Bidding and Procurement

Construction Project Management, 3rd ed.Fred Gould and Nancy Joyce

© 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved

Bidding and ProcurementChapter 7

Gould and Joyce: Construction Project Management, 3rd ed. © 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved

Presentation Overview Bidder Prequalification Bidding process Bidding strategies Work breakdown packages Analysis of bids Award of contract


Bidder PrequalificationBidders should be put through a qualification process to verify that if selected they will have both the resources and expertise to successfully perform the work they have been contracted to complete.


Work Packages “Work Packaging” establishes the

breakdown of the overall project into smaller, manageable, subcontract pieces.

All project work needs to be covered and each package must clearly articulate the work to be accomplished

On a “fast-track” project the A/E and CM must coordinate the design and release of each package


Bidding Information

Invitation to bid Instruction to the bidders Bid form Alternates Addenda


Invitation to Bid Project Description Project Location Bid Due Date Project Start and Completion Dates Bonding Requirements Document Location Legal Requirements


Instruction to Bidders Bid Due Date Bid Form Instructions

Place to indicate fee of additional work Unit Prices

Location to Deliver Bid Method of Awarding Contract Expected Date of Award and Project

Start


Bid Form Name of

Contractor Price in #’s and

words Price Breakdown

by major trades Amount of bond Alternates Fees for

additional work Unit Prices

Time required to complete job

Bidder acknowledgement of receipt of addenda

Key Subcontractors

Bidder legal status: ie. Corporation

Signature, title and date


Alternates

An alternate is a request for a price for substituting one material for another, for adding to the scope of work, or for deducting from the scope.


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


Study the Contract! 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


Contractual Information Agreement General Conditions Special Conditions Bonding Requirements Insurance Requirements Technical Requirements


Bonds Bid Bond – guarantees that the

selected contractor will enter into a contract with the owner for the bid price

Performance Bond – guarantees the contractor will perform the work in accordance with the terms of the agreement

Payment Bond – guarantees the contractor will pay all bills


Insurance Workers' Compensation - this insurance

covers disability and medical insurance for the workforce

Comprehensive Liability – provides protection for 3rd party claims – injuries to non-workers even after completion

Builder’s Risk – Property insurance for the building while it is under the control of the contractor: fire, water, explosion, vandalism and theft.


Technical Requirements

Project technical information is delineated in two forms: graphic (drawings) and narrative (specifications). Information is usually only shown in one of the two places.


Types of Specifications Design – Descriptive specification

which the contractor follows and the owner takes responsibility for

Performance – Expectations identified the contractor determines how to meet

Proprietary – the exact product or method is specified to ensure a preferred product

Open – very nonrestrictive allowing a number of choices


ABC Project

ElectricalSiteworkGeneral

Level 1: Project

Level 2: CSI Concrete

SOG ElevatedColumnsFootings

Spread Strip Caissons

Level 3: Category

Level 4: Subcategory

Work Breakdown Structure


Note the CSI Switch to MFormat 2004MasterFormat 1995 MasterFormat 2004

Facility Construction Subgroup

2 Site Construction 02 Existing Conditions3 Concrete 03 Concrete4 Masonry 04 Masonry5 Metals 05 Metals6 Wood and Plastics 06 Wood, Plastics, and

Composites7 Thermal and Moisture Protection

07 Thermal and Moisture Protection

8 Doors and Windows 08 Openings


Work Breakdown Structure (WBS) “A labeling system that arranges

project components into divisions with a number of subdivisions”

CSI divisions

DOT divisions


Keys to Winning a Bid Ability to achieve a responsible

profit based on company investment and risk What will be the risks for this project? How will you mitigate the risks? Ability to be bonded for this job (must

make initial judgment as to project size vs. bonding capacity)

Challenges with doing public work


Bid Strategy Matching the company’s

position & strength against the competition’s weakness What sets you apart from the

competition? Consider local competition: looking

for work at any price, economy, relationship with owner, architect


Responsiveness to owner’s needs What is more important: cost, time,

or quality? Does the owner have the resources

to complete the project if changes occur (tight vs. loose budget)

Quality & reputation of the owner: fair & knowledgeable

Bid Strategy


Subcontractors Materials Equipment Project Staffing

Procurement Process


Subcontract or Self-Perform? Considerations

‘Estimated’ Cost & Risk of Delivery @ that $

Availability of: Supervisory personnel Skilled labor

Location (remoteness) of the project Long-term liability (leaks, maintenance,

…) POOR REASON

‘All the sub bids are over the estimate/budget’


Preparation for Buyout Review Contract Documents Prepare Preliminary Project

Schedule Prepare Contract ‘Boilerplate’ Review Subcontractor Scope Review Estimate & Scope Sheets Review Subcontractor Quotation Prepare ‘Subcontractor Interview

Form’


Important Subcontract Provisions Bind to the terms of the Owner-GC Contract Performance reqm’ts that give the GC control Non-performance clause / procedure Procedures for Changes Cleanup Subcontracting / assigning the subcontract Payment terms and conditions (inc. pay-when-

paid) No ‘Damages for Delay’


Analysis of BidsIs the low bid the best bid?

Check Base Bid Alternates Addenda Unit Prices Exclusions Qualifications Value Engineering Suggestions


Project Cleanup “Maintaining a clean job can be an expensive

proposition and at certain times during construction becomes a continuous operation.”

Project Cleanliness has a direct effect on:

Quality of the work Productivity Safety

Often a ‘struggle’ (finger pointing, excuses,..)

Make a Requirement of Subcontract Establish ‘Back Charge’ Procedures

Bidding and Procurement

Documents

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