what you need to know before embarking on a new building program: what really happens on bid day?...
TRANSCRIPT
What You Need to Know What You Need to Know Before Embarking on a Before Embarking on a New Building Program: New Building Program: What Really Happens on Bid What Really Happens on Bid Day?Day?
Presented by:
Robert L. MoultrieChairman & CEO
Discussion PointsDiscussion 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
1st Design-Build Project - 1st Design-Build Project - MacedoniaMacedonia
Design-Build TimelineDesign-Build Timeline
Trends in the Design Trends in the Design and Construction Industryand 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)
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
Regardless of delivery method, research Regardless of delivery method, research showed that cost increases by the showed that cost increases by the contractor were due to:contractor were due to:
Research Findings from the Research Findings from the Construction Industry InstituteConstruction Industry Institute
Factors Leading to Factors Leading to Alternative Delivery MethodsAlternative 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 ChoicesYour 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-Traditional Approach: Design-Bid-BuildBuild
Architecture / Engineering
Owner
Architecture / Engineering
GeneralContractor
Owner
HIRES
S S S S S
GeneralContractor
BIDS OUT TO
HIRES
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
Traditional Approach: Design-Bid-Traditional Approach: Design-Bid-BuildBuild
Key:
Contract Responsibility
Communication
Architecture / Engineering
GeneralContractor
Owner
Bidding TimelineBidding Timeline
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
1 Month Before Bid: (In Today’s Market)
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
2 Weeks Before Bid:
Bidding TimelineBidding Timeline
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
Week of The Bid
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?
Implications?
Bidding TimelineBidding Timeline
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
Bid Day – Bid Time is 2:00pm
Subs “shop” prices
Why?
Bidding TimelineBidding Timeline
A. ½ price number is out that contains an alternate material Should we carry it and hope we get it approved?
B. We only have 1 elect & 1 mech number out of 20 subs in each trade
Where are the sub quotations?
C. The low mason only has 85% of the block & brick in our take-off -- and he can’t bond the job!
Bid Day 1:30pm – CHAOS!
Bidding TimelineBidding Timeline
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!
Bid Day 1:45pm – PANDAMONIUM!!
Bidding TimelineBidding Timeline
How much do we “discount” the project?
1/3 Skill Getting all the sub quote numbers & tabulating them Adding up all the numbers and addressing all the
alternates and proposal technicalities
1/3 Ethics
1/3 Luck
It is difficult to win against “cheaters” / “shoppers” How can we get unspec’d materials approved? How will you buy-out your discount?
Did you get most of the right numbers? Did you discount enough? How “hungry” was the competition?
Bid Day 1:55pm – DECISION TIME
What What ReallyReally Happens on Bid Day? Happens on Bid Day?Traditional Approach with GC BidTraditional Approach with GC Bid
General Conditions, Site Supervision, Insurance, Fee and Bond costs are in addition to the above bids and included in the overall Lump Sum.
Contractor Sitework Concrete Masonry Structural Roofing Finishes Fire Protection Plumbing Mechanical Electrical TOTAL
A $1,240,000 $760,000 $1,079,000 $1,100,000 $302,000 $2,888,000 $164,000 $428,000 $1,181,000 $1,635,000 $10,777,000B $1,315,898 $729,904 $1,122,592 $1,188,000 $314,201 $2,773,635 $167,280 $445,113 $1,157,380 $1,667,700 $10,881,703C $1,290,096 $790,704 $1,057,420 $1,144,440 $308,040 $2,830,240 $170,626 $445,291 $1,134,232 $1,798,500 $10,969,589D $1,190,896 $775,200 $1,100,580 $1,122,000 $295,960 $3,004,675 $160,720 $436,560 $1,204,620 $1,765,800 $11,057,011E $1,215,200 $744,800 $1,036,272 $1,210,000 $290,041 $2,945,760 $157,506 $436,211 $1,228,712 $1,701,054 $10,965,555
Bid Comparisons
What the Owner does NOT see.
