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Understanding Key Concepts in Construction Management: Value Engineering and Payment Processes

This tutorial covers fundamental concepts in construction management, focusing on Value Engineering, Suspension, Delay or Interruption, Liquidated Damages, Progress Payments, Retainage, Progress Reporting, and Acceptance and Final Payment. Participants will learn how to encourage cost-saving methods, the implications of project delays, the importance of progress reporting, and the processes leading to final project acceptance. This session emphasizes practical applications and the importance of documenting project progress to meet contractual obligations.

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Understanding Key Concepts in Construction Management: Value Engineering and Payment Processes

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Presentation Transcript

  1. CIVL202Construction Engineering I Tutorial 4 T1 Mon 11:00 – 11:50 T2 Wed 09:00 – 09:50

  2. Tutorial Outlines • Value Engineering • Suspension, Delay or Interruption • Liquidated Damages • Progress Payments and Retainage • Progress Reporting • Acceptance and Final Payment

  3. Value Engineering • Encourage the contractor to suggest a cost-saving construction method • Allow the contractor to share a portion of saved cost • DBB contracts, contractor seldom have input to the design process • Weighted evaluation

  4. Suspension, Delay or Interruption • For government contracts, the officer may order the contractor in writing to suspend, delay or interruption for certain period of time • But it may be costly to the contractor • The owner is required to pay an adjustment for unreasonable suspension

  5. Liquidated Damage • The contractor cannot complete the project by a certain point of time, which will lead to non-availability of service of construction • Usually given in supplementary conditions • Amount of LD should reflect the actual amount incurred • If Charges > the actual amount of damage incurred, it acts as a kind of penalty, In this case, the owner have to give bonus to the contractor if the project has been finished earlier than expected

  6. Progress Payments and Retainage • Progress payments: contractor is reimbursed on a periodic basis, usually at the end of each month • Retainage: owner retains a portion of money(say 10%) which acts as an incentive for the contractor to complete the project properly

  7. Progress Reporting • The contractor is required to report the schedule of activity periodically to reflect the actual progress of the project • S-curves and bar charts

  8. Acceptance and Final Payment • Final acceptance is implemented by joint inspection, after which, final payment including retainage will be made • Punch list: which record the deficiencies of the project under joint inspection • Similar procedure between prime contractor and sub-contractors

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