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Phase 3

Pre-Construction Stage

Procure | Bid | Tender | Awards

1.1 Calling Bids & Tenders Guide – CCDC23 & CCA51

1. A Tender is an invitation to a bidding process for a project. Tendering usually refers to the process whereby governments and financial institutions invite bids for large projects that must be submitted within a finite deadline. The word tender can also refer to the acceptance of a formal offer, such as a takeover bid (Investopedia).

What is the Contractor’s Guide to Bidding process?

The Bidding Process

  • Step 1: Request for proposals. …
  • Step 2: Bid preparation and submission. …
  • Step 3: Bid evaluation and selection. …
  • Step 4: Contract negotiation. …
  • Step 5: Project delivery.
  • Everything You Need to Know at 101 Level: 

What is Contract A and B In Canadian Procurement Contract Law in Canada?

Contract A is the contract that is made when a bidder submits a bid in response to an invitation to tender, or similar document. Contract B is the agreement that will be formed between the procuring authority and the winning bidder (Blacke Cassels & Graydon LLP & Wiki)

CCDC 23 – A Guide to Calling Bids and Awarding Construction Contracts provides recommended best practices for procuring construction services by means of a competitive bidding process using the lowest bid procurement method (CCDC, 2024).

CCA 51 – A Guide that recommends best practices in all aspects of the bid calling and award subcontract process. CCA 51 addresses the practices involved in the procurement of Subcontractor’s construction services, whereby price is the primary determinant in Subcontractor selection. Its use is intended to foster improved mutual cooperation and productivity between Prime Contractors and Subcontractors (CCDC, 2024).

2. Contractors’ Response to RFQ & RFP Process

2.1 A Contractor’s Or Subcontractor’s  Response to an RFQ and RFP Process (Request for Quotation or Proposal), which is a document calling for proposals or quotations to be submitted by a specific RFQ/RFP General timeline for a specific construction project works, with No fear. The RFQ/ RFP proposal or quotation explains the Subs or Contractors price submission Or How you or your company might accomplish the specified project effectively. Typically, Key Basic Steps to the RFQ/ RFP process may include information like: 

  • Cover letter
  • Executive Summary
  • Key Company Details & Project Org Chart 
  • Company Services/ Project Plan/ Execution Summary
  • Professional Services Fees Or Project Pricing Form 
  • Industry Certifications/ Regulatory & Security Info
  • Resources Matrix & Schedule Implementation timeline 
  • Past Similar Successful Projects & Client References 
  • Agreement Details 
  • Any Value-Added Services & Innovations

3. Quantity Take-Offs & Query Lists

3.1 A Construction Quantity Takeoffs is a process of listing and measuring the materials required for the project to calculate the cost to complete it. The construction takeoff exercise is the first basic step in mastering the estimation process and involves quantifying the materials necessary to start and execute the job. Construction take-offs may utilize several different take-off worksheet formats such as Trade Master format divisional and QS Elemental Uniformat approach based on preference and operations set-up (Autodesk). 

Take-Off Query sheets provides a formal record of questions that have been asked and answers given and should also record who asked each question, and when, and who answered each question, and when (Wiki UK).

4. Cost Estimating, GCs & OH&P Markups

4.1 Construction Costs estimating is the process of calculating all of the required costs for a construction project, including direct costs for materials and worker wages and indirect costs for equipment depreciation and office worker salaries etc. and estimating Change orders during the construction stage. The Cost Estimate is the probable anticipated Total Construction costs estimate at the anticipated time of bid/tender period and over the construction phase, including contingency allowances based on the level of commercial risks assessed by the contractor pursuing the construction works (Procore & CHOP).

 

How to Understand the Basics of Cost estimating for a project?

  • Look at the Cost Estimating Step-By-Step Process guide,  
  • Prepare your estimating templates and/or tools and software 
  • Break down the project scope into deliverables or phases. 
  • Estimate the duration of each deliverable or phase. 
  • Calculate the cost of each task and deliverable. 
  • Add external costs.
  • Calculate the total project cost estimate.
  • Get your quote approved internally. 
  • Share the estimate with your prospect or client.

