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What You Need to Know Before Embarking on a New Building Program: What Really Happens on Bid Day?. Presented by: Robert L. Moultrie Chairman & CEO. Discussion Points. Trends in the Design and Construction Industry Research Findings Evaluation of Alternative Delivery

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slide1

What You Need to Know Before Embarking on a New Building Program: What Really Happens on Bid Day?

Presented by:

Robert L. Moultrie

Chairman & CEO

discussion points
Discussion Points
  • Trends in the Design and Construction Industry
  • Research Findings
  • Evaluation of Alternative Delivery
  • The Evolution of Project Delivery Systems Factors Leading to Alternative Delivery Methods
  • Critical Success Factors
trends in the design and construction industry
Trends in the Design and Construction Industry
  • A growing number of public and private owners faced with large construction projects and tighter schedules are using outside program managers to deliver projects. (ENR Magazine)
  • A greater acceptance of Alternative/Total Responsibility at Risk
  • All states, with the exception of two, allow alternative delivery
  • “Volume of turn-key projects expected to increase from 40% to 60% over the next two years” (Design-Build Magazine)
research findings from the construction industry institute
Research Findings from the Construction Industry Institute

Regardless of delivery method, research showed that cost increases by the contractor were due to:

  • Lack of early planning participation by the contractor (constructibility reviews and value engineering suggestions)
  • Lack of previous working relations of the architect/engineer and the contractor
  • Contractor’s recognition of engineering errors during the bidding process, but there was no intercommunication
factors leading to alternative delivery methods
Factors Leading to Alternative Delivery Methods
  • Changes in Owner staff makeup
  • A focus on the Owner’s “core business” (and it’s usually not building large capital programs)
  • A need to downsize in-house capabilities
  • The business client and Owners have changed
your choices
Your Choices
  • Design-Bid-Build (aka, Traditional Approach)
  • Construction Management at-Risk
  • Design-Build

The project delivery method defines the relationships, roles, responsibilities, and risks of all parties involved.

traditional approach design bid build

Owner

Architecture /

Engineering

GeneralContractor

S

S

S

S

S

Traditional Approach: Design-Bid-Build

Owner

GeneralContractor

BIDS OUT

TO

HIRES

HIRES

Architecture /

Engineering

traditional approach design bid build10

Owner

Architecture /

Engineering

GeneralContractor

Key:

Contract Responsibility

Communication

Traditional Approach: Design-Bid-Build
  • Owner holds separate A/E & Construction contracts
  • Potential for adversarial relationships
  • Qualifications are rarely considered in contractor selection on public work projects
  • No assurance that design is within budget
  • No benefit of contractor input during design
  • No ability to accelerate project delivery
  • Owner has no input in subcontractor selection
  • Increased change orders
  • Owner does not share in savings: Contractor awarded Lump Sum
bidding timeline

2 Weeks Before Bid:

Bidding Timeline

1 Month Before Bid: (In Today’s Market)

Nothing happening, WHY?

  • Too busy on other bids
  • Plenty of time
  • Casual sub contact
  • All you are accomplishing is getting on the bid schedule
  • Manufacturers check specs to see if they are protected
  • Sub contact begins in earnest
  • Good contractors begin quantity survey or take-off
    • Bad contractors rely on subs for this and change order owner if quantities are wrong
bidding timeline12
Bidding Timeline

Week of The Bid

  • Project execution planning and general conditions formulation
  • Alliances may be formed between subs and GC’s
  • Subs begin to look at the job and decide to bid or pass
  • Final Addenda is issued – subs begin take-off
  • Calls to subs from the GC get frantic
  • Manufacturers begin to look at the job
  • Bid packages are broken down

Implications?

  • GC’s & subs are trolling for the right circumstances:
    • Holes in drawings
    • Weak / little competition
    • Good subs interest from their cadre
  • Where are the Owner’s interests in this process?
bidding timeline13

Why?

Bidding Timeline

Bid Day – Bid Time is 2:00pm

  • A good contractor will have a “box run” total price
    • Sub budgets + pricing + self-pricing + SWAGS
    • Before computers, this is where the cut & add sheet began
    • General Conditions & fees are set
  • Sub & supplier quotes start to trickle in
  • By lunch, should have a quote for each bid package except for mech. elect. & other specialties
  • Subs “shop” prices
bidding timeline14
Bidding Timeline

Bid Day

1:30pm – CHAOS!

  • ½ price number is out that contains an alternate material
    • Should we carry it and hope we get it approved?
  • We only have 1 elect & 1 mech number out of 20 subs in each trade
    • Where are the sub quotations?
  • The low mason only has 85% of the block & brick in our take-off --and he can’t bond the job!
bidding timeline15
Bidding Timeline

Bid Day

1:45pm – PANDAMONIUM!!

All the mech and elect numbers have come in – including the 10 you have never heard of

  • You can not carry the low number – you can only shop it to someone you know
  • Do you have enough phone lines and people to get all the numbers?
  • We won’t use him again, unless he’s low!
bidding timeline16
Bidding Timeline

Bid Day

1:55pm – DECISION TIME

How much do we “discount” the project?

  • Getting all the sub quote numbers & tabulating them
  • Adding up all the numbers and addressing all the alternates and proposal technicalities
  • 1/3 Skill
  • It is difficult to win against “cheaters” / “shoppers”
  • How can we get unspec’d materials approved?
  • How will you buy-out your discount?
  • 1/3 Ethics
  • Did you get most of the right numbers?
  • Did you discount enough?
  • How “hungry” was the competition?
  • 1/3 Luck
what really happens on bid day traditional approach with gc bid
What Really Happens on Bid Day?Traditional Approach with GC Bid

What the Owner does NOT see.

