BIDS, PROPOSALS &

CONTRACTS
By: CRESANELLE L. POLO

This process is the lifeblood of the

engineering- construction industry.

Contractor selection process

- Refers to a system for selecting the
contractor and negotiating the contract.
The contract itself sets the ground rules
and apportions the risks for executing the
construction work.

THE CONTRACTING PROCESS:

1.Development phase
2.Contracting Phase
3.Execution Phase

Development Phase
-Project planning
- Market development
-Process planning
-Cost estimating
-Basic design

Contracting Phase

-Contracting plan
-Contractor screening
-Selection of bidders
-Invitation for proposals
-Contractors proposals
-Bid review
-Contract award

 Execution Phase
-Detailed Engineering
-Procurement
-Construction

The construction
manager is responsible
for the administration of
the contract after it has
been signed. Often the
CM is named in the
contract as the prime
contact for interaction
between the contractor
andCM
themust
owner.
The
participate in the
estimating, preparing
for the proposal and
closing the contract
for the project.

Four basic approaches to

construction contracting:
1. Single construction contractor
using a self-perform and
subcontract
2. Design- build (turnkey) by
single contractor or joint venture
team
3. Owner lets design-procure to
A/E and third-party build
contracts
4. Owner lets construction
management contract

TRADITIONAL
Owner

Design

Subcontractor

General
Contractor
Own forces
work

Separate Designer
Single general
contractor
Numerous
subcontractors
Fixed price, unit
price, guaranteed
maximum or cost
plus a fixed fee
construction contract
Negotiated
professional fee for a
design services

OWNER- BUILDER
Owner
Design department

Contractors and
subcontractors

Construction
department

Optional own forces

work

Owner responsible to
design and
construction
Optional own forces
work contractors and
subcontractors
Fixed price, unit
price, or negotiated
construction contracts

THE CONTRACTOR SELECTION

-must follow the contracting plan.
Changing the plan in mid-section will likely
cost money and valuable time in the
strategic planning schedule.
Successful contractor selection can be best
accomplished through an open and honest
approach by all parties.

MAJOR ITEMS TO CONSIDER:

Project needs
Requirements of the project execution
plan
Key schedule milestone dates
The scope of contractors services
Possible contracting alternatives
Local project conditions
Contracting market conditions
The owner is looking for the contractor
who will perform best by delivering a
quality facility on time at the lowest
overall cost.

Some major points to consider

in the screening process:
Screen as wide an area as needed to
satisfy your needs
Use a written screening document: letter,
fax, or mailgram
Prequalify the screening list
Use a simple screening request
document

Some keypoints to cover:

Brief project description
A statement of the scope of services
Key dates for proposals, contract award,
project start and desired completion date
Tentative project plan and schedule
A statement of contractors interest
Location of the work
Request for status of contractors existing
work load
List of contractors current technical
personnel capability
Pertinent experience in area of project
site

Major sections of RFP:

Proposal instructions
Form of proposal
Scope of works and services
Pro forma contract
Coordination procedure and job
standards

Important areas to include in

the instructions to contractors:
General project requirements- project
description, proposal document index,
scope of work, site location and
description, etc
Special project conditions- owner
contracts, site visitation, proposal
meetings, etc
Technical proposal requirements- as
needed for contractors technical input
Project execution proposal
requirements

The proposal form is at the heart

of the contractors commercial
proposal.
The Pro forma contract is the
draft of the contract that the
owner plans to execute with the
successful firm

Some of the major areas of contractual risk that

must be considered when selecting a construction
contracting strategy:
Degree of project definition
Possibility of ongoing design changes
Possibility that the facility will not meet its
performance goals
Potential escalation of labor and material costs
Unknown labor productivity in project locale

The specific areas of interest in the contract :

1.Scope or work
2.Payment terms
3.Change order procedure
4.Quality control
5.Guarantees and warranties
6.Schedule requirements
7.Incentive clauses
8.Suspension and termination