Contractor Markups are the amount that a contractor charges above their direct costs. As a contractor, this is your profit margin, or the amount left after paying all the job costs. Every contractor needs to add markups to their prices to maintain a net profit. Overhead costs are operating expenses for necessary equipment and facilities. Profit is what allows the GC to earn their living. O & P are stated as a percentage of a total job. Where O & P are set at “10 and 10”, they will be charged as 20% on top of the total job estimate (methids.me & United policyholders).

Mark-Ups 101: The average minimum overhead percentage for construction is +10% and higher. However, this number can vary greatly depending on the size and scope of the project. A small residential project may have an overhead percentage of 10%, while a large commercial project could have an overhead percentage of +15% or more (Workyard).

How do you calculate OH&P?

  • Overhead = (fixed monthly expenses) + (indirect costs)Profit = (project cost) – (overhead + direct costs) 
  • Overhead and profit are two essential metrics that construction companies account for during every accounting cycle.

5. Projects General Conditions & General Requirements

5.1 What is the difference between ‘Site’ General conditions and ‘Specifications’ General requirements?

In the general requirements, typically found in Division 1 of the specifications, the owner spells out exactly what the Subs and Contractor needs to provide on the project. In the general conditions, the general contractor describes how they will fulfill each of the listed requirements — and how much they will cost (Procore and Plan& Spec). See Vid Here

Subs and Contractors Construction General Conditions helps ensure the completion of a project will be on time and within budget, all while adhering to the processes and methods defined by the general requirements. General conditions outline the duties and responsibilities of all parties involved on a project (Procore).

Subs and Contractors Construction General Requirements are the non-management indirect costs of executing the project, including items such as pre-development costs, permits, security, bins, fences, temporary lighting, worker amenities, and clean-up costs. General Requirements means those provisions of the Specifications which apply to the entire Work and means the requirements for the Work developed and issued by the Architect/Engineer, including those items under Construction Specifications Institute (CSI) Division 1. ( SDV law & Law insider). 

Subs and Contractor Beware of 6 General Requirements that Can Bust Your Cost Estimate (procore).

6. Construction Scheduling & Work Breakdown Structures (WBS)

6.1 Construction scheduling organizes activities and their sequence in a construction project. It is a project management process that acts as a blueprint for how the project will be executed. It not only organizes the activities and tasks but the overall timeframe for the project, including milestones. All Subs and Contractors must be able to prepare a construction schedule step-by-step for its Scope of work for the project and submit it to the Lead Contractor and/or the Owner for review, feedback, revisions and acceptance (project manager.com). 

Construction work breakdown structure (WBS) is a visual, hierarchical and deliverable-oriented de-construction of a project in all its various key components, elements, activities, tasks and work items (from WBS level 1 down to level 4 level of detail). It is a helpful diagram for project managers because it allows them to break down their project scope and visualize all the key activities and lower-level tasks required to complete any construction projects. The WBS “breaks down” the structure of a project into manageable deliverables. Each deliverable is assigned a task, or series of tasks that can be further broken down into subtasks to meet the needs of the project (Wiki & Adeaca).

7. Trade Scope of Work, Master format and Uniformat

7.1 The Trade Scope of work (SOW), also known as a statement of work, describes at length what work is required to successfully complete a project. The scope of work in construction is the list of construction obligations, as well as work activities that all contractors, subcontractors, and suppliers are obligated to do. The drafting of an Effective Construction Scope of Work in an agreement or contract, which is then called the scope of work (Letsbuild).

CSI Master Format is a system of numbers and titles for organizing construction information into a standard order or sequence. The Master Format classification system is continuously updated jointly by the Construction Specifications Institute (CSI) and Construction Specifications Canada (CSC) (RAIC). Refer to the Guide for CSI master format.

Uniformat II is a standard classification of building specifications, cost estimating, and cost analysis in the U.S. and Canada. The elements are major components common to most buildings. The system can be used to provide consistency in the economic evaluation of building projects (Wiki). 

