DAN JOSEPH ARCHITECTS
  • Home
  • Service
  • Properties
  • Media
  • About
  • Subject Matter Expert
  • BLOG
  • Contact






​It's in Our Blog

Expert Advice & Professional Perspective
Moose Model I
Moose Model II
Moose Model III
Moose Lake Lodge / Dan Joseph Architects
Yellowstone Club, Big Sky Montana

Construction Contracts

11/17/2018

 
Risk Graph













Owner's Risk


Often times I am approached by friends and prospective clients that are in need of explanation, direction or supplemental information on how best to engage a contractor. While this topic is much more inclusive than what can be shared within this brief informational, the graph above will help to assist with understanding risks involved relative to the Construction Contract selected.

​Basically, different types of construction contracts can be sub-divided into two large groups. One group includes those contracts for which the owner selects a contractor based upon competitive bidding; the other in which the owner negotiates a contract directly with the contractor.
​
Summarizing, a competitive environment fosters the best price and an efficient construction schedule. Risk of claim or a dispute can be greatly diminished by issuing comprehensive supplemental conditions and by understanding how to control other associated project costs not well defined by the construction documents: weather protection, below grade obstructions, utilities, allowances, and owner driven change orders or extras.

As always, Dan Joseph Architects is available to assist you with understanding the many options possible, implications and risk associated with any preferred method, including: Lump Sums, Unit Price, Competitive Bid, Special Reimbursable, Contractor Fees, Cost Plus-Percentage of Cost, Cost Plus-Fixed, Incentive Fee Contracts, Guaranteed Maximum Price and Design Build.

COMMON METHODS OF CONTRACTOR SELECTION
Competitive Bidding - By where Contractors have been pre-qualified based upon experience, reputation and capacity to serve; award would go to the "lowest responsible bidder" qualified to complete the job in accordance with the terms of the contract.

Negotiated Contract - By where a Contractor has been hand picked based upon experience, reputation and capacity to serve; candidate is assumed to be qualified to complete the job in accordance with the terms of the contract.

Cost Plus Fee Contract - Contracts of the cost-plus-fee variety are used where, in the judgment of the owner, a fixed-sum contract is undesirable or inappropriate. Cost-plus contracts are normally negotiated between the owner and the contractor. Most cost-plus contracts are open ended in the sense that the total construction cost to the owner cannot be known until completion of the project.

Cost Plus or Time and Material agreements should be thought of as "on the clock" arrangements that if used exclusively, may reduce the incentive to manage closely the work at large, resulting in inflated budgets, unexpected cost(s) and extended schedules. However, when used in conjunction with Competitive Bid Contracts, there are benefits to limited hourly tasking that at times will prove to be useful for managing project cost.

POINTS TO REMEMBER:
1. Competition fosters the best price and a timely completion of your project.

2. Limit disputes by making sure that your architect issues Supplementary Conditions with the Bid Set for items not well defined in the General Conditions: weather protection, below grade obstructions, utilities, allowances, supervision, clean up, dumpsters, schedules, equipment rentals, other responsibilities, insurances requirements, safety programs, RFI’s, etc., along with owner driven change orders (adds & deducts).
​
3. Understand the common methods of Contractor Selection and the attached graph for implications.


https://www.djawest.com/contact.html

louis link
8/3/2022 02:36:34 pm

Very good this content, thanks for sharing

David Anthony link
8/3/2022 02:46:11 pm

While this topic is much more inclusive than what can be shared within this brief informational, the graph above will help to assist with understanding risks involved relative to the Construction Contract selected. Thank you for the beautiful post!

Paul Crovella
8/11/2022 11:23:26 am

Very interesting graphic. Does anyone know the source?


Comments are closed.

    Author

    ​Daniel Joseph Turvey, AIA 
    Award Winning Architect & Construction Adminitrator

    Archives

    January 2023
    December 2020
    December 2019
    September 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018

    Categories

    All

    RSS Feed

Copyright © 2023 Dan Joseph Architects, LLC - All Rights Reserved
Bozeman, Montana / Jackson, Wyoming USA

  • Home
  • Service
  • Properties
  • Media
  • About
  • Subject Matter Expert
  • BLOG
  • Contact