Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
141 Cards in this Set
- Front
- Back
|
4 construction categories |
1 - housing (private) 2 - building (non-residential, public and private) 3 - Engineering (civil works projects, public) 4 - industrial (private) |
|
|
5 types of contracting procedures |
1 - General Contract Method 2 - Separate Contracts Method 3 - Self-performance Method 4 - Design-build method 5 - Professional construction management |
|
|
General contract method |
- between owner and general contractor - owner represented by firm (contract documents)
|
|
|
Brokerage |
all the work is subcontracted out |
|
|
Advantages of General Contract |
- reduce cost for owner when contractor has unique skill set - only method that gives owner a firm idea of final cost prior to construction phase - clearly defined roles for each party - owner minimizes contractual liability for cost overruns and late project delivery |
|
|
Disadvantages of General Contract |
- often extends project duration - leads to tight bid and small profit margins - incentive for general contractors to cut corners on performance - inflexibility - high probability of claims for owner |
|
|
Separate contract method |
- multiple prime contracts method - owner contracts directly to specialty contractors for various jobs - appropriate if owner has in house capabilities to manage construction project - owner keeps profit that would have gone to general contractor |
|
|
When to use separate contract method |
- availability of competent construction mgr - where required specialty work is restricted to a few types of construction - not widely used |
|
|
Self-performance method |
- force account work - owner self-perform construction work/do work in house - no written contract - just the owner and workers - owner as manager - appropriate for projects small in scope, simple, ongoing and maintenance projects - criticized when public owners decide to do projects by self-performance |
|
|
Design- build method |
- also called turnkey construction - single contract for both design and build - utilizes construction firms experience in design - similar to general contract, except contractor responsible for design as well - popular in large industrial projects
|
|
|
Advantages of design-build |
- owners keep savings in public sector and share savings in private sector - eliminate potential for being embroiled in disputes between design and construction firm
|
|
|
Fast- tracking |
- the overlap of design and construction that can occur in design build projects |
|
|
professional construction management |
- owner hires firm with construction expertise - on large complex projects - permits flexibility for changing
|
|
|
Risks of professional construction management contract |
- CM is responsible to the owner to complete project on time and budget - similar to GC method - firm enters contract prior to design completion |
|
|
litigation |
- dispute resolution in court between two parties of a contract
|
|
|
common-law |
- based on tradition or accepted practice over an extended course of time |
|
|
Executed contract |
- when both parties to the agreement have fully performed their duties |
|
|
Executory contract |
- when some portion of the agreement remains undone |
|
|
bilateral contract |
- consists of an agreement created by mutual promises made by contracting parties |
|
|
unilateral contract |
one sided contract in that only one of the contracting parties makes a promise, the other party exchanges something other than a promise - most commonly some stated performance |
|
|
unreality of consent |
- a formal contract is made and there was no meeting of the minds |
|
|
duress |
threats forcing consent to an agreement |
|
|
consideration |
something of value. primary reason for someone to enter a contract |
|
|
Estoppel |
- contract becomes binding in spite of the fact that no formal agreement was made between parties concerned - result of a court action asserting that an agreement or contract exists, based largely on the behaviour or actions of the parties involved |
|
|
Sovereign immunity |
- the government entity cannot be sued without its consent |
|
|
eminent domain |
the right of the federal government or a state to take possession of private property and appropriate it for public use - also called condemnation |
|
|
tract of land, usually consisting of a series of connected parcels of property, that is used for the operation of a highway or public utility |
right of way |
|
|
notice to owner/notice of intent to lien |
initial notification to owner of lien |
|
|
lien discharged in two ways |
foreclosure or elimination |
|
|
partial release of lien |
lien rights for certain portion of the work that have been paid are officially released |
|
|
stop notice |
permits works or material suppliers to notify owners that a general contractor has failed to pay them |
|
|
criticism of liens |
- they are complex and take a long time to process - inconsistent between states - no guarantee of payment and are often useless - severe means of collection if the debt is small
|
|
|
how to avoid liens |
- owners can post a notice of nonresponsiblity - no lien contract - owner can require the contractor to furnish an affidavit that all the bills related to a project have been paid - owner can demand to see receipts - owner can require GC to pay the subs before he gets paid - owner can keep retainage |
|
|
Agency agreements vs contracts |
similar in that they contain the same basic elements |
|
|
agency agreements consist of |
1. agent 2. principle |
|
|
Agent is appointed to act for the principle and is authorized to... |
do only what the principle wants |
|
|
Acts agents cannot perform |
- anything personal in nature - anything illegal - immoral acts - acts opposed to public policy
|
|
|
agent is responsible for actions if |
they are not authorized by the principle |
|
|
independent contractor |
agent relationship where the owner is not responsible for the actions of the agent but only specifies a required result |
|
|
9 ways an agency is terminated |
- death of principle or agent - destruction of the subject matter for which the agency was formed - occurrence of a specified event - fulfillment of the particular purpose of the agency - bankruptcy of either party - exipiration of a time period set in the agreement - development making subject matter illegal - mutual consent - unilateral termination by either party |
|
|
Contingent liability |
- under the rules of this, an injured third party is not or should not be affected by a contract between two other parties. - it can sue the owner under the premise that the owner is jointly or wholly liable |
|
|
Proprietorship |
