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What You Need to Know Before Embarking on a New Building Program: What Really Happens on Bid Day? Presented by: Robert L. Moultrie Chairman & CEO.

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Presentation on theme: "What You Need to Know Before Embarking on a New Building Program: What Really Happens on Bid Day? Presented by: Robert L. Moultrie Chairman & CEO."— Presentation transcript:

1 What You Need to Know Before Embarking on a New Building Program: What Really Happens on Bid Day? Presented by: Robert L. Moultrie Chairman & CEO

2 Discussion 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

3 1st Design-Build Project - Macedonia

4 Design-Build Timeline

5 Trends in the Design and 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)

6 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 Contractors recognition of engineering errors during the bidding process, but there was no intercommunication Regardless of delivery method, research showed that cost increases by the contractor were due to: Research Findings from the Construction Industry Institute

7 Factors Leading to Alternative Delivery Methods Changes in Owner staff makeup A focus on the Owners core business (and its usually not building large capital programs) A need to downsize in-house capabilities The business client and Owners have changed

8 Your 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.

9 Traditional Approach: Design-Bid-Build Architecture / Engineering Owner Architecture / Engineering General Contractor Owner HIRES SSSSS General Contractor BIDS OUT TO HIRES

10 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-Build Key: Contract Responsibility Communication Architecture / Engineering General Contractor Owner

11 Bidding 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 Todays 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:

12 Bidding Timeline Project execution planning and general conditions formulation Alliances may be formed between subs and GCs 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 GCs & subs are trolling for the right circumstances: – Holes in drawings – Weak / little competition – Good subs interest from their cadre Where are the Owners interests in this process? Implications?

13 Bidding 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?

14 Bidding 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 cant bond the job! Bid Day 1:30pm – CHAOS!

15 Bidding 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 wont use him again, unless hes low! Bid Day 1:45pm – PANDAMONIUM!!

16 Bidding 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 unspecd 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

17 What Really Happens on Bid Day? Traditional 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. What the Owner does NOT see. **Indicates lowest bid

18 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-Risk Key: Contract Responsibility Communication SSSSS Owner Architecture / Engineering Construction Manager

19 What Really Happens on Bid Day? CM At-Risk Pricing What the Owner Does See

20 Design-Build: General Contractor Led Team DESIGN PHASE Contractor Owner HIRES ArchitectureEngineering STAFF or HIRES BUILDING PHASE S S S S 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

21 Design-Build: Integrated Firm 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

22 What Really Happens on Bid Day? Design-Build Approach What the Owner Does See * Value Engineering suggestions can discount bids by 5% D/B

23 Traditional vs. Alternative Design-Bid-Build Construction Bid Architecture / Engineering Planning Construction Bid individual trade packages CM at Risk Lump sum amount established Planning Architecture / Engineering 80% Complete documents; GMP established 13.3% Faster OneSource Construction Bid individual trade packages Planning Architecture / Engineering 60% complete documents; GMP established 33.5% Faster Realistic budget or confirmation of cost limitation Integrated Contractor Led 80% complete documents; GMP established Faster Fast-Track

24 Delivery Method 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 Qualifications Proposal (Qualifications Based Selection) Total Construction Cost are not a factor in the final selection criteria Design-Bid-Build CM/GC Competitive Cost Proposal CM / GC Competitive Qualifications Proposal Design-Build Competitive Sealed Bid Design-Build Competitive Cost Proposal OneSource Competitive Qualifications Proposal

25 Delivery 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% faster7% faster 33.5% faster13.3% faster23.5% faster Table shows average differences between project delivery systems

26 Making 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.

27 Industry Tools A well-defined plan The use of Building Information Modeling (BIM) Early Cost, Schedule & Constructability Input

28 Critical Success Factors Two critical success factors for any project, regardless of delivery method, are: 1. A well thought out, comprehensive facility plan that addresses all of the clients objectives and all of the necessary requirements of the project, and 2. A competent and skilled manager, knowledgeable in the projects niche market, to manage the program and implement the plan - from start to finish

29 DECISIONS COSTS Approach Time Planning Implementation PUBLIC Planning 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 Cost Manage Move-In & Commissioning BOND APPROVAL

30 Building 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. Parametric Change Engine Views Annotations Components PLANNING ANALYSIS DESIGN IMPLEMENTATION CONTINUOUSIMPROVEMENT

31 South Paulding High School Dallas, 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

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