Lecture 3 - Bidding and Procurement -1.pdf

CEE 472/ARCH 432 Construction Project Management Bidding and Procurement-1 1 Where we are… ✓ 8/27 Course Overview and Introduction ✓ 8/29 Industry Overview; Procore Introduction 9/3, 9/5 Bidding and Pro...

CEE 472/ARCH 432 Construction Project Management Bidding and Procurement-1 1 Where we are… ✓ 8/27 Course Overview and Introduction ✓ 8/29 Industry Overview; Procore Introduction 9/3, 9/5 Bidding and Procurement (2) 9/10, 9/12 Project Delivery Methods & Construction Contracts (2) 9/17, 9/19, 9/24 Cost Estimating (3) 9/26 Pre-construction Services; Midterm Exam-1 Review 10/1 Midterm Exam-1 10/3, 10/8, 10/10 Construction Planning & Scheduling (3) 10/15 Materials Management 10/17 Project Startup 10/22, 10/24 Project documentation & communications (2) 10/29 Project payments 10/31, 11/5 Cost & Time control (2) 11/7 Quality Management 11/12 Safety Management 11/14, 11/19 Project Closeout (2) 11/21 Midterm Exam-2 Review 11/26 Midterm Exam-2 12/3-12/16 Work on Final Projects 12/17 Final Project Due 2 Last Week Overview of AEC Industry – Sectors – Funding – How is it different from Manufacturing? Industry Participants and Roles – Main stakeholders/players – Contributions 3 Objectives The Procurement Process – Methods – Bidding process Contract documents 4 Project life-cycle (from last week) Design Build/Maintain Operate Eliminate/ Conception Design Build Maintain Recycle/ Revise Repair 5 Project life-cycle Design Procurement Build/Maintain Operate Eliminate/ Conception Design Bidding Contracting Build Maintain Recycle/ Revise Repair 6 Procurement Phase Also known as the bidding and awarding phase Selection of the contractor takes place 7 Common methods of procurement Bid Method – RFP (Request for Proposal) is prepared by the owner – Based on lowest bid price – The design should be at least 90% or more complete Sole Source Selection- Without proposals – An owner calls one service provider and award the project – Shorter procurement time – Lack of price competitiveness – Not for public projects 8 Common methods of procurement (Contd.) Negotiated Method – Contractors who qualify to bid for the job should meet pre-defined criteria – Criteria (past performance, reputation, technical competence, experience, financial, safety, etc.). Price is not included in the selection criteria – Shortlisted firms/contractors are asked to submit proposal – Best proposal is selected based on criteria 9 Procurement – Bidding process Bidding is the process of submitting a proposal (Bid) to undertake a project Two types of bids – Public – public projects – Private – private projects 10 Procurement – Bidding process Public projects – must be advertised – normally awarded to the low responsive bidder – are funded by taxpayer dollars – are subject to regulations that control the bidding process and award of the project – must use the open bid process – require the contractor to post 3 separate bonds (which ones?!) – may require prequalification – E.g.; public schools, roads, government buildings 11 Procurement – Bidding process Private projects – are usually negotiated – only a limited number of selected contractors involved in the negotiation closed bid system - can solicit bids from whomever they want, invitation for bids – private jobs do not need to be advertised (at the discretion of the private owner) – are funded by private investors – May require the contractor to post bonds – May require prequalification – E.g.: apartment buildings, private office buildings, factories 12 Procurement – Bidding process Public-Private Projects (PPPS) – are a hybrid of Public and Private projects – utilize a combination of private entities to provide capital and construction resources, and government agencies to oversee the process and ensure that taxpayer dollars are used efficiently – allow important infrastructure projects to move forward sooner using private $ – have a variety of regulations that control the bidding and award of the project – depending on the state – are usually formed when a public entity seeks out qualified bidders for a project – E.g.: roadways, waste-water treatment, urban development 13 Procurement – Bidding process Owner Advertise Issue addenda Open and (if needed) evaluate bids - Acquire Conduct quantity Submit (Offer) documents take-off bid Contractor - Decide whether to bid - Review bid Determine prices Finalize documents and for quantities bid examine the site** Suppliers and sub’s submit bids **Required to notify owner if discrepancies or errors exist 14 Procurement – Bidding process From Owner to Contractor Usually, the owner prepares the contract documents with help of the designers – Drawings (plans) Civil, architectural, structural, electrical, mechanical, etc. – Project Manual (specs) Bidding documents Agreement Contract Documents General Conditions Special conditions Technical specifications 15 Contract Documents – The Drawings The drawings are a graphical set of directives prepared to express the wishes and desires of the owner. The most important communication tool used to convey the work. There has been a shift with how drawings are produced and communicated. Today models have been reintroduced to supplement drawings using 3D and 4D computer modeling. (4D includes time/schedule) Most drawing today are produced electronically using computer aided design (CAD). 