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The best way to answer this question is to decide if you really understand what is involved in handling your particular project. Keep in mind that every project is unique and therefore has its own set of circumstances. Whenever you undertake a construction project whether it's the replacement of a door in your home or the building of a commercial facility the construction management process is used. Here are the steps taken and questions asked for every construction project, big or small, simple or complex:

Define the problem or specific objective and don't overlook simple questions like "is it really broken?"," should it be remodeled?" or "do I need a new building?", and Solve the problem by determining how to achieve the objective by asking simple questions like:

Before answering these questions we must understand the available construction options, professional relationships and roles.

First let's look at available construction options, they are:

Design Build: When a prime or main contractor bids or negotiates a project with the owner to provide both design and construction services on a specific project. The prime or main contractor performs as an independent contractor and this concept can save time and costs over the traditional Contractor and Architect concept;

Traditional Contractor and Architect Concept: When a prime or main contractor bids or negotiates the construction of the entire work AFTER the design and final plans and specifications are complete. The prime or main contractor performs as independent contractor and this concept usually costs more and takes longer;

Fast Track Construction: When a prime or main contractor, or construction manager (CM) at-risk negotiates to start a construction project BEFORE the plans and specifications are complete. The contractor or CM at-risk performs as Independent Contractor. This option is generally used on very large projects and can expedite the completion time but costs are continually adjusted as the design progresses; and many property owners are not aware of a construction process available to them that can save them thousands of dollars, lots of time, and allow them to achieve ultimate project control, which is:

Owner-Builder as Prime or Main Contractor. When the owner takes on the responsibilities of the prime or main contractor to build a specific project. This option gives the owner ultimate control over schedule and costs especially when employing a construction manager for fee as the owner's agent.

By contracting directly with licensed specialty contractors the Owner-Builder can:

1. Save money because the general contractor marks up the specialty subcontractors actual bid price and then adds other fees such as overhead, profit and general conditions. All of these fees and mark ups can be substantial. Unless you have a cost plus contract with the general contractor and are entitled to see actual subcontract agreements, material receipts and actual labor time sheets you never know how much a project really costs; and

2. Have direct control over the specialty contractors costs, schedule and work quality because you will see and approve actual invoices, schedule results, and work in place quality before releasing any payments. Answering YES or NO to the following questions you could determine if this Owner-Builder process is right for your next construction or alteration project:

A YES answer to all of these questions probably makes you a good Owner-Builder candidate. However, those who can't answer YES can still take advantage of this Owner-Builder process. The owner can still have ultimate control over schedule and costs by hiring a Construction Manager for fee who basically acts as his/her agent. Some Construction Managers will help set up a project and/or work on an as needed consulting basis. This gives the owner the best of both worlds because Construction Managers are required to be licensed by the Contractors License Board and Construction Management fees are generally substantially less than a General Contractors combined specialty contractor mark ups plus his/her overhead and profit. Also, the Construction Manager for fee, acting as the owner's agent, owes a client a "Fiduciary Duty" (Trust). Whereas, a General Contractor is an independent contractor who is free from the influence, guidance, or control of another or others and does not owe a "Fiduciary Duty".

Next look at the professional relationships of the parties. It is important to understand if a contractor or professional is an Agent or Independent Contractor.

Agent: One authorized by a client (principal) to act in his/her stead or behalf and owes the client a "fiduciary duty" (Trust). Example: Construction Manager for fee but classified as an independent contractor for tax purposes. A construction manager for fee has limited or no financial responsibility whereas a construction manager at-risk does have financial risk similar to a general contractor; and

Independent Contractor: One free from the influence, guidance, or control of another or others and does not owe a "fiduciary duty". Example: architect, engineer, prime or main contractor, construction manager at-risk.

Owner Builder Project Types:

The following three-owner/project types usually use one or more licensed specialty contractors. Using the Owner-Builder process can prove extremely beneficial on these types of projects because these licensed specialty contractors can usually be easily coordinated and their scope of work defined without risk or conflict.

When selecting a Construction Manager or Construction Management firm request a written Construction Management proposal. The proposal may include all or some of the following depending on the size and complexity of your building project:

This is a checklist of essential and commonly used activities and tasks for any project broken into the following twelve (12) phases:

The form links you to project directories, scheduling terminology, and budgeting/estimating calculators.

