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Project Collaboration - Best Practices

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Section I-9
Negotiated Bid Delivery System

This delivery method is similar to the Design/Bid/Build method in that design and construction are performed by different firms. Unlike the Design/Bid/Build approach, a General Contractor and an Architect are selected at the project's inception. These firms work together throughout the design phase.

When the Owner does not have preexisting relationships with companies that have a proven ability to perform, it will qualify a list of Architects and Contractors via a request for qualifications (RFQ) process; followed by a request for proposal (RFP) to those that best qualify. As the proposals are short-listed, a selected subset of candidates are typically interviewed by the Owner to determine which company understands the project, has the chemistry to collaborate with the team, is able to display competency throughout the proposed team, and offers the best solutions and strategy. The chosen Architect and Contractor will enter into a contract with the Owner based upon negotiated terms.

The General Contractor provides estimated construction costs throughout the design phase and may offer a Guaranteed Maximum Price before the design documents are complete. When design documents are complete, the final construction costs are negotiated by the General Contractor through bids from Subcontractors on various scopes of work.

Among the Chief Advantages of the Negotiated Bid Delivery System are:

  • An Owner may expect some advantages from employing a particular Contractor whose policies and methods are known and who has in the past proved capable of fulfilling his obligations;
  • With the General Contractor being pre-qualified and able to select his Subcontractors, better quality, early completion, and smooth administration can be anticipated;
  • The GC is one in which the Owner and the Design Professional have confidence, and which is of known integrity and reliability. Moreover, the work to be carried out is within his special scope and experience.
  • The GC has the opportunity to provide input to the design and suggest alternative materials, systems, or means and methods which the GC feels will improve the project or reduce costs;
  • The GC provides preconstruction budgeting and scheduling in order to determine project feasibility, to establish economic parameters, and to gain preliminary "buy-in" from ancillary departments;
  • 'Typical' details do not need to be provided in the drawings since the methods and details are being discussed and agreed upon between the Design Professional and GC;
  • Not having to solicit competitive bids and possibly solicit revised bids to meet a budget saves time;
  • The GC's bid can be compared to national and regional averages. If there is a large discrepancy these averages can be used to negotiate the price with the GC;
  • Beneficial gain is realized through the team striving to achieve mutually accepted project goals in which all parties have contributed value input;
  • Projects performed under these terms are often times more collaborative, resulting in greater overall satisfaction with the value and quality of the end product;
  • This system typically reduces the overall project schedule from conceptual phase to occupancy, in large part by avoiding the re-design, value engineering, and re-bid phases common to the Design/Bid/Build delivery process;
  • Change orders should be reduced or eliminated since the GC was party to the design.

Among the Chief Disadvantages of the Negotiated Bid Delivery System are:

  • It does not provide the Owner with comparative prices from several bidders;
  • The cost of work may be higher in this method;
  • The Owner may feel that he is in a weaker negotiating position when getting final pricing since there is a disadvantage to utilizing a GC other that the one retained throughout the design process (giving up advantages noted above);
  • The GC may not submit the bid in the itemized format. In this case it may be difficult to decipher the bid and the GC may resist further breakdowns.

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Glossary Terms for the Best Practices Guide

History of Recommendation:
Approved July, 2010

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