While an integrated team works with the owner throughout the design and construction phase, the design must be completed by the team and approved by the owner during a design verification phase prior to the start of work. This allows for more efficient diversion for the owner, who can terminate the contract during the design phase, purchase the design work by paying the other parties on a time-based fee basis, and then seek other options to complete the remaining design work and for the construction of the project. While construction management contracts have gained popularity since the revision of model contracts proposed by the Canadian Construction Documents Committee (CCDC) in 2010, they have raised recurring questions among construction industry stakeholders and members of the legal community. Cost Plus Contract (CCDC 3 – 2016) The Cost Plus Contract Template (CCDC3 – 2016) is used when the work is performed by the Contractor on the basis of actual costs plus a percentage or fixed fee that is higher than the actual cost to pay the Contractor for their work on the project. An acceptable premium for the contractor`s overhead and profits is typically between 10 and 25%, depending on the size of the project, with small projects attracting a higher percentage than large projects. In this model, the contractor is expected to work economically to keep costs under control and to keep verifiable records to prove project costs. It should be noted that if the owners use industry standard contract formats, they should be used in conjunction with specially adapted additional terms and conditions prepared with the advice and assistance of qualified legal counsel to meet the legal and business requirements of the respective owner. The owner typically uses the stipulated price contract format (CCDC 2 – 2008) in conjunction with a tendering format (ITT) or a low bid request for quote (RFQ), where price is the only award criterion. This tendering procedure can also be combined with a previous prequalification procedure to select potential bidders who will then be invited to the subsequent tendering process. While the pre-qualification and tendering stages are less common in construction tenders, they can also be combined into a single high-scoring Request for Tender (RFQ) or Tender (RFP) format that takes into account both price and non-price criteria in a single tendering process. The Stipulated Price Contract Model (CCDC 2 – 2008) is the construction industry`s traditional standard format for typical tendering and contracting processes for the tendering and design contract processes. In this format, the owner first hires the owner`s design consultant (an architect or engineer), who then prepares the project specifications for the next call for tenders. Contractors bid for the prefabricated project and the contract for the agreed price (CCDC 2 – 2008) is usually awarded by the owner on a low bid basis.
The Standard Multiparty Agreement Form for Integrated Project Delivery (AIA C191 – 2009) (called IPD (AIA C191 – 2009)) consolidates overall responsibility for managing the design and construction phases of the project with the owner. At the beginning of the project, the owner awards separate contracts with the planning consultant, the client and the trades, so that they can all participate as an integrated project team in the design and construction phases of the project as part of a single, multi-part contract. In these contracts, the Construction Manager acts as the owner`s limited partnership representative, providing consulting services and managing and supervising contracts between the owner and commercial contractors. This model, called the “Owner at Risk” format, requires a careful definition of the scope of the site manager`s specific responsibilities compared to the traditional design and project supervision work performed by the design consultant. The transaction costs associated with the management, award and administration of these contracts are prohibitive for all but the largest construction projects, resulting in well-documented public audit reviews when this approach has been used for public sector projects, with significant public criticism from a transparency and cost-benefit perspective. Menu of options Among the nine generally accepted construction contract formats that can be made available to project teams for use in their specific projects are: Annex A-1 of the CCDC-5A and CCDC-5B contracts illustrates a range of services that can be selected à la carte by the parties. In the second case, the site manager assumes not only the obligation to provide services, but also to carry out the work with his staff and that of his subcontractors. He can therefore be considered both a manager and a general contractor, with all the associated risks (quality of services and quality of work). When used correctly, this approach provides greater incentives for design innovation and further reduces time and cost overruns, as performance incentives are built into the contract from the outset to allow the entire project team to exceed the deadlines and prices set jointly during the design verification phase. In such situations, tendering would tend to take into account price-independent factors such as competence and experience, as it is not possible to obtain precise price tenders before the contract is awarded due to incomplete designs. It would be preferable to use the RFP format for this contract format, which allows the owner to assess the skills and experience of competing contractors.
Similar to the Construction Management Services Contract (CCDC 5A – 2010), this model allows construction to begin and proceed in phases prior to the completion of all designs, as the phases are designed, offered and built in phases, but represent less contract management effort and risk for the owner. The general contractor who receives this contract in turn subcontracts to the various trades (e.B. using the subcontract at the agreed price (CCA 1 – 2008)), which the general contractor will lead and take over as a customer during construction. The general contractor`s obligation is to carry out the work entrusted to him by the owner with his own staff and that of his subcontractors. Public-private partnership (P3) The public-private partnership model or P3 contract builds on the traditional design-build format while introducing a financing element into the project. In this format, the P3 design-build consortium typically provides financing for the construction of the project instead of the owner, and then amortizes their investment and profits through various cash flows, which may include future installment payments from the owner, direct user fees, or various combinations of these. Those lists of framework contracts should be drawn up for a predefined period or with updating procedures to include new contractors in the list and should be accompanied by prequalification framework rules setting a maximum contract value for a given work order, so that all work orders exceeding the maximum value can be issued on the basis of a separate tendering procedure published publicly. .
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