CONSTRUCTION CONTRACTING What is construction construction defined as

CONSTRUCTION CONTRACTING What is “construction” construction defined as or include? q Building? q Altering ? q Repairing? q Demolishing? q Public Improvements?

CONSTRUCTION CONTRACTING What does “construction” NOT include? q Routine operation q Routine repair q Routine maintenance

CONSTRUCTION CONTRACTING Major Types of Construction Solicitations or Construction Contracts (allowed under A. R. S. , Title 34): q Design-Build Design-Bid-Build Job-Order-Contracting Construction Manager at Risk q Simplified Construction (A. R. S. 41 -2535) q q q

CONSTRUCTION CONTRACTING q Design-Build �Single contract for design and construction �Separate contracts can be used Preconstruction services Construction services § Basis of Award: Demonstrated competence and qualifications

CONSTRUCTION CONTRACTING q Design-Build cont. § Advantages üFaster Delivery üCost Savings üBetter Quality üSingular Responsibility üDecreased Administrative Responsibility üReduced Risk üReduced Litigation Claims

CONSTRUCTION CONTRACTING q Design-Build cont. �Disadvantage üLoss of Checks and Balances (An “outside” A/E is NOT acting as the contractor watch dog for your agency) D-B most useful for: 1. Time sensitive projects 2. Projects with specialized, technically complex scopes of work

CONSTRUCTION CONTRACTING q Design-Bid-Build (“similar” to Invitation for Bid) � Sequential Award (Two Separate Contracts) § Design Contract § Construction Contract � Design and Construction are non-concurrent � D-B-B contracts do not include: § Finance Services (financing for construction services) § Maintenance Services § Operation Services § Good choice for simple projects with small number of change orders

CONSTRUCTION CONTRACTING q Design-Bid-Build cont. § Advantages üChecks and Balances are present üFamiliarity to construction firms üScope/stages of work more easily defined üOwner has greater degree of control § Disadvantages ü“Team” environment lacking üFinger pointing üLinear schedule – Slowest method

CONSTRUCTION CONTRACTING q Job Order Contracting Invented by COL Mellon (U. S. Army) for NATO for routine maintenance and alteration of U. S. Army facilities in Europe IDIQ contract § Multiple contracts for multiple years (5 years max) § Incorporates a “Unit Price Book” (Ex. RS Means or equiv. ) and coefficient markup for line items in Unit Price Book § Basis of Award: Most Qualified Firm(s) §

CONSTRUCTION CONTRACTING q Job Order Contracting cont. § Advantages ü Fast, responsive and time savings ü Simplicity (for repetitive types of work) ü Longer term relationships with contractor § Disadvantages ü Potential reduces contracting opportunities for other contractors ü Learning curve implementing JOC ü Limited to projects less than $1, 000 ü Possibly more expensive than other alternatives

CONSTRUCTION CONTRACTING q Construction Manager at Risk (CMAR) � Sequential Award (Two separate Contracts) § Design Contract § Construction Contract (Pre-Construction Phase/Construction Phase) � Design and Construction can be concurrent � Construction Manager is brought in early during the design phase and proposes GMP near the end of the Design Development Phase(s) § Used for large, time sensitive, requiring extensive management, multi-trade, technically complex projects § Basis of Award: Contractors demonstrated competence and qualifications

CONSTRUCTION CONTRACTING q Construction Manager at Risk cont. § Advantages ü Increased speed (Contractor(s) is/are chosen before design is 100% complete) ü Contractor is selected based on demonstrated qualifications ü Contractor and A/E work as a team ü Separation of duties between contractor and A/E ü Greater/enhanced transparency (bids are open to inspection)

CONSTRUCTION CONTRACTING q Construction Manager at Risk cont. § Disadvantages ü Difficult to know if lowest bid is achieved (compared to D-B-B process) ü CMAR jobs tend to cost more

CONSTRUCTION CONTRACTING q Simplified Construction � Authorized by: A. R. S. 41 -2535 ($100 k or less) A. R. S. 15 -213 ($150 k or less) – State Board of Education/School � Restricted, if “practicable” to small businesses � Pursuant to rules adopted by “director” Maricopa County requires 3 written quotes � Vendor list is maintained of “persons” who are interested with additions permitted throughout year � Think of D-B-B and Request for Quotation (for goods/services)

CONSTRUCTION CONTRACTING q Bonds � Three types of Construction Bonds: Bid Bond - Guarantees the contractor will honor its bid and will sign all contract documents if awarded the bid. Performance Bond - Guarantees the contractor will complete the contract according to its terms including price and time. Payment Bond - Guarantees the subcontractors and suppliers will be paid monies that are due from the contractor.

CONSTRUCTION CONTRACTING q Bond Submittals � Bonds can be submitted as a Surety Bond or � In the form of a certified check or cashiers check in the amount(s) required.

CONSTRUCTION CONTRACTING q Bond Ratings � What type of rating should your agency specify and why? � Bond Rating/Financial Strength: (A. M. Best Ratings) Secure Vulnerable A++, A+ (Superior) B, B- (Fair) A, A- (Excellent) C++, C+ (Marginal) B++, B+ (Good) C, C- (Week) D (Poor) E (Under Regulatory Supervision) F (In Liquidation) S (Suspended)

CONSTRUCTION CONTRACTING � BOND SAMPLE LANGUAGE: All Insurers and Sureties shall have at the time of submission of the proposal an A. M. Best’s Key Rating Guide of “A-” or better as currently listed in the most recent Best Key Guide, published by the A. M. Best Company, payable without condition to the Owner.

CONSTRUCTION CONTRACTING Construction Bond Matrix Design Service s Bid Bond Performance Bond Payment Bond Design/ Build Design-Bid. Build (low bid) JOC CM @ Risk None 10% (Budget for Construction) A. R. S. 34 -608 10% (Contractors Bid) A. R. S. 34 -608 10% (1 st years Construction Budget) A. R. S. 34 -608 None 100% (Construction contract amount) A. R. S. 34 -610 100% (Construction contract amount) A. R. S. 34 -222 100% (Construction contract amount) A. R. S. 34 -610 None 100% (Construction contract amount) A. R. S. 34 -610