contract specifications, bidding and contractor selection for capital replacement projects
TRANSCRIPT
Contract Specifications
Bidding and Contractor Selection
for
Capital Replacement Projects
Presented by:
Mitchell H. Frumkin, PE, RS, CGP President
www.kipcon.com (800) 828 4118
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Topics Covered
Who are the Involved Parties
The Construction Process
The Contracts
The Construction Documents
Bidding
Contract Administration
Cost Reduction Techniques
And In All Cases, How To Minimize Risk
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Construction Projects For Community Associations
Typical Projects
◦ Paving
◦ Roofing
◦ Facades
◦ Siding
◦ Drainage
◦ Decking
◦ Retaining Walls
◦ Mechanical Equipment
Construction Projects For Community Associations
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Reasons For Projects
◦ Age (review your reserve study)
◦ Upgrades
◦ New Amenities
◦ Natural Disasters
Flooding
Ice Damming
◦ Fire
◦ Energy Efficiency
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Sources of Funds For Community Associations
Sources of Funds ◦ Reserves ◦ Assessments ◦ Borrowing ◦ Insurance ◦ Incentives
Pay 4 Performance Direct Install Dsireusa.org
The Involved Parties 6
The Community Association
The Community Association Manager
The Community Associations Attorney
The Engineer
The Contractor
The Construction Process 7
Engineer works directly for the Owner: ◦ Preparing designs and specifications
◦ Providing assistance in selecting contractor
◦ Providing oversight during construction
Contractor works directly for the Owner ◦ Doing the work
Design / Bid / Build
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The Design, Bid, Build Process
Owner
Community Association
Design Professional
Contractor
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Who Is The Owner?
With the project being coordinated through the Manager
Owner
Design Professional
Contractor
Manager Manager
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Who Is The Design Professional?
The Design Professional is Typically the Engineer (or Architect) who drafts the specifications and provides Contract Administration Services
Owner
Design Professional
Contractor
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Who Is The Contractor?
The Contractor is responsible for taking the specifications and for the agreed upon price delivers the described work.
Owner
Design Professional
Contractor
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Who Is The Contractor?
And, lets not forget the Attorney for the contract reviews and preparation
Owner
Design Professional
Contractor
Attorney
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The Contracts
Community Association and Engineer
◦ Generally Prepared by Engineer and Reviewed by Associations Attorney and describes contractual requirements and scope of work
Payment terms
Insurance
Commercial Terms
Schedule
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The Contracts
Community Association and Contractor
◦ Contract : Describes the contractual requirements.
Payment terms
Warranties
Insurance
Schedule
Commercial terms
Work to be performed
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What are the Contracts?
The Contracts form the basis for the Relationships and Responsibilities of the Parties
◦ Prepared (or reviewed) by Owners Attorney
Forgotten when the project is going smoothly
When problems occur they are the primary source of what is and is not included
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The Owner/Engineer Contract
Scope of Services ◦ Construction Documents
Drawings Specifications
◦ Cost Estimates First Cost Evaluated Cost
◦ Bidding Pre Bid Meetings Contractor Selection Bid Evaluation
◦ Contract Administration Construction Observations and
Reports Change Order Requests Punch lists Review and Approval of
Invoices
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The Owner/Engineer Contract
◦ Should Describe
The work to be performed
Cost of the work
Payment Terms
Schedule
Dispute resolution
Additional work
◦ Limits of liability
Indemnification
Additional Insured's
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The Construction Documents
Design Drawings
Specifications
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Design Drawings
A graphical presentation of the proposed project which identifies both the existing as well as the proposed conditions which are used to define the project.
◦ Architectural
Floor plans
Elevations
Sections
◦ Engineering
Civil
Structural
Electrical
Mechanical
Plumbing
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Specifications
The written portion of the construction documents which describe the specific products and quality standards required for the construction of the project.
The Contractor should acknowledge in the Contract that they have read and agree to all portions of the Specification and that they can perform the work outlined, have no questions regarding the work specified and will be performing all work in conformance with the Contract and if they are not, what alternates they are proposing.
Specifications are not intended to define the means or methods for execution the project. This is the Contractors responsibility.
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Specification Sections
For Major Projects, Much Less Extensive For Small Projects
Advertisement for Bid
◦ When bids are due
◦ Pre bid meetings
◦ Questions regarding bids
Instructions to Bidders
◦ How to ask questions (in writing by deadline)
◦ How to submit bids (3 copies, sealed envelopes)
Bid Proposal Form
◦ Format of bids (lumps sum, quantities, etc.)
◦ Adds, deducts
Certificate of Ownership (of contracting firm)
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Specification Sections
Bidders Affidavit
◦ Confirming price and for how long
Qualification Questionnaire
◦ References
Non Collusion Affidavit
Site Visit Form
Bid Bond
Affirmative Action Plan
General Conditions
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The General Conditions
Are Meant to Define the Relationships, Rights and Responsibilities of the Various Parties Involved
Cost of Project
Method, Conditions and Limitations (retainage) of Payment
◦ Retainage : a reductions in payments until certain construction milestones are reached or the project is completed. In a typical case, a 10% retainage is withheld from each payment and not released until all work is complete and all punchlist work is completed.
