When faced with a new project in the construction industry, general contractors collaborate with their clients to create a cost model during the design phase and ultimately determine a GMP (Guaranteed Maximum Price) at which they are hired.
Finalizing the design to a goal price and comprehending every component included require an appropriate SOV (Schedule of Values). The GC or bidder is required to assess the information and point out inconsistencies when several design disciplines are leased and the base design and final design are made up of separate papers. Since most contracts are drafted to favor the most costly option in conflict situations, problems that go unnoticed when GMP is being assessed could become serious concerns as the construction process progresses.
Risk Scale In Relation To Identification Time
On bid day, every bidder hopes to have complete coverage, depending on contingency to make up for any gaps. Contingencies are utilized to fill in the project’s scope gaps. The expense of closing a scope gap would be much greater if it were discovered only during the building stages as opposed to when it was discovered during the design phase. The identification stage establishes if the scope gap is covered by the GMP’s contingency budget or if it requires a revision to the GMP.
Actual Case
- 425 student flats in a student housing project
- GMP was created for 50% of CD papers.
- There is a 3% contingency in GMP.
- The project is worth $100,000,000 in total.
- A complete finish schedule and elevations of every space were included in the architectural plans.
- In addition to room elevations with finishes, interior design drawings included material call-outs and identification.
- Half of the CD documentation for the wall finishes in each of the 425 units’ bathrooms are in conflict.
- Architectural designs call out paint, and ID drawings call out tile.
The Identification Process Prior To Contract
The project’s bid process is incredibly stressful and time-sensitive. The preconstruction team, which consists of estimators, schedulers, project engineers, and possible field personnel, has between seven and twenty-eight days on average to study, plan, and put together a project price. They contact the subcontracting community during this time to provide project pricing. To establish the submitted pricing for in-progress designs, numerous assumptions, qualifications, and follow-up decisions must be made. The majority of subcontractors will limit the scope of their proposals. They typically achieve this using only a portion of the drawing sets’ information.
The architectural set of drawings in the case study included details, a materials listing, and a room finish timetable. This timeline was followed in the tile subcontractor’s bid.
The price of 425 bathrooms The cost of the work would have been about $560,000 during the pricing competition. The GMP sum would have included this.
The Identification Of The Post Contract (GMP)
The contract has been given to the general contractor at a predetermined GMP. The GC starts the buyout phase for the project’s subcontracts after the designs are complete. Bids are leveled and range in value from little over the bid day value to 30% over target pricing; the procedure is competitive.
The estimated cost of the renovation in this phase would have been $630,000 for the 425 bathrooms. The value would have been targeted as a contingency draw and a value engineering opportunity rather than being part of the GMP.
The Identification Of The Submittal And A/E Review Phase
During the submission process, it was observed that the architectural drawings and the ID drawings have distinct bathroom callouts. The response to an RFI specifies that all bathrooms should have tile in accordance with the ID drawings. The GC acknowledges the overlooked disparity between design disciplines and, in accordance with the contract, owes the tile in 425 bathrooms when the subcontractor informs the GC of the expanded scope. As a result, VE has no chance, and the expense of the work is covered as a contingency draw.
COST OF 425 BATHROOMS: According to an after-contract estimate, tile installation will cost $700,000, or roughly $1.3 million in total. The designs and wall placements, access, and ADA are verified for tile application on walls versus the architectural call out of paint. It is seen that no framing or layout has taken place.
Identification Of The Construction Phase
The walls and rooms are being laid out. Plumbing and MEP systems have been roughed in, and all sleeves have been finished. According to the ID drawings, all 425 bathrooms have tile. It is necessary to place mortar on the tile walls. The following rework expenses will be applicable based on the building stage.
COST OF 425 BATHROOMS: According to an after-contract estimate, the tile work will cost $700,000. ($1647 per bathroom). At every location, rework is also necessary.
- $250 is the cost to core any plumbing location.
- Pipe removal and relocation will cost $700.
- The cost of replacing the frame and/or drywall because of inadequate clearances is $2300.
- Subtotal Cost: $3300 per room
Over $1,400,000 was spent on the project’s rework in total.
Final Results
Any project must include risk control, and the cost of the work component is greatly impacted by when a discrepancy or design risk is discovered. Finding differences during the bidding process not only saves money and yields important data, but it also enables value engineering and other methods to assess the cost-benefit ratio. Early discrepancy detection is essential to develop a more accurate GMP, address cost and savings decisions, and prevent delays and rework, particularly in areas where the bidder depends on the summaries (schedules) provided by the design teams.