What You Need to Know What You Need to Know Before Embarking on a Before Embarking on a New Building Program: New Building Program: What Really Happens on Bid What Really Happens on Bid Day?Day?

Presented by:

Robert L. MoultrieChairman & CEO

Discussion PointsDiscussion 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 - 1st Design-Build Project - MacedoniaMacedonia

Design-Build TimelineDesign-Build Timeline

Trends in the Design Trends in the Design and Construction Industryand 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)

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

Regardless of delivery method, research Regardless of delivery method, research showed that cost increases by the showed that cost increases by the contractor were due to:contractor were due to:

Research Findings from the Research Findings from the Construction Industry InstituteConstruction Industry Institute

Factors Leading to Factors Leading to Alternative Delivery MethodsAlternative 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 ChoicesYour 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-Traditional Approach: Design-Bid-BuildBuild

Architecture / Engineering

Owner

Architecture / Engineering

GeneralContractor

Owner

HIRES

S S S S S

GeneralContractor

BIDS OUT TO

HIRES

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-Traditional Approach: Design-Bid-BuildBuild

Key:

Contract Responsibility

Communication

Architecture / Engineering

GeneralContractor

Owner

Bidding TimelineBidding 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 Today’s 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:

Bidding TimelineBidding Timeline

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

Week of The Bid

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?

Implications?

Bidding TimelineBidding 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?

Bidding TimelineBidding 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 can’t bond the job!

Bid Day 1:30pm – CHAOS!

Bidding TimelineBidding 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 won’t use him again, unless he’s low!

Bid Day 1:45pm – PANDAMONIUM!!

Bidding TimelineBidding 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 unspec’d 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

What What ReallyReally Happens on Bid Day? Happens on Bid Day?Traditional Approach with GC BidTraditional 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.

Contractor Sitework Concrete Masonry Structural Roofing Finishes Fire Protection Plumbing Mechanical Electrical TOTAL

A $1,240,000 $760,000 $1,079,000 $1,100,000 $302,000 $2,888,000 $164,000 $428,000 $1,181,000 $1,635,000 $10,777,000B $1,315,898 $729,904 $1,122,592 $1,188,000 $314,201 $2,773,635 $167,280 $445,113 $1,157,380 $1,667,700 $10,881,703C $1,290,096 $790,704 $1,057,420 $1,144,440 $308,040 $2,830,240 $170,626 $445,291 $1,134,232 $1,798,500 $10,969,589D $1,190,896 $775,200 $1,100,580 $1,122,000 $295,960 $3,004,675 $160,720 $436,560 $1,204,620 $1,765,800 $11,057,011E $1,215,200 $744,800 $1,036,272 $1,210,000 $290,041 $2,945,760 $157,506 $436,211 $1,228,712 $1,701,054 $10,965,555

Bid Comparisons

What the Owner does NOT see.

**Indicates lowest bid

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-RiskConstruction Management At-Risk

Key:

Contract Responsibility

Communication

S S S S S

Owner

Architecture / Engineering

ConstructionManager

What What ReallyReally Happens on Bid Day? Happens on Bid Day?CM At-Risk PricingCM At-Risk Pricing

What the Owner Does See

Contractor Sitework Concrete Masonry Structural Roofing Finishes Fire Protection Plumbing Mechanical Electrical TOTAL

A $1,240,000 $760,000 $1,079,000 $1,100,000 $302,000 $2,888,000 $164,000 $428,000 $1,181,000 $1,635,000 $10,777,000B $1,315,898 $729,904 $1,122,592 $1,188,000 $314,201 $2,773,635 $167,280 $445,113 $1,157,380 $1,667,700 $10,881,703C $1,290,096 $790,704 $1,057,420 $1,144,440 $308,040 $2,830,240 $170,626 $445,291 $1,134,232 $1,798,500 $10,969,589D $1,190,896 $775,200 $1,100,580 $1,122,000 $295,960 $3,004,675 $160,720 $436,560 $1,204,620 $1,765,800 $11,057,011E $1,215,200 $744,800 $1,036,272 $1,210,000 $290,041 $2,945,760 $157,506 $436,211 $1,228,712 $1,701,054 $10,965,555

