Construction Contracting

2013 Providers Conference
Todd Macalady
Assistant Professor UAF
Construction Project Development
◦ Phases of a construction project
Preliminary planning and feasibility studies
Preliminary engineering and design
Final Design Completion
Construction Bid Proposals
◦ Contains the cost estimate
◦ Includes all of the bid forms
◦ Required to bid competitively if government
◦ 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
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
◦ 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
◦ 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
General conditions
Supplementary conditions
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:
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
◦ The Joint Engineering Contract
Documents Committee (EJCDC)
◦ The Associated General Contractors
◦ Other Professional And Trade
◦ 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
◦ Act Of Determining Whether The
Contractor Is Meeting The
Construction Contract
◦ Determining Whether The
Contract Is Being Built According
To The Contract, Plans, And
Definition of Changes
Owner requested changes
Inadequate design
Material unavailability
Budget changes
Natural disasters
Five Types of Potential Alterations to
Construction Contracts
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
◦ For projects with bonds they are signed by the
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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