FACULTY OF ENGINEERING DEPARTMENT OF CIVIL ENGINEERING SPRING SEMESTER ASSOC.PROF.DR. İBRAHİM YİTMEN CIVL 493 CONSTRUCTION MANAGEMENT

PROJECT DELIVERY SYSTEMS

STRUCTURE Facility delivery process Planning Design Construction Startup and Commissioning Operation and Maintenance 3

STRUCTURE Market Sector Versions of Facility Delivery Process Residential Commercial Industrial Heavy civil engineering 4

STRUCTURE Project delivery methods Design-Bid-Build Phased Construction Design-Bid-Build-Warranty Design-Build Engineer-Procure-Construct Indefinite Delivery/Indefinite Quantity 5

STRUCTURE Commercial contract terms Lump Sum Cost-Plus-Fee Unit Price Alternate Methods for Contract Award A+B (Time + Cost, Multiparameter) Best Value (Price + Quality) Bid Averaging Method Optionally Combined Bidding 6

PROJECT DELIVERY SYSTEMS General characteristics of the construction industry Project-driven Participants include owner, designer/arch./engineer, contractor, specialty contractors, vendors, and material suppliers 7

PARTIES TO A PROJECT 8 PROJECT Designer Insurance Owner’s Insurance Owner Permanent Lender Interim Lender National Government Regional Government Local Government Project Management General Contractor Vendors Contractor’s Insurance Suppliers Architects Engineers Consultants Attorneys Accountants Unions Specialty Contractors

GENERAL CHARACTERISTICS Different ways to organize participants, to assign roles, responsibility, and risk  MANAGEMENT Timing of participation Relationships to other players Linked to construction industry trend of shorter life cycles 9

FACILITY DELIVERY PROCESS Process in which ideas are transformed into useful facilities Every construction project is completed with a Facility Delivery Process 10

FACILITY DELIVERY PROCESS 11 Ability to Influence Cost Planning Design Construction Operation & Maintenance High Low Startup & Commissioning Time 5-15% 2-20% 65-93% 0.5-5% Capital Investment

“LET ME SEE THOSE BLUEPRINTS AGAIN” 12

FACILITY DELIVERY PROCESS Planning owner expresses a need for a new facility concepts are worked out feasibility studies are a must 13

FACILITY DELIVERY PROCESS Design Where the majority of engineering takes place Detailed plans and specifications are developed Owner’s initial ideas are further refined Owner gives go-ahead Contract is bid and awarded 14

“ALL WE DO IS PUT IT ON PAPER. IT’S YOUR JOB TO BUILD IT.” 15

There Comes A Time in The History Of Every Project When It Becomes Necessary to Shoot the Engineers and Begin Production 16

DO YOU MEAN YOU WANT THE REVISED REVISION OF THE ORIGINAL REVISED REVISION REVISED? 17

FACILITY DELIVERY PROCESS Construction Where the physical manifestation of the design appears Design often continues through construction Startup and Commissioning Verifying whether the constructed facility operates as designed 18

FACILITY DELIVERY PROCESS Operation and Maintenance Owner accepts built facility Facility continues in O&M until it is renovated or decommissioned 19

FACILITY DELIVERY PROCESS - COMMERCIAL BUILDING CONSTRUCTION 20

FACILITY DELIVERY PROCESS - INDUSTRIAL CONSTRUCTION 21

FACILITY DELIVERY PROCESS - HIGHWAY CONSTRUCTION Planning Phase A. Feasibility and needs assessment B. Scoping report Design Phase A. Preliminary engineering B. Plans, specifications and estimate C. P.S. & E. review and approve Construction Phase A. Pre-construction B. Construction C. Post construction 22

PROJECT EXPENDITURES 23 Cost Influence Cost of Change ++ Time SD DD CD B B Construction Traditional * Fixed Price

METHODS OF DELIVERY Selecting a project delivery system depends on: Complexity of the project Owner's resources and risk management Past experience Corporate policy Value of time Value of innovation Owner assumes risk in selecting a project delivery system: losses occur if need is not met 24

DESIGN-BID-BUILD CONTRACT Also known as hard-money or competitively bid contract Designer and contractor are usually different entities 3 distinct phases Cake mix analogy 25

DESIGN-BID-BUILD CONTRACT Design Phase Arch./designer develops plans and specs to meet owner's needs Engineers design building systems (structural, mechanical, electrical, etc.) Decisions made about equipment, materials, and methods 26

DESIGN-BID-BUILD CONTRACT Bid Phase Several general contractors bid on design documents Owner receives firm price offers for work Contract normally goes to the lowest bidder 27

DESIGN-BID-BUILD CONTRACT Build Phase A fixed price contract is signed by the owner and contractor Contractor assumes financial risk of project Contractor wants to minimize costs and maximize profit No incentive to increase quality beyond minimum standards 28

ADVANTAGES OF DESIGN-BID-BUILD Very familiar to industry participants Large body of case law Model contracts Structures geared toward system 29

DISADVANTAGES OF DESIGN- BID-BUILD Incentives to build cheap Litigation: leads to cost and schedule overruns No incentive for innovation Owner assumes most of the risk beyond the contract 30

“HE WAS THE LOWEST BIDDER” 31

PHASED (FAST-TRACK) CONSTRUCTION Form of design-build where all parties are brought in at the beginning Stages of design and construction are overlapped Time from conception to use is substantially reduced A construction manager may be used to coordinate between all parties 32

PHASED CONSTRUCTION Design phase Owner, designer, engineers, general contractors, and mechanical and electrical specialty contractors form a team to develop design General contractor evaluates design's cost and time implications This allows designer to maintain owner's goals within budget, sometimes leads to major design changes which could not be made later 33

PHASED CONSTRUCTION Construction phase Project is being designed, bid, and built in stages Excavation, foundations, and structure are bid and started before design work is finished Mechanical and electrical are bid and built while partition work are still being designed 34

PHASED CONSTRUCTION A construction manager (CM) can coordinate between parties in this arrangement A pure construction manager will not guarantee a budget or schedule nor will they perform any work on site A construction manager at risk will guarantee and perform work that is critical to control cost and schedule 35

PROJECT DELIVERY SYSTEMS 36 Cost Influence Cost of Change ++ Time SDDD * Fixed Price Traditional SD DD CD B B Construction Management (Phased Construction) * Fixed Price CD Construction CD B B Construction CD B B Construction CD B B Construction B

DESIGN-BID-BUILD- WARRANTY: DEFINITION Warranty: A guarantee of the integrity of a product and of the maker ’ s responsibility for the repair or replacement of deficiencies. A warranty is an absolute liability on the part of the Warrantor, and the contract is void unless it is strictly and literally performed. It usually is applied to manufactured products and their qualities, although it could apply to design and construction. Donn Hancher - NCHRP Synthesis of Highway Practice “ Use of Warranties in Road Construction ” 37

DISTRIBUTION OF THE COMPLETED WARRANTY PROJECTS 38

TYPICAL WARRANTY SPECIFICATION Product Length of Warranty Award of Contract Bonds Maintenance Conflict Resolution Team 39

TYPICAL WARRANTY SPECIFICATION Contractor Rights & Responsibilities Owner Rights & Responsibilities Performance Indicators Requirements for Corrective Action Basis of Payment 40