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Abstract: Construction Management

Construction Management Basics

In the 1970s, many large general contractors and architectural/engineering firms recognized the growing need for professional construction managers (CMs), and the market for construction management services has grown since. Universities establish their own CM departments or use outside construction management firms.

Definition of Construction Management. Construction management is a discipline and management system to promote execution of capital projects for owners. A professional construction manager (CM) augments owner staff with preplanning, design, construction, engineering, and management expertise to optimize results regardless of project delivery method. The CM represents the owner and project; deals with construction, private, and public organizations; and executes specified duties (e.g., management of funds, scope, schedule, contractor skills,  design  and construction quality, contract and procurement flexibility, and avoidance of delays, changes, disputes). Most large institutions  have  construction  management departments, and a trend toward in-house services has emerged among smaller schools. Institutions should consider outside construction management firms if they undertake a very large  or  complex  project,  lack resources for a department, or have great variability in workload. Key personnel are the CM (owner’s representative), construction contract administrator (facilities director or construction management  head), and architect/engineer (either owner’s representative per AIA or design consultant with clear lines of authority).

Profiles and duties vary among institutions. Because the architect/engineer performs a professional service requiring a license based on years of schooling and professional practice, the CM must seek direction  from the architect/engineer on all design clarifications.

Construction Manager. Project manager and CM roles must be defined and delineated. They manage two discrete phases, exchanging primary and secondary management roles between bid  opening  and construction contract award. The CM is involved in the design phase to influence the construction  phase,  and the project manager monitors progress during construction, an approach that more efficiently focuses the client and architect/engineer on one project manager during construction.  Institutions  have  different governing policies, but CMs must have a broad range of project responsibilities to avoid waiting for bureaucratic  or committee-based decisions (a serious threat to construction progress) and are the central contact point for all project and stakeholder communications  during the construction phase. CMs need responsibilities and authority (e.g., first level of approval of billings for contractor and architect/engineer)  to  position themselves as equal peers and partners with contractor project managers and architect/engineer  firms.  CM duties cover all aspects of construction contract administration (e.g., contractor negotiations, review of contract documents during design, budget, schedule, inspections, liaison, first-line disputes).

Selecting a Construction Manager

Selection of a CM to provide professional services is very similar to selection of an architect or engineer for design services. (1) Requests For Qualifications (RFQs) are similar to Requests For Proposals (RFPs), but fee negotiations occur after firm selection in most states. RFQs detail required services, project specifics,  business environment, and other critical factors. After the RFQ is prepared, an outreach and publication strategy targets construction management firms and local newspapers or state contracting opportunity journals. (2) A presubmittal conference can be mandatory or voluntary (each with listed advantages) and is recommended for larger projects. This conference offers an opportunity to share more detailed project-specific scope and characteristics. The agenda is brief, and meeting minutes are distributed to attendees. The cutoff date for bidder questions is at least 1 week before RFQ responses are due. The suggested RFQ timeline can be dictated by local statute. The schedule can be shortened or lengthened. (3) Receiving RFQ responses is based on a firm due date, with responses dated and time-stamped. (4) Evaluating RFQ responses is the job of a small committee selected to assess responses and preliminarily rank them based on an objective scale of criteria (e.g., firm experience, staff experience and availability, project-specific criteria). (5) Short-listing firms for interviews is decided at a committee meeting, using a matrix of preliminary rankings to formally rank responses. (6) Interviewing firms is performed after sending notification letters to firms to be interviewed and to those that do not qualify. (7) Interviewing and final ranking of firms are performed by managing interview sessions to end on time and consistently using the same questions. The evaluation committee prepares and finalizes the final ranking of  firms. (8) Tentatively selecting  a  firm  and  negotiating fees starts with the top-ranked firm. If negotiations are successful, final award is made, and the contract (in the RFQ, with nonnegotiable terms and conditions, so negotiations are restricted to scope and fee) is issued. If unsuccessful, the institution can declare an impasse and negotiate with the next-ranked firm.

Prequalification

General contractor prequalification (subject to state law  in many jurisdictions) is not limited to  one  project delivery method. It differs from embedding experience requirements in the actual project bid documents, saving time and money for the institution and potential bidders.

Process. The prequalification process is  similar  to  that for a publicly bidded project (e.g., prepare prequalification document, confirm attainable criteria, advertise, conduct presubmittal meeting, issue addenda  if needed, receive submittals, evaluate them, interview teams, score outcomes, notify submitters, allow protest period to expire, establish pool of prequalified contractors that can bid).

