Construction Process Planning and Management An Owner’s Guide to Successful Projects Sidney M Levy AMSTERDAM • BOSTON • HEIDELBERG • LONDON NEW YORK • OXFORD • PARIS • SAN DIEGO SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Butterworth-Heinemann is an imprint of Elsevier CHAPTER Butterworth-Heinemann is an imprint of Elsevier 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA Linacre House, Jordan Hill, Oxford OX2 8DP, UK © 2010 ELSEVIER Inc All rights reserved Except Appendix A: Copyright Construction Management Association of America, Inc., 2005 All rights reserved Appendix B: AIA Document A101™ – 2007 Copyright © 1915, 1918, 1925, 1937, 1951, 1958, 1961, 1963, 1967, 1974, 1977, 1987, 1991, 1997 and 2007 by The American Institute of Architects All rights reserved Appendix C: AIA Document A102™ – 2007 (formerly A111™ – 1997) Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, 1987, 1997 and 2007 by The American Institute of Architects All rights reserved No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage and retrieval system, without permission in writing from the publisher Details on how to seek permission, further information about the Publisher’s permissions policies and our arrangements with organizations such as the Copyright Clearance Center and the Copyright Licensing Agency, can be found at our website: www.elsevier.com/permissions This book and the individual contributions contained in it are protected under copyright by the Publisher (other than as may be noted herein) Notices Knowledge and best practice in this field are constantly changing As new research and experience broaden our understanding, changes in research methods, professional practices, or medical treatment may become necessary Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein In using such information or methods they should be mindful of their own safety and the safety of others, including parties for whom they have a professional responsibility To the fullest extent of the law, neither the Publisher nor the authors, contributors, or editors, assume any liability for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions, or ideas contained in the material herein Library of Congress Cataloging-in-Publication Data Application submitted British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-85617-548-7 For information on all Butterworth–Heinemann publications visit our Web site at www.elsevierdirect.com Printed in the United States of America 09 10 11 12 13 10 Contents Preface ix Chapter The genesis of a construction project Architectural industry snapshot The architect and the client The construction industry An owner’s major commitment Project delivery Green and sustainable building Contracts and the contractor Ethics in the construction industry 10 Chapter Selecting and working with an architect 13 The changing world of the architect 14 The architect and engineer selection process 14 The architect’s qualification statement 14 Interviewing an architect 16 The architect’s team 17 Building information modeling 18 Defining the services of the design team 19 Contract administration 20 Owner’s responsibility for services 21 Inspection services 22 Preparation of the bid documents 25 The prebid conference 26 Contract-administration services 28 The preconstruction conference 28 The owner-architect contract for services 30 The design process 30 Negotiating the architect’s fee and other forms of compensation 35 The case for reimbursable expenses 41 The standard architect agreement 41 The owner’s role in the design process 42 Constructability and coordination 43 iv Contents Chapter The architectural, engineering, and contracting industries 45 The architectural profession 45 The architect’s intern program 46 State licensing requirements 46 Landscape architects 47 Education, training, and certification 47 The construction-related engineering profession 47 Structural engineers 48 Mechanical engineers 49 Electrical engineers 49 The materials engineer 50 The construction industry 50 Size and revenue of contractors 51 Risky business 52 The