International Burch university Course : Building Construction Technology IArchitecture department Date : xx / xx / xxxxSarajevo LECTURE NO.4 OFFER – TENDRING – PLANNING Building Construction Technology I Professor : Prof.dr.Nerman Rustempasic Assistant : M.Sc. Ahmed El Sayed
INTRODUCTION Offer – tendering and construction site are very important themes for every engineer. Without understanding these terms and process, a lot of problems will occur such as : why we didn’t get this project? Why the other company or designers are getting the jobs and not us? This kind of questions can be answered if the designer ( engineer ) learns the realtion between designing and winning in tender. Without the tenderation there are no projects, which means that designers will have no jobs to do.
TENDER OFFER FROM THE CLIENTS ANDARCHITECTS PERSPECTIVE Perception of the stages of a construction project often varies between the client/architect and the contractor. Client and architect are involved in the project for months before the actual construction work commences, for a contractor however stages of the project include only the tender offer and construction stages. Tender procedure, from client’s and architect’s point of view, is regulated by NJCC (National Joint Consultative Committee for Building).
TENDER OFFER FROM THE CLIENTS ANDARCHITECTS PERSPECTIVE Most small projects apply the "Single Stage Selective Tendering” which can be characterized in the following way: Invitation to tender – the contractors are contacted if they would be willing to tender. The enquiry is issued in writing 4-6 weeks before the tender and it should contain a brief description of the investment and the commencement date. Number of contractors tendering – recommended maximum number of contractors is 6, with additional in reserve. The limitation is due to the fact, that the tenders tend to be expensive and it is irresponsible to unnecessarily inflate prices in the construction industry.
TENDER OFFER FROM THE CLIENTS ANDARCHITECTS PERSPECTIVE Tender documentation – the aim of tender documentation all offers will be presented on the same basis, so the competition may only be about the price. It is assumed that each contractor will complete works in a way specified in documentation. Time to prepare tender offer – in smaller projects it is usually 3-4 weeks, in bigger and more complex investments it can take longer. Changes in tender documentation – contractors should not make any changes. They should instead send an enquiry min. 10 days before the tender date. Architect should send a reply to all contractors to provide them all the same chances.
TENDER OFFER FROM THE CLIENTS ANDARCHITECTS PERSPECTIVE It is often disregarded in practice, due to the short time allowed to prepare an estimate or vagueness. Withdrawal of the offer – tender offer can be withdrawn by the contractor at all times, as long as it has not been chosen by the investor. Acceptance of an offer constitutes an agreement between the investor and contractor. Tender offers analysis – tender offers should be analyzed soon after they were returned. After the contract is awarded architect should inform all participants about the offers received, without naming the companies, which put them forward. Even though it gives contractors an insight into competitor’s pricing policy, it is often disregarded.
TENDER OFFER FROM THE CLIENTS ANDARCHITECTS PERSPECTIVE Error check – the winning estimate is checked and the erroneous calculations are sent back to the contractor. There are two procedures to resolve those: "Alternative 1" – where the contractor can confirm or withdraw the offer and "Alternative 2" - where the contractor can confirm the offer or correct mistakes. Price negotiation – procedures allow pricing negotiations leading to lowering the prices if the lowest offer exceeds investor’s budget.
BASICS OF COST ESTIMATE PREPARATION Preparation of tender offer requires various documentation types, as specified by an architect or an investor. They involve different terms of settlement and risk. Regardless of the type of documentation one should take into account costs not directly connected with corresponding construction works, e.g. cost of the toilet, on-site safety, company standing costs etc. Those costs are usually included in the "Preliminaries", at the beginning of the estimate.
SPECIFICATION & DRAWINGS This type of documentation contains drawings and specification; it can also contain a separate scope of works to clarify the full costs. Contractor is responsible for surveying the works. Any errors in measurements and cost estimates will not be taken into consideration and the contractor will be required to conduct all the works indicated in the documentation, regardless of whether they are specified by the scope of work. It means that contractor needs to check all documentation carefully, since each its element included in any part of documentation constitutes part of contract and needs to be completed.
BILL OF QUANTITIES In case of bigger projects, tender documents often consist of "Bill of Quantities" (BoQ). It is a list of all required works (with all measurements already made) – the contractor needs to provide their rates for each of the works. BoQ is prepared by "Quantity Surveyor" employed by the investor, according to Standard Method of Measurement - SMM. The latest version is SMM7, but the smaller project still often use.
BILL OF QUANTITIES The rates given in BoQ will be used to calculate the cost of additional works of the same type during the project, it is therefore worth to try to foresee potential additional works and raise the rate for the corresponding type of works. The errors in the BoQ are the liability of the investor – the contractor needs to be paid for all works required, even if they are erroneous or if some works are omitted. Because of that BoQ is not used often anymore. If the investor cannot state exact measurements, the approximate quantities are applied.
