Construction Contracting

Report
2013 Providers Conference
Presented
By
Todd Macalady
Assistant Professor UAF
AK TTAP
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Construction Project Development
◦ Phases of a construction project
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Preliminary planning and feasibility studies
Preliminary engineering and design
Final Design Completion
Procurement
Construction
Closeout
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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
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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
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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
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Bid Advertisements Include Information on:
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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
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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
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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
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The Main Components of Construction
Contracts
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General conditions
Supplementary conditions
Specifications
Contract drawings (plans)
Critical path method schedules
Components of Engineering Contracts
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Articles in contracts include:
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Services to be provided
Owner’s responsibilities
Schedule for rendering services
Invoices and payment information
General considerations
Components of Engineering Contracts
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Articles in engineering contracts include:
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Definitions
Exhibits and special provisions
Engineer’s services
Additional services
Construction cost limit
Dispute resolution
Allocation of risks
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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
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Definition of Changes
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Owner requested changes
Inadequate design
Material unavailability
Budget changes
Natural disasters
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Five Types of Potential Alterations to
Construction Contracts
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Changes
Extras
Deletions
Modifications
Waivers
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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
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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

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