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ICSC European Retail Property School

ICSC European Retail Property School. Construction Administration & Construction Management. July 2014 Berlin, Germany. Construction Administration. L ec t u r e r. Ivana Maksimović CRX, CDP Confluence Property Management Belgrade, Serbia. Construction Administration. AGENDA

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ICSC European Retail Property School

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  1. ICSC European Retail PropertySchool Construction Administration& ConstructionManagement July2014 Berlin, Germany

  2. ConstructionAdministration Lecturer Ivana Maksimović CRX,CDP Confluence PropertyManagement Belgrade,Serbia

  3. ConstructionAdministration • AGENDA • DEFINITIONS ANDROLES • PRE-QUALIFICATION AND SELECTION OFCONTRACTOR • CONSTRUCTIONAGREEMENTS • CONSTRUCTIONPROCESS

  4. ConstructionAdministration D EFINITIONS Construction is the process of preparing and forming buildings and building systems. Construction starts with planning, design, and financing and continues until the structure is ready foroccupancy. Construction management or construction project management is the overall planning, coordination, and control of a construction process from beginning to completion. Construction project management is aimed at meeting a client's requirement in order to produce a functionally and financially viableproject.

  5. ConstructionAdministration D EFINITIONS BUDGET SCHEDULE QUALITY

  6. ConstructionAdministration • D EFINITIONS • Owner’s Rep / ProjectManager • Company or person planning, organizing and managing theprocess of design andconstruction • ProgramManager • Person who manages a retail store rollout program,planning organizing and managing design and constructionprocess.

  7. ConstructionAdministration R ELATIONS OWNER Investor OWNER’S REPRESENTATIVE ProjectManager DESIGNPROFESSIONAL Architect Engineer CONSTRUCTION Construction Manager (CM) General Contractor(GC)

  8. ConstructionAdministration • D EFINITIONS • ConstructionManager • At Risk (Construction Manager asContractor) Agency • The difference is just in level of riskassumed • GeneralContractor • Company appointed to execute construction works and deliver the building as per agreed cost, schedule andquality

  9. ConstructionAdministration R ELATIONS OWNER Investor CONSTRUCTION MANAGER atrisk SUBCONTRACTOR 1 SUBCONTRACTOR 2 SUBCONTRACTOR 3

  10. ConstructionAdministration R ELATIONS OWNER Investor CONSTRUCTION MANAGER asagency SUBCONTRACTOR 1 SUBCONTRACTOR 2 SUBCONTRACTOR 3

  11. ConstructionAdministration What would be the difference between Construction Manager atrisk and GeneralContractor?

  12. ConstructionAdministration • PREQUALIFICATIONS ANDSELECTION • A. Pre-QualificationQuestions • Company • People • Legal • TrackRecord • Contractual • B. SelectionMethods • Bidding theJob • NegotiatedAgreement

  13. ConstructionAdministration • PREQUALIFICATIONS ANDSELECTION • Considerations • Relevant experience, references, generalreputation • Financial stability of company / credit reports, bondingcapability • Schedulecontrol • Quality of performed works on representativeprojects • Prior experience with contractor, strategicrelationship • Litigations

  14. ConstructionAdministration • PREQUALIFICATIONS ANDSELECTION • Company • Does the size of the company match the size of theproject? • What is the safety record of acompany? • EMR / experience modificationrate • <1 moresafe • >1 lesssafe • Personnel who will be working onproject • Do they have experience on this particularjob? • What do former client say aboutsuperintendent? • What is a current teamworkload?

  15. ConstructionAdministration • PREQUALIFICATIONS ANDSELECTION • Price • Best possible work at the lowest possibleprice • Pay a little more for company with graterexperience • Extremely high and low bids should be eliminatedquickly

  16. ConstructionAdministration SELECTIONMETHODS Depends on MAIN PROJECTOBJECTIVE • Budget • Schedule • Quality • Bidding the job after design iscompleted • Negotiate agreement to involve contractorearly • Combination

  17. ConstructionAdministration • SELECTIONMETHODS • TO BID OR NOT TO BID? • Type of Job – Project DeliveryMethod • Size ofJob • ProfitPotential • ClientRelationship • ResourceAvailability • Competition • BondingIssues • Quality ofOwner • Quality ofArchitect

  18. ConstructionAdministration • SELECTIONMETHODS • BIDDING THEJOB • Primarily based onprice • Clear designdocumentation • Clear scope ofwork • Most suitable for traditional design/bid/build project deliverymethod • Requires longerschedule • Lowestcost • Open vs. Restricted bidderslist • Bid roomatmosphere

  19. ConstructionAdministration SELECTIONMETHODS BIDDING THE JOB /PITFALLS

  20. ConstructionAdministration • SELECTIONMETHODS • NEGOTIATEDAGREEMENT • The contractor is selected in competitive negotiation basedon: • Theteam • Appropriateexperience • Understanding of thejob • Fee for preconstructionservices • General conditionscosts

