2013 Providers Conference

PresentedBy

Todd MacaladyAssistant Professor UAF

AK TTAP

Construction Contracting

Construction Project Development

◦Phases of a construction project Preliminary planning and feasibility studies Preliminary engineering and design Final Design Completion Procurement Construction Closeout

The Next Step

Construction Bid Proposals

◦Contains the cost estimate◦ Includes all of the bid forms◦Required to bid competitively if

government projects◦Private owners could require bidders to

prequalify before bidding on a project

Instructions to Bidders

◦Provides procedures to follow in order to bid on a project

◦Provides detailed instructions on the requirements for the bid documents, bid submission, project information, and information on how to prepare the bid documents

The Bid Submission Process

◦Owner issues bid documents (usually done by the owner’s representative)

◦Contractors prepare their bid documents◦The bids are submitted at the location

indicated in the bid instructions◦Public or private bid openings◦Contractors have to sign noncollusion

statement that they did not work with other contractors during the bid process

Bid Advertisements Include Information on:

◦ The project◦ Who is building it◦ The A/E◦ The date of issue◦ A description of the work ◦ The basis of the bids◦ The time of completion◦ Bid opening information◦ Where to locate the bid documents◦ Prequalification requirements◦ Statement on the right to reject any and all bids ◦ References to any government laws and

regulations that pertain to the project

Bid Shopping

◦Occurs when the prime contractor asks the subcontractors to lower their bids after a contract has been awarded or uses different subcontractors than the ones that submitted bids

◦Results in additional profit to the prime contractor

◦ Illegal◦Could be prevented by requiring the prime

contractor to provide a list of the subcontractors with the bid

Proposal Evaluation

◦ Evaluation and selection of contractor Bids are either responsive or non-responsive

◦ Issue Intent to Award◦ Prepare contract documents

Contracts

◦Set Forth The Terms And Conditions Of Agreements

◦Protect Parties To A Contract◦Protect Parties When There Is A Default

◦Help Parties To Determine Who Is In Breach Of Contract

The Need to understand Contracts

◦ The Legal Terminology◦ The Basics Of Contact Law◦ Whether A Contract Addresses The

Requirements Of The Engineering And Construction Project

◦ Whether The Contract Favors An Engineer Or The Constructor To The Detriment Of The Owner

The Main Components of Construction Contracts

◦ General conditions◦ Supplementary conditions◦ Specifications◦ Contract drawings (plans)◦ Critical path method schedules

Components of Engineering Contracts

Articles in contracts include:◦Services to be provided◦Owner’s responsibilities◦Schedule for rendering services◦ Invoices and payment information◦General considerations

Components of Engineering Contracts

Articles in engineering contracts include:

◦Definitions◦Exhibits and special provisions◦Engineer’s services◦Additional services◦Construction cost limit◦Dispute resolution ◦Allocation of risks

Commercially Available Construction and Engineering Contracts Are Available Through

◦The American Institute Of Architects (AIA)

◦The Joint Engineering Contract Documents Committee (EJCDC)

◦The Associated General Contractors (AGC)

◦Other Professional And Trade Organizations

◦Owner Developed Contracts

Difficulties in Contracts Arise Due to Interpretation which is Caused by:

◦Vague Terms◦Unclear Contract Clauses◦Lack Of Familiarity With Contracts

Contract Administration

◦Act Of Determining Whether The Contractor Is Meeting The Construction Contract Requirements

◦Determining Whether The Contract Is Being Built According To The Contract, Plans, And Specifications

Definition of Changes◦ Owner requested changes◦ Inadequate design◦ Material unavailability◦ Budget changes◦ Natural disasters

Changes to Contracts

Five Types of Potential Alterations to Construction Contracts

◦ Changes◦ Extras◦ Deletions◦ Modifications◦ Waivers

Change Orders

◦Document in writing the terms agreed to by both the Owner and the contractor for altering the scope of work

◦Provide written instructions for contractors and they are signed by owners, the A/E, and the contractor

◦For projects with bonds they are signed by the surety

Change orders are also used to correct construction documents if there are errors, omissions, or discrepancies

Types of Items that Require Change Orders:◦ Additions or deletions of work◦ Unforeseen site conditions◦ Changes in market conditions