Contract Specifications, Bidding and Contractor Selection for Capital Replacement Projects presented by Mitchell Frumkin, PE, RS, CGP.

1. Contract Specifications
Bidding and Contractor Selection
for
Capital Replacement Projects
Presented by:
Mitchell H. Frumkin, PE, RS, CGP
President
mfrumkin@kipcon.com
www.kipcon.com
(800) 828 4118

2. 2
Topics Covered
 Who are the Involved Parties
 The Construction Process
 The Contracts
 The Construction Documents
 Bidding
 Contract Administration
 Cost Reduction Techniques
 And In All Cases, How To
Minimize Risk

3. 3
Construction Projects
For Community Associations
 Typical Projects
◦ Paving
◦ Roofing
◦ Facades
◦ Siding
◦ Drainage
◦ Decking
◦ Retaining Walls
◦ Mechanical Equipment

4. Construction Projects
For Community Associations
4
 Reasons For Projects
◦ Age (review your
reserve study)
◦ Upgrades
◦ New Amenities
◦ Natural Disasters
 Flooding
 Ice Damming
◦ Fire
◦ Energy Efficiency

5. 5
Sources of Funds For
Community Associations
 Sources of Funds
◦ Reserves
◦ Assessments
◦ Borrowing
◦ Insurance
◦ Incentives
 Pay 4 Performance
 Direct Install
 Dsireusa.org

6. The Involved Parties
6
 The Community Association
 The Community Association
Manager
 The Community Associations
Attorney
 The Engineer
 The Contractor

7. The Construction Process
7
 Engineer works directly for the Owner:
◦ Preparing designs and specifications
◦ Providing assistance in selecting contractor
◦ Providing oversight during construction
 Contractor works directly for the Owner
◦ Doing the work
Design / Bid / Build

8. 8
The Design, Bid, Build Process
Owner
Community
Association
Design
Professional
Contractor

9. 9
Who Is The Owner?
 With the project
being coordinated
through the
Manager
Owner
Design
Professional
Contractor
Manager Manager

10. 10
Who Is The Design Professional?
 The Design Professional is
Typically the Engineer (or
Architect) who drafts the
specifications and provides
Contract Administration
Services
Owner
Design
Professional
Contractor

11. 11
Who Is The Contractor?
 The Contractor
is responsible
for taking the
specifications
and for the
agreed upon
price delivers
the described
work.
Owner
Design
Professional
Contractor

12. 12
Who Is The Contractor?
 And, lets not
forget the
Attorney for the
contract reviews
and preparation
Owner
Design
Professional
Contractor
Attorney

13. 13
The Contracts
 Community Association and
Engineer
◦ Generally Prepared by Engineer
and Reviewed by Associations
Attorney and describes
contractual requirements and
scope of work
 Payment terms
 Insurance
 Commercial Terms
 Schedule

14. 14
The Contracts
 Community Association and
Contractor
◦ Contract : Describes the
contractual requirements.
 Payment terms
 Warranties
 Insurance
 Schedule
 Commercial terms
 Work to be performed

15. 15
What are the Contracts?
 The Contracts form the basis
for the Relationships and
Responsibilities of the Parties
◦ Prepared (or reviewed) by
Owners Attorney
 Forgotten when the project is
going smoothly
 When problems occur they are
the primary source of what is
and is not included

16. 16
The Owner/Engineer Contract
 Scope of Services
◦ Construction Documents
 Drawings
 Specifications
◦ Cost Estimates
 First Cost
 Evaluated Cost
◦ Bidding
 Pre Bid Meetings
 Contractor Selection
 Bid Evaluation
◦ Contract Administration
 Construction Observations and
Reports
 Change Order Requests
 Punch lists
 Review and Approval of
Invoices

17. 17
The Owner/Engineer Contract
◦ Should Describe
 The work to be performed
 Cost of the work
 Payment Terms
 Schedule
 Dispute resolution
 Additional work
◦ Limits of liability
 Indemnification
 Additional Insured's

18. 18
The Construction Documents
 Design Drawings
 Specifications

19. 19
Design Drawings
 A graphical presentation of the proposed project which identifies
both the existing as well as the proposed conditions which are
used to define the project.
◦ Architectural
 Floor plans
 Elevations
 Sections
◦ Engineering
 Civil
 Structural
 Electrical
 Mechanical
 Plumbing

20. 20
Specifications
 The written portion of the construction documents which describe
the specific products and quality standards required for the
construction of the project.
 The Contractor should acknowledge in the Contract that they
have read and agree to all portions of the Specification and that
they can perform the work outlined, have no questions regarding
the work specified and will be performing all work in conformance
with the Contract and if they are not, what alternates they are
proposing.
 Specifications are not intended to define the means or methods
for execution the project. This is the Contractors responsibility.

21. 21
Specification Sections
 For Major Projects, Much Less Extensive For Small Projects
 Advertisement for Bid
◦ When bids are due
◦ Pre bid meetings
◦ Questions regarding bids
 Instructions to Bidders
◦ How to ask questions (in writing by deadline)
◦ How to submit bids (3 copies, sealed envelopes)
 Bid Proposal Form
◦ Format of bids (lumps sum, quantities, etc.)
◦ Adds, deducts
 Certificate of Ownership (of contracting firm)

22. 22
Specification Sections
 Bidders Affidavit
◦ Confirming price and for
how long
 Qualification Questionnaire
◦ References
 Non Collusion Affidavit
 Site Visit Form
 Bid Bond
 Affirmative Action Plan
 General Conditions

23. 23
The General Conditions
 Are Meant to Define the Relationships, Rights
and Responsibilities of the Various Parties
Involved
 Cost of Project
 Method, Conditions and Limitations (retainage)
of Payment
◦ Retainage : a reductions in payments until
certain construction milestones are reached
or the project is completed. In a typical case,
a 10% retainage is withheld from each
payment and not released until all work is
complete and all punchlist work is
completed.
 Project Schedule
◦ Penalties for being late possibly including
cost of additional engineering oversight

24. 24
The General Conditions
 Insurance Requirements
◦ General Liability (for personal
injury or property damage)
◦ Motor Vehicle
◦ Workers Compensation (on the job
injuries)
◦ Builders Risk (property loss during
the project prior to completion)
◦ Owner should also require
certificates of insurance from all
subcontractors being used as well
as from Contractor showing that all
policies are current.
◦ Also request that the Association,
Management Company, Engineer
and all Contractors representatives
are named as additional insured's
on the policies.

