Transcript No Slide Title

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
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
1st Design-Build Project - Macedonia
Design-Build Timeline
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)
Research Findings from the
Construction Industry Institute
Regardless of delivery method, research
showed that cost increases by the
contractor were due to:



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
Factors Leading to
Alternative 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 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-Build
Owner
Owner
BIDS OUT
TO
HIRES
Architecture /
Engineering
General
Contractor
Architecture /
Engineering
General
Contractor
HIRES
S
S
S
S
S
Traditional Approach: Design-Bid-Build
 Owner holds separate A/E & Construction
contracts
 Potential for adversarial relationships
Owner
 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
Architecture /
Engineering
General
Contractor
 Owner has no input in subcontractor selection
 Increased change orders
Key:
Contract Responsibility
Communication
 Owner does not share in savings: Contractor
awarded Lump Sum
Bidding Timeline
1 Month Before Bid:
(In Today’s Market)
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
2 Weeks Before Bid:

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
Bidding Timeline
Week of The Bid







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
Implications?

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?
Bidding Timeline
Bid Day – Bid Time is 2:00pm

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
Why?

Subs “shop” prices
Bidding Timeline
Bid Day
1:30pm – CHAOS!
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!
Bidding Timeline
Bid Day
1:45pm – PANDAMONIUM!!
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!
Bidding Timeline
Bid Day
1:55pm – DECISION TIME
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
It is difficult to win against “cheaters” / “shoppers”
How can we get unspec’d materials approved?
How will you buy-out your discount?
 1/3 Luck
Did you get most of the right numbers?
Did you discount enough?
How “hungry” was the competition?
What Really Happens on Bid Day?
Traditional Approach with GC Bid
What the Owner does NOT see.
Bid Comparisons
Contractor
A
B
C
D
E
Sitework
$1,240,000
$1,315,898
$1,290,096
$1,190,896
$1,215,200
Concrete
$760,000
$729,904
$790,704
$775,200
$744,800
Masonry
Structural
Roofing
Finishes
$1,079,000
$1,122,592
$1,057,420
$1,100,580
$1,036,272
$1,100,000
$1,188,000
$1,144,440
$1,122,000
$1,210,000
$302,000
$314,201
$308,040
$295,960
$290,041
$2,888,000
$2,773,635
$2,830,240
$3,004,675
$2,945,760
Fire Protection
$164,000
$167,280
$170,626
$160,720
$157,506
Plumbing
$428,000
$445,113
$445,291
$436,560
$436,211
Mechanical
Electrical
$1,181,000
$1,157,380
$1,134,232
$1,204,620
$1,228,712
$1,635,000
$1,667,700
$1,798,500
$1,765,800
$1,701,054
**Indicates lowest bid
General Conditions, Site Supervision, Insurance, Fee and Bond
costs are in addition to the above bids and included in the
overall Lump Sum.
TOTAL
$10,777,000
$10,881,703
$10,969,589
$11,057,011
$10,965,555
Construction Management At-Risk
 Owner holds separate A/E and
construction contracts
 Higher degree of teamwork between
architect and contractor
Owner
 Qualifications based selection;
negotiated fees
Architecture /
Engineering
 Pre-construction services during design
to verify budget and constructability
Construction
Manager
 Project acceleration may be
implemented
S
S
S
S
S
 Subcontractors may be competitively
bid
 Open reporting to owner
Key:
Contract Responsibility
Communication
 GMP late in design
 Owner may share in savings
What Really Happens on Bid Day?
CM At-Risk Pricing
What the Owner Does See
Bid Comparisons
Contractor
Sitework
E
$1,240,000
$1,315,898
$1,290,096
$1,190,896
$1,215,200
CM
$1,190,896
A
B
C
D
Concrete
$760,000
$729,904
$790,704
$775,200
$744,800
Fire Protection
Masonry
Structural
Roofing
Finishes
$1,079,000
$1,122,592
$1,057,420
$1,100,580
$1,036,272
$1,100,000
$1,188,000
$1,144,440
$1,122,000
$1,210,000
$302,000
$314,201
$308,040
$295,960
$290,041
$2,888,000
$2,773,635
$2,830,240
$3,004,675
$2,945,760
$164,000
$167,280
$170,626
$160,720
$157,506
$290,041 $2,773,635
$157,506
$729,904 $1,036,272 $1,100,000
Plumbing
$428,000
$445,113
$445,291
$436,560
$436,211
Mechanical
Electrical
$1,181,000
$1,157,380
$1,134,232
$1,204,620
$1,228,712
$1,635,000
$1,667,700
$1,798,500
$1,765,800
$1,701,054
$428,000 $1,134,232
TOTAL
$10,777,000
$10,881,703
$10,969,589
$11,057,011
$10,965,555
$1,635,000 $10,475,486
Design-Build: General Contractor Led Team


