Market Watch – The Corona Virus – How Quarantines Around the Globe Are Impacting Operations and What Owner’s Should Expect When Work Resumes.

If you have been reading this blog consistently for the past few weeks, you probably were expecting this week’s article to be the fourth and final installment detailing my talk from the ProcureCon Conference this past January.

That article will publish next week.  Given the massive impact the Corona virus has had on our lives globally, I could not go on with this blog without addressing it.

So this week, we will talk about the impact the virus could have on ongoing bids and active projects.

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Industry watch – Collaborative Delivery – Case Studies Of Collaborative Delivery – What They Tell Us and Why Standard Forms of Agreement May not be Right For You.

Over the last two weeks we have been exploring collaborative agreements.

Two weeks ago, I gave you a brief overview of the difference between the AIA’s two collaborative delivery contract models. Last week, I shared some of the most pivotal clauses that shift the relationship of the parties from adversaries to collaborators.

This week, I want to share some of the case studies I have read from projects that used some form of collaborative agreements and share some of the anecdotal comments I have received from friends and colleagues that have worked under one of these models.

Industry watch – Collaborative Delivery – What Are The Pivotal Clauses of Collaborative Delivery That Shift the Parties From Adversaries to Collaborators.

Last week I provided a brief overview of the two contracting models the AIA classifies as collaborate delivery.

We reviewed the nuances between Integrated Project Delivery (IPD) and Single Purpose Entities (SPE).  I even correlated SPE agreements in the United States with Alliance Agreements in the United Kingdom

This week, I wanted to share with you some of the contract terms these agreements require you to accept in order to implement the model.

Best Practices – GC led Design Build – Why This is the Worst Contracting Model And You Should Never Use It.

No matter how many times I counsel against using a contractor to lead design-build projects there is always someone who rationalizes away all of the negatives.

I have written about General Contractor led Design Build (GC led DB) a number of times, but I continue to encountered Stakeholders who simply insist on this model.  Quite frankly there is little that I find redeeming about this model and I remain steadfast against it.

With respect to every other contracting model, I can honestly say that I hold a neutral point of view.  I see viable applications for everything from Multi-prime T&M to Stipulated Sum GMP and everything in between, but I honestly feel that GC Led DB is the most despicable form of contracting in the market.

I know how strong that statement sounds, but I’m taking the gloves off for this one.

Before I go on (and alienate all of my contractor buddy’s) let me clarify that none of what follows is meant to suggest that ALL contractors are bad, nor am I suggesting that there are No contractors capable of delivering a good project under GC-led-DB.

For clarity, I feel I must take a moment to describe how GC led Design-build works.

GC led Design build is a variation of design-build where the General Contractor takes a prime contractual relationship with the Owner. All other parties (including the Architect) are sub-contracted to the GC.

This means that the Owner hires the General Contractor and then the General Contractor hires the Architect, the Engineers, and all the trade contractors.  In its worst form this model also allows the GC to subcontract the commissioning agents and maybe even buy the furniture.

This is your classic one-throat-to-choke turn-key design-build model.  Yes, all of those terms mean the same thing.

So why is GC-led DB so bad?

Industry Watch – Responsibility Standards – How the Public Sector is Getting Smart About Qualifying Contractors.

In an article posted January 29th, 2020, Mark Cavitt writing for the Oakland Press tells us about a new resolution adopted by the County of Oakland Michigan which impacts the way the County awards construction projects.

Resolution 19416 states that performance of public construction and maintenance in the County of Oakland will be performed by Contractors that meets the “Responsible Contractor and Best Value Bid Evaluation Standard for Construction Project Policy”.

The standard states that “best value will be determined by looking at a variety of criteria including: quality, references, experience, proposed schedule, safety, time and cost. The responsibility of a bidder will be determined by looking at: experience on projects of similar size and complexity within the past 5 years, references from owners, credit worthiness/financial condition and bonding capacity among other criteria.”

The resolution establishes that the county shall create, “a standard measurement of responsibility qualifications for each, construction project bid.”

The resolution goes on to identify the information that may be required as;

Experience on projects of similar size and complexity within the past 5 years.
References from owners.
Credit worthiness/financial condition and bonding capacity.
Proof of Insurance and/or Certificate of Insurance.
Certification from the bidder that construction workers will not be misclassified.
Disclosure of any debarment by any federal, state or local governmental unit.
Disclosure of any violations of any federal, state, or local laws, including OSHA/MIOSHA violations.
If required by bid standards, ensure there is a criminal record check for each employee the bidder proposes to use on a construction site or alternative security clearances approved by the County.

For far too long public sector procurement has strictly observed the practice of awarding contracts to the lowest “responsible” bidder.  Lawmakers have relied on the interpretation of the word “responsible” as a form of qualifier, but that single word created vagueness and ambiguity that allowed too broad of an interpretation.  Often this interpretation translated into “any” bidder with insurance and a license was deemed “responsible”.  This left public sector works exposed to unqualified or barely qualified suppliers instead of in the hands of “Responsible Contractors”.

The issue that will likely come up from a policy like this will be award challenges from Contractors who fail to meet the County’s standard. 

The success of this policy will be tied to establishing clear and objective scoring methodologies.  This can be challenging, so in support the move by Oakland County, I wanted to spend some time discussing the keys to establishing sound and objective scoring methodologies for evaluating supplier qualifications.

Best Practices – Commercial Terms – The Critical Commercial Terms You Need to Make Your Contracts Stronger.

With the start of the New Year, I’ve jumped right back into the deep-end with several projects that began towards the end of last year and grew hot over the break.

Each of these projects have required some amount of re-write of contract terms.  Coincidentally all of these agreements started on Vendor paper (or the Vendor’s form of agreement).

As I have completed my reviews (all around the same time), it became evident that the vast majority of these were lacking some of the same things.

Some were vague in their description of scope of work, others had poorly defined payment terms, others simply offered no contractual remedy in the event of a breach.

In previous articles we reviewed the differences between a scope of work and a scope of services.  Collectively these two pieces of information convey the scope of the agreement.

Of course this is the number one part of an agreement that needs to be right, but there are a few others:

Industry Watch – Payment Protection – Why the US and Other Leading Nations Need Payment Protection Legislation and What Procurement Can Do in the Meantime.

Throughout the world legislative actions are transforming the way the construction industry behaves.  These legislations are not only protecting trade contractors from unfair practices, they are protecting Owners too.

Surprisingly, some of the world’s most sophisticated markets have yet to enact similar protections.  In those parts of the world, certain common and persistent practices continue to put the supply chain and Owners at risk.