  21. ConstructionAdministration • SELECTIONMETHODS • NEGOTIATEDAGREEMENT • Preconstructionservices • budgeting, • scheduling, • systemanalysis, • valueengineering • Should be expressed in$

  22. ConstructionAdministration • SELECTIONMETHODS • NEGOTIATEDAGREEMENT • Generalconditions are indirect costs generally related to contractors on-site staffing and creating constructionenvironment • Price for on sitepersonnel • Field office establishment,equipment • Temporarytoilets • Job safetyofficer • Dumpsters • Generalclean-up • First aid equipment and fireextinguishers • Small toolspurchase… Should be expressed in$

  23. ConstructionAdministration SELECTIONMETHODS NEGOTIATEDAGREEMENT CostSummary Preconstruction Services General Conditions ProfessionalFee Mark-Up on Self-Performed Work General Liability Insurance Savings /Split Mark-Up on Changes ForSubcontractors For General Contractor PerformanceBond $ $ % % % Owner /CM % % %

  24. ConstructionAdministration • REQUESTINGPROPOSALS • RFP = Request forproposal • General information aboutInvestor • General information about the Projectitself • Requested quality ofwork • Requested form of proposal / documents to beprovided • Drawings andspecifications • Bill ofQuantities • Deadline for submittingproposals

  25. ConstructionAdministration EVALUATINGPROPOSALS • Completeness of documentationsubmitted • References • Pricecomparison

  26. ConstructionAdministration

  27. ConstructionAdministration • TYPES OF CONSTRUCTIONCONTRACTS • CONTRACTELEMENTS • Theparties • The work (described by plans andspecs) • The price (including paymentconditions) • Schedule

  28. ConstructionAdministration • TYPES OF CONSTRUCTIONCONTRACTS • Stipulated lump – sumcontract • Design/build • Unitprice • Construction management atrisk • Construction management asagency

  29. ConstructionAdministration • TYPES OF CONSTRUCTIONCONTRACTS • 1. Stipulated lump – sumcontract • contractor is performing works for fixed lumpsum • well defined quality and scope ofworks • risk for extras/savings is shared between contractor andowner • no additional cost, knownprice

  30. ConstructionAdministration • TYPES OF CONSTRUCTIONCONTRACTS • 2. Design/buildagreement • designer works for constructionentity • no issues withconstructability • higher risk for owner’sbudget

  31. ConstructionAdministration • TYPES OF CONSTRUCTIONCONTRACTS • 3. Unitprice • works are contracted as per unit price for material andlabor • when scope of work is not preciselydefined • when expecting significantchanges • fair for bothparties • total price is not known until the end ofconstruction

  32. ConstructionAdministration • TYPES OF CONSTRUCTIONCONTRACTS • 4. Construction management atrisk • usually, contractor is selected based on qualifications, notprice • contractor is brought early in designphase • cost and fees are openbook • allowable and unallowablecosts • guaranteed maximum price(GMP)

  33. ConstructionAdministration • TYPES OF CONSTRUCTIONCONTRACTS • 5. Construction management asagency • CM is in consultancyrole • separate agreements with eachsubcontractor

  34. ConstructionAdministration • STANDARD CONTRACTFORMS • FIDIC –Europe vs AIA –USA • FIDIC is the International Federation of Consulting Engineers. Its members are national associations of consultingengineers • the most widely used standard conditions for theconstruction contract • Used by World Bank, EBRD, EIB…

  35. ConstructionAdministration • STANDARD CONTRACTFORMS • FIDICCONTRACTS • Red book /construction • Yellow book /design/build • Silver book / turnkeyprojects • Green book / short form ofcontract • Gold book / design, construct &operate • White book / projectmanagement

  36. ConstructionAdministration STANDARD CONTRACTFORMS Complexproject Design docsprepared Unitprice Simpleproject Value less then $500K Project up to 6months NO NO Complexproject Contractor is providingdesign MEP Lump-sumprice NO Complexproject Lump-sum fixedprice

  37. ConstructionAdministration Major Contract BusinessIssues • General conditions – describing project andparties • Investor’sresponsibilities • Contractor’sresponsibilities • Appointedsubcontractors • Contractor’semployees • Requested quality ofworks • Start, delays and temporary breaks inconstruction • Changes and modifications duringconstruction • Price: lump-sum, GMP, unit price and payment conditions includingadvance • Advance paymentguaranty • Performance bond and retention money10% • Handover between Contractor andOwner • Deficiencies • Guaranty period andbonds • Risk and responsibility – liquidated vs. consequentialdamages • Force majeure (Excusabledelay) • Disputes andArbitration

  38. ConstructionAdministration • Priority ofdocuments • Contract • The Letter ofAcceptance • The form ofTender • TheSpecifications • TheDrawings • TheSchedules

  39. ConstructionAdministration CONSTRUCTIONPROCESS OWNER Investor PM DESIGN SUPERVISION SITESUPERVISION ENGINEER CONSTRUCTION MANAGER orGC SUBCONTRACTOR 1 SUBCONTRACTOR 2 SUBCONTRACTOR 3

