ARCH 332

BUILDING CONSTRUCTION MANAGEMENT

CHP 2:

PREPARING BID PACKAGE

By
Julinda KEÇI
EPOKA University,
Civil Engineering Department
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 Presentation Outline
◆ Phases of construction project
◆ Project concept and need (Establishing need, Formal Need
evaluation)
◆ Design (Conceptual drawings and estimates; Preliminary and
detailed design)
◆ Notice to Bidders
◆ Bid package : (General conditions, Supplementary conditions,
Technical Specifications, Addenda)
◆ Decision to bid
◆ Prequalification
◆ Subcontracts
◆ Bonds (bid, performance and payment) 2
 Objectives of Class :

◆ To acquire a working knowledge of the principal project

phases.
◆ To identify activities associated with each phase of a
construction project.
◆ To define contents of Bid Package and relationship
between the documents .
◆ To recognize the bidding documents, contract
documents that make up construction documents

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 2.1 - Project Concept and Need
• The construction industry is generally focused on production
of a single and unique end product.
• Unique in design and method of fabrication.
• So, the format in which these one-off units are achieved is
called the project format.
• Since the constructed environment (in which we live) is
realized in a project format, the construction process can be
best understood by examining the steps required to realize a
complete project.

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 2.1 - Project Concept and Need
• Each project has a life cycle triggered by the recognition of a
NEED that can be best addressed with the construction of a facility.
• Needs that will shape the built environment is very diverse.
•Private individuals- seek to build functional and comfortable houses
•Public entities- seek to enhance the quality of citizens’ life (bridges,
tunnels, transportation facilities, dams, etc.
•Private entities- seek to build facilities to provide services to the
economy, driven by realizing financial revenues (manufacturing
plans, hospitals, laboratories, hotels and commercial buildings, etc.

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 2.2 - Project Need Project Life Cycle

1 st step in any project

•– Owner establishes
a NEED
•– Conceptual definition
•• Economic considerations
•– Projection of demand
•– Time frame to meet market need
•• Feasibility study- plan size, site location, availability
of the labor, supporting resources such as energy, water
supply, etc
•• Critical information for decision makers

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 2.2 - Project Need
Example: Building a hotel in Arizona

The Need is established

(plan size, site location, availability of the
Conceptual definitions labor, supporting resources such as energy,
water supply, etc)

Economic Considerations •Projection of demand

•– Time frame to meet market need

The economic
Yes No
analysis support
the idea?

Approve the need Finish

The preliminary and

detailed design

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 2.3 – Project Need
•Public and community based-service-related projects do not
typically involve profit.

•So,

Economic Considerations Benefit Cost Analysis

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 2.3 - Formal Need Evaluation
••To decide weather to proceed or not, three items should be
developed during conceptual design:
1. Cost/benefit analysis
•Compare estimated cost and disbenefits versus revenues and
benefits*
* Two types of benefits
– Tangible ($$)
– Intangible (improve quality of life)

2. Plans of the facility (sketches, graphical representation)

3. Cost Estimate (conceptual)

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 2.3 - Formal Need Evaluation
Cost/Benefit Analysis
•• Commercial/Profit based projects
- Comparison of project costs against expected revenues
•• Public or Non - profit based projects
- Tangible benefits ($$)
Ex. Expected amount of revenues generated (ex. Electricity)
-Intangible benefits- Related to quality of life

Ex: Dam project, highway projects, water treatment plants, etc.

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 2.4 - Conceptual Drawings & Estimates
•In order to be funded, it is important to present conceptual
documentations to the potential funder (banks, investitures)
•Conceptual design package includes:
•Benefit/Cost analysis
• Architectural sketches and drawings,
•3D computer modeling and layouts
•Cost estimate based on conceptual drawings
•Supporting budget for the project
•Amount of documentation is based upon complexity of the
project.
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 2.5 - Preliminary & Detailed Design

•• A/E is hired by owner to produce:

•– Set of plans: drawings indicating work to be accomplished
•– Specifications: verbal description of construction and quality
•• Completed set of documents are legally binding elements of a
contract.