age of the master builder 56 A typical general contracting company organization 57 Salary levels 60 The shift to subcontracted work 60 The double-breasted contractor 61 Differences between union and nonunion 61 The construction manager 63 The design-builder 64 Program management 64 Chapter Construction contracts pros and cons 67 The letter of intent 67 Types of construction contracts 70 Stipulated or lump-sum contract 70 Value engineering 72 Cost of the work plus a fee contract 73 Cost plus a fee with a guaranteed maximum price contract 75 Construction-management contract 83 Design-build contract 87 Bridging contract 89 The general conditions to the contract for construction 90 The AIA general conditions document 91 Standard contract forms 93 American Institute of Architects contracts 93 Associated General Contractors of America contracts 93 Construction Management Association of America contracts 94 Design-Build Institute of America contracts 94 Contents v Documents synopses by series 95 A series 95 B Series 102 Chapter Preparing the bid documents 113 The contractor qualification process 113 Safety and quality issues 115 References 116 The invitation to bid 121 Insurance and bonds 124 Owner- and contractor-controlled insurance programs 125 Construction surety bonds 126 Subguard 128 Letter of credit 128 General conditions 128 Evaluation of the bid 131 Contractor selection 134 Chapter The construction contract 137 Schedule-of-values exhibit 138 Exhibits 141 Alternate exhibits 141 Allowance exhibits 144 Unit prices 145 Guaranteed maximum price (GMP) contract 146 Limiting an owner’s exposure to final plan development costs 148 Documenting general conditions costs 149 Change orders 149 Controlling overhead and profit 154 Including a “definitions” section in the contract 156 Liquidated damages 156 Additional contract provisions 158 Chapter Organizing for the construction process 165 Architectural forms 165 The project meeting 166 Shop drawings 170 Material and equipment substitutions 170 Value engineering 171 Project schedule 172 Importance of the owner’s role 173 Requests for information 176 Architect’s supplemental instructions and field instructions 179 vi Contents The submittal log 179 Pace of construction 184 Contractor’s application for payment 184 Offsite material and equipment storage 192 Project closeout 193 Chapter Change orders 201 Change-order provisions in the AIA general conditions document 203 Review procedures for change orders 205 Documentation of change-order work 206 Cost issues 209 Changes in scope of work 210 Change orders and scheduling 215 Float and the schedule 216 Quantum meruit and unjust enrichment 221 Chapter Green and sustainable buildings 223 The impact of construction on the environment 223 Whole-building design 224 The U.S Green Building Council 225 Promoting green buildings 229 Green building components 234 EPA’s energy performance ratings 235 The U.S Department of Energy Building Technologies Program 238 Energy modeling 240 Green infrastructure 241 Low-impact development 241 Geothermal heating and cooling 242 Fenestration 243 How cost effective are green buildings? 243 Green building products and processes 245 Sustainability 245 The risks and pitfalls in green building design 248 Chapter 10 Disputes and claims 251 Documentation in the bidding process 251 Documentation during construction 253 Principal causes of disputes and claims 254 Contract issues 254 Plans and specifications containing errors or omissions 256 Lack of proper drawing coordination 257 Incomplete or inaccurate responses 259 Contents vii Inadequate administration of the project 259 Unwillingness to comply with the intent of the drawings 260 Site conditions that differ materially from the contract documents 260 Unforeseen subsurface conditions 263 A change in conditions 264 Discrepancies in the plans and/or specifications 265 Disruptions to the normal pace of construction 266 Inadequate financial strength of any party 267 Delays and the problems they cause 268 Legal precedents relating to construction claims 272 Differing site conditions 272 