SCHEDULE OF RATES "Schedule of Rates" is the list of the rates and it’s used very rarely, only in case if the scope of work is impossible to define. The contractor is accountable for completed works according to the time and agreed hourly or daily rates. It is of course an ideal basis for cooperation from contractors point of view, because they are not at any risk and all the materials and employees working time is being paid for. In case of such cooperation form it is crucial to keep a detailed record of time and resources spent during the project. Those are necessary to establish the payment and eliminate potential conflicts between contractor and investor.
SCHEDULING AND PLANNING CONSTRUCTIONWORKS Without proper planning it is difficult to make a construction project run smoothly and be completed on time and within budget. Of course, smaller and less complex projects very often do not have a formulated formal plan or schedule, since all planning takes place in manager’s head. It is an acceptable solution, however everyone’s perception has its limits, and in most cases it is impossible to manage all aspects of a months-long project without the use of additional tools. The main reasons for planning in construction works can be summed up as: Improved management of works and resources, their sequence and consequences of any changes that may take place Ability to establish a realistic completion date Improved efficiency control Facilitated risk assessment process of the project Basis for solving contractual claims resulting from delays
SCHEDULING AND PLANNING CONSTRUCTIONWORKS Appropriate schedule of works allows to establish completion dates for all stages and elements of works, e.g. when will the electrician be needed, when will the garden door be installed, floor panels delivered etc. Of course, scheduling is not about planning works a week in advance – this can be done by every skilled worker. A correctly designed work schedule allows such information to be provided months in advance. Such information often proves crucial, especially when orders have to be made long before the delivery.
PLANNING TECHNIQUES The only technique commonly applied in small and middle sized projects is “Gantt chart" or "Bar chart” (both names refer to the same method). Other techniques (arrow diagrams, precedence diagrams, line of balance, time-chainage diagrams) are only applied to large projects, often involving infrastructural works. Please contact us for further information about these methods.
GANTT CHART Gantt or Bar chart is the easiest available planning technique, and probably the only one commonly understood without prior training. Despite its simplicity, a correctly designed chart will provide a lot of information necessary to complete the project. Each line on the chart indicates a task or group of tasks necessary in the project. The length of a bar is relative to the time necessary to carry out a task. Individual tasks stand in dynamic dependency relationships that reflect the order of completion. This allows for a fast check of how, e.g. a delay of task A will influence the completion of task C, taking place 2 months later.
GANTT CHART Appropriately prepared chart indicates the critical tasks, i.e. the ones that determine the timely completion of the entire project. These form a "critical path". This allows for more attention to be given to the most important tasks. Each task can be assigned necessary resources, workers, equipment and material, which facilitates the procedures of placing orders and workforce management. Additionally, the chart may include, or be the basis for a detailed analysis of financial flow in the project and risk management.
TYPES OF SCHEDULES Schedules can be classified depending on the type and precision of information provided. Master program : It is a general project plan, which does not include any details, and only shows the main stages of works. It is mainly useful for the clients and architects supervising the completion time. The master program must be provided to architect by the contractor. Detailed program : It is an expansion of a master program, which includes all activities and details of works completion. It is used by the contractor to manage works and resources. Usually it is not passed on to client or architect. Due to the large amount of information it contains, the detailed program is often prepared to only embrace a specific period of time (e.g. 1 or 2 weeks of works).
TYPES OF SCHEDULES Purchase Schedule : Additional schedules are created as necessary by filtering the data included in “Detailed program”. The most popular is "the purchase schedule", which indicates the deadlines for making orders. All data is dynamically related, and therefore if the installation of windows, which have to be ordered 4 weeks in advance, is delayed, the schedule will automatically suggest new order date. Using schedules greatly facilitates site management and reduces risk of making a mistake or missing out important tasks.
SOFTWARE The development of computers and scheduling software has made preparing and updating of schedules much easier. There are many programs available, differing in functions advancement, user- friendliness and price. Probably the most popular tools available for MS Windows are: MS Project Asta PowerProject Primavera Choosing appropriate planning software depends on individual needs and preferences. It’s worth to have a look around and choose among many available additional options. One very useful additional feature is the possibility to synchronize tasks with calendar, or sharing the plan among several employees.
RISK MANAGEMENT Using planning software makes it possible to expand the functions of schedules to include project risk management. Easy scenarios analysis processes allow preparation of many variants of project, e.g. what will the consequences of a delay for a particular task be and how to deal with them. This kind of theoretical analysis allows better understanding the mechanisms behind the project and preparing alternative plans, should problems emerge. Risk analysis can be summed up with the following: Hazard identification ( Identification of dangerous things ) Probability and consequences estimate Deciding on risk management method (avoidance, reduction, sharing and retention) Management and supervision Conclusion and report
PROBLEMS WITH SCHEDULES Planning and schedules are not problem-free and, as it happens, their benefits are not fully used. One must bear in mind that schedule is a dynamical tool which needs to be regularly updated in order to serve us most efficiently. Every construction plan is appropriate only until the project has started. It can be often seen, that our plans do not reflect reality, in which case the plan must be updated, otherwise it will lose its adequacy. Plan is only as good as the person who created it. Software is only a tool, not a magical solution to all our problems. If the project deadline we set is not realistic, there is no plan which will make completion on time possible.