[spider]

New contract tendering rules.

It is time to stop project overruns of both time and cost components in the municipal contract world. The contract bidding process is an adversarial construct and should be understood as such. Instead of accepting the lowest bid from the ABC Co. knowing full well that the project is wide open to often spurious claims for cost plus extra billing because a gas service is not exactly where it is supposed to be or bad weather conditions or the cost of concrete. The bidders should be required to deal with these and other excuses for jacking up the bill as the cost of doing business, a cost borne by themselves, not the municipality.

Not going to happen you say, well then a lot of contractors will be out of business and so they should be if they don't want to invest due diligence regarding the project they are bidding on.

Contractors will proceed with a project until they run out of money and quit? Not if they ever want to bid on another project.

It is time to initiate this model starting with small contracts right now. Why not?

 

[SunriseChampion]

I work in custom residential (but a bit of commercial and institutional as well) construction. I have yet to see a new build that doesn't go over budget.

Unforeseen conditions/circumstances.
Later additions.
Contract changes during construction.
Scope of work changes during construction.

It's almost unavoidable. Especially with fickle clients....oh, and weather. Yeah, you know, that thing that nobody can control.

All contractors already include in their pricing contingencies for small added costs based on previous experience. However, this cannot possibly cover the added costs of additions, changes, and extreme problems with conditions (for example, an ice storm knocks out power in an area for a few weeks or results in damage to existing construction).


I find no fault with projects running over budget and over time....what I find to be dubious is their initial cost. I'm no expert on large-scale infrastructure projects, of course, but extrapolating from the cost of as expensive as 50-million dollar projects (this was a custom home that was supposed to cost 42-mill to build but went over budget) I've worked on, I find most public contracts to be overpriced to begin with.

 

[Palma]

New contract tendering rules.

It is time to stop project overruns of both time and cost components in the municipal contract world. The contract bidding process is an adversarial construct and should be understood as such. Instead of accepting the lowest bid from the ABC Co. knowing full well that the project is wide open to often spurious claims for cost plus extra billing because a gas service is not exactly where it is supposed to be or bad weather conditions or the cost of concrete. The bidders should be required to deal with these and other excuses for jacking up the bill as the cost of doing business, a cost borne by themselves, not the municipality.

Not going to happen you say, well then a lot of contractors will be out of business and so they should be if they don't want to invest due diligence regarding the project they are bidding on.

Contractors will proceed with a project until they run out of money and quit? Not if they ever want to bid on another project.

It is time to initiate this model starting with small contracts right now. Why not?

Hopefully John Tory will tackle this issue

 

[Mulder]

New contract tendering rules.

It is time to stop project overruns of both time and cost components in the municipal contract world. The contract bidding process is an adversarial construct and should be understood as such. Instead of accepting the lowest bid from the ABC Co. knowing full well that the project is wide open to often spurious claims for cost plus extra billing because a gas service is not exactly where it is supposed to be or bad weather conditions or the cost of concrete. The bidders should be required to deal with these and other excuses for jacking up the bill as the cost of doing business, a cost borne by themselves, not the municipality.

Not going to happen you say, well then a lot of contractors will be out of business and so they should be if they don't want to invest due diligence regarding the project they are bidding on.

Contractors will proceed with a project until they run out of money and quit? Not if they ever want to bid on another project.

It is time to initiate this model starting with small contracts right now. Why not?

Many problems with this.

1) There are many contracts that don't automatically goto the lowest bidder.

2) If the contract administrator seems claims to be spurious, they will be denied.

3) If an engineer puts a gas service on a plan, and it's not actually there, then it's the engineers fault. Unless he got it from locates, then it's the locating companies fault. It's often faster and cheaper to just pay the contractor the extra money. Even still, sometimes gas mains, and other services are not even located until they are dug up.

4) Weather delays are a real thing, in estimating there is a set number a working days per month. Lets say June is 20 days. This already accounts for weather. If there are weather extremes, as they are beyond the contractors control, the projects get delayed. Not sure why you would blame a contractor for the inability to complete the job due to extreme weather.

5) If you've ever worked in any project, design, or construction, you know that sometimes shit just happens and it's no ones fault. There is also many cases where there are design changes mid-construction because someone had an idea, or needed to work around something. That's not the contractors fault. This is why when estimating construction jobs, municipalities include a contingency.

 

[spider]

My recommendations are the result of having spent several years overseeing and regulating contractors during the construction of projects within the various restrictions imposed by contract and municipal restrictions.

1) There are many contracts that don't automatically goto the lowest bidder.

True, but immaterial.

2) If the contract administrator seems claims to be spurious, they will be denied.

Maybe in the Bible, but not necessarily on earth. Thou shall not bribe.

3) If an engineer puts a gas service on a plan, and it's not actually there, then it's the engineers fault. Unless he got it from locates, then it's the locating companies fault. It's often faster and cheaper to just pay the contractor the extra money. Even still, sometimes gas mains, and other services are not even located until they are dug up

Locates are available to the contractor/bidder, in fact they will have to have them done in any event so why not require them to do so before bidding instead of after winning the bid.

4) Weather delays are a real thing, in estimating there is a set number a working days per month. Lets say June is 20 days. This already accounts for weather. If there are weather extremes, as they are beyond the contractors control, the projects get delayed. Not sure why you would blame a contractor for the inability to complete the job due to extreme weather.

