Page 237 - Urban Construction Project Management

192 Chapter Nine
c. Disadvantages
• GC usually bids what is shown on the documents (even if the drawings are not
consistent with intent).
• Selection of the subcontractors is usually based on the lowest bid and not nec-
essarily on the quality of work.
• Interpretation of the documents may have future cost implications for the
owner and the GC.
• The GC’s staff may not be up to organizational standards required for the project
(unless spelled out in the documents). This is done in order to submit a competi-
tive price.
• It is a closed-book relationship. The owner does not see any of the subcontrac-
tor’s pricing.
d. Suggested use
• If dictated by company policy.
• When construction market is weak.
• When several good GCs are bidding on the project.
• When owner’s staff is limited.
• Government/municipal-type projects.
• May be required under the Sarbanes–Oxley Act, which is a government man-
date to enforce ethical standards for public corporations.
2. Cost plus
a. Procedures
• CM/GC will be paid for all trade costs and expenses plus a fee to complete the
work.
• This method could be used when all the construction documents are com-
pleted, but in most cases, it is used when the construction documents are not
complete.
• Can be used to negotiate with only one CM/GC.
b. Advantages
• Can expedite construction when the scope is not clearly defined.
• Long lead items can be purchased early.
• Is usually owner/CM/GC “friendly” because the scope is reviewed when bids
are obtained.
• Can be open book when spelled out in the contract. (Open book is the process
whereby the owner reviews the bids of the subcontractors as submitted to the
CM/GC.)
• The owner will know the subcontractors bidding the work and thus will give
approval for the subcontractors being selected. A full leveling process has to
be accomplished by the CM/GC (see Chapter 16).
• Clearly defines the CM/GC’s team and time to be spent on the project.
• It is easier for the CM/GC to perform value engineering.