Forms of Prequalification.  Two  forms  of prequalification use three sets of criteria (mandatory contract requirements, firm experience, staff experience). Key prequalification elements include objective criteria (can be contract specific), verifiable information, and ease of completion and evaluation. (1) The pass/fail process is simple and easy to evaluate, using yes-or-no questions. Contractual requirements include valid contractor license, ability to meet required insurance limits and bonding requirements, safety EMR, and other requirements or general conditions. Past project experience focuses on a specific project type (e.g., a minimum of three comparable projects in the past 5 to 10 years).  Past project experience of proposed staff focuses on key staff (e.g., project executive, project manager, construction superintendent with one or two comparable projects in the last 5 to 10 years). (2) Point accumulation uses the same criteria as the pass/fail model but screens for more experienced firms by using questions with an answer scale (e.g., 5 points for yes, 0 points for no) and specifies total number of points and minimum points to advance.

Lessons Learned. Contractor prequalification is a highly technical process and an art form (i.e., making sure that criteria requested are attainable by competent, experienced, and reputable construction firms). Lessons learned include using a pass/fail process and minimal requirements when construction employment is high (and point accumulation during low employment); verify objective information via a third party, interview proposed team and staff, tailor firm and staff qualifications to project-specific criteria, define criteria for a comparable project, provide appeals process, include the score sheet in the prequalification document, do not prequalify subcontractors, and issue an addenda if needed for criteria changes.

Permits

All construction permits required by the institution are obtained before the start of construction. In some cases, permitting authorities allow deferred approvals for specific parts or systems (e.g., fire sprinklers), which must be clearly identified, conveyed to the general contractor in bid documents, and monitored during the construction phase. Permits that the owner must obtain (e.g., electrical power, water and sewer connections, easements and curb cuts, ancillary permits) are monitored and managed to avoid delays affecting the general contractor. A matrix of permit responsibilities might be needed to track status.

Procurement and Bidding

Bidding construction projects is highly regulated  for public institutions (e.g., by board policies, state laws, bidding limits or dollar thresholds). Private institutions often have greater latitude; this section reflects the   public institution perspective. Bidding process steps are optional prequalification (covered in the previous  section), advertisement, prebid conference, addenda if needed, bids receipt, and award to lowest responsible bidder.

Advertisement. Local laws usually specify frequency, timing, and location of bid opportunity notices. In general, projects meeting specific dollar thresholds must be publicly bid. Advertisement of opportunity to bid is placed two times in a local newspaper or general circulation journal (before prebid conference).

Prebid Conference. A prebid conference (mandatory or voluntary) is typically led by the contracting officer to

educate and inform bidders about project requirements and bidding procedures, enabling the institution to obtain feedback (e.g., market conditions, bid document quality, inaccurate drawings or specifications, bid dates) from the contracting community. Questions can be answered after the meeting through a formal addenda.

Issuance of Addendum. Any material changes to the bid (e.g., change in bid date, time, location) and information of value to all bidders are issued in an addendum and numbered sequentially.

Receipt of Bids. Bid receipt  is  a  highly  scripted process. All bids are time stamped, and late bids are time stamped and immediately returned unopened to the bidder. The contracting officer opens the bids and reads required information (name, bid prices, acknowledgments, list of subcontractors). All bids are taken under advisement so that all bid paperwork can be reviewed separately for completeness.

Bid Protests.  If a bid is protested (not unusual in times   of high unemployment), the institution must  immediately obtain legal counsel and proceed with due diligence and timeliness.

Determination   of   Apparent   Lowest   Responsible Bidder. The paperwork for each bidder is reviewed in detail for completeness, and  required  due  diligence (e.g., bid bond verification, contractor license) is performed. If bids are incomplete or faulty, the bidder is notified immediately (with no cure periods for public institutions). The bidder can withdraw a bid if it proves a clerical error was made. Bid bonds usually are required with bid submittals. After the resolution of any bid protests and determination of the lowest responsible bidder, the institution proceeds with award of the construction contract.

GMP Negotiation

A Guaranteed Maximum Price (GMP) contract (where a contractor uses a contingency to guarantee the construction price to the owner,) is not usually an option for public institutions. The earlier in the design process a GMP is set, the larger the contingency, based on one if not two independent reconciled cost estimates. GMP contingency use is mostly at the discretion of the general contractor, but specific controls can ensure that costs are appropriate, fair, and reasonable. A shared savings GMP contract clause has an incentive for the general contractor to preserve the contingency. The institution maintains its own project budget contingency regardless of the GMP contingency.