**Indicates lowest bid
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
Construction Management At-RiskConstruction Management At-Risk
Key:
Contract Responsibility
Communication
S S S S S
Owner
Architecture / Engineering
ConstructionManager
What What ReallyReally Happens on Bid Day? Happens on Bid Day?CM At-Risk PricingCM At-Risk Pricing
What the Owner Does See
Contractor Sitework Concrete Masonry Structural Roofing Finishes Fire Protection Plumbing Mechanical Electrical TOTAL
A $1,240,000 $760,000 $1,079,000 $1,100,000 $302,000 $2,888,000 $164,000 $428,000 $1,181,000 $1,635,000 $10,777,000B $1,315,898 $729,904 $1,122,592 $1,188,000 $314,201 $2,773,635 $167,280 $445,113 $1,157,380 $1,667,700 $10,881,703C $1,290,096 $790,704 $1,057,420 $1,144,440 $308,040 $2,830,240 $170,626 $445,291 $1,134,232 $1,798,500 $10,969,589D $1,190,896 $775,200 $1,100,580 $1,122,000 $295,960 $3,004,675 $160,720 $436,560 $1,204,620 $1,765,800 $11,057,011E $1,215,200 $744,800 $1,036,272 $1,210,000 $290,041 $2,945,760 $157,506 $436,211 $1,228,712 $1,701,054 $10,965,555
Bid Comparisons
CM $1,190,896 $729,904 $1,036,272 $1,100,000 $290,041 $2,773,635 $157,506 $428,000 $1,134,232 $1,635,000 $10,475,486
Design-Build: General Contractor Led Design-Build: General Contractor Led TeamTeam
DESIGN PHASE
Contractor
Owner
HIRES
Architecture Engineering
STAFF or HIRES
BUILDING PHASEBUILDING PHASE
SS
SS
S
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
Design-Build: Integrated Design-Build: Integrated FirmFirm
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 What ReallyReally Happens on Bid Day? Happens on Bid Day?Design-Build ApproachDesign-Build Approach
What the Owner Does See
Contractor Sitework Concrete Masonry Structural Roofing Finishes Fire Protection Plumbing Mechanical Electrical TOTAL
A $1,240,000 $760,000 $1,079,000 $1,100,000 $302,000 $2,888,000 $164,000 $428,000 $1,181,000 $1,635,000 $10,777,000B $1,315,898 $729,904 $1,122,592 $1,188,000 $314,201 $2,773,635 $167,280 $445,113 $1,157,380 $1,667,700 $10,881,703C $1,290,096 $790,704 $1,057,420 $1,144,440 $308,040 $2,830,240 $170,626 $445,291 $1,134,232 $1,798,500 $10,969,589D $1,190,896 $775,200 $1,100,580 $1,122,000 $295,960 $3,004,675 $160,720 $436,560 $1,204,620 $1,765,800 $11,057,011E $1,215,200 $744,800 $1,036,272 $1,210,000 $290,041 $2,945,760 $157,506 $436,211 $1,228,712 $1,701,054 $10,965,555
Bid Comparisons
DEB $1,190,896 $729,904 $1,036,272 $1,100,000 $290,041 $2,773,635 $157,506 $428,000 $1,134,232 $1,635,000 $10,475,486
* Value Engineering suggestions can discount bids by 5%
D/B
Traditional vs. Traditional vs. AlternativeAlternative
Design-Bid-BuildDesign-Bid-Build
ConstructionConstructionBidBidArchitecture / EngineeringArchitecture / EngineeringPlanningPlanning
ConstructionConstruction
Bid individual trade packagesBid individual trade packages
CM at RiskCM at Risk
Lump sum amount established
PlanningPlanning Architecture / EngineeringArchitecture / Engineering
80% Complete documents; GMP established
13.3% Faster
OneSourceOneSource
ConstructionConstruction
Bid individual trade packagesBid individual trade packagesPlanningPlanning Architecture / EngineeringArchitecture / Engineering
60% complete documents; GMP established
33.5% Faster
Realistic budget or confirmation of cost limitation
IntegratedContractor Led 80% complete documents; GMP established
“Faster Fast-Track”
Delivery Method Delivery Method Matrix Matrix
Project Delivery Options(with basis for selection)
# of CONTRACTS
Designer & Contractor(2 separate contracts)
Design/Builder (1 combined contract)
SELECTION TYPES
Competitive Sealed Bid(Low Bid)
Total Construction Cost is sole criteria for final selection
Competitive Cost Proposal(Best Value)
Total Construction Cost and other criteria are weighted factors in the
final selection
Competitive QualificationsProposal
(Qualifications Based Selection)Total Construction Cost are not a factor in the final selection criteria
Design-Bid-Build
CM/GCCompetitive Cost
Proposal
CM / GCCompetitive
QualificationsProposal
Design-BuildCompetitive Sealed
Bid
Design-BuildCompetitive Cost
Proposal
OneSourceCompetitive
QualificationsProposal
Delivery Method ComparisonDelivery Method Comparison
Comparisons
OneSource vs.Design-Bid-Build
Unit Cost
CM@Risk vs.Design-Bid-Build
OneSource vs.CM@Risk
Construction Speed
Delivery Speed
Cost Growth
Schedule Growth
6.1% lower
12% faster
5.2% less
11.4% less
1.6% lower
7.8% more
9.2% less
4.5% lower
12.6% less
2.2% less
5.8% faster 7% faster
33.5% faster 13.3% faster 23.5% faster
Table shows average differences between project delivery systems
Making the Right ChoiceMaking 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 ToolsIndustry Tools
A well-defined plan
The use of Building Information Modeling (BIM)
Early Cost, Schedule & Constructability Input
Critical Success FactorsCritical Success Factors
Two critical success factors for any Two critical success factors for any project, regardless of delivery project, regardless of delivery method, are: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
DECISIONS
COSTS
ApproachApproach
Time
PlanningPlanning ImplementatioImplementationn
PU
BLI
CPlanning
Ed Specs
Guide Specs
Master Plan
Master Schedule
Program
Enrollment Projections
Master Budget
Manage Architects
Manage Bid Process
Manage Construction
Manage Cash Flow
Manage Information
Re-Allocate Savings
Concept Design
C
ost
Manage Move-In & Commissioning
BO
ND
APPR
OV
AL
Building Information ModelingBuilding 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.
ParametricChangeEngine
ParametricChangeEngine
ViewsViews
AnnotationsAnnotations
ComponentsComponents
PLANNING PLANNING
DESIGN DESIGN
IMPLEMENTATIIMPLEMENTATIONON
CONTINUOUS CONTINUOUS
IMPROVEMENTIMPROVEMENT
South Paulding High SchoolSouth Paulding High SchoolDallas, GADallas, GA
Part of an overall Program Management At-Risk program, which includes construction of a new 100,000 SF elementary school as well.
240,000 SF, 1,600 students
Auxiliary facilities: gymnasium, dining hall, 500-seat auditorium
Athletic facilities: 3,000-seat football stadium, practice fields, eight-lane synthetic track, and baseball/softball complex