Bid Comparisons

CM $1,190,896 $729,904 $1,036,272 $1,100,000 $290,041 $2,773,635 $157,506 $428,000 $1,134,232 $1,635,000 $10,475,486

Design-Build: General Contractor Led Design-Build: General Contractor Led TeamTeam

DESIGN PHASE

Contractor

Owner

HIRES

Architecture Engineering

STAFF or HIRES

BUILDING PHASEBUILDING PHASE

SS

SS

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

Design-Build: Integrated Design-Build: Integrated FirmFirm

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

What What ReallyReally Happens on Bid Day? Happens on Bid Day?Design-Build ApproachDesign-Build Approach

What the Owner Does See

Contractor Sitework Concrete Masonry Structural Roofing Finishes Fire Protection Plumbing Mechanical Electrical TOTAL

A $1,240,000 $760,000 $1,079,000 $1,100,000 $302,000 $2,888,000 $164,000 $428,000 $1,181,000 $1,635,000 $10,777,000B $1,315,898 $729,904 $1,122,592 $1,188,000 $314,201 $2,773,635 $167,280 $445,113 $1,157,380 $1,667,700 $10,881,703C $1,290,096 $790,704 $1,057,420 $1,144,440 $308,040 $2,830,240 $170,626 $445,291 $1,134,232 $1,798,500 $10,969,589D $1,190,896 $775,200 $1,100,580 $1,122,000 $295,960 $3,004,675 $160,720 $436,560 $1,204,620 $1,765,800 $11,057,011E $1,215,200 $744,800 $1,036,272 $1,210,000 $290,041 $2,945,760 $157,506 $436,211 $1,228,712 $1,701,054 $10,965,555

Bid Comparisons

DEB $1,190,896 $729,904 $1,036,272 $1,100,000 $290,041 $2,773,635 $157,506 $428,000 $1,134,232 $1,635,000 $10,475,486

* Value Engineering suggestions can discount bids by 5%

D/B

Traditional vs. Traditional vs. AlternativeAlternative

Design-Bid-BuildDesign-Bid-Build

ConstructionConstructionBidBidArchitecture / EngineeringArchitecture / EngineeringPlanningPlanning

ConstructionConstruction

Bid individual trade packagesBid individual trade packages

CM at RiskCM at Risk

Lump sum amount established

PlanningPlanning Architecture / EngineeringArchitecture / Engineering

80% Complete documents; GMP established

13.3% Faster

OneSourceOneSource

ConstructionConstruction

Bid individual trade packagesBid individual trade packagesPlanningPlanning Architecture / EngineeringArchitecture / Engineering

60% complete documents; GMP established

33.5% Faster

Realistic budget or confirmation of cost limitation

IntegratedContractor Led 80% complete documents; GMP established

“Faster Fast-Track”

Delivery Method Delivery Method Matrix 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 QualificationsProposal

(Qualifications Based Selection)Total Construction Cost are not a factor in the final selection criteria

Design-Bid-Build

CM/GCCompetitive Cost

Proposal

CM / GCCompetitive

QualificationsProposal

Design-BuildCompetitive Sealed

Bid

Design-BuildCompetitive Cost

Proposal

OneSourceCompetitive

QualificationsProposal

Delivery Method ComparisonDelivery 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% faster 7% faster

33.5% faster 13.3% faster 23.5% faster

Table shows average differences between project delivery systems

Making the Right ChoiceMaking 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 ToolsIndustry Tools

A well-defined plan

The use of Building Information Modeling (BIM)

Early Cost, Schedule & Constructability Input

Critical Success FactorsCritical Success Factors

Two critical success factors for any Two critical success factors for any project, regardless of delivery project, regardless of delivery method, are: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

DECISIONS

COSTS

ApproachApproach

Time

PlanningPlanning ImplementatioImplementationn

PU

BLI

CPlanning

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

C

ost

Manage Move-In & Commissioning

BO

ND

APPR

OV

AL

Building Information ModelingBuilding 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.

ParametricChangeEngine

ParametricChangeEngine

ViewsViews

AnnotationsAnnotations

ComponentsComponents

PLANNING PLANNING

DESIGN DESIGN

IMPLEMENTATIIMPLEMENTATIONON

CONTINUOUS CONTINUOUS

IMPROVEMENTIMPROVEMENT

South Paulding High SchoolSouth Paulding High SchoolDallas, GADallas, 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