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Construction Contract Administration PDF

206 Pages·1999·7.33 MB·English
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Construction Contract Administration Charles S. Phillips, P.E. Published by the Society for Mining, Metallurgy, and Exploration 8307 Shaffer Parkway Littleton, CO 80127 Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009. For my wife Mary Christian Vest Phillips Society for Mining, Metallurgy, and Exploration, Inc. (SME) 8307 Shaffer Parkway Littleton, CO, USA 80127 (303) 973-9550 www.smenet.org SME advances the worldwide minerals community through information exchange and professional development. With more than 16,000 members in 50 countries, SME is the world’s largest professional association of mineral professionals. Copyright © 1999 Society for Mining, Metallurgy, and Exploration, Inc. Electronic edition published 2009. All Rights Reserved. Printed in the United States of America. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. ISBN: 0-87335-191-6 ISBN-13: 978-0-87335-191-1 Ebook: 978-0-87335-314-4 Library of Congress Cataloging-in-Publication Data Phillips, Charles S., 1924– Construction contract administration/ Charles S. Phillips. p. cm. Includes bibliographical references and index. ISBN 0-87335-191-6 (pbk.) 1. Construction contracts. 2. Construction industry--Management. I. Title. TH425.P49 1999 692'.8 21--dc21 99-043494 CIP Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009. . . . . . . . . . . . . . . Contents LIST OF FIGURES vii PREFACE ix PART 1 CONTRACT PRODUCTION 1 CHAPTER 1 INTRODUCTION 3 Definition of Contracts 3 History 3 Current Construction Spending 4 Considerations for Creating Contracts 4 Requirements for Effective Contracts 4 Construction Industry Organizations 6 CHAPTER 2 PROJECT ORIGIN 7 Concept Proposal 7 Base Design 7 Method of Award 8 Contract Types 8 Bid List 9 Construction Management 9 Bond Requirements 10 Insurance Requirements 10 CHAPTER 3 PLANNING AND CONTROL 11 Master Development Plan 11 Project Planning 12 Bid Package 15 Invitation to Bid 18 Project Documents Register 18 iii Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009. CHAPTER 4 CONTRACT AWARD 21 Pre-Bid Activities 21 Post-Bid Activities 27 The Construction Contract 31 PART 2 CONTRACT ADMINISTRATION 39 CHAPTER 5 FUNDAMENTALS 41 Organization 41 Pre-Construction Activities 49 CHAPTER 6 IMPLEMENTING THE CONTRACT 53 Site Manager Role 53 Compliance 54 Changes and Extras 58 Delays and Time Extensions 59 Suspension or Termination 59 Disputes 59 Claims 61 Progress Payments 64 Beneficial Occupancy 64 Closure and Start-Up 64 CHAPTER 7 SITE MANAGEMENT DOCUMENTS 67 Construction Schedule and Progress Report 67 Notice to Proceed 69 Site Transmittal Memos 69 Routine Management Reports 69 Construction Contract Amendments 90 Progress Payment Authorization 90 Final Inspection, Test Run, and Acceptance 90 Release and Waiver of Lien 90 PART 3 CASE STUDIES AND INFORMATION SYSTEMS 95 CHAPTER 8 CASE STUDIES 97 Case 1. Defective Work 97 Case 2. Changes, Delays, and Time Extensions 99 Case 3. Suspension of Work 100 Case 4. Contract Termination for Cause 101 iv Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009. CHAPTER 9 INFORMATION SYSTEMS 103 Background 103 Design 104 Construction Applications 105 Management Systems 105 PART 4 APPENDICES 107 APPENDIX A CHECKLIST FOR PROCESSING FROM START TO START-UP 109 APPENDIX B SAMPLE BID PACKAGE 119 APPENDIX C MAJOR CONSTRUCTION INDUSTRY ASSOCIATIONS 175 GLOSSARY 177 INDEX 189 v Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009. Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009. . . . . . . . . . . . . . . Figures 1.1 Construction contract checklist 5 3.1 Sample CPM schedule 13 3.2 Construction bid package major divisions 15 3.3 Typical list of general conditions 17 3.4 Sample Invitation to Bid letter 19 3.5 Project documents register 20 4.1 Contractor performance evaluation form 23 4.2 Contractor qualification questionnaire form 24 4.3 Bid price comparison form 29 4.4 Bid and adjusted price comparison form 30 4.5 Letter of Understanding 32 4.6 Letter of Intent 34 4.7 Notice of Award 35 4.8 Construction Contract Agreement form 36 4.9 Path from bid package to construction contract