**Indicates lowest bid

General Conditions, Site Supervision, Insurance, Fee and Bond costs are in addition to the above bids and included in the overall Lump Sum.

construction management at risk

S

S

S

S

S

Key:

Contract Responsibility

Communication

Construction Management At-Risk
  • Owner holds separate A/E and construction contracts
  • Higher degree of teamwork between architect and contractor
  • Qualifications based selection; negotiated fees
  • Pre-construction services during design to verify budget and constructability
  • Project acceleration may be implemented
  • Subcontractors may be competitively bid
  • Open reporting to owner
  • GMP late in design
  • Owner may share in savings

Owner

Architecture /

Engineering

Construction

Manager

design build general contractor led team

S

S

S

S

S

Engineering

Architecture

Design-Build: General Contractor Led Team
  • Owner holds single contract for total Design-Build delivery
  • Architect is subcontracted to CM because CM provides the bond
  • Contractor (costs) driven approach
  • Bid or Qualifications based on selection
  • Pre-Construction Services during Design to control budget and constructability
  • Subcontractors may be competitively bid
  • Enables “Fast-track” construction scheduling
  • Well defined program is essential to define scope
  • Owner may participate in savings

Owner

HIRES

Contractor

STAFF or

HIRES

BUILDING PHASE

DESIGN PHASE

design build integrated firm
Design-Build: Integrated Firm
  • Owner holds single contract for Program Management, A/E & Construction
  • Highest Degree of Teamwork
  • Qualifications Based Selection; negotiated fees
  • Integrated design and pre-construction from the start
  • Subcontractors typically are competitively bid
  • Enables fast-track construction
  • GMP early in the design process
  • 100% savings returned to Owner
what really happens on bid day design build approach
What Really Happens on Bid Day?Design-Build Approach

What the Owner Does See

D/B

* Value Engineering suggestions can discount bids by 5%

slide23

Traditional vs. Alternative

Design-Bid-Build

Lump sum amount established

Bid

Planning

Architecture / Engineering

Construction

CM at Risk

80%Complete documents; GMP established

Architecture / Engineering

Planning

Bid individual trade packages

Construction

13.3% Faster

60% complete documents; GMP established

OneSource

Integrated

Contractor Led

80% complete documents; GMP established

Architecture / Engineering

“Faster Fast-Track”

Planning

Bid individual trade packages

Realistic budget or confirmation of cost limitation

Construction

33.5% Faster

delivery method matrix
Delivery Method Matrix

Project Delivery Options

(with basis for selection)

# of CONTRACTS

Design/Builder

(1 combined contract)

Designer & Contractor

(2 separate contracts)

SELECTION TYPES

Competitive Sealed Bid

(Low Bid)

Total Construction Cost is sole

criteria for final selection

Design-Bid-Build

Design-Build

Competitive Sealed Bid

Competitive Cost Proposal

(Best Value)

Total Construction Cost and other

criteria are weighted factors in the final selection

CM/GC

Competitive Cost

Proposal

Design-Build

Competitive Cost

Proposal

Competitive Qualifications

Proposal

(Qualifications Based Selection)

Total Construction Cost are not a

factor in the final selection criteria

CM / GC

Competitive Qualifications

Proposal

OneSource

Competitive Qualifications

Proposal

slide25

Delivery Method Comparison

Comparisons

[email protected] vs.

Design-Bid-Build

OneSource vs.

[email protected]

OneSource vs.

Design-Bid-Build

6.1% lower

1.6% lower

4.5% lower

Unit Cost

12% faster

5.8% faster

7% faster

Construction Speed

33.5% faster

13.3% faster

23.5% faster

Delivery Speed

5.2% less

7.8% more

12.6% less

Cost Growth

11.4% less

9.2% less

2.2% less

Schedule Growth

Table shows average differences between project delivery systems

making the right choice
Making the Right Choice
  • No one method is perfect for every project!
  • Selecting a delivery method depends on factors such as level of quality desired, budget, and schedule
  • Regardless of delivery method there are other tools that can help you meet your quality, cost and schedule goals.
industry tools
Industry Tools
  • A well-defined plan
  • The use of Building Information Modeling (BIM)
  • Early Cost, Schedule & Constructability Input
critical success factors
Critical Success Factors

Two critical success factors for any project, regardless of delivery method, are:

1. A well thought out, comprehensive facility plan that addresses all of the client’s objectives and all of the necessary requirements of the project, and

2. A competent and skilled manager, knowledgeable in the project’s niche market, to manage the program and implement the plan - from start to finish

slide29

Approach

Planning

Implementation

DECISIONS

BOND APPROVAL

Ed Specs

Guide Specs

Manage Architects

Master Plan

Manage Bid Process

Manage Construction

Master Schedule

Cost

Planning

Manage Cash Flow

PUBLIC

Program

Manage Information

Master Budget

Re-Allocate Savings

Enrollment

Projections

Manage Move-In & Commissioning

Concept Design

COSTS

Time

building information modeling
Building Information Modeling

New approach to building design, construction, and management

Virtual three dimensional model that offers continuous and immediate information

Parametric building modeling technology

Dynamic… uses a relational database together with a behavior model to capture and present building cost and schedule information.

Components

Views

Annotations

ParametricChangeEngine

PLANNING

CONTINUOUS

IMPROVEMENT

DESIGN

IMPLEMENTATION

ANALYSIS

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South Paulding High SchoolDallas, GA
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