Can we assume that the contractor will refuse payment for work done in unusually good weather?

5) If you've ever worked in any project, design, or construction, you know that sometimes shit just happens and it's no ones fault.

Yet, said Shit is always deemed to be the fault of the municipality. never the contractor.

There is also many cases where there are design changes mid-construction because someone had an idea, or needed to work around something. That's not the contractors fault. This is why when estimating construction jobs, municipalities include a contingency.

A valid observation.

 

[wopchop]

New contract tendering rules.

It is time to stop project overruns of both time and cost components in the municipal contract world. The contract bidding process is an adversarial construct and should be understood as such. Instead of accepting the lowest bid from the ABC Co. knowing full well that the project is wide open to often spurious claims for cost plus extra billing because a gas service is not exactly where it is supposed to be or bad weather conditions or the cost of concrete. The bidders should be required to deal with these and other excuses for jacking up the bill as the cost of doing business, a cost borne by themselves, not the municipality.

The contractor is beholden to the bid documents, provided by the Owner. How can the contractor be held contractually responsible for omissions?

If I bid a job, and the job fails to mention that the soil is contaminated, or there are undisclosed gas lines, or whatever, that is the fault of the Owner and not the Contractor. To say otherwise is ridiculous, and I would counter that Owners need to be doing a far, far better job of drafting bid documents if they expect to lower the rate of contract disagreements.

Scope change is also a common cause of contract disagreements, where Owners / Architects make changes, issue no-cost change COs, and expect contractors to pickup the tab for the difference in price. This is also ridiculous. Should this cost also be borne by contractors as a "cost of doing business"?

Or what about delay claims? Also very common. Subcontractor 1 is late is delivering predecessor work for subcontractor 2. When subcontractor 1 finally finishes the work, the Owner still expects the same scheduled completion date, and expects subcontractor 2 to finish the project faster (meaning, extra cost for overtime). Should subcontractor 2 be expected to eat this cost? Also ridiculous.

 

[Rufus8]

You know what is ridiculous? Two summers ago I cycled Queens Quay, there were WEEDS growing around the alleged construction site - WEEDS. Explain that. Oh and don't forget that the whole bloody downtown core is nothing but a mudbath thanks to constant construction over the past 4 years, yes that's right FOUR YEARS. four fricking miserable dirty filthy diversion-filled years, it pisses me off that the Mayor will apologize for cost over runs but residents and motorists and even tourists are just supposed to put up with it. Any new contracts the city approves should include a public statement from the developer, including a clear time line and trouble shooter phone number or email address. I live downtown and love it but I am thoroughly heartily most assuredly DONE with pandering the fricking developers. yeah that's right i said "fricking".

 

[BurlOak]

The contractor is beholden to the bid documents, provided by the Owner. How can the contractor be held contractually responsible for omissions?

If I bid a job, and the job fails to mention that the soil is contaminated, or there are undisclosed gas lines, or whatever, that is the fault of the Owner and not the Contractor. To say otherwise is ridiculous, and I would counter that Owners need to be doing a far, far better job of drafting bid documents if they expect to lower the rate of contract disagreements.

Scope change is also a common cause of contract disagreements, where Owners / Architects make changes, issue no-cost change COs, and expect contractors to pickup the tab for the difference in price. This is also ridiculous. Should this cost also be borne by contractors as a "cost of doing business"?

Or what about delay claims? Also very common. Subcontractor 1 is late is delivering predecessor work for subcontractor 2. When subcontractor 1 finally finishes the work, the Owner still expects the same scheduled completion date, and expects subcontractor 2 to finish the project faster (meaning, extra cost for overtime). Should subcontractor 2 be expected to eat this cost? Also ridiculous.

When working on the COMRIF and BCF (Canada-Ontario Municipal and Rural Insfrastructure Fund and Building Canada Fund), the bean counter realized that there were two type of extra costs after a project was awarded. However, they thought that scope change was perfectly reasonable and the government should pay their portion of that increase. Extras due to unforseen reasons were viewed as avoidable and should not be covered. Engineering could not convince them otherwise.

 

[wopchop]

Extras due to unforseen reasons were viewed as avoidable and should not be covered. Engineering could not convince them otherwise.

Construction case law supports Contractors in the matter of "unforseen reasons", also known as excusable delays. If a delay can be proven to be excusable, meaning that the Contractor is not at fault for the cause of the delay, due to it being caused by matters completely outside of their control, than they may be entitled to schedule extensions or damages. In such cases, the delay must also affect the Critical Path. Again, case law supports this, and it has been successfully demonstrated on many occasions and on many contracts.

Obviously there are often cases where claims arise, and it is determined that the "unforseen reasons" are unreasonable, and not excusable. But that doesn't mean that all unforseeable reasons are non-excusable. I have worked on projects where various parties involved "could not convince them otherwise", causing the dispute to end in arbitration or litigation, where the arbitrator or the court disagreed with that opinion, and resulting in successful claims for the Contractor.

In my experience, especially on very large projects, critical delays are more often than not caused by 1) excessive changes in design; 2) inadequate specifications and drawings; 3) poorly coordinated specifications and plans or 4) failure to provide drawings and specifications in a timely fashion. These types of issues are the fault of the Owner, and almost always lead to schedule acceleration, so it is very easy to prove that they are excusable delays, and to win a delay claim on the part of the Contractor.

The #1 way to reduce construction claims would be to minimize design changes after construction has begun.