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35 Cards in this Set
- Front
- Back
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Brokerage |
General contractor subs out all work on a project -not good for owner bc extra cost from each subcontractor's profit -gen contractor takes managerial role with subcontractors |
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When to use General Contract Form |
When the general contractor has unique skills that should reduce costs of construction |
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When not to use General Contract Form |
-if the owner has construction management capability |
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General Contract Form |
-Only method that gives the owner a firm idea of the project's final cost before the construction phase -gives clear roles for each party -minimizes liability for cost overruns and late project delivery |
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Public General Contract Form |
-Public advertisement of upcoming bid -Sealed bids submitted in designated time, place and manner -bids opened and read to all in attendance -contract goes to lowest responsible bidder |
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General Contracting Disadvantages |
-Longer project duration -no agent/"friendly party" for owner -small profit margins (contractors cut corners) -adversarial parties -inflexible -more claims likely |
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Separate Contracts Method |
Owner contracts directly with specialty contractors -owner must be project manager (advisable) or hire a firm to manage the project (management role is outlined in contract) aka Multiple Prime Contracts Method |
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Pros of Separate Contracts Method |
Profit saved by not having to pay a general contractor |
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Cons of Separate Contracts Method |
-profit saved from lack of general contractor is small -some permits require a general contractor's license to acquire -owner assumes greater risk |
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When to use Separate Contracts Method |
-when owner has construction manager or an engineer to administer contracts -for projects with only a few types of specialty construction |
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Self Performance Method |
aka Force Account Work The owner does some or all of the work in-house -no contracts -owner is the project manager -design is usually done in-house, or designer plays a minor role |
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Pros of the Self-Performance Method |
-the owner saves money by not paying contractors and not going through the contract/bid process -sometimes money saved in engineering and inspection (for simpler projects) |
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Cons of the Self-Performance Method |
-Contractors don't like when public entities compete in bids (bc public entities underestimate costs and underbid) -Outsourcing is seen as more profitable (private sector) |
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when to use the Self-performance Method |
-small projects -simple projects -ongoing projects (maintenance) -when the owner already has the necessary resources |
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Design-Build Method |
aka Design-Construct aka Turnkey Construction uses construction firm's expertise in the design phase to make the final product easier to construct -contractor is responsible for design & construction -no existing design on which to calculate a bid |
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Guaranteed Maximum Price (GMP) contract |
-used to bid projects to design-build firms -project scope well-defined -sometimes paid as the construction/design cost + a fixed fee Public - owner keeps savings when cost is below GMP Private - Owner may share savings with the contractor as an incentive for them to control costs |
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Pros of Design-Build |
-fewer changes due to construction-informed design -owner won't deal with disputes that arise between design & construction -potentially cheaper can be 20-30% faster |
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Cons of Design-Build |
-owner has less control -fewer checks and balances Public projects -laws and regulations may restrict the process |
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When to use design-build |
-when owner wants to fast-track project -large, complex projects -when project scope is clearly defined before entering a design-build contract |
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Variations of design-build |
design-build-finance design-build-operate |
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Professional Construction Management contract method |
Owner hires a firm with construction expertise to manage construction on the owner's behalf -Construction management firm (CM) usually hired before any substantial design or any construction -compensation arranged between owner and CM -construction may begin once design is partially complete |
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Construction Management Firm responsibilities |
-CM works for owner's benefit -sometimes gives owner a GMP (owner could give CM savings under GMP as incentive) -periodically reviews project design during development -finds ways to reduce cost & time spent -NOT responsible for means/methods of construction -might provide skeleton workforce for general overhead work (cleanup) |
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When to use Professional Construction Management |
-large, complex projects that require construction expertise in the design phase -flexible projects subject to change design as project evolves (hospitals) -when owner trusts CM and knows what they need from CM -projects that need fast-tracking |
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Construction Management At Risk (CM at Risk) |
aka GC/CM aka CM/GC a Construction Manager is hired as an independent contractor, and is therefore "at risk" -CM must compensate owner when construction doesn't satisfy standard of performance for the project -CM responsible for hiring all sub-contractors and coordinating them -CM enters project prior to design completion if Guaranteed Maximum Price used: -CM must absorb costs that exceed GMP -owner usually keeps savings if actual costs are under GMP |
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Contract |
agreement between 2 or more parties enforceable by law contract breach occurs when a party doesn't comply with the contract terms |
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Litigation |
Taking matters into the hands of the law when conflicts can't be settled amicably |
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Common Law |
based on tradition or accepted practice over extended time -used to define 'right' and 'wrong' -not formally documented -past court cases form a reference on which to judge -can inform what constitutes a breach of contract |
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Written Law |
Formal, written statutes, laws, ya know, what it sounds like |
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Executed Contract |
Both parties have fully performed the terms of the contract - contract not executed until all terms have been completed (project is built and contractor is paid) |
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Executory Contract |
Part(s) of the contract has not been completed -by one or both parties -an entirely executory contract (nothing has been done yet) is the easiest to cancel |
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Bilateral Contract |
agreement created by mutual promises made by both parties involved -each party is 'promiser' and 'promisee' -most construction contracts are bilateral ex) contractor agrees to build for owner, owner agrees to pay contractor |
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Unilateral Contract |
Only one party makes a promise, and the other exchanges something else ex) subcontractor offers general contractor railroad ties for a certain price, and the general contractor sends the sub the agreed amount of money for the railroad ties |
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Express Contract |
-clear, concise, definite terms (verbal or written) |
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Implied Contract |
-Terms are not clearly stated, but established through inference and deduction -facts and circumstances are implied from the actions of both parties |
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Joint Arrangement |
individuals are 'joined' as one party in a contractual agreement -if one individual is released from the agreement, then all individuals are released ex) landowners with adjacent properties combine their land to sell it if there's a disagreement with the real estate agent, then all the individual landowners would be sued as one entity |