firms owned by an individual structure is whatever owner wants |
|
|
partnership |
association of two or more persons to carry on a business - pays no income tax - cannot own real property in its own name - each partner assumes unlimited personal liabilty to third parties |
|
|
limited partner |
-contributes cash or property to the business and shares in the profits and losses -provides no service and holds no vote |
|
|
silent partner |
remains unknown to the public |
|
|
joint ventures |
two or more construction firms join to build a project |
|
|
advantages of joint ventures |
- increase bond capacity - gain familiarity with the local labor market be enlisting the services of a local firm - increase capabilities - pool equipment resources - increase available capital |
|
|
Corporations |
legal entity created to act as an individual while protecting the owners and stockholders of the firm |
|
|
expulpatory provision |
one party, typically the contractor, is asked to assume liability that would not otherwise be assumed |
|
|
Strict interpretation |
court tries to interpret the provision, as much as it can within reason, against the party that seeks protection under the provision |
|
|
conditions must be met for a tort to occur |
- one party owes a duty to another party - the party does not conform to the standard (breach in performance of the duty) - the second party is harmed by the act or failure to act - there is a clear casual relationship between the act and the harm that results |
|
|
6 examples of torts |
- defamation of character through libel or slander - unlawful entry onto another's premises - unwarranted seizure, alteration, or destruction of another's property - unauthorized use of another's patent, trademark, or copyrights - violation of another's freedom through nuisance and negligance - failure to exercise care in the exercise of one's duty to another |
|
|
standard of care |
conduct that is expected of someone acting in a given capacity |
|
|
negligence |
legally protected interest is overtly invaded or violated in some way |
|
|
attractive nuisance |
occurs when a child wanders on to a construction site due to curiosity and the owner may be liable |
|
|
arrangment of the three parties in a surety bond |
surety - the bond company obligated to perform or pay when principle doesn't perform principle - general contractor whose performance is promised or guaranteed obligee - owner who is promised the performance |
|
|
lump sum projects are particularly vulnerable for the following reasons... |
- prices can increase - labor difficulties can arise - subsurface conditions may be different than expected - government policy may change, affecting the ability to borrow |
|
|
bid bond as liquidated damages |
owner will retain full amount of the bid bond when low bidder does not sign the contract and provide the required additional bonds |
|
|
12 things typically in notice to bidders |
- nature or type of project - location of project - type of contract for construction - bonding requirements - dates in which to perform work - terms of payment - estimated construction costs - time, manner, and place to submit bids - location to obtain bid documents - deposit required on bid documents - owners right to reject any and all bids - requirements regarding wage rates |
|
|
private sector advertisements for bids |
- owner can choose a contractor by any means - public advertising is frequently used to obtain the advantages of open and free competition - owner can elect to negotiate with a particular contractor - owner can create a select bidders list who are then asked to bid on the project |
|
|
advantages of bid process |
- owner benefits from competitive market place - owner has appearance of being impartial - process full embraces the fundamentals of free market - may be only viable method for some government agencies
|
|
|
disadvantages of bid process |
- accurate costs cannot be known until the design is completed - bids that exceed owners budget cannot be readily accomodated - various parties tend to be adversarial under this process - errors or ommisions in the design may lead to costly change orders |
|
|
value engineering |
specific procedure - critically analyze various aspects of contract documents in relations to owners objectives - determine if alternate methods or materials might be more appropriate
|
|
|
typical instructions relative to the writing of bid (8) |
- bids must be submitted on forms provided - erasures must be initialed by the signer - all items in the bid schedule must be priced - alternatives are not considered unless called for - discrepancies between the unit price and the extended amount are discussed - can the bid be mailed? - can bid modifications be made? - submission policy must be followed |
|
|
12 rules to bidding |
1 - follow instructions as in last card 2 - contractor MAY be required to submit an experience record 3 - instructions clearly list all documents part of the bid document 4 - construction time period spelled out 5 - instruction indicate who is responsible for geotech 6 - requirements of bid guarantee outlined 7 - insurance to be provided by contractor is stipulated 8 - bonding requirements given 9 - conditions for handling bid irregularites are stated 10 - where and when to deliver bids 11 - closed or public opening of the bids indicated 12 - a prebid conference MAY be described |
|
|
alternatives |
modifications to the base bid - consist of changes in structure of project, quality of material, inclusion of additional items, deletion of specified work items - bidders are asked to state the changed amount due to the alternate - gives owner more flexibility
|
|
|
10 common things on a bid form |
- price (lump or unit) - time of completion - bid surety - agreement to provide contract surety - acknowledgement of having reviewed addenda - list of subcontractors - experience record - declaration regarding fraud and collusion - statement regarding site examination - signature
|
|
|
notice to contractor may be called either |
notice of award
- start date is usually specified here
notice to proceed |
|
|
construction contract documents include.... (6) |
1. construction agreement 2. drawings 3. general conditions 4. supplementary conditions 5. technical spec's 6. addenda |
|
|
On public works projects the design ownership is assigned to the,... |
owner |
|
|
On private works projects the design ownership is assigned to either the owner or designer in the.... |
contract you idiot |
|
|
Project Manual consists of... (4) |
1 - bidding documents 2 - general conditions 3 - supplementary conditions 4 -technical specifications |
|
|
Another name for General Conditions |
Boiler Plate |
|
|
General Conditions do the following...