Complete set of drawings 272 Damages for breach of contract 272 Electronic records 273 Contractor’s guarantee of design 273 Withholding payment due to defective or incomplete work 273 Claim for lost productivity 274 Prompt review of shop drawings 274 Generic guidelines for coordination drawing 275 Effective claim development and preparation 276 Chapter 11 Basic construction components 277 Site work 277 Foundations 278 Site utilities 280 Concrete 280 Structural steel 282 Masonry 285 Bricks 285 Concrete-masonry units 288 Mortar 288 Wall reinforcement 291 Glass and glazing 291 Roofing 292 Drywall partitions and ceiling construction 292 Fire-rated partitions 293 Sound-rated partitions 294 Moisture resistance 294 Exterior sheathing 294 Doors and frames 295 Finishes 295 viii Contents Plumbing 297 Heating, ventilating, and air conditioning 299 Fire-protection systems 302 Electrical systems 305 Glossary of architectural and construction terms 307 Appendix A Construction management owner-contractor contract 329 Appendix B American Institute of Architects stipulated sum contract 355 Appendix C American Institute of Architects cost of work plus a fee with a guaranteed maximum price (GMP) contract 363 Index 377 Preface Traversing the design and construction process, even for an experienced hand, is sometimes daunting When dealing with unfamiliar terminology and professionals in the field of architecture, engineering, and construction, project owners may need some guidance along the way and, at times, wish they had a relative in the building business to provide them with some helpful tips That is the purpose of this book: to offer project owners who are new to the design and construction process some firsthand experience from someone who has been in this business for 40 years, and, for owners who have been involved with many projects, perhaps shed some new light on problems they may have encountered previously and wish to avoid in the future Of fundamental importance in this process is the establishment of a good working relationship with the architect’s team and the contractor In the heat of a stressful moment during either design or construction, these strong relationships will prevail, resulting in a reasonable approach to a reasonable solution Being able to view that difficult situation from the perspective of others is another trait that takes on added importance when hundreds or tens of thousands of dollars are at stake An owner has a right to expect professional performance from the architect and contractor After all, they have committed or will shortly be committing significant funds to each of these professionals The architect and engineers will in turn be committing their staff and their reputation to the design of your building, and in today’s complex building systems, incorporating compliance with a multitude of local, state, and federal rules and regulations, and that is a mighty task Selecting an architectural firm specializing in the type of project being considered and interviewing their past clients are two ways to move toward a welldesigned project Visiting some of those recently completed projects can give an owner an opportunity to look at the architect’s work and talk to those former clients to learn a little bit more about their experience working with that architect Because the relationship between architect and owner is a close one, the client must feel comfortable with the design team A contractor can be selected first by offering bid documents to a selected group of builders, and, second, upon selection, negotiating the final terms, conditions, and contract sum Contractors work on slim profit margins, and most try to control their project by monitoring their costs closely And most reputable contractors will assume some responsibility for minor contract obligation interpretations Owners driving a particularly hard bargain with the contractor may find that there is little “wiggle” room left for the builder Appendix C 367 368 Appendix C Appendix C 369 370 Appendix C Appendix C 371 372 Appendix C Appendix C 373 374 Appendix