25. 25
The General Conditions
 Bond Requirements
(insurance that work will
be completed if
Contractor goes out of
business during course
of project)

26. 26
The General Conditions
 Indemnifications : Contractor will
indemnify and defend parties for damage,
injury etc. caused during the project.
◦ Association
◦ Management Company
◦ Engineer

27. 27
The General Conditions
 Schedule of Values
◦ Lists total cost as well as a breakdown of the quantities
and costs for each portion of the work. In many cases the
schedule of values is used as the basis for payment to
the contract as they will submit an invoice which shows
the percentage complete for each item and how much is
due (less retainage if applicable).
◦ Quantities
 Include for apples to apples and ask for confirmation
 Request for apples to apples , not confirmation
◦ Allowances
◦ Unit Pricing
◦ Add Alternates
◦ Deduct Alternates

28. 28
The General Conditions
 Types of Project Costing Methods
◦ Lump Sum
◦ Unit price
◦ Time and Materials
◦ Costs plus fees
◦ Combinations
 Pavement restoration project, combination lump sum
for overlay and unit cost for pavement reconstruction
in areas that are not visible during specification
preparation
 Roofing, combination lump sum for shingles and unit
cost for damaged sheathing which cannot be seen
during specification preparation.

29. 29
The General Conditions
 Guarantees and
Warranties required
 Communications
◦ Owners rep, Engineer etc.
 Coordination of Permits
and Inspections

30. 30
Bidding
 The process in which the
Construction Documents are Sent to
the Selected Bidders to Obtain Bids
 The first step is to select the
Contractors to bid. This should be
based on
◦ Experience with Contractors
◦ Reputation of Contractors
◦ Trade Journals (such as CAI
magazines)
 If the project is publicly bid using
services such as the Dodge Reports
of the Construction Data News, it is
much more imperative to check
references, financial strength etc.

31. 31
Bidding
 The Pre Bid Conference
◦ Either mandatory or optional
◦ Listen to Contractors questions as
they will help understand the
completeness of the bid
documents and any areas which
should be clarified.
◦ Typical Agenda
 Circulate a sign in sheet
 Introduction of Owner, Manager and
Project Team
 Introduction of contractors
 Overview of project
 Bidding procedures and deadlines
 Questions and Comments
◦ Answers will be provided to all in a
formal addendum
 Tour of property

32. 32
Negotiation
 Purposes of Negotiation
◦ Value Engineering
◦ Confirm low bids
◦ Discuss project
schedule, penalties,
subcontractors
◦ Bonds vs. payment
terms
◦ Cost savings based on
payment terms
◦ Working hours

33. 33
Negotiation
 This is the opportunity to confirm
that all parts of the specification
are clear and that no
misunderstanding can exist with
any of the Contractors. During this
period, any questions can be
answered and clarifications
provided to all bidders. It also can
help assure that all bidders are
bidding based upon the same
expectations of the bid documents.
 It is also very important that the
bidders are not only clear on the
work to be performed but also on
the Bid Proposal Form
requirements. This is the
opportunity to confirm this
understanding

34. 34
Contract Administration
 The services provided by the Engineer to
review for general conformance to the
construction documents.
 Reviewing Work For General
Conformance with Design Documents
◦ Field reports
 Provide interpretations of the contract
documents when requested
 Evaluate and recommend additional work
◦ Critical for renovations
 To review progress of work to authorize
payment
 To prepare punch list of damage to be
corrected prior to release of retainage
 Not responsible for “supervision”
 Not responsible for means or methods
 CONTRACTOR IS STILL RSPONSIBLE FOR
THEIR WORK !

35. 35
Cost Reduction Techniques
 Consolidate Multiple
Projects of the Same
Type When Bidding
 Review available
Incentives/Rebates
 Review break even
periods when including
maintenance and
energy costs (Use
Green Reserve Study
as starting point)

36. 36
Minimize Risk
 Understand the roles of each
party
 Contractor is responsible for
executing the construction
documents
 Engineer is responsible for
developing the construction
documents and is the Owners
Representative.
 Low price is not always the
best alternative
 Establish payment terms based
on completed work only (if
possible)
 Do not let Manager provide
services out of expertise

37. 37
Why Pay For an Engineer When I
can Get it Free From a Contractor?
 Nothing is Free
 Better Pricing Due to
Competition
 ‘Apple for Apple’
Comparison
 Consistency in the Bids
 Predictable Results

38. 38
And Now, The Short Commercial…
mfrumkin@Kipcon.com
 Reserves
 Transitions
 Value
Engineering
 Energy Audits
 Building
Envelope
Analysis and
Design
 Site Analysis and
Design
 Rebate Analysis

39. 39
Questions ?
Mitch Frumkin
mfrumkin@Kipcon.com
Call us to walk site or for in house
presentation or a copy of this
presentation
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Construction Defects : How to
Evaluate if Your Claims are
Objective
Wednesday February 18