16 Contract Documents – The Project Manual The Project Manual is the second part of the contract documents and is often referred to as the specs. Provides written instruction to the builder. Typically contains four primary sections: – Bidding documents – General conditions – Supplemental conditions – Technical specifications 17 Project Manual – Bidding Documents Advertisement or invitation to bid: appears at the beginning of the project manual and describes how the contractor can get the work. Instruction to bidders: provides specific instructions regarding the bidding process, and includes: – Procedures for submitting questions and obtaining clarification during the bidding process. – Information regarding addendum receipt and inclusion. – Rules concerning submissions such as bond requirements, bid opening, rejection of bids, and awarding the project. – Expectations for post-bid deliverables (schedule of values, construction schedule, etc.) 18 Project Manual – Bidding Documents (Contd.) Bid forms: these are actual forms that need to be filled out when submitting the bid and are included in this section. – Sections to be filled out include bid price, completion date, subcontractors, alternate pricing, and receipt of addendum. – Some projects have special requirements such as Minority or Women’s Business Enterprise (MWBE) participation. 19 Project Manual – Bidding Documents (Contd.) Alternates: Alternates may consist of features to be added to the base bid, at an additional cost for each additive, or they may be deductive with a cost reduction for each alternate accepted – A request for a price for substituting one material for another, for adding to the scope of work, or for deducting from the scope. 20 Project Manual – Bidding Documents (Contd.) Addenda: An addenda is a change in the documents made during the bidding phase, before contract award – Bidders often identify inconsistencies that must be corrected – Bid documents may also be released prior to design completion such that the addenda complete the remaining design. – Acknowledgement of all addenda releases occurs on the bid form 21 Project Manual – Agreement The contract form that will be signed by both parties after the contract is awarded. – Identification of parties to contract – Description of project and work to be performed – Start Date – Date of Substantial Completion – Liquidated Damages – Contract Sum – Progress Payments – Interest Rate – Retainage – Final Payment – Enumeration of Contract Documents 22 Project Manual – General Conditions The General Conditions are one of the most important parts of the construction contract. The General Conditions outline the responsibilities of each of the parties and clearly delineate and specify the terms of the contract (rights, responsibilities, relationships): – Roles and work of different parties – Schedule – Cost & payments – Change orders – Claims & disputes 23 The Construction Specification Institute (CSI) CSI was founded in 1948 and serves all major disciplines involved in the design and construction industry. Developed CSI MasterFormat which is the standard format for construction specifications. 24 Project Manual – Supplementary Conditions Special or supplemental conditions deal with condition that are project specific. They are considerations beyond the scope of the standard general conditions and serve as augmentation to the terms laid out in the general conditions. Examples of project specific conditions include: – Soils and soil testing information. – Survey information provided by the owner. – Materials or other services provided by the owner. – Job signage requirements. – Traffic control and pedestrian safety – Phasing requirements – Security requirements – Temporary structure requirements 25 Project Manual – Technical Specifications Deal directly with construction, as opposed to administrative aspects of the other sections. Used in conjunction with the plans and identify requirements related to labor, materials, equipment, and procedures needed to complete the project. Discuss the following aspects of the job: – Quality of materials. – Standard of workmanship. – Methods of installations and erection. – Quality control and quality assurance procedures. 26 Procurement – Bidding process From contractors to owner (responding to the RFP) Complete the bid documents and requests (price, schedule, forms, and project management process “ quality, safety, risk, etc.”) Addenda should be included (a list of clarifications/changes during the bidding) Include Bid Bond, Performance Bond, and Payment Bond (the owner will evaluate the bids and selects the best bidder) 27 Bonds Bid bond – guarantees that the low bidder will submit performance and payment bonds and execute a contract to complete the project at the price bid. If the contractor does not, the bid bond becomes payable to the owner as compensation for damages sustained, which are the additional costs incurred by awarding the contract to the next lowest bidder Performance bond – guarantees that the contractor will complete the project in accordance with the contract plans and specs. If the contractor defaults or fails to perform, the bonding company will either complete the project in accordance with the contract requirements or compensate the owner for additional costs incurred by hiring another contractor to complete the project Payment bond – guarantees the contractor will pay all suppliers and subs and that no liens will be places on the complete projects. If the contractor is unable or refuses to pay for work performed or for materials, the surety will pay the claimants 28 Contract Award Phase Issue notice Conduct Award Issue notice Owner of award pre-construction contract to proceed conference (Acceptance) Award Acquire Contractor received required Organize Begin construction construction bonds and team insurance 29