award 38 5.1 Example of site logbook page 43 5.2 Example of Owner’s site transmittal memo form 45 5.3 Sample schedule and progress report form 46 5.4 Typical Notice to Proceed letter 50 6.1 Typical progress payment request form 65 7.1 Sample construction schedule and progress report 68 7.2 Notice to Proceed letter 70 7.3 Transmit contract documents 72 7.4 Transfer custody of Owner-furnished materials 73 7.5 Return Contractor shop drawings 74 7.6 Missing routine Contractor reports 75 7.7 Proposed changes within scope of work 76 7.8 Proposed changes outside scope of work 77 7.9 Accept Contractor proposal for changes 78 7.10 Proposal for changes unacceptable 79 7.11 Return revised shop drawings 80 7.12 Use time and material basis for changes 81 vii Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009. 7.13 Confirm verbal agreements for changes 82 7.14 Reject defective work 83 7.15 Accept proposal to correct defects 84 7.16 Claims, delays, and time extensions 85 7.17 Concern with lack of progress 86 7.18 Beneficial occupancy 88 7.19 Sample site transmittal memo log sheet 89 7.20 Construction contract amendment form 91 7.21 Contract progress payment request form 92 7.22 Inspection for completion and acceptance form 93 7.23 Release, waiver of lien, and indemnity form 94 D.1 Sample schedule and progress report form 140 D.2 Sample CPM construction schedule 142 G.1 Sample certificate of insurance for bidding purposes 149 viii Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009. . . . . . . . . . . . . . . Preface A successful construction project is completed safely, on time, and within budget; meets designed performance; and produces no claims. This book was written to help those working with privately awarded construction contracts meet these goals. Students, Contractors, foremen, superintendents and managers, project managers and engineers, site and contract administrators and managers, Owner’s representatives, and others associated with the industry will find the book to be current and useful. It is designed to serve as a guide and general reference for the many subjects that must be considered in the production and site management of a construction contract. The author has represented Owners and Contractors for the past 50 years in operations, maintenance, design, construction, estimating, engineering, management, and claims resolution in domestic and offshore mining, process, mineral, refinery, smelter, petro- chemical, and environmental remediation facilities. The book is divided into three parts. Part 1 deals with the selection, production, and assembly of the elements required for a construction contract. Part 2 reviews the basics for a reasonable, fair, practical, logical, and orderly contract administration system, using the sample bid package included in appendix B to illustrate the various elements and considerations. Part 3 presents four case studies from construction projects to help those who manage contracts recognize potential problem areas. Some of the latest advances in information technology for construction contract management are discussed in chapter 9. I hereby acknowledge the many friends and colleagues who have gone out of their way to help me through the past 50 years in a career spent in mining, engineering and con- struction: Charles T. Holland, Frank Morris, K.C. Browne, D.C. Tretzel, S.F. Erba, Walter F. Jones, S.J. Campagna, O.J. Champagne, Robert L. Presson, C.W. McCumsey, W.O. Hansen, Hans J. Zimmermann, S.V. Distefano, Sheldon Teel, T.D. James, Michael Killgore, and Roy A. Dardenne, Jr. In particular, I thank Stephen M. Spohrer, P.E., for taking the time to review each page of text as the book took shape and for many valuable suggestions and assistance. ix Copyright © 1999 Society for Mining, Metallurgy, and Exploration Inc. Electronic edition published 2009.

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A successful construction project is completed safely, on time, and within budget; meets designed performance; and produces no claims. This book was written to help those working with privately-awarded construction projects meet these goals.Students, contractors, foremen, superintendents and manager
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