C Appendix C 375 This page intentionally left blank Index A Acceleration, 269–271 Accounting, 59 Alternates, 142, 144 Artchitects, 2, 3, 13–24, 28, 30–41, 43–50, 90–93, 95–112, 128–131, 165, 166, 184–186 A Series contracts, 95–102 Application for payment, 184–186 B series contracts, 102–112 Client Relationships, 2, Constructability and coordination matters, 43, 44 Contract administration, 20, 21, 28 Defining services required, 19, 20 Design firms, 46 Design process, 30–35 Engineers, 47–50 Forms, 165, 166 General conditions, 90–93, 128–131 Handbook of Professional Practices, Industry snapshot, 13, 14 Inspection services, 22–25 Intern program, 46 Interviewing, 16, 17 Licensing requirements, 46 Negotiating the fee, 35–41 Reimbursable costs, 41 Owner-architect contract for services, 30 Owner’s responsibilities, 3, 21, 22, 42 Pre-construction conference, 28–30 Preparing bid documents, 25 Pre-bid conference, 26–28 Qualifications statement, 14–16 Selection process, 14–17 Qualification statement, 14–16 Standard agreement principles, 41, 42 State licensing requirements, 46 Supplemental instructions (ASI), 179 Training, 45, 46 Team, 17, 18 Architectural forms, 165, 166 A.I.A Cost Plus Guaranteed Maximum price contract form, 364–375 A.I.A Stipulated sum contract form, 356–361 American Institute of Architects, 1, Working with an architect Application for payment, 184–188 Associated General Contractors of America (AGC), 67, 93 B Bailment agreement, 194 Bids- preparing and evaluating, 113–135 Contractor selection, 134, 135 Contractor qualification process, 113–131 Documentation in bidding process, 251–253 Evaluating, 131–135 General conditions, 128–131 Insurance and bonds, 124–126 subguard, 128 Surety bonds, 126–128 Invitation to bid, 121–124 Letter of credit, 128 References, 116, 118 Safety and quality issues, 115, 116 Bonds, 126–128 Bid bonds, 127 Payment and performance bonds, 127 Surety bonds, 126 Building information modeling (BIM), 18, 19 Bridging, 89–90 C Change orders, 149, 152–155, 162, 165, 166, 178, 185, 201–222 Changes in scope of work, 210, 211 Controlling contractor’s overhead and profit, 154, 155 Contractor equipment rates, 213, 214 Cost issues, 209, 210 Documentation for, 206–208 Inordinate amount of, 265 Labor rates, 217–220 Premium time labor rates, 217–221 Proposed change orders (PCO), 178 Provisions in AIA General Conditions, 203–205 Review procedures, 205, 206 Scheduling, 215–220 Float, 216 Time and material work, 207, 208 What are change orders?, 201, 202 377 378 Index Change in conditions, 264, 265 Civil engineers, 48 Claims, 270–275 Acceleration, 270 Breach of contract, 272, 273 Differing site conditions, 272 Effective management, 276 Lack fo complete drawings, 272 Loss of productivity, 270, 274 Out-of-sequence work, 269 Trade stacking, 270 Constructability, 43 Construction components, 277–305 Concrete, 280–282 Characteristics, 281 Testing, 282 Types of, 281 Strength requirements, 280 Doors and frames, 295 Aluminum, 295 Door parts, 296 Door “handing”, 298 Plastic laminate, 295 Steel, 295 Wood, 295 Drywall partitions, 292–294 Exterior sheathing, 294 Fire-rated, 293 Moisture resistant, 294 Sound-rated, 294 Electrical, 305 Primary and secondary service, 305 Fire protection, 302–303 Components of a fire protection system, 303 Deluge system, 302 Dry systems, 302 Wet system, 302 Foundations, 278, 279 Glass and glazing, 291, 292 Types and uses, 291 Heating,ventilating and air-conditioning (HVAC) Air handlers, 299 Chillers, 299 Cooling towers, 302 Condensers, 299 Heat exchangers, 302 VAV devices, 302 Masonry- brick and block, 285, 288–291 Brick shapes and positions in wall, 288 Concrete masonry units (CMU), 288, 289 Mortar-types and uses, 288–290 Wall reinforcement, 291 Materials for various site utilities, 280 Paint and wall coverings, 295, 296 Piles- types and functions, 278 Plumbing, 297–299 Basic components, 297, 298 Types of piping, 298, 299 Roofing- single ply, built-up, 292 Site work test borings, 278 Structural steel, 282–285 Beams and angles, 283, 284 How to determine size/weight, 282 Grades, 282 Joists and metal deck, 287 