian Construction Documents Committee (CCDC) forms of construction contract be used. These documents have widespread acceptance in the construction industry and have been tested and endorsed by all CCDC constituent members. The Construction Contract https://chop.raic.ca/chapter-6.5 9/11 10/24/21, 4:24 PM Chapter 6.5 - RAIC FIGURE 1 Relationships in a Stipulated Sum Contract such as per CCDC 2 See Chapter 2.1 – The Construction Industry, Appendix A – List – Canadian Construction Documents Committee Contract Agreement Forms and Guides for a list of CCDC documents. The number of copies of the contract to be executed depends on the client and the client’s lawyer. A minimum of two original copies (with CCDC authorization seals) should be prepared – one for the client and one for the contractor – as well as one photocopy for the architect. The signatures (and corporate seals) should be applied to both original copies. CCDC 20 – A Guide to the Use of CCDC 2 describes the method for filling in and completing the agreement form in CCDC 2 – Stipulated Price Contract. Some lawyers recommend binding and sealing the documents to make it difficult to remove and replace pages without breaking the seal. Two sealing methods are: a ribbon or cord through each page with a wax seal on the cover; wire and lead seal. Less formal methods may be acceptable for smaller projects. To execute the contract, both the client and the contractor should sign and seal the covers of the documents, including the cover page of the drawings and the speci cations. Sometimes, every page of the supplementary conditions and occasionally all the drawings are initialed. A contract set is then provided to the client and to the contractor for their records. https://chop.raic.ca/chapter-6.5 10/11