Project Schedule
◦ Penalties for being late possibly including cost of additional engineering oversight
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The General Conditions
Insurance Requirements
◦ General Liability (for personal injury or property damage)
◦ Motor Vehicle
◦ Workers Compensation (on the job injuries)
◦ Builders Risk (property loss during the project prior to completion)
◦ Owner should also require certificates of insurance from all subcontractors being used as well as from Contractor showing that all policies are current.
◦ Also request that the Association, Management Company, Engineer and all Contractors representatives are named as additional insured's on the policies.
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The General Conditions
Bond Requirements (insurance that work will be completed if Contractor goes out of business during course of project)
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The General Conditions
Indemnifications : Contractor will indemnify and defend parties for damage, injury etc. caused during the project.
◦ Association
◦ Management Company
◦ Engineer
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The General Conditions
Schedule of Values
◦ Lists total cost as well as a breakdown of the quantities and costs for each portion of the work. In many cases the schedule of values is used as the basis for payment to the contract as they will submit an invoice which shows the percentage complete for each item and how much is due (less retainage if applicable).
◦ Quantities
Include for apples to apples and ask for confirmation
Request for apples to apples , not confirmation
◦ Allowances
◦ Unit Pricing
◦ Add Alternates
◦ Deduct Alternates
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The General Conditions
Types of Project Costing Methods
◦ Lump Sum
◦ Unit price
◦ Time and Materials
◦ Costs plus fees
◦ Combinations
Pavement restoration project, combination lump sum for overlay and unit cost for pavement reconstruction in areas that are not visible during specification preparation
Roofing, combination lump sum for shingles and unit cost for damaged sheathing which cannot be seen during specification preparation.
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The General Conditions
Guarantees and Warranties required
Communications ◦ Owners rep, Engineer etc.
Coordination of Permits and Inspections
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Bidding
The process in which the Construction Documents are Sent to the Selected Bidders to Obtain Bids
The first step is to select the Contractors to bid. This should be based on
◦ Experience with Contractors
◦ Reputation of Contractors
◦ Trade Journals (such as CAI magazines)
If the project is publicly bid using services such as the Dodge Reports of the Construction Data News, it is much more imperative to check references, financial strength etc.
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Bidding
The Pre Bid Conference
◦ Either mandatory or optional
◦ Listen to Contractors questions as they will help understand the completeness of the bid documents and any areas which should be clarified.
◦ Typical Agenda Circulate a sign in sheet
Introduction of Owner, Manager and Project Team
Introduction of contractors
Overview of project
Bidding procedures and deadlines
Questions and Comments ◦ Answers will be provided to all in a
formal addendum
Tour of property
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Negotiation
Purposes of Negotiation
◦ Value Engineering
◦ Confirm low bids
◦ Discuss project schedule, penalties, subcontractors
◦ Bonds vs. payment terms
◦ Cost savings based on payment terms
◦ Working hours
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Negotiation
This is the opportunity to confirm that all parts of the specification are clear and that no misunderstanding can exist with any of the Contractors. During this period, any questions can be answered and clarifications provided to all bidders. It also can help assure that all bidders are bidding based upon the same expectations of the bid documents.
It is also very important that the bidders are not only clear on the work to be performed but also on the Bid Proposal Form requirements. This is the opportunity to confirm this understanding
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Contract Administration
The services provided by the Engineer to review for general conformance to the construction documents.
Reviewing Work For General Conformance with Design Documents
◦ Field reports
Provide interpretations of the contract documents when requested
Evaluate and recommend additional work
◦ Critical for renovations
To review progress of work to authorize payment
To prepare punch list of damage to be corrected prior to release of retainage
Not responsible for “supervision”
Not responsible for means or methods
CONTRACTOR IS STILL RSPONSIBLE FOR THEIR WORK !
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Cost Reduction Techniques
Consolidate Multiple Projects of the Same Type When Bidding
Review available Incentives/Rebates
Review break even periods when including maintenance and energy costs (Use Green Reserve Study as starting point)
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Minimize Risk
Understand the roles of each party
Contractor is responsible for executing the construction documents
Engineer is responsible for developing the construction documents and is the Owners Representative.
Low price is not always the best alternative
Establish payment terms based on completed work only (if possible)
Do not let Manager provide services out of expertise
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Why Pay For an Engineer When I can Get it Free From a Contractor?
Nothing is Free
Better Pricing Due to Competition
‘Apple for Apple’ Comparison
Consistency in the Bids
Predictable Results
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And Now, The Short Commercial…
Reserves
Transitions
Value Engineering
Energy Audits
Building Envelope Analysis and Design
Site Analysis and Design
Rebate Analysis
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Questions ?
Mitch Frumkin [email protected]
Call us to walk site or for in house presentation or a copy of this
presentation Next Webinar
Construction Defects : How to Evaluate if Your Claims are
Objective Wednesday February 18