Contracts and Administration

Owner’s Responsibilities. Most CM time is spent on construction contract administration (e.g., payment processing, inspection and testing, shop drawings and submittals, change orders, project closeout).

Preconstruction Meeting. Before work begins,  all principal project participants attend a preconstruction meeting to establish team and partnering relationships, set lines of communication, review administrative procedures (e.g., shop drawing submittals, payment procedures), and discuss relevant topics (e.g., project access; premise use; special scheduling; property protection; institution rules; and, at some institutions, OSHA training for all construction staff). The contractor notes critical items on the initial draft schedule; the architect/engineer answers design questions; and the owner asks the contractor about any potential change orders identified during bid preparation. The meeting agenda comprehensively addresses the institution- contractor interface. A written preconstruction record is made and distributed.

Payment Process. The most significant owner contractual duty (most often cited in a claim of owner breach of contract) is timely payments to the contractor for services rendered. The most common basis for payments is the schedule of values document, which breaks down contract prices into work items with values. The general contractor performance bond, payment bond, and insurance costs are listed as a line item, with payment requested in the first application.

The CM reviews and approves the schedule of values to ensure proper detail and valuation of the breakdown and preventing payment front loading. Contractors use the schedule of values, usually monthly, to prepare and submit pay requests based on the sum of partial billing calculations for each line item. The contractor bills for approved and completed change orders (separate line item) and materials received and stored onsite but not yet installed. They are reimbursed for only 90 to 95 percent of work completed in a period; the owner holds the rest as retainage, security against the contractor failing to perform the contract. Retainage can represent significant funds and cash flow problems for contractors and subcontractors; a common trend is withholding 10 percent retainage until the project is 50 percent complete, when retainage drops to 5 percent. The CM should hold authority to approve contractor pay requests, even though the owner holds a contractual duty to pay.

Contract Award. The construction contract includes several documents, tied together and referenced under the agreement and signed by both parties, binding them to terms, conditions, and obligations.

Bidding Requirements. These requirements include advertisements or invitation to bidders, instructions and information for bidders, bid forms, and bond requirements. The bid bond expires when a contract is signed, but owner practices vary on including remaining bid-related documents in the formal contract.

Contract Forms. Contract forms consist of the agreement, performance bond, payment bond, and insurance certificates.

Contract Conditions. These documents describe the conditions or terms (e.g., general conditions, supplementary or special conditions) under which the contractor will construct the project.

Specifications.  Specifications  for  a  university construction project usually are organized in a standard format (developed by CSI), detailing the quality of project components.

Drawings. Drawings are organized by design discipline categories (e.g., architectural, structural, civil, mechanical, piping and plumbing, electrical, controls) and show component quantity and arrangement.

Modifications.   Contract  changes  take  one  of  two forms, addenda (during the bidding phase) or change orders (during the construction phase).  Often, the same  or a similar set of documents is used to bid the project  and to serve as the construction documents. Before returning the contract agreement to the owner, the contractor secures bonding, insurance, and, if applicable, construction permits. The owner reviews  these documents for contract compliance, co signs the agreement, and issues a notice to proceed, marking the beginning of the construction phase. Contract formalization can take weeks or months. If bidding and contract award do not need to follow public statutes, several contract terms are negotiable.  A common  industry practice is an owner letter of  intent  to  award the contract, signed by and binding on both parties, to authorize the contractor to proceed with construction pending formal contract finalization.

Inspection and Testing.  Inspection  for  quality assurance and contract adherence lies at the core of CM responsibilities, but CMs are now more managers and administrators. Special inspectors and testing laboratories perform some specific inspections. Some states require certifications and reporting. The CM needs authority to reject nonconforming work, requiring the contractor to modify, improve, or remove the work until it complies. Construction builds on previous work, so daily CM reviews are key. Testing services and inspection agencies are becoming more specialized, with services such as concrete testing, structural testing, weld inspection, HVAC testing and balancing, asbestos sampling and clean air monitoring, non destructive testing, and materials testing. The CM reviews the regularly submitted testing agency reports. In the best practice, the institution contracts for (or performs) testing and inspection services to avoid conflicts of interest, and the contractor handles test timing and coordination.