Owner

HIRES

Contractor

S
STAFF or
HIRES
S
S

S
S
Architecture
Engineering

BUILDING PHASE

DESIGN PHASE

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 Firm

Owner holds single contract for
Program Management, A/E &
Construction

Highest Degree of Teamwork

Qualifications Based Selection;
negotiated fees

Integrated design and preconstruction from the start

Subcontractors typically are
competitively bid

Enables fast-track construction

GMP early in the design process

100% savings returned to Owner
What Really Happens on Bid Day?
Design-Build Approach
What the Owner Does See
Bid Comparisons
Contractor
Sitework
E
$1,240,000
$1,315,898
$1,290,096
$1,190,896
$1,215,200
D/B
DEB
$1,190,896
A
B
C
D
Concrete
$760,000
$729,904
$790,704
$775,200
$744,800
Fire Protection
Masonry
Structural
Roofing
Finishes
$1,079,000
$1,122,592
$1,057,420
$1,100,580
$1,036,272
$1,100,000
$1,188,000
$1,144,440
$1,122,000
$1,210,000
$302,000
$314,201
$308,040
$295,960
$290,041
$2,888,000
$2,773,635
$2,830,240
$3,004,675
$2,945,760
$164,000
$167,280
$170,626
$160,720
$157,506
$428,000
$445,113
$445,291
$436,560
$436,211
$290,041 $2,773,635
$157,506
$428,000 $1,134,232
$729,904 $1,036,272 $1,100,000
* Value Engineering suggestions can discount bids by 5%
Plumbing
Mechanical
Electrical
$1,181,000
$1,157,380
$1,134,232
$1,204,620
$1,228,712
$1,635,000
$1,667,700
$1,798,500
$1,765,800
$1,701,054
TOTAL
$10,777,000
$10,881,703
$10,969,589
$11,057,011
$10,965,555
$1,635,000 $10,475,486
Traditional vs. Alternative
Design-Bid-Build
Planning
Lump sum amount established
Architecture / Engineering
Bid
Construction
CM at Risk
80% Complete documents; GMP established
Planning
Architecture / Engineering
Bid individual trade packages
Construction
13.3% Faster
OneSource
Planning
Realistic budget or
confirmation of
cost limitation
Integrated
60% complete documents; GMP established
Contractor Led
80% complete documents; GMP established
Architecture / Engineering
“Faster Fast-Track”
Bid individual trade packages
Construction
33.5% Faster
Delivery Method Matrix
Project Delivery Options
(with basis for selection)
# of CONTRACTS
SELECTION TYPES
Competitive Sealed Bid
(Low Bid)
Designer & Contractor
(2 separate contracts)
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
(1 combined contract)
Design-Bid-Build
Design-Build
Competitive Sealed Bid
CM/GC
Competitive Cost
Proposal
Design-Build
Competitive Cost
Proposal
CM / GC
Competitive
Qualifications
Proposal
OneSource
Competitive
Qualifications
Proposal
Total Construction Cost is sole
criteria for final selection
Competitive Cost Proposal
(Best Value)
Design/Builder
Delivery Method Comparison
Comparisons
OneSource vs.
Design-Bid-Build
Unit Cost
Construction Speed
Delivery Speed
Cost Growth
Schedule Growth
CM@Risk vs.
Design-Bid-Build
OneSource vs.
CM@Risk
6.1% lower
1.6% lower
4.5% lower
12% faster
5.8% faster
7% faster
33.5% faster
13.3% faster
23.5% faster
5.2% less
7.8% more
12.6% less
11.4% less
9.2% less
2.2% less
Table shows average differences between project delivery systems
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.
Industry Tools



A well-defined plan
The use of Building
Information Modeling (BIM)
Early Cost, Schedule &
Constructability Input
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
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
Ed Specs
Guide Specs
Master Plan
Implementation
Manage Architects
Manage Bid Process
Manage Construction
Planning
Manage Cash Flow
Program
Manage Information
Enrollment
Projections
Concept Design
Time
PUBLIC
Master Schedule
Master Budget
Cost
BOND APPROVAL
Planning
Approach
Re-Allocate Savings
Manage Move-In &
Commissioning
Building Information Modeling
PLANNING




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.
CONTINUOUS
DESIGN
IMPROVEMENT
IMPLEMENTATION
Components
Parametric
Change
Engine
Annotations
Views
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