Construction Management Your grade will be based upon your ability to “spot issu

Question

Construction Management Your grade will be based upon your ability to “spot issues” and to analyze the situation in order to arrive at a credible answer to the questions posed. Be concise and to the point. Use good grammar, sentence construction and spelling. Brevity is appreciated, but please provide a complete answer. Fact Situation: You are a young project manager for a Wackinsmack, Inc., a general contractor, who, after competitive bidding, has just been awarded the prime contract for the construction of a new waste water treatment plant for Dimwit County DPW. The Contract Price is $45 million. As part of the bid process, bids were received from three mechanical subcontractors, who provided quotes for the mechanical work associated with the project, including the process piping, treatment equipment, instrumentation, start-up, commissioning, and the like. The low mechanical subcontract price, submitted by a Acme Mechanical, Inc., a credible mechanical contractor who has significant experience in constructing plants of this kind, was $26.3 million. You have been charged with negotiating and obtaining a signed mechanical subcontract with Acme. You have been advised by your boss, that the mechanical price used for Wackinsmack’s bid, and your target subcontract price for this work is to be $25 million, $1.3 million less than Acme’s low bid. In anticipation of your discussions with Acme, you review the mechanical specifications, and Acme’s bid. The mechanical plans and specifications include furnishing, installing, and commissioning the mechanical equipment and instrumentation, and the plant, for compliance with the NPDES discharge permit. Also of note, is the requirement – in the general specifications – for dewatering an identified aquifer in order to accommodate the deep excavations at the retention ponds, digester tanks, and the foundation/treatment tanks (in the basement) at the tertiary treatment building. The dewatering specifications are prescriptive and specify the pump and discharge piping arrangements for the dewatering process, including treatment of the effluent before discharge into the adjacent river. There will also be the requirement for making “picks” of heavy mechanical equipment in order to life it into place. Your company plans to have a large crane on site for much of the contract period, for the erection of structural steel and other activities requiring lifting. Your crane will have the capacity to lift the mechanical equipment into place. You observe that Acme’s bid is: “complete, per plans and specifications” and lacks a detailed statement of the scope of work included in the bid price. To initiate your conversation with Acme, you prepare a draft subcontract, using Wackinsmack’s standard subcontract form. You provide a subcontract price of $25 million; you add words requiring the mechanical construction to be in accordance with the plans and specifications; you add words delegating the dewatering work to Acme; and you add provisions charging Acme for rental of your crane for making the subcontractor’s picks. Acme responds to your proposed subcontract, by advising you that its bid price was $26.3 million, not $25 million; that the dewatering work was not included in its bid price because dewatering is outside the scope of its bid, and, if you want Acme to perform dewatering it will be at a $2.5 million add. Finally, Acme says its bid is based on Wackinsmack making the picks at no charge, since the crane will be on site when Acme is performing its work. 5. If Acme’s bid was signed by one of its estimators, Bob “Chugalug” Jones, (one of your classmates while at EMU) - and whom who you know is not an officer at Acme - does that raise any issues for you? If so, what issues are raised. (10 Points). 6. As to the dewatering issue, if Acme tells you it did not include dewatering in its price because dewatering was not provided for in the mechanical sections of the specifications, nor was it shown on the mechanical drawings, does Acme’s argument have merit? Why or why not? (10 Points)

Explanation / Answer

(1.) As per the contract the Acme is at stronger position than Wackinsmack. The charging of the crane was not included in the contract, hence is it pre assumed that Acme don't have to pay for that.

On the other hand if an estimator Bob Jones sign the contract, it definitely raises some issues. Although he can sign the contract on behalf but he has to keep some things in mind. They are as under -

(i). If he is signing the tender on behalf of the person or on behalf of the firm then he shall attach a certified copy of power of attorney on non-judicial stam paper of requisite value executed in his favour by all the partners of the firm stating that this person has the authority to sign such tenders on behalf of other person or firm and he should be liable to any consequences occurred during the process.

If he attaches this kind of certified copy then it is ok for him to sign.

(2) Acme do have the merit on dewatering issue , as it was not provided in mechanical sections nor was in the drawings. So they can increase the price of tender which is completely right.

During execution there are many things which are unseen or which cannot be forecasted. They occur suddenly and make a make a matter of dispute between the parties. The best way to overcome this is to include a 10 % miscellaneous item in the tender process. By this if any work is required which was not mentioned during the initial process can be covered.

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