|
establish the rights, authority and obligations of the contracting parties: the owner, the owner's representative, and the contractor |
|
|
Supplementary conditions |
more specific for the job being constructed serve the function of amending and augmenting the general conditions and thus tend to be more specific |
|
|
Specifications in the broader term of the contract.... 10 |
1 - invitation to bid 2 - instruction to bidders 3 - general conditions 4 - supplementary conditions 5 - bid proposal form 6 - bid bond form 7 - contract bond form 8 - list of prevailing wages 9 - noncollusion affidavit 10 - technical specifications |
|
|
stipulates ground rules for the work to be performed and defines the scope of work to be performed within the specification sections |
General Spec's |
|
|
describes the product or products and the development and manufacturing process to be used in producing them |
Product Specs |
|
|
Describes the preparation, workmanship, installation, erection, and application procedures to be employed along with quality requirements and performance criteria that must be satisfied |
Execution Specs |
|
|
This governs in the case of a conflict between plans and specs |
specs |
|
|
in the case of a conflict between the plans and specs the conflict will be resolved by the.... |
architect |
|
|
Another names for Design specifications |
method and materials specs prescriptive specs material and workshop specifications |
|
|
Design Specifications |
particular kind or type of material is to be used, a particular dimension is required, installation method given etc. |
|
|
Performance spec |
results or performance of finished product is specified |
|
|
Performance and Design Spec |
instructed how to do task and how it should perform |
|
|
Closed Spec |
requires a specific item or system - ensures only products of a particular type are used |
|
|
Propreitary spec |
states what is to be provided without any allowance for alternatives |
|
|
multiple proprietary spec |
models of more than one manufacturer are specified |
|
|
Open specification |
nonrestrictive in that they permit a wide variety of choices |
|
|
Equal specification |
proprietary spec with the words 'or equal' afterwards |
|
|
approved equal |
the more acceptable 'equal' specification |
|
|
reference specification |
make items, establish tests, or formal procedures a part of the contract documents be reference |
|
|
the submittal procedure |
- GC reviews contract docs and prepares submittals list - Supplier, GC, Subs prepares submittals - GC reviews submittals and submits to owners rep. - GC notified of acceptable submittal - GC notifies appropriate parties of submittal approval |
|
|
3 types of construction CONTRACTS |
1 - unit price 2 - cost plus 3 - lump sum |
|
|
When unit price contracts are appropriate |
- when project is fairly well defined but actual quantities may be difficult or impossible to estimate with accuracy after construction has started
|
|
|
Balanced Bid |
- anticipated costs for the various bid items are accurately reflected in the unit prices that are submitted |
|
|
unbalanced bid |
unit prices of the various bid items are altered so that they do not reflect the true cost of those items |
|
|
payment in unit price contract |
- usually contractor will request payments on the basis of measurements of in-place quantities |
|
|
disadvantages of unit price |
- owner is not certain of the actual cost of the project until the project is completed - plans must be reasonably complete in order for the bidders to develop unit prices for all the bid items |
|
|
cost plus contract |
- owner is reimbursed for most of the direct expenditures related to the project plus an allowance for overhead and profit |
|
|
positives of cost plus contract |
contractor almost always assured of not losing money |
|
|
when a cost plus contract is approppriate |
- used when the actual costs of a project are difficult to estimate with accuracy - plans may not be complete - project cannot be accurately portrayed - project could be needed to be complete within a fairly short time period and the plans and specs cannot be completed before construction starts - almost exclusively in the private sector |
|
|
disadvantages of cost plus contracts |
- owner has little idea of what actual cost of project will be - owner must maintain additional staff to monitor the progress of contractor |
|
|
most simple and used contract in the construction industry |
lump sum contract |
|
|
payment in lump sum |
contractor asked to break down the project into a variety of work items and to allocate the appropriate payment to be made for each item |
|
|
advantages of lump sum |
- plans are completed - price is what it will be - good for limited budgets
|
|
|
disadvantages of lump sum |
- construction of project is delayed while plans are completed - errors in plans will be costly because they result in extras |
|
|
it is common for changes clauses to include the following items.... (4) |
