Lecture 5: Construction Management

Question 1

Means by which a person or persons can
let someone else do something for
them. These agreements are similar to contracts.Consists of a principal being represented by an agent in business dealings with a third party.

Answer 1

Agency

Question 2

A ________ is an agent of the
Owner.
The ____ is hired and paid by the Owner to represent the latter in matters of contract
administration.

Answer 2

Construction manager

Question 3

1. Projects exceeding budget (Cost overruns)
2. Projects consistently fell behind schedule (Delays)
3. Construction quality was not as expected
4. Design efforts fell short of expectations
5. Owners had limited participation
6. Contracting flexibility was minimal
7. Contract disputes were common and costly
8. Fair value was not being produced

Answer 3

The need for a construction manager

Question 4

This term was introduced to remind A/E’s that satisfying the Owner’s needs
in a practical and economic way is the Owner’s main priority. The balance between form, function, and
budget has to be reached.

Answer 4

Designability

Question 5

1. Late involvement of the contractor in the project does not allow for the Contactor’s input to be incorporated in design at its earlier phases.
2. This term was introduced in response to the repeated observation that some designs can not be economically or safely built.
3. It describes the level of cost-related features designed in the project.
4. It requires a sound knowledge of construction methods, tools and techniques

Answer 5

Constructability

Question 6

Should be performed while design is

being developed to maximize its benefit and avoid major design changes or late and costly construction changes.

Answer 6

Constructability review

Question 7

Is the term used for the economic
optimization of the contracting aspects of a
project.
It references contract structures, contract
documents, and general and special contract conditions.
May also be referred to as contract administration or contract management.

Answer 7

Contractability

Question 8

1. A contracting approach involving a “Construction
   Manager” as an owner’s agent.
2. The Construction Manager (CM) may be involved as early
   as the planning phase or as late as the Procurement phase
   or anywhere in between.

Answer 8

Construction

Management

Question 9

1. Responsible for coordination, supervision, evaluation, overseeing the tests performed by the GC, reviewing and authorizing the interim and final payment requisitions submitted by the GC.
2. Does not have labor, material, or equipment involved in construction (other than management team)
3. Has no contracted responsibilities to the owner as an independent contractor or as the A/E.
4. Has a service contract with the owner.

Answer 9

Agency Construction Manager (ACM)

Question 10

1. When the bidding process results in costs within the budget.
2. When owner occupancy (Project completion) occurs on schedule.
3. When specified quality is met.
4. When no claims are brought against the owner by contractors.

Answer 10

Measuring ACM Performance

Question 11

1. Has the same main duties as the ACM, with the addition of guaranteeing a schedule (Completion date) and a budget (Completion cost).
2. Is liable to the owner in case of deviation from the set goals.
3. Rate of compensation much higher than ACM (To offset the risks involved)
4. Is somewhere between an ACM and aGC

Answer 11

Construction Manager at risk (CM at Risk)

Question 12

Five basic schedules

Answer 12

1. Program schedule
2. Detailed construction schedule
3. Milestone schedule
4. Short-term contractors activity plan (CAP)
5. Completion schedule

Question 13

Drives the project from start to finish

Answer 13

Program Schedule:

Question 14

(a.k.a. Master Schedule):
Determines the time needed for construction (Prepared by
Contractor)

Answer 14

Detailed Construction Schedule:

Question 15

Drives the project during construction

providing the start and finish dates of major milestones

Answer 15

Milestone Schedule:

Question 16

Plans contractor’s activities to meet milestones. Usually 6 to 8
weeks period.

Answer 16

Short Term Contractor’s Activity Plan (CAP):

Question 17

Coordinates construction completion and occupancy.

Answer 17

Completion Schedule:

Question 18

CM keeps the positive

attributes of GC

Answer 18

1. Firm commitment to cost, time, and quality
2. Competitive bidding of prescribed scope of work.
3. Accommodation of Fast Track
4. Construction expertise available during design
5. Continuity between design and construction
6. Uses existing industry participants
7. Contractors can act as CM
8. A/E’s can act as CM

Question 19

1. Insufficient construction expertise available during design
2. Insufficient contracting expertise available to the Owner
3. Lack of Owner decision making involvement during
   construction
4. No measure of bidders’ management ability prior to
   contract award
5. Limits on Owner’s involvement in the selection of trade
   contractors
6. Insufficient continuity between design and construction
7. Adversarial relationship between Owner and Contractor
8. Post bid shopping
9. Inequitable risk allocation

Answer 19

CM eliminates GC system

Negatives

Question 20

CM eliminates negatives of Design-build

Answer 20

1. Design quality directly affects contractor’s profit
2. Owner must have high level construction
   expertise otherwise hires bridging consultant
3. No decision-making checks and balances
4. Cannot be used in public sector without
   modification

Question 21

1. Professional party 
assisting in preparation of 
schedule and budget.
2. Complements A/E’s 
effort and offers a new 
eye for VE and 
Constructability 
issues.
3. Can consolidate the risks 
for construction and 
supervision (CM at risk)

Answer 21

Advantages of having a CM.

Question 22

Disadvantages:
1. Extra cost to the owner
2. Unclear lines of 
responsibility/coordination 
problems with A/E.

Answer 22

Disadvantages of a CM.

Question 23

1. Method usually used for the purchase of
   material/equipment.
2. Does not cover labor for installation.
3. Becomes a valid contract only upon signing by both parties (Vendor and buyer).
4. May use boiler plates or tailor-made forms
5. May have flow-down language from original contract.
6. May include cash discounts for immediate or short –term payment, as well as for large
   quantities.

Answer 23

Purchase Orders

Question 24

What information should purchase orders contain?

Answer 24

1. Construction project for which the prime construction contract 
is held by the buyer
2. Owner for that project
3. Architect/engineer
4. Contractor/ buyer
5. Seller/supplier
6. Complete description of material ordered
7. Price to be paid (Sales tax, customs, delivery charges, etc.)
8. Delivery conditions (Schedules, On-
site, FOB, etc.)
9. Inspection provisions
10. Signatures

Question 25

1. One of the contractual remedies for delays
2. Sometimes the damages suffered due to delays in
   project completion are very hard, or impossible, to
   determine at the time the contract was signed.

Answer 25

Liquidated damages

Question 26

The owner will try to evaluate, in anticipation, the value
of such losses and determine an equitable
compensation for the resulting damages.
The ____ usually has no input into the
determination of the value of the liquidated damages.

Answer 26

contractor

Question 27

_________ are not a penalty. Current judicial attitude toward liquidated damages is to enforce such provisions in the event of unexcused late completion by the contractor.

Answer 27

Liquidated damages

Question 28

Defenses against Liquidated damages:

Answer 28

1. Proving the project is substantially complete
2. Excusable or compensable delays
3. Concurrent delays

Question 29

What does Amount of damages mean when talking about liquidated damages?

Answer 29

Actual damages not punitive damages

Question 30

Substantiating documents when dealing with liquidated damages are?

Answer 30

1. Schedule
2. Weather reports
3. Change and variation ordersEtc.
4. Milestones