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 2.5 - Preliminary & Detailed Design
Preliminary Design
••1 st Step in document production:
•– 40% of completed design
•– Offers time to review plans and specifications
•– All engineering disciplines involved
Structural, Mechanical, Electrical, Civil, etc.
•Architect- floor plans, layout drawings, exterior and interior finish
•Mechanical eng.- heating, ventilating, air conditioning
•Structural eng,- develop the structural frame, substructure foundation
• All disciplinary designs become interlinked and effect on each other

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 2.5 - Preliminary & Detailed Design
Preliminary Estimate
•– Preliminary estimate is developed based upon preliminary designs
± ( 20% accuracy)

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 2.5 - Preliminary & Detailed Design
Preliminary Design

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 2.5 Preliminary & Detailed Design
Final or Detailed Design
••2 nd step in document production
•– Decisions on all aspects of the project are made:
•• Exterior/interior finishes: walls, floors, celling, glazing, etc.
•• Precise locations of utilities
•• Design of substructure and superstructure
•– Specifications are finalized
• Detailed estimate
- Based upon detailed set of plans
- ± 3% accuracy

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 2.5 Preliminary & Detailed Design
Final or Detailed Design

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 Final or Detailed Design (contd)

•• Owner’s Estimate helps:

•1. Ensure project is within financial resources
•2. Establishes a reference point while choosing the bider
•• Bids may be rejected
•• Once complete, owner approves/disapproves design
•• If design is approved, owner advertises the project

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 2.6 - Notice To Bidders
•A document announcing that the documents are available for
consideration, and that the owner is ready to receive bids.
•• Seeking Lowest Bid Price
•– Job advertisement to qualified bidders*
*Qualified bidders- are capable of completing the work at a
reasonable price
•• Advertisement Methods
1.Sending Notice to Bidders by emails

2.Periodical newspapers

3.Regional agents
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 2.6 - Notice To Bidders
Information:
•• Notice To Bid contains:
•– General description of project
•- Type, size, location
•– Availability of plans and specs.
•– Time, place, and date of bid opening
•– Required Bid Bond/Bidding Security
•– Proposal information
•• Describes what shall be include in submitted proposal

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 2.7 – Bid Package

• Documents available to the contractor and on which he must make a

decision to bid or not
• – A set of plans and technical specifications, Proposal form,
general conditions, special conditions.
• • Description of the project to be constructed
• • Bid Package is prepared by: …
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 Construction Bid Documents (Drawings)

Structural Mechanical
Architect Engineer Engineer

CAD Drafting
Software

Mechanical
Specification Architectural Structural
& Electrical
s Drawings Drawings
Drawings

Construction Bid Documents

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 CONDITIONS OF CONTRACT

•Define basic rights, responsibilities, and relationships of the

parties involved in the construction project.
• 2 types: General Conditions and Supplementary Conditions
• GENERAL CONDITIONS
•SUPPLEMENTARY CONDITIONS
• ADDENDA

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 2.8 – General Conditions
•A standard set of stipulations that establishes procedures and applies
them to all construction contracts. This is called general conditions.
• General clauses that establish how the project is to be
administered.
• Contain basic expressions of rights, duties, and limitations of the
entities involved.
• Include principles common to most construction Contracts
published by experts.(e.g. AGC)

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2.8 – General Conditions

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 2.9 – Supplementary Conditions
• Modify or supplement general conditions as need to provide for
requirements specific to a project. They are not standardized
documents and are prepared for specific project needs.
•Items contained in SC are 2 types:

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 2.9 – Supplementary Conditions
Another typical index of specifications for
a heavy construction project might be as follows:

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 2.10 – Technical Specifications
• Define the qualitative requirements for products, materials, and workmanship upon
which the contract is based
• SPECIFY: DESCRIBE OR
DEFINE IN DETAIL
• Organized into CSI 16 Divisions
• Dictionary Definition: "Specifications are written
or Printed description of work to be done, forming
Part of the contract and describing qualities of
material and mode of construction,
and also giving dimensions and o
other information not shown in the drawings."

