bids, proposals & contracts

BIDS, PROPOSALS & CONTRACTSBy: CRESANELLE L. POLO

This process is the lifeblood of the engineering- construction industry.

Contractor selection process

- Refers to a system for selecting the contractor and negotiating the contract. The contract itself sets the ground rules and apportions the risks for executing the construction work.

THE CONTRACTING PROCESS:1.Development phase2.Contracting Phase3.Execution Phase

Development Phase-Project planning

- Market development-Process planning-Cost estimating

-Basic design

Contracting Phase

-Contracting plan-Contractor screening-Selection of bidders

-Invitation for proposals-Contractor’s proposals

-Bid review-Contract award

Execution Phase-Detailed Engineering

-Procurement-Construction

The construction manager is responsible for the administration of the contract after it has been signed. Often the

CM is named in the contract as the prime contact for interaction between the contractor

and the owner.The CM must participate in the

estimating, preparing for the proposal and closing the contract

for the project.

Four basic approaches to construction contracting:

1. Single construction contractor using a self-perform and subcontract

2. Design- build (turnkey) by single contractor or joint venture team

3. Owner lets design-procure to A/E and third-party build contracts

4. Owner lets construction management contract

TRADITIONALOwner

Design General Contractor

Own forces work

Subcontractor

•Separate Designer•Single general contractor•Numerous subcontractors•Fixed price, unit price, guaranteed maximum or cost plus a fixed fee construction contract•Negotiated professional fee for a design services

OWNER- BUILDEROwner

Construction department

Design department

Optional own forces work

Contractors and subcontractors

•Owner responsible to design and construction •Optional own forces work contractors and subcontractors•Fixed price, unit price, or negotiated construction contracts

THE CONTRACTOR SELECTION-must follow the contracting plan.

Changing the plan in mid-section will likely cost money and valuable time in the

strategic planning schedule.

Successful contractor selection can be best accomplished through an open and honest

approach by all parties.

MAJOR ITEMS TO CONSIDER:•Project needs

•Requirements of the project execution plan

•Key schedule milestone dates•The scope of contractor’s services•Possible contracting alternatives

•Local project conditions•Contracting market conditions

The owner is looking for the contractor who will perform best by delivering a quality facility on time at the lowest

overall cost.

Some major points to consider in the screening process:

•Screen as wide an area as needed to satisfy your needs•Use a written screening document: letter, fax, or mailgram•Prequalify the screening list•Use a simple screening request document

Some keypoints to cover:•Brief project description•A statement of the scope of services•Key dates for proposals, contract award, project start and desired completion date•Tentative project plan and schedule•A statement of contractor’s interest•Location of the work•Request for status of contractor’s existing work load•List of contractor’s current technical personnel capability•Pertinent experience in area of project site

Major sections of RFP:

•Proposal instructions•Form of proposal•Scope of works and services•Pro forma contract•Coordination procedure and job standards

Important areas to include in the instructions to contractors:

•General project requirements- project description, proposal document index, scope of work, site location and description, etc•Special project conditions- owner contracts, site visitation, proposal meetings, etc•Technical proposal requirements- as needed for contractor’s technical input•Project execution proposal requirements

The proposal form is at the heart of the contractor’s commercial proposal.

The Pro forma contract is the draft of the contract that the owner plans to execute with the successful firm

Some of the major areas of contractual risk that must be considered when selecting a construction contracting strategy:•Degree of project definition•Possibility of ongoing design changes•Possibility that the facility will not meet its performance goals•Potential escalation of labor and material costs•Unknown labor productivity in project locale

The specific areas of interest in the contract :1.Scope or work2.Payment terms3.Change order procedure4.Quality control5.Guarantees and warranties6.Schedule requirements7.Incentive clauses8.Suspension and termination