Shop Drawings and Submittals. Manufacturers and suppliers provide drawings and specifications for  their own products (known as shop drawings) that include detailed fabrication and erection drawings, catalog cuts, wiring and control drawings, performance and test data, and samples. Shop drawings supplement and clarify contract documents and are submitted to, and approved by, the architect/engineer. Especially on public owner projects, the term “or equal” follows  the  list  of acceptable manufacturers to express  owner  willingness to use products by suppliers not listed if such products meet specifications. These clauses have advantages but are at the root of many contract disputes, creating a   trend to require contractors to  submit “or  equal” products for architect/engineer approval during the bidding phase. The subcontractor and general contractor check shop drawings against contract drawings and specifications and forward them  to  the architect/engineer for review.  Despite  the  range  of terms used, the practice is basically the same; the architect/engineer returns the shop drawings to the contractor, who returns them to the supplier (with either approval to order or request for resubmittal). Even with approved shop drawings, contractors can have an  installed product that does not meet contract requirements. Courts recognize that shop drawings  are not contract documents.  Architect/engineer approval does not relieve the contractor from shop drawing errors or omissions or exempt the contractor from fully complying with contract requirements. Material delivery problems are a leading cause of project delays. Because orders are not placed until shop drawings are approved, the supplier, contractor, and architect/engineer must emphasize the shop drawing submittal process early  in the project. Because shop drawing turnaround time can have a significant impact on the schedule, the owner might expedite the process by  allowing  submittals  to flow directly between the contractor and architect/engineer. However, a copy of the transmittal letter (without actual shop drawings) is sent to update CMs, who can verify that what is actually delivered and installed complies with the approved shop drawings.

Change Orders.  Change orders are the contractual tool   to alter terms and conditions of a construction contract. Change orders have had negative connotations because more change orders increase the risk of budget overrun, but change orders are a key method for making adjustments required during construction. Construction contracts give the owner the right to  direct  the contractor to perform change order work unless it represents a cardinal change (one that materially alters fundamental project character and is not within general contract scope; only used in an  emergency).  Out-of- scope change order requests are cardinal changes (and within the contractor’s right to refuse) but often are performed; they can lead to potentially serious issues about liability of the architect/engineer and the bonding company. Change order categories are design errors or omissions, unforeseen conditions,  deviation  from contract unit-price quantities  or  allowances, circumstance beyond contractor control, and owner requirement changes.  Most  change  orders  originate with the contractor and include an itemized breakdown   of labor and materials costs, overhead, and profit (and a request for time extension if needed). Change order administration is one of the most important responsibilities of the CM because they are negotiated, not competitively bid. To achieve  fair pricing, either the CM or architect/engineer prepares an independent estimate, which should be plus or minus 10 percent of contractor estimate (or trigger negotiations). Change order pricing has three forms:   lump sum (often  preferred, suitable for majority of campus projects); unit price (often the fairest), or time and materials  (elimination of forward pricing but little  protection against productivity concerns; mitigated by a fixed maximum cost).  The type of project, urgency, and scope  of change govern the method used.  The institution  should have an established procedure for change order administration, with a core change order request form. A written and signed change order formally amends the contract.

Project Communications, Documentation, and Reporting. As primary liaison for the design consultant and general contractor, the CM serves as the point through which all communications flow  among contractor, architect/engineer, and campus client.  The  CM serves as the institution contact during the construction phase. CMs must communicate with many people depending on project type  and  size,  using vehicles such as project coordination meetings (regularly scheduled, with detailed minutes), project correspondence, oral communications, CM daily log, photographic reporting, internal reporting (using a computer-based information and reporting system), and other reports (e.g., site visit, testing and inspection, safety). Proper documentation is critical to protect institution legal interests.

Insurance, Surety, and Safety Management Construction contracts specify bonding and insurance requirements for the project.

Bid Bond. Bidders often must submit bid security (e.g., contractor’s surety verification, cashier’s check, irrevocable letter of credit) with proposals to guarantee that the successful low bidder will enter into a contract with the owner. Bid bonds usually are a percentage of the contractor’s bid price (e.g., 5 percent).

Performance and Payment Bonds. The contractor supplies performance and payment bonds (usually at 100 percent value) at contract execution. Performance bonds guarantee that the surety fulfills the contract if the contractor defaults; payment bonds ensure that workers, subcontractors, and suppliers are paid.

Builder Risk Insurance. Builder  risk  insurance  is industry standard property insurance on the project itself (e.g., fire, smoke, collapse, vandalism, water, freezing), supplied by either the owner or contactor.

