Midterm 1

Payment Bond

Insurance companies expect losses while bonding companies work to prevent losses.

Insurance companies only repay what is lost while bonding companies work to ensure that a project is completed

1) Encourages competitive bidding
2) Project Scope in well designed beforehand
3) Little financial risk to owner
4) Used mostly in public projects so the public/taxpayer can know exactly what their money is being used for

Direct costs are costs that are specific to the given project

Examples: Labour, equipment, materials

Poor Planning
Changes in line of work and scope of business
Poor accounting and financing
Poor Project management
Rapid over extension

Covers all the stipulations regarding how a contract is to be administered and the relationships between the parties involved

To provide a written description of the technical requirements of the work to be performed

To incorporate in a bid package changes in detail, additions, corrections, and contract conditions that arise before bids are opened and that arise before bids are opened and that  are also basis for bidding

To specify those aspects of the contractual relationships that are peculiar or unique given to a unique project (duration of the project, instructions on commencement of work, owner-procured materials, format to report progress, etc.)

1) Capacity -  shows whether the contractor is capable of handling the project
2) Character -  Reputation, shows if a contractor is reputable and respectful and a good choice
3) Capital -  whether contractor is financially able to take on a project

To ensure that he sticks to the agreement if he is awarded the contract

Make sure he doesn't run away

FALSE

TRUE

a) Look for defaults on previous contracts
b) Look at bonding capacity
c) Look at technical Expertise

Prevention

costs that occur when you are late on a project

Owner default
Contractor Default
Mutual Agreement

Zero accidents, 0

A change order is  any changes made to the project AFTER the contract has been signed that the contractor now has to make adjustments to accommodate

The owner is GENERALLY responsible because the contractor will have to now make adjustments beyond what was agreed upon

CM @ Risk is similar to DBB. However, CM is more involved in the design and is allowed the opportunity to be more creative with it. The RISK involved is that if the design that is built goes over budget or does not fit specifications, the M is responsible and has to pay out of pocket

Diagram:  Owner,A/E ----> CM @ Risk----> Subcontractor-----> Supply Vendor

Situations where work must start immediately (war, natural disasters, man-made disasters)

Insurance for the Owner

before the contract is awarded and signed

Open because it's a government agency, i.e. it is public. All federal projects are open bids

Hiring union/non-union workforce

be organized and deliver on time
Respect others and communicate efficiently
Integrate design knowledge into an execution plan
Manage construction resources: labor, materials, equipment, money and time
Work ethically

READ IT AND UNDERSTAND IT

RFI is used for clarification on drawings.  Used to ask questions on a project.

Submittals are used for fabrication. They are used to clarify designs, etc.

Advantage: Scope of work is well defined before-hand
Disadvantage: It is hard to make any adjustments to the project once contract is signed

Advantage: Can be used when project/project scope is not well defined because it deals with specific units/items

Disadvantage: It can be used to estimate specific units accurately at the time of signing the contract

Unit price because it deals with specific units (piers) as opposed to a large overall project

Using separate contracts to start with construction before the design is totally complete

Budgets and schedules ahead or below of plan

This is when a party has the legal possession of the property of the owner until the owner fulfills some legal duty/obligation to the party who has it. e.g. Mortgage

FALSE

subcontractors acknowledge they are obligated to and familiar with the prime contract

Because it puts the owner at a great risk. The contractor does not have any incentives to give good work, be economic efficiently, and the owner will still have to pay because the contractor gets a fee based on project cost.

Cost plus fee-  the owner pays a fixed fee at the end of the project that is not directly based on the project. Thus the contractor is inspired to work more efficiently to get his project, without putting the owner at risk.

From bottom to top of stairs:
Prevention--> Negotiation ---> Standing neutral---> Non-binding Resolution--->Binding Resolution--->Litigation
--------------------------------------------------------Escalating cost, time, and less of control------------------------------->
Example: Court Orders, Arbitration, Mediation, Discussion of discrepancies to avoid further disagreement, agreement by parties involved

One that works outside the state in which it is instated

Proprietorship - High liability risk because owner assumes responsibility for all assets and thus it is his personal assets at risk

Partnership - Lower risk than proprietorship but still somewhat high because again it involves personal assets at risk - those of the partners

Corporation - Personal assets NOT at risk, only those of company (stocks, etc.) least risky of the three

A corporation is most difficult because of legal procedures that are involved in establishing it

Risks: Disagreements between contractor and architect that can arise and cause discrepancies and/or problems

Benefits: Design and construction phases overlap and as project duration is shortened and adjustments can be made easily