Contracting construction work bidding

Some companies such as E.I. DuPont de Nemours and Co. have their own construction divisions. The construction division is usually not large enough to handle all the company s construction business. On certain jobs it may bid for the construction contract along with other firms. The lowest bidder is then awarded the job. In other cases the company may only contract for work that the construction division cannot handle. 

Even before the optimum plant size was determined, a contractor had been selected and process design work was in progress. The contractor was selected on the basis of competitive cost plus fixed-fee bids. The contract was later converted to a turn-key type, based on the competitive-bid fixed-fee percentage and a definitive cost estimate for completion of the job. This saved about 2 months in over-all job completion time. Through duplication of equipment purchases and construction drawings, it was possible to reduce over-all completion time for three subsequent plants by as much as 8 months from the 17 months required for the first module (Fig. 2). About 29 months were required from Geld discovery to startup of the last Exxon treating facility. 

It is usually easier to arrange for a single, competitive lump sum contract on a simple, small project requiring less engineering and shorter bidding time. The only caveat to this option is that the chosen contractor must be able to perform most of the work without help from subcontractors. The use of subcontractors will add a layer of costs that need not be incurred if the Owner has the capability to do the construction management. 

Site construction of the project requires organizing the constmction bid packages, selecting contractors, and writing subcontracts. These contracts include a specific scope of work for the various construction and installation tasks and the implementation of appropriate procedures for expediting the project. An equipment installation document is then prepared for the construction contractor (9). This document verifies that equipment is properly connected to the defined utilities (air, electrical, water, sanitary drains, product, cleaning systems) and that the contractor has a planned schedule of events. Arrival of the equipment will initiate the startup and testing phase for the equipment. 

In addition to cost, time is also critical - not least to ensure construction companies do not overrun the agreed contract duration and incur additional costs themselves (Loosemore et a/. 2003). Clients will also consider project duration when awarding their work, and so companies also frequently bid for work with promises of delivery within very short timescales. 

Sharing risk with the contractor can significantly reduce the average bid price on a project. This is particularly true in underground construction. Items that should be addressed in contracts involving HDD work may include ... 

Turbidity of Water and Inadvertent Returns. Difficult to predict these events may lead to work stoppage and loss of equipment The contract should offer a mechanism to mutually address and mitigate these problems if and when they arise. For example, contingency plans for containment and disposal of inadvertent returns can be priced as a separate bid price and agreed prior to construction. 

The tender includes detailed technical and contractual information upon which the Contractors base their bids. The tender procedure usually requires Contractors to prove their ability to construct the works (technical bid). Once the Contractors have gone through this selection procedure successfully, the project is usually favoured to the lowest bidder. The Tender Documents make up the basis of the contract between the Client and the Contractor. 

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