Comprehensive  General  Liability.  Comprehensive general liability insurance, the primary liability coverage for the project, encompasses three liability exposures: public (legal liability to third persons), contingent (liability arising from subcontractor acts or negligence), and completed operations.

Owner-Contracted Insurance Policy. Some institutions (typically consortia) provide wrap-up insurance coverage under owner-contracted insurance policies for all parties involved in design and construction.

Other Insurance Policies.  The  contractor  carries workers’ compensation and automobile insurance. For design-build projects, the contractor furnishes a professional liability policy to cover negligent design errors and omissions. Although not usually required by contract, many contractors have contract liability insurance to cover the liability assumed with indemnification and hold-harmless clauses. The  CM must not allow any work to be performed onsite unless these bonds and insurance policies are in full effect.

Safety. Construction job site safety is the sole responsibility of the general contractor, with a single point of accountability. All visitors must comply with general contractor safety requirements. Any hazards or unsafe working conditions must be immediately reported to general contractor staff. The CM or school safety department can regularly observe and perform safety audits, shared with the general contractor.

Closeout

Substantial completion is when the project is sufficiently completed and ready for its intended purpose; final completion is when the contractor has completed all contract requirements (e.g., all punch list items and submittal of as-built drawings, warranties, extra stock, operations and maintenance manuals). An institution often occupies the project, with final closeout of all project and contract details taking several weeks or months; the owner accepts responsibility for operating, maintaining, and insuring the facility and issues a certificate of substantial completion or a change order noting occupancy and remaining  issues  (e.g.,  on attached punch list). Before a certificate of substantial completion is issued, all parties (e.g., architect/engineer, CM, campus and user departments) perform a thorough inspection of work (and reference deficiencies in the certificate). The project closeout process is highly disciplined and follows a consistent checklist. Larger institutions have a specialist focused solely on closeout. The as-built drawings and O&M manuals are critical deliverables. After all punch list items are done, the contractor asks the CM to hold  a  final  inspection, possibly with the architect/engineer. If all work and contract requirements are completed, a  certificate  of final completion is issued and usually recorded publicly, releasing remaining retainage within statutory guidelines (e.g., 30 to 45 days), and the general contractor invoices the balance of the contract. After a certificate of final completion is issued, the institution cannot hold monies owed to the general contractor; the owner waives all claims (except for warranty claims); and, once the contractor accepts final payment, all claims against the owner are waived. For new construction, the normal warranty period is 12 months, with a proactive 10-month or 11-month warranty walkthrough of the project. Some major subcontractors (e.g., mechanical,  fire  alarm system, electrical, elevator) might be engaged  through the warranty period under an extended service agreement.

Claims and Disputes

Construction contracts typically include procedures to address claims and disputes and to request and receive     a change order at the earliest possible stage, often requiring general contractors to notify the institution of a potential cost issue within a specific  number  of  days (e.g., 3 to 5 days), or it is time barred. The contractor is required to proceed with disputed work, but dispute settlement remedies are noted. The CM and contractor superintendent or project manager  should  be empowered to resolve as many disputes as possible as quickly as possible, or the issue is escalated promptly to the next administrative level for review, assistance, or intervention.   Beyond  that level, the institution can have a formal administrative review procedure. Further contractor challenge requires other dispute resolution methods (e.g., high-cost litigation, arbitration). Owners and contractors are turning to alternative dispute resolution methods (e.g., binding arbitration, per AIA standard contract documents; mediation by independent third parties who do not make judgments or determinations; mini-trials; dispute review boards). The industry is focusing on claim avoidance, including the popular partnering method. Proper planning, due diligence during the design phase, and a modest investment early in the process (before construction) in peer reviews, constructability reviews, and  other reviews reduces the potential for claims and change orders.

Other Considerations

Preconstruction Phase. CMs included in the design process can gain critical insights to apply during construction and bring construction expertise to bear on the project. Construction management firms have successfully marketed design phase services to reduce project costs. In-house CMs can provide the same design services, offsetting a lack of sophisticated systems with specific institutional knowledge and experience; construction management firms usually underestimate campus project management needs.

Plan and Specifications Review. As construction documents are developed, the rest of the design team must view the CM as the document customer; modern management concepts (e.g., total quality management) recognize that any service provider has multiple customers, internal and external. CMs should not accept construction documents until they meet construction requirements. CM involvement during the design phase pays huge dividends in time and effort saved during construction. Identifying design errors and omissions through rigorous document review avoids wasted dollars and days. It is well known in design and construction that the ability to influence final project scope and cost diminishes as time passes, so CMs   must recognize that their greatest project influence occurs during the design phase.

