Finals Flashcards
(53 cards)
Types of Bidding
Single Stage Bidding Two Stage Bidding Open Bidding Negotiable Bidding Serial Bidding Selective Bidding
Bids are usually based on complete design
Single Stage Bidding
Bids based on partially developed consultant design
• Contractors assists with final development of design and tender documents
• First stage bidder may bid / negotiate second construction stage
Two Stage Bidding
• Contractors invited to bid for a contract through advertisements
• Can result to a large number of unsuitable firms bidding for the work • Can result in wasted time and effort in selection process
• Best prices by firms wanting to establish themselves
Open Bidding
• Consultants / Clients will normally have a list of contractors who undertake different types of contracts
• Most common arrangement because it allow price to be the deciding criterion
• Contractors are invited to bid on their proven record in relation to the type and size of contract and their reliability
Selective Bidding
• One contractor is approached
• Used mainly for specialist work, such case there are limited number of contractors to do the work in the market
• Based on one to one discussion with contractor
Negotiated Bidding
3-party contract in which a bonding company lends its
reputation and financial resources to a contractor for a feel
Bonding
2-party contract in which an insurance company MAY accept
financial risk for a fee
Insurance
Need for bonds
- Poor Management
- Inadequacy of bids
- Personnel personal problems
- Credit Problems
Factors that the bonding company must consider in reviewing application for bonds
- CASH SITUATION
- CHARACTER
- CAPACITY
Types of Construction Bonds
- Bid bonds – usually 5~10% of the contract price
- Downpayment /Advanced payment bonds – equal to
down payment - Performance bonds – usually 20% of the contract price
- Warranty / Guarantee bonds – usually 10% of the contract price
- Labor and material payment bonds – less common
- Maintenance bond – less common
Usually used as a bid security
Bid bonds
Bid bonds Purpose?
Purpose: If the contractor withdraws his bid subsequent to his
acceptance, ensures that the bonding company will pay to the owner
an amount of money equal to the difference between the bid
withdrawn and the next lowest accepted bid
- Downpayment / Advanced Payment Bonds
Purpose:
• If the contractor engaged to do work cannot finish the job
(reason must not be attributable to the owner), it ensures the
owner will be able to recover the unrecouped downpayment or
advanced payment
. Performance Bonds
Purpose:
• If the contractor engaged to do work cannot finish the job
(reason must not be attributable to the owner), it ensures the
owner funds will be made available to make certain that work
will be completed by another contractor acceptable to the
owner at no extra cost
- Usually used as a substitute for retention.
- Sometimes called as Retention Bond
Warranty Bonds
Categories of Insurable Risks
Owner’s interest a. physical damage to work in progress b. claims from 3rd parties Contractor’s interest c. all of the owner’s interest d. own business operation Designer’s interest e. business operation f. errors and omission
Insurance
ensures money will be made available to…
A. Physical damage to work in progress B. Claims from third parties C. All of the owner’s interest D. Own business operation – Other insurable risks: E. Business operation: Designer F. Errors and omission
Arrangement in Insurance
TRADITIONAL ARRANGEMENT and WRAP-UP ARRANGEMENT
Insurance where the Main contractor - insures own operations - protects owner as additional insured Subcontractor - provides own protection
TRADITIONAL ARRANGEMENT
Insurance where
Owner
- provides blanket coverage to cover self, main
contractor, subcontractor, suppliers, and
consultants
Wrap-up Arrangement
Construction Risk Insurances
- Contractor’s All Risk Insurance (CARI)
- Public liability Insurance
- Employer’s Liability Insurance
- Environmental Insurance
- Non-negligence Insurance
- Unexpected archaeological discovery Insurance
- Consequential loss
CARI stands for what?
Contractor’s All Risk Insurance
Provides indemnity on all risks of sudden and unforeseen physical
loss or damage to permanent and temporary works during the
construction period
Contractor’s All Risk Insurance (CARI)