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 2.11 – Addenda
• Written or graphic documents issued to clarify, revise, add to, or
delete information in the original bidding documents or in
previous addenda.
• addenda to be issued anytime prior to execution of the contract.
•CHANGE ORDER:
• After the construction agreement has been signed, additions
to, deletions from, or modifications of the work to be done are
accomplished by change orders.
• These can be issued any time during the contract period

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 2.12 – Decision to Bid
• Whether to Bid or Not to Bid
• Major decision: Financially, substantial cost incurred
which might not be recovered.
• Requires man-hours form contractor to develop estimates.
• Bid Price = Direct cost of performing work
• + Indirect Cost (Cost that cannot be assigned directly
to particular estimating item)
• + Overhead cost
• + contingences + profit

Refer Section 2.12 Page 40 of Textbook for more details 30

“He was the lowest bidder”

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 2.13 – Prequalification
• Owner makes certain that the selected contractor is
capable of performing the work described
• Before considering a bid, owner may decide to
prequalify all bidders
• Each bidders submits documents that establish
firms expertise and capacity in similar construction
Prequalification: Why
• Owners has a doubt regarding the contractors ability
to complete construction or perform the work
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 CONSTRUCTION DOCUMENTS
CONTRACT DOCUMENTS

• Contract documents (graphic and written) describe the proposed

construction (the ‘Work’) that results from performing services,
furnishing labor, and supplying and incorporating materials and
equipment into the construction
A. Contract Forms
B. Conditions of the Contract
C. Specifications (Divisions 01 through 16)
D. Drawings
E. Addenda
F. Change Orders
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 2.15 – Bid Bond

•Concept of bond allows one party to protect itself

Against default in a relationship with a second party.
A third party (surety) provides protection such that,if a default
between two parties occurs that results in damage (loss
ofmoney) the surety protects the damaged party.
• This protection is typically in the form of offsetting or covering
the damage involved.
•So, a bond involves a relationship between three parties; the
principal, the obligee and the surety.
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 2.16 – Performance and Payment Bonds
• PERFORMANCE BOND
• Provides a guarantee that if the contractor defaults of fails to perform,
the surety will either complete the contract in accordance with it terms, or
provide sufficient funds up to the penal amount for such completion.

•PAYMENT BOND
• Provide a guarantee that subcontractor, material suppliers, and others
providing labor, material goods, and services to the project will be paid.

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“Let me see those blueprints again”

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 2.17 – Cost and Requirements for Bonds
• Performance and payment bonds are issued for a service charge.
•Common rate is 1% or €10 per €1000 on first €200 000 of contract cost.

•A surety seeks to keep itself well informed of a contractor’s

progress on bonded projectsand contractors changing business
and financial status. To help to surety, contractor makes periodic
reports on progress.
•Based on these reports, the contractor’s bonding capacity can be
determined. This is calculated as a multiple of the net quick assets
as reflected in the company balance sheet.
• The multiple to determine bonding capacity is based on
contractor’s performance over the years. New contractor…. 5 or 6.
Old one 40 or more. 37
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Summary
■ Agreement
❑ this is the document that formalizes the contract
■ General Conditions
❑ Define the rights, responsibilities, and relations of all
parties to the construction contract
■ Supplementary General Conditions (Special
Conditions)
❑ Are requirements specific to the local conditions and
are used to supplement or amend the General
Conditions
Summary
■ Working Drawings
❑ The actual plans from which the project will be built
❑ contain dimensions and locations of all building
elements and materials required
■ Specifications
❑ Written instructions concerning project requirements
that describe quality of material to be used and their
performance characteristics
■ Addenda
❑ Statements or drawings that modify the basic
contract documents after they have been issued to
bidders, but before the bid.