Construction contracts, 63, 64, 70–112, 137–163, 330–354 Allowances, 144, 145 Alternates, 142, 144 Basic elements, 137 Change orders, 161, 162 Controlling overhead and profit on change orders, 154, 155 Cost of work plus a fee, 73, 74 Cost of work plus fee with guaranteed maximum price (GMP), 75–83, 146–149 Costs to be reimbursed, 80, 81 Costs not reimbursed, 82, 83 Documenting general conditions costs, 149 Limiting exposure to final costs, 148 Qualification and exclusions lists, 77 Construction management, 5, 83–87 Reimbursables, 86 Defining costs, 74, 160, 161 Design-build, 67, 87–89 Bridging, 89 Design-Build Institute of America, 67 Exhibits, 141, 142 Including a “Definitions section, 156 General conditions to the contract, 90–92 Liquidated damages, 156–158 Punch list, 162, 163 Requiring contractor to verify field conditions, 158 Retainage, 140 Schedule adherence, 159 Schedule of Values form, 138–140 Standard contract forms, 93–112 American Institute of Architects, 93 A Series-Owner-Contractor, 95–102 B Series- Owner-Archittect, 102–112 Associated General Contractors, 93 Construction Management, 94 Design- Build Institute, 94 Stipulated or lump sum, 70, 72, 355–361 Index 379 Unit prices, 145, 146 Substantial completion, 162 Time and material work, 159, 160 Weather delays, 161 Construction Industry, 2, 3, 50–63 Ethics, 10, 11 Failure es, 54, 55 Master builders, 56, 57 Number of contractors, Risky business, 52, 53 Size and revenue of contractors, 51–54 Typical company organization, 57–60 Accounting, 59 Estimators, 58 Purchasing, 59 Project executive, 58 Project manager, 57 Salary levels, 60 Shift to subcontracting, 60 Trade organizations, 61 Union, non-union, merit shop, 60–61 Differences, 61–63 Double-breasted, 61 Why contractors fail, 54–56 Construction Manager (CM), 5, 6, 63, 64, 83–87, 330–354 Basic services, 63, 64, 85 Construction Management Association of America (CMAA), 67 Contract forms, 83–87, 330–354 For fee & At Risk, 84 Reimbursable costs, 86, 87 Construction consultant, Contractor selection process, 134, 135 Contractor trade organizations, 61, 63 Contractors application for payment, 184–192 Contracts, 9, 67–70, 73–83, 128, 154, 155, 158–163, 330–354, 363–375, (See also Construction Contracts) Additional contract provisions, 158–163 Construction Management (CM), 330–354 Cost of work plus a fee, 73, 75 Cost plus fee with guaranteed maximum price, 75–83, 363–375 Letter of intent, 67–70, 128 Stipulated sum, 75–83, 355–361 Contingencies, 77 Coordination drawings- guidelines, 275, 276 Subcontractor involvement, 276 Cost-reporting, 58, 59 Court decisions re claims/delays, 271–274 Appeal of Clark Construction, 274 BEGL Construction v Los Angeles, 273 C.L Fairly, 271 John McShain v U.S, 272 Hensel Phillips v GSA Peter Kiewits Sons v Iowa Utility Randa/Madison v Dahlberg, 272 S Leo Harmmonay v Binks, 274 Spearin v Uited States, 266 Teufil v Weinner, 273 D Definitions, 156 Delays, 161, 268, 269, 271, 272, 274, 275 Compensable, 269 Concurrent delays, 269 Court decisions, 271, 272, 274, 275 Excusable delays, 268 Weather delays, 161 Design-build, 3–5, 64, 87–90 Bridging, 89, 90 Differing conditions, 261, 262, 272 Type I, 261 Type II, 262 Disputes and claim, 251–277 Contract provisions dealing with disputes, 254–256 Documentation in bidding documents, 251–253 Documentation during construction, 253, 254 Effective claim management, 271, 276, 277 Principle causes of disputes/claims, 254–271 Acceleration, 269 Errors and omissions in plans, 256, 257 Changed conditions, 264, 265 Coordination of drawings missing, 257–259 Delays caused by any/all parties, 268, 269 Disruptions to the pace of construction, 266 Drawing discrepancies, 265, 266 Financial problems- owner or contractor, 267 Inadequate administration of the project, 259, 260 Out-of-sequence work, 269, 270 Poor response from owner, architect, contractor, 259 Site conditions, 260–263 Things to consider, 271 Unforeseen sub-surface condtions, 263, 264 Unwillingness to comply with “Intent”, 260 Documentation, 251–254 During bidding, 251–253 During construction, 253–254 Index 380 E Electrical