A best value award contract usually requires the contractor to provide a detailed technical plan that supports the overall project objectives in which the client assigns a value other than just low price. Other values may include past performance on similar work, knowledge of the specifications, expedited scheduling, and knowledge of agency compliance, innovative construction methods, safety experience, and commitment to other client objectives such as minority business enterprise goals. There is a deliberate focus on how the contractor will perform the work not just his price. Best value is more likely to assure the client that the contractor fully understands the scope of work, environmental constraints, timelines, and other critical project success elements. Syblon Reid has received several "Best Value" awards in the past few years.
Engineer, Procure, and Construct
Engineer, Procure, and Construct (EPC) method lends itself more to lump sum turn key projects where the contractor is fully responsible for the construction of the project This means that the design engineer has direct contracts with the contractor. Syblon Reid is well positioned to support this type of delivery method.
Early Contractor Involvement/Construction Manager at Risk
Early Contractor Involvement (ECI)/Construction Manager at Risk (CMAR) is an innovative contracting method similar to EPC that is used now by some owners. In this method, the contractor is brought on board during the design phase to provide constructability input, realistic construction schedules and more accurate cost information for funding needs.
The advantages to this delivery method are when:
- Risks are unknown and cannot be adequately allocated to any one party thus requiring the sharing of risks on a project.
- Budgets and schedules are limited and an extraordinary effort is required to achieve the outcomes expected.
- Project scope is unclear or uncertain, and is very difficult to properly define in the time available with significant/many unknown factors involved.
- There are various diverse key stakeholder interests to be brought together early and these key stakeholder interfaces and relationships are complex; and where community interests are complex and require a special approach.
- The knowledge and creativity of the contractors (innovation) can improve the overall project outcome.
This option most often becomes a contract with the owner on either design build, EPC, or other type of contract such as a Negotiated Fixed.
Syblon Reid partners with several engineering firms on this type of procurement method by providing input to constructability of designs, realistic scheduling, better cost estimating accuracy, timely permit acquisition, innovative construction methods, etc.
Syblon Reid has used the "Design Build" delivery method on multiple projects in the past decade. The design build project delivery method provides a higher quality service to the owner than any other delivery method. With the builder being identified prior to project start date, years of construction experience is integrated into the design at the onset of the project. By performing phase analysis, value engineering and cost estimating early in the planning stages, provides better scheduling and budgeting for the project. Overall project schedules are shortened by early identification and procurement of long lead time materials and services. Regular planned interface meetings with the client's personnel and the design/construction team during the design phase of the project, insures that owner concerns are fully addressed up front rather than after the construction begins.
Negotiated Fixed Price
Similar to the Bid Build delivery method, a firm-fixed-price contract provides for a price that is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract. The main difference is that the cost is negotiated rather than just low bid. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. It provides maximum incentive for the contractor to control costs and perform effectively and imposes a minimum administrative burden upon the contracting parties. The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive and performance or delivery incentives when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives.
Although not often used, Syblon Reid has experience with this delivery method. The client or owner pays a fixed sum for each completed unit of work. The work to be performed is broken into various parts, usually by construction trade, and a fixed price is established for each unit of work. In a unit price contract, like a lump sum contract, the contractor is paid the agreed upon price, regardless of the actual cost to do the work. Time and Cost Risk are shared. The owner is at risk for total quantities and the contractor is at risk for his fixed unit price. Large quantity changes (>15-25%) can lead to increase or decrease in unit prices.
This delivery method requires:
- Adequate breakdown and definition of work units
- Good quantity surveying and reporting system
- Sufficient design definition to estimate quantities of units
- Experience in developing bills of quantities
- Payment terms properly tied to measured work completion
- Owner-furnished drawings and materials must arrive on time
- Quantity sensitive analysis of unit prices to evaluate total bid price for potential quantity variations
For more than 55 years, the majority of our work has been awarded on a hard-bid. Syblon Reid readily accepts this type of work were the contractor assumes all the known risks. We have highly trained estimating staff that are skilled at evaluating bid specifications and drawings and planning the work as well as estimating costs.
Time and Material
In this arrangement the contractor is paid on the basis of the actual cost of direct labor at specified hourly rates plus the actual costs of materials and equipment usage. The contractor and client agree upon a fixed add-on to cover the contractor's overhead and profit. Syblon Reid has used this contract delivery method most effectively on emergency response projects, where the full scope of the work is undefined.