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Service Contracts

Types of Service Contracts include two basic means of contracting utilizing current AIA or “Architects in Association” documents:

    • GMP or Guaranteed Maximum Price
    • Lump Sum

Either document can be used in conjunction with the methods described below.

There are four basic methods to arrive at a Contract price:

The Fee Proposal Method of the construction process emphasizes the competitive proposal process without reverting to pitfalls of the traditional open bidding of permit documents.  This process allows the Client to enjoy the market competitiveness and Team atmosphere together.  The Client first procures the Architect who would assemble a building concept Request for Proposal (RFP) Package to distribute to General Contractors (GC) for competitive response.  The package would require the GCs to provide a set timeline and associated lump sum general conditions, either a set fee or percentage fee, estimated cost of the project based on current information, project resumes and an in depth interview.   The Owner and Architect would then choose a GC based on the RFP package response information and interview.  The TEAM is now formed and the development process continues.   The Owner now has a conceptual budget and critical design decisions can move forward to the design of Permit and Construction documents.  The Owner now has the resources within the team, the General Contractors estimating skills and scheduling, to provide cost and budget information for specific design elements as well as schedule impacts for certain design and material elements of the project. The GC also has the resources to pull design and pricing consultation from his stable of subcontractors adding further constructability expertise and up to date information. All of the members of the team can contribute to the needs of the Owner and the project during the design of the permit and construction drawings through various design meetings.  These meetings also develop Team camaraderie and important cohesive relationships required to produce an effective and successful project.  This process also allows the contractor to provide important input into the drawings prior to construction reducing or virtually eliminating change orders.  No one likes change orders as they have a negative effect to everyone involved in building a project.  This system however is not perfect in eliminating ALL change orders.  In recognizing this Allowances can be inserted into the budget and construction contract amount to cover foreseen gray areas.  Allowances only use what monies are required returning unused portions to the Owner.  As no process is perfect, a design and construction Contingency fund is also agreed upon and included as a line item in the budget for unforeseen conditions.  As you can see this process enjoys the best budget managing tools available.  Once the Permit Documents have been designed and submitted for the local jurisdictional review process, these documents are reproduced in sufficient quantities to distribute to the GCs select subcontractors for competitive pricing. The GC at this point will select a minimum of three subcontractors to send bid invitations to with a set bid date. On bid day the Architect and Owner are invited to join our estimators in the bid room as pricing comes in and is assembled on one of our Bid Analysis Bid Sheets.  The bids are carefully scoped for thoroughness and entered on the bid folders. During the conceptual estimating process during the design phase, Chamberlain’s estimators have formed an intimate knowledge of the project including materials and quantities’ adding to the ability to thoroughly scope the bids.  Once the bidding process is complete, there is an opportunity to fine tune the drawings and issue a “For Construction Set” to eliminate subcontractor generated change orders.  The construction process now begins and the TEAM atmosphere continues as everyone strives to the shared goal of building a successful project in a positive atmosphere.

Design / Build Negotiated method includes the General Contractor as one point of contact for the project.  The General Contractor would solicit and assemble the Design Team to work together with the Owner from conception to turnkey.  Feasibility Studies, soft costs to include design fees, interest carry, and all fees and permit costs are established and added to the overall project budget.  Project budgets are provided during various stages of the design process to provide the Owner with information in which to guide the Architect and Engineers.  Once the Permit and Bid drawings are developed a bid date is established and the project is “put out to bid” to a select subcontractor list best suited for the specific project.   Subcontractor bids are organized and thoroughly analyzed for scope of work and the appropriate numbers entered onto a computerized bid format. The General Contractors Fee and General Conditions are negotiated and agreed on prior to the process and entered onto the bid sheet along with the Subcontractors numbers to form the Construction Budget.  The appropriate contingency is established and entered as well. Most all the processes described in the Fee Proposal Method above are also utilized in the Design / Build Negotiated Method process.

The Negotiated Method of the construction process requires that the client procure and assemble design and construction professionals at the onset or concept phase of the project creating a Project Team consisting of the Owner, the User, the Building or Space Designer (Architect), Site Designer (Civil Engineer), Design Consultants (Civil Engineer, MEP Engineers and required special Consultants) and the Builder (General Contractor).  Both of the Negotiated Methods build Team character; promote ownership and responsibility for the project, thereby reducing the unknowns and changes in scope of work thus eliminating change orders.  Most all the processes described in the Fee Proposal Method above are also utilized in the Negotiated Method process.

Many Owners feel that the traditional Competitive Hard Bid processutilizing permit drawings is the only way to ensure that they are getting a competitive price.  We tend to disagree with that mindset as the “hard bid process” has many negative pitfalls, one being that the Owner typically does not have the resources to ensure that the bids are scoped thoroughly. The GCs bidding the project often receive unsolicited bids from unknown subcontractors that may not be qualified for that project.  The hard bid process does not allow for any Contractor input with the benefits described above and virtually guarantees an excessive amount of dreaded Change Orders sometimes to an unpredictable magnitude resulting in a budget disaster.   Some do not find this process unmanageable given an adequate Change Order Contingency Fund allotment.  This being said, Chamberlain is on many select bid lists and is very competitive when given the opportunity to competitively bid any project.

Given participation utilizing any of the methods described above, Chamberlain’s main goal is customer satisfaction, fair and honest management style and leaving behind a quality product with a satisfied client.

 

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