Bidding and Procurement Chapter 7
Presentation Overview Bidder Prequalification Bidding process Bidding strategies Work breakdown packages Analysis of bids Award of contract
Bidder Prequalification Bidders 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
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 Bid Form
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
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 Study the Contract!
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 Level 1: Project General Sitework Concrete Electrical Level 2: CSI Footings SOG Columns Elevated Level 3: Category Spread Strip Caissons Level 4: Subcategory Work Breakdown Structure
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 Bids Is 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