engineers, 49 Electronic records, 273 Environmental engineers, 50 Estimators, 58 F Fast track, 7, 68 Float, 216 FUTA/.SUTA, 159, 160 G General conditions, 90–93, 128–131, 203–205 A.I.A general conditions, 91–93 Change order provisions, 203–205 Glossary of architectural and construction terms, 307–326 Green construction, 8–10, 38, 223–249 Building design checklist, 236–237 Building products and processes, 245 Components, 234, 235 Cost effectiveness of green buildings, 243–245 Energy modeling, 240, 241 EPA Energy performance ratings, 235, 238 Green infrastructure, 241–243 Geothermal, 242, 243 Low impact development, 241 Impact on environment, 223, 224 Risks and pitfalls of green design, 248, 249 Sustainability, 245–248 U.S Department of Energy Technology program, 238–240 U.S Green Building Council (USBC), 225–227, 229 LEED, 225, 227–33, 234 Checklists, 227–233 Levels of certification, 225–227 Promoting Green Buildings, 229, 232 Whole building design, 224, 225 L Landscape architects, 47 Letter of Intent, 67–70, 128 Lien waivers, 188–191 Liquidated damages, 156, 157 Loss of productivity, 270, 274 M Master builder, 56, 57 Material engineers, 50 Material Safety Data Sheets (MSDS), 200 Mechanical engineers, 49 O Off-site storage of materials and equipment, 192–195 Bailment agreement, 194 Bill of sale, 195 Out-of-sequence work, 269, 270 Owner, 2, 3, 16, 21, 22, 27, 35–41, 173–200, 202, 203 Change order review, 202, 203 Commitment to project, 2, 16, 27 Importance of role, 173 Negotiating architect’s fees, 35–41 Project meetings, 173–200 Request for information, 176, 179 Responsibilties, 21, 22 P Pay when paid, 267 Purchasing, 59 Punch list, 59 Preparing bid documents, 113–128 Contractor qualification, 113–116 References, 116, 118 Safety and quality issues, 115, 116 General conditions, 128–131 Insurance and bonds, 124, 125 Owner/contractor controlled insurance programs, 125, 126 Invitation to bid, 121–124 Letter of credit, 128 Subguard, 128 Surety bonds, 126, 127 Principle causes of disputes and claims, 254–268 Project close out procedures, 193–200 Affadavits, 198 Consent of surety, 199 Equipment checklists, 197 Extra materials, 196 MSDS, 200 Project Management, 57, 58, 64, 65 Cost reporting, 58 Program manager, 6, 64, 65 Project close-out, 193–200 Project delivery systems, 3–8, (See also Contracts) Considerations, Construction consultant, Construction management, 5, Design-bid-build, 3, Index 381 Design-build, Fast-track approach, Green and sustainable construction, 8, Program manager, Project meetings, 165–184 Architect’s supplemental instructions, 179 Contents, 168–169 Material and equipment substitutions, 170–171 Meeting minutes, 167, 169 Off-site storage of material, 192 Owner’s role, 173, 176 Pace of construction, 184 Requests for information, 176, 178–179 Schedule, 171, 172 Shop drawings, 170 Q Quantum Meruit, 221, 222 R Shop drawings, 170, 182, 184, 274, 275 Prompt review required, 274, 275 Stipulated sum contract, 70–72 Structural engineers, 49 Subcontractors, 54, 55, 60, 149 Subguard, 128 Submittal log, 179, 180, 182–184 T Trade stacking, 270 U Union and non-union contractors, 60–63 Unit prices, 145, 146 Unforeseen subsurface conditions, 263, 264 Unjust enrichment, 221, 222 V Value engineering, 72, 73, 171–172 Requests for Information (RFI), 176, 178, 179 Retainage, 140 W S Weather delays, 161 Winter conditions, 153, 208 Withholding payment on defective work, 273–274 Schedules, 172, 173, 215–220, 266 Schedule of Values, 138–139 .. .Construction Process Planning and Management An Owner? ? ?s Guide to Successful Projects Sidney M Levy AMSTERDAM • BOSTON • HEIDELBERG • LONDON NEW YORK • OXFORD • PARIS • SAN DIEGO SAN FRANCISCO... procedures for decking and shear studs ■ Shop and field welds for metal fabrications such as steel railings and stairs ■ Visual inspections and torque tests for some structural-steel bolt connections... requires an owner to have a specific detailed plan in place and experienced staff on hand to manage the process from the owner? ? ?s standpoint; in some instances, state laws not permit design-build projects