Lecture 1.pptx
- 1. Contracts, Specifications and Quantity Surveying CE-5121 Bereket Bezabih beackon@gmail.com Hydraulic and Water Resource Engineering Department 2021
- 3. The Construction Industry • It is the highest employer after agriculture in the national economy • It provides large capital wealth in the form of buildings, highways, railways, dams, utilities etc • It is multi disciplinary as it involves problems of economics and management not to mention engineering and technology • Each product of the industry is unique in character and is produced on its place of use
- 4. The Construction Industry • Construction Works – Public Works • Owned by governments at any level – Private Works • Owned by individuals, company or corporations – Architectural Construction • Building construction with exception of industrial buildings – Engineering Construction • All other construction work (highway, bridge, water supply, dams, sewers, railroads, irrigation canals etc)
- 5. The Construction Industry • Financing Construction Works – Private works can be financed through • capital Expenditure • Loans • Floatation of Shares • Corporate Bonds – Public Works can be financed through • Annual operation Budgets derived from tax • Government Bonds • Domestic and International Borrowing(Bilateral or Multilateral sources)
- 6. The Construction Industry • Professional Relationship in Engineering • The standard Three Party System – Irrespective of the construction type construction works involve the following three parties • The Owner • The Engineer/Architect • The contractor – The actual working relationship depends on the nature of the construction method /Contract – A typical working relation ship looks like …. – The general duties and responsibilities of each party is defined in the contract agreement for the works
- 7. The Construction Industry Owner Engineer/Architect Contractor Subcontractors Suppliers Fabricators
- 8. The Construction Industry • Methods of construction – Construction by General Contract • Employing a contractor – Construction by Force account • Day labor method – Construction by Separate contract • Employ specialty contractors for various part of the work directly by the owner • How can we select the appropriate method of Construction?
- 9. The Construction Industry • Methods of construction • Variations of General Contract – Traditional Approach (D-B-B): The most common delivery system is called “the traditional or standard approach” or “design-bid-build”, in which the employer assigns the design and construction phases to two different firms (consultant/designer and contract Constructing Designing Appointing Consultant Appointing Main Contractor
- 10. Methods of construction • For many years, DBB has been the most common method of project delivery for public projects, and for many private projects as well. • Design Bid-Build is effective on projects • where the owner needs both professional design services and construction services • where the designer does not require detailed knowledge of the means and methods of construction. • DBB provides the owner with a high degree of control. That’s why it is the preferred project delivery system for owners who:
- 11. Methods of construction – The owner defines project goals and objectives, secures the financing, and specifies the standards and contract terms. – The owner may perform planning, conceptual design and full design, or may engage an outside design professional (designer) for some or all of these tasks. – During this planning and preliminary stage, owner and designer work as a team to obtain required permits and conduct necessary site investigations. – The designer prepares the construction bid documents to reflect the owner’s project goals and objectives, the project’s site conditions, and sound engineering practices.
- 12. Methods of construction • Prospective contractors prepare their bids from these complete and specific bid documents. • The bidders submit their proposals to the owner, who determines the most responsive (typically the lowest) bid meeting project requirements. • In certain circumstances, owner may be justified in selecting a contractor outright and negotiating contract terms directly.
- 13. Methods of construction • Advantages of DBB – Applicable to a wide range of projects. – Well established and easily understood. – Clearly defined roles for all parties. – Provides the lowest initial price that competitive bidders can offer. – Extensive litigation has resulted in well established legal precedents. – Insurance and bonding are well defined.
- 14. Methods of construction • Disadvantages of DBB – Least-cost approach requires higher level of inspection. – Initial low bid might not result in ultimate lowest cost or final best value. – Designers may have limited knowledge of the true cost and scheduling implication of design decisions.
- 15. Methods of construction • Design Build Approach – Design Build Approach is a project delivery involving a single contract between the project employer and a design-build contractor covering both design and construction of the project. Constructing Designing Appointing design & construction contractor Tendering
- 16. Methods of construction • The owner contracts with a single entity to provide the design and to construct the project according to that design. • The contract might be negotiated with a single design-builder or result from competitive proposals. • The selection can be based on low price or on a set of value criteria (experience, staff, bonding capacity, etc.).
- 17. Methods of construction • Design-build provides the owner with a single point of contact for project responsibilities, eliminating the need to assist in resolving designer-contractor disputes. • With the contractor playing a major role in design, costs are typically defined and maintained to a greater degree, and the coordination of fast-track management to achieve early completion is greatly simplified. • The design-builder makes many decisions that owner would make under DBB, due to delegation of greatly increased authority.
- 18. Methods of construction • For many owners, delegation of responsibilities leads to satisfactory projects. However, if the parties are inexperienced and do not cooperate, the transfer of control and risk can be disappointing. • The owner may need to restructure his/her internal procedures to accommodate design-build approach. • Compared to DBB, this involves a significantly different set of requirements and expectations for process, timelines and communications. • A clear understanding and documentation of design- build processes enhances the quality of design-build projects
- 19. Methods of construction • Advantages of design and build Approach – Innovation and quality improvements through • Alternative design and construction methods suited to the contractors capabilities • Flexible in the selection of design, materials and construction methods • Early schedule and cost certainty • Disadvantages of Design build approach • Reduced opportunities for smaller, local construction firms. • Fewer competitors and increased risk may result in higher initial costs. • Elimination of traditional checks and balances. Quality may be subordinated by cost or schedule considerations. • Less Engineer control over final design. • Higher procurement costs.
- 20. Methods of construction • Turn Key Projects – Turnkey adds to the design-builder’s responsibilities the operation and/or maintenance of the completed project. – Turnkey delivery has the potential for bringing a new project on line more quickly. – Three forms of turnkey project delivery: – Design-build-operate-transfer – Design-build-operate-maintain – Design-build-own-operate-transfer
- 21. Methods of Construction • Variations on turnkey add financing as a key component. While financing arrangements are unique for each project, developer financed projects generally resemble one of the turnkey delivery methods: • FDBT (Finance, design, build, transfer) • FDBOT (Finance, design, build, operate, transfer) • FDBOOT (Finance, design, build ,own, operate, transfer) • In each case, the transfer of the project occurs only after the developer’s interests and financial obligations have been satisfied.
- 22. Construction Cost • The cost of Construction Works – The over all cost of construction can be grouped in to the following categories • Direct cost – Construction material – Direct wages and Salaries – Small expendable tools • Overhead Cost – Plant Charges and Equipment Rentals – Overhead salaries – Interest on loans and Other financing Costs – Taxes, Licenses and Other Assessments – Other indirect undistributed costs • Contractors net Profit
- 23. Testing times….. 1. Explain some of the conditions which might make it advisable for the government to adopt the force account method for the construction of a large dam during economic depression in lieu of accomplishing the work by contract. 2. Explain why it is usually to the best interest of the owner to adopt the general-contract method of construction in lieu of any other method. 3. Describe the turnkey methods, turnkey variations, and construction management method, highlighting on advantage and disadvantage of each one.