Value  Engineering  and   Constructability  Analysis. Value engineering aims to reduce construction costs without sacrificing project function, quality, or reliability. CM knowledge of construction equipment and materials cost and life-cycle performance enables informed recommendations on reducing construction costs. During the design phase, CMs offer constructability analyses (e.g., site access, appropriate hoisting equipment, storage and laydown requirements, disposal of excavated materials, related concerns).

Schedule and Budget. The CM is responsible for the construction phase being on schedule and within budget and so must have authority to reject unrealistic schedules or budgets. When design delays steal time from the construction schedule, it is better to adjust the completion date during the design phase than commit to a contract with an unrealistic completion date. CMs must be familiar with the budget and the estimates used to build it and must be involved in creating the budget.

Budget Management

A lack of institutional procedures and controls are at the heart of most budget overruns. The construction estimate represents the largest component of the total project budget, but several non construction costs must be identified and adequately budgeted. The CM needs a comprehensive list of project costs.  Cost overrun control measures include prohibiting, discouraging, or limiting elective change requests by the user; and discouraging owner-driven design changes by requiring an increase in budget (not contingency fund use) for a new scope of work. The contingency usually is 5 to 10 percent of total budget (20 percent or more for major renovations) and covers unforeseen but expected cost overruns, most often during construction. Testing for hazardous materials in advance identifies risks and proactive mitigation plans. CM budget management begins during the design phase; if the CM allows an artificially low contingency to be set during the design phase, the odds of the project being on budget decrease. The institution needs a programmed contingency curve driven by the construction contract amount. CM contingency budget management requires a tracking software tool. Early recognition of contingency overruns enables the CM and administration to take action (e.g., elective change limits, contract scope reduction, additional funds).

Time Management. Campus clients often approach projects with unrealistic expectations and a critical completion date driven by academic calendar, funding cycles, research grants, and other campus-specific pressures. Tools and techniques are available that increase the likelihood of a project meeting a tight schedule. (1) Project schedule sophistication varies by contractor but includes bar charts, most frequently used on campuses; S-curves, measuring actual versus planned project schedule performance; and critical path method, the most powerful scheduling tool. (2) Schedule incentive clauses offer a monetary incentive for timely project completion and often assess monetary damages on the contractor for completion delays.

Schedule incentive clause types include actual damage, liquidated damage, and bonus/penalty clauses. (3) Schedule management is needed regardless of schedule type or incentive clauses; the CM must monitor the schedule and require periodic contractor updates. Each delay can lead to others, so early detection, rapid reaction, and prompt correction are key to schedule management.

Electronic and Web-Based Project Management Systems. Many electronic and web-based project management systems are commercially available, but the construction industry still relies on paper. Using an electronic or web-based project management system is a key strategic decision made before project initiation, based on system capabilities, transparency, ease of use and training, costs, and hosting capability. The best technology solution comes closest to meeting institution goals at the best price.

Partnering. Partnering is a cooperative effort among the owner, contractor, and architect/engineer to work toward a common goal while  recognizing  the  respective  needs of team members in an  atmosphere  of  trust, cooperation, and enhanced communication. Partnering agreements vary throughout the  industry  and  are  used in both private and public projects. Through formal or informal workshops and retreats, each member of the agreement comes to understand and respect the other’s point of view and needs. Win-win situations are favored over win-lose; individuals take more responsibility for actions; and group cooperation leads to more creative problem solutions. The partnering objective is to reduce claims, disputes, and litigation; it represents more of an attitude change than a formal contractual requirement.

Ethical  Considerations.   Building  and  maintaining  a good reputation and relationships with contractors  reflect positively on the institution and improve its processes and procedures for campus construction. Contractors increase their bids (a margin known as the university factor) to cover increased risk of dealing with an unfair or unreasonable owner (not an owner who firmly enforces clear contract  requirements).  Owners also need to create procedures and  policies  to encourage contractors to perform university work ethically. Unethical contractor practices include bid shopping (using a price from one subcontractor to encourage another to undercut the price, which can be discouraged by requiring a list of subcontractors with bids). Unethical owner practices include withholding payments for completed work (unless clearly authorized by contract provisions), risking a breach-of-contract  claim. Owners should urge contractors to make timely payments to subcontractors. Conducting professional, ethical, and fair programs go a long way toward making university projects attractive to the contracting community and thus increasing competition, decreasing costs, and enhancing the reputation of the university.

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