  40. ConstructionAdministration • CONSTRUCTIONPROCESS • Pre constructionphase • Development of Plans andSpecifications • Financing, Budgets, Permits,Schedules • Tendering and contractingworks • Initial constructionphase • Site preparationworks • Building the foundations, structure and exterior envelope includingroof • Installing windows, doors, verticaltransportation • Finishesphase ▪ ▪ ▪ MEP Interior finishesapplied Exterior landscaping, planting andhardscape • Post constructionphase • Testing and commissioning, close out, completion inspections,handover

  41. ConstructionAdministration Max 42days Period for offers submission Period for offers evaluation Prolongation of works due to changes and variations Final completion date Handover protocol signing Last dayfor offers submission Notification on Min 7 days commencement of works Contracted Deadline Circulate RFP Contracted period ofworks Letter of acceptance Startof works 8 9 7 1 2 4 5 5 28days Max 28days Max 28days PM comments onprovided schedule Basedate Works program/ Schedule 3 11 10 Start of workson site Approach toParticular Precondition conditions site 14 13 Performance guaranty 12 Max 28days Max 21 day or* Advance payment guaranty Advancepay application Particular conditions 15 16 CONSTRUCTIONPROCESS Diagram1 Advance payment * Max 42 days, depending which date islater 17

  42. ConstructionAdministration Contracted period of worksContracted deadline Works completion date Prolongation due to changes andvariations Startof works 2 3 1 Confirmation upon quality ofworks Max 28days Deadline Notification period for Deadline for Prolongation of perioddue notifications to deficienciesreported 7 deficiencies 8 9 Notification on completion ofworks 5 Inspection of max 28 days completed works 14days Handover protocol issuing 6 Approvalof pay application Notification on completion ofworks 10 Final Valuation/ Invoice Max 28days Repairing works 14 days Inspectionof completed works Max 84days Inspectionof completed works Request for handoverby contractor Payment 14days Snaglist 16 17 15 4 14 11 12 13 Max 28days Max 56days Max 28days CONSTRUCTIONPROCESS Diagram2

  43. ConstructionAdministration • CONTRACTORSSERVICES • PRECONSTRUCTIONSERVICES • Budgeting – estimating cost forbuilding • Scheduling – creating worksprogram • Building system analysis – determine most cost effectivesolution • Value engineering – best solution for the availablebudget • Constructability review – review plans andspecifications • Life cycle costing – price of system over its entire lifespan

  44. ConstructionAdministration CONTRACTORSSERVICES ESTIMATING /BUDGETING Who budgets jobs? architect/engineer costmanager constructionprofessional How the job isbudgeted? WeekOne WeekTwo WeekThree Receive biddocuments Reviewdocuments Prepare estimate surveysheet Determine sublist Distributedrawings Learn aboutJob Visitsite Pre-Bidmeeting Self performedworks Preliminaryschedule Develop subcontractors scope ofworks Method of bid delivery Receive subcontractors bids Complete surveysheet Addprofit Submit bidproposal

  45. ConstructionAdministration CONTRACTORSSERVICES BUDGET DURINGDESIGN Documentsand Information ConceptualDesign ▪ Napkin PricingType PricingAccuracy ScheduleType • DataBank +/-15% • PastProjects • SitePlan • PreliminaryLayouts • Systems SchematicDesign • BarChart • MasterSchedule • SystemsPricing +/-10% • SystemsComplete • Some Details • BuildingSections DesignDevelopment • Quantities • TradeItems • LongLeads • PreliminaryCost +/-5% • “Complete” (no such thing asa • complete set ofCD’s!) Final Design Construction Documents • Detailed QuantitiesUnit Prices • SubBids • GMP / FinalBudget +/-2% • DetailedCost

  46. ConstructionAdministration • CONTRACTORSSERVICES • BUDGETINGPITFALLS • Lack ofDetails • Make allowance for “hidden” and unforeseenworks • Inadequate research : geographical and weatherconditions • Update budget frequently – at least once amonth

  47. ConstructionAdministration Project BudgetReport

  48. ConstructionAdministration CONTRACTORSSERVICES OVERBUDGET? • recognize the problemearly • evaluate major building systems: structure, building envelope, HVAC, electrical… • review thefinishes

  49. ConstructionAdministration CONTRACTORSSERVICES SCHEDULING • Creating a works program / schedule is simply identifying the needed activities, calculating the length of time for each activity, determining how the activities relate to each other, developing logical sequence and identifying a criticalpath. • Milestoneschedule • Masterproject • Barchart • Criticalpath

  50. ConstructionAdministration SCHEDULING • MILESTONESCHEDULE • a list of start or completion dates of major steps in the project, such aswhen: • Ground will bebroken • The foundations or the superstructure arefinished • Walls arecompleted • The roof will be watertight • MEP willbegin • The interior start and finish will commence and becompleted • FF&E • Occupation

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