- owner has the right to make changes within the general scope of the contract - contractor is obligated to perform the work necessitated by the change - the change must be in written form and must be signed - an adjustment to the contract price and/or contract duration will be assessed by some means, or can be predetermined |
|
|
A change issued by the owner |
change/change order |
|
|
Can be authorized by personnel in the field without direct owner approval |
field change |
|
|
process of change order |
- Owner issues modification - GC reviews proposed change - GC finalizes estimate for changes - Owner evaluates price proposed - owner issue form change order to the GC agreed price/cost-plus basis OR owner decides not to issue change order |
|
|
Cardinal changes |
changes that are not within the general scope of the original contract and are not covered in typical changes clauses - considered a breach of the contract to force a contractor to perform |
|
|
additional work must be from a change that... (3) |
- should not have been anticipated - was not open to observation - could not readily be discovered until work under the contract was undertaken |
|
|
signatures on change orders |
- owner - architect - contractor |
|
|
calender days |
every day that takes place |
|
|
3 types of delay categories |
- delays caused by the contractor or contractor's agents - delays caused by the owner or the owner's agents - delays caused by the force majeure or acts of god |
|
|
only time a contractor can terminate a contract due to delays |
- when the owner delays in issuing a certificate or a delay in making payments |
|
|
no damage for delay clause |
protects owner from paying any damages to contractor for delaying a project |
|
|
actual acceleration |
consists of a direct order by the owner to hire additional works, work overtime, or work extra shifts |
|
|
constructive acceleration |
does not result from a direct order but is construed as acceleration because of the owners refusal to grant time extensions for an excusable delay |
|
|
punch list |
correction of minor deficiencies |
|
|
typical project completion phase (9) |
1 - major construction work items are completed 2 - punch list prepared 3 - substantial completion - owner may occupy - warranty for project begins - time of completion marked - time is marked for filing liens - last periodic payment is requested 4 - punch list items addressed 5 - final inspection conducted 6 - final completion defined 7 - project accepted 8 - release of retainage requested 9 - final payment |
|
|
typical subcontractor agreement provisions (3) |
- subcontractors will be paid:
1 - after completion of the work 2 - after acceptance by architect/engineer 3 - after full payment of the work by the owner |
|
|
warranty |
an aspect of a contract is in fact as it was promised to be |
|
|
maintenance bond |
gaurantees that the contractor will rectify defects in workmanship or materials - 1 year maintenance bond is normally included in the performance bond without additional charge |
|
|
implied warranty |
does not mean that the contractor guarantees that the completed project will be suitable for its intended purposes - rather |
|
|
caveat |
warning - buyer be aware |
|
|
subrogation |
insurance companies can seek recovery from the third party at fault |
|
|
premium |
payment or consideration for an insurance contract |
|
|
dividends |
money returned to clients with relatively low losses |
|
|
three types of hold harmless agreements |
1 - limited form indemnification 2 - intermediate form indemnification 3 - broad form indemnification |
|
|
limited form indemnification |
contractors negligence agreement, the owner is held harmless for claims caused by operations or negligence of the contractor or subcontractor |
|
|
intermediate form indemnification |
joint negligence, the owner is held harmless when both parties are negligent |
|
|
broad form indemnification |
owner is held harmless against all losses caused by or contributed by the owner, architect or othersc |
|
|
certificate of insurance |
means by which a contractor can demonstrate to the owner that specific forms of insurance have been obtained |
|
|
claims clause |
permits the contractor to present disputes to the owner without having to resort to litigation as a first step - allows contractor to request additional compensation |
|
|
Negotiation |
occurs before conflict becomes larger both parties calmly discuss an issue and listen carefully to eachother's comments |
|
|
Litigation |
when negotiations fail and there is no contractual guidance for dispute resolution, the parties will find themselves in a lawsuit |
|
|
depositions |
oral testimony in court |
|
|
Partnering |
voluntary approach to establishing teamwork among contracting parties - disputes resolved at the lowest managerial level |
|
|
disputes review board |
generally consists of 3 individuals who meet whenever one of the contracting parties on a project desires a hearing on an issue of conflict |