Uniformat is a more flexible classification system than CSI Index Format, as it is designed to be applicable to a wide range of building types and project stages, from conceptual design to facility management. In contrast, CSI Index Format is more geared towards the construction stage of a project (LinkedIn).

8. Insurance, Bonding, WSIB & Payment Security

8.1 Contractor’s Liability Insurance is specifically designed to keep companies, contractors, and subcontractors protected against common third-party liabilities. Not only does this insurance give added peace of mind, but it is also mandatory for some businesses. It is important of every Subs and Contractor to Understanding the Importance of Contractor Insurance in Ontario (KASE Insurance Toronto & Chambers Insurance).

At a minimum, Ontario contractors are required to have general liability insurance, which provides protection in case of bodily injury or property damage to a third party at a worksite. Some projects may require you to provide a certificate of insurance. There are 9-Types of insurance policies that Subs and Contractors Need to Know (Zensurance & Procore).

A Contractor’s Construction bond (or contract bond) is a legal agreement in which a Surety company guarantees that a contractor will perform all its specified obligations according to the established terms of a construction contract. The construction bond is a type of Surety bond used by investors/clients in construction projects. The bond protects against disruptions or financial loss due to a contractor’s failure to complete a project or failure to meet project specifications. It is important for Every Contractor and Owner Should Know about construction bonds in relations to construction contract law (Constructionbond & Investopedia & Jenkins Marzban & Logan).

What is WSIB or Workplace Safety and Insurance Board in Ontario is responsible for providing wage-loss benefits, medical coverage and support to help different Types of workers get back to work after a work-related injury or illness. Fact Sheet: WSIB is funded by premiums paid by Ontario businesses. WSIB provides No-fault collective liability insurance and access to industry-specific health and safety information. WSIB promotes workplace health and safety, supporting injured employees recover and return to work, and for providing compensation and other benefits to injured workers and their survivors and For Families (WSIB & CAMM, 2024).

Starting in 2013 nearly everyone working in Ontario in the construction industry MUST have Mandatory WSIB Coverage from the Workplace Safety and Insurance Board – WSIB (ISHA, 2024).

Payment Security means security to guarantee payment for labor and materials under a construction contract. “Performance security” is defined as security to guarantee the performance of a construction contract. Security is usually provided by a contractor in the form of a surety bond. There are 9 types of Payment Security under a construction contract (Law Insider & turtons).

9. Standard Forms Contracts & Supplementary Condition Clauses

9.1 A Standard Form Contract is a written or spoken agreement between two or more parties intended to be enforceable by law and has 9 Key components and there are 5 Key Types of Construction Contracts. Contract law is a complex topic and can be confusing for both consumers and businesses alike especially when Selecting a Proper Contract Structure for a project. Your provincial or territorial consumer protection office has jurisdiction over contract law. Generally, a contract is binding when the following is true. (Govt. of Cdn. & Procure):

  • the parties intend to make a contract
  • there is an offer and an acceptance
  • the parties receive something in return for their promises
  • If one or more party Under-performs in the contract then they risk to Breach (break) the Contract 
  • Simple purchase and sale transaction example: In most cases, a consumer will sign a contract to gain ownership of or access to a good or service. In return, the company selling the good or service will receive financial payment or access to the consumer’s data.

*Before signing a contract, keep the following in mind:

  • always read the contract carefully, especially the General Conditions and any fine print and
  • only sign if you understand and agree with everything in the contract
  • pay close attention to what you are responsible for and what the company must provide
  • research the company and check reviews
  • make note of any automatic renewals or cancellation dates in the contract which could cause additional fees or charges

Supplementary conditions are terms and clauses that amends or modifies of changes the General terms and conditions of a standard form construction contract , issued as a separate additional document with the base standard form contract, and provides details and conditions for specific and unique aspects of a project’s contract and the organizational requirements of an Owner (BCA & Law Insider, 2024).

What is CCDC? Founded in 1974, the Canadian Construction Documents Committee (CCDC), is a national joint committee responsible for the development, production and review of standard Canadian construction contracts, forms and guides. Checkout website: https://www.ccdc.org/about/