Project Information Sheet:

This form helps you gather basic information about your project. It is not intended to be a Project Directory, but rather a quick reference of key project members and overall project objectives during the planning phase of the project. It is useful for selecting and identifying major team members for your next project.

Prepare and Maintain a Project Directory:

To keep track of who's involved prepare a Project Directory. A Project Directory is important for the purpose of listing all persons and/or companies contacted and/or being considered for the project. The preliminary directory is generally completed in long hand or an electronic data base as the respective project contacts are made and being selected for consideration. The directory keeps all contacts in one location for fast reference.

Communication Tip!

Keep a copy of this directory in a central location so that anyone associated with your project can have access to it for quick reference.

Productivity
Tip!

Keep a copy of the preliminary directory containing all contacts whether they were actually selected on not. It will save a lot of time in the future because you will have names and addresses of individuals and companies that may prove useful on future similar projects.

Budget for Savings and Understanding the Estimate:

A Budget gives you a handle on how much you are willing to spend for the project.

Before establishing a budget it is important to understand the limitations of estimating. An estimate is defined as a forecast of construction cost, as opposed to a firm proposal; whereas construction estimating is a forecast of construction costs prepared on the basis of a detailed analysis of materials, labor, equipment for all items of work by multiplying the volume by costs per unit or measurement, and finally an approximate evaluation of the finished product. In either case a construction cost estimate is a forecast based on designed and planned items.

At the onset of a project planned items do not exist. Therefore, early conceptual budget planning is essential for establishing a target range for monitoring performance as the project progresses. Also, this conceptual budget can serve as a basis for continuous in progress revisions to insure that the original overall budget objectives are not being overlooked. Those who understand this process will experience an easier time working with the project team members as the project is executed.

Establish a Project Budget:

Before making a budget the following actions must be taken:
The project must be identified and a preliminary Scope of Work for the project must be completed. Here are simple scope of work outlines for large or small projects. The idea is to begin gathering information about your project and putting it in writing.

Small Project

Project statement or identification:
Replace back yard fence

Preliminary Scope of Work:
Hire a contractor to remove and dispose of an existing fence; supply all labor, materials and equipment necessary to install a new fence.

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Large

Project statement or identification:
Build new office facility

Preliminary Scope of Work:
1. Complete a feasibility study

2. Purchase land

3 Hire construction consultants (Architects, Engineers, Construction Manager, etc.)

4. Build a new building complete with interior improvements and furniture

5. Sell the building

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Identify, Organize and List Cost/Budget Components:

It is good practice to organize your project and cost components using a widely accepted construction industry format. The MASTERFORMAT published by The Construction Specifications Institute (CSI) has been widely accepted as an industry standard in the United States and Canada since 1963. The numbers of MASTERFORMAT are organized into 16 basic groupings of related construction information called "divisions.

This MASTERFORMAT provides the specifications writer with a standard yet flexible system for writing specifications at various levels of detail as needed to meet the project's needs.

Cost Classifications:

Familiarization with the MASTERFORMAT allows the users to easily relate a specification section with both product information and cost data. The following describes how job costing or job budgeting can be organized using the MASTERFORMAT division

Division 1 - General Requirements can be used to accumulate costs for temporary construction facilities and controls, mobilization, job site administration, and other general requirement cost items;

Divisions 2 - through 16 can be used to accumulate applicable project costs related to products and their installation;

How Much Contingency is Enough?

Contingency is defined as a sum designated to cover unpredictable or unforeseen items of work, or changes subsequently required by the owner.

The table below indicates possible contingency items and their corresponding variations through various project phases. These contingencies are to be applied to the known identifiable items of cost at each stage.

These percentages should be determined and agreed to by all respective project team professionals. The percentages should include factors for experience and judgment limitations, and represent probable additional budget requirements in addition to those which are definable at the beginning stage of project development. Therefore, it is likely that the percentages will vary between firms and projects.

With contingencies determined, each member of the project team can better understand his/her responsibility in maintaining the overall project budget.

Maintain a "the budget cannot be exceeded" attitude. Agree at the start if various contingencies are exhausted either the budget will be revised (if approved by the owner), the design will be altered or a creative alternative will be developed.

The following is a good guide for determining the amount of contingency (per cent of total project cost) to allow for depending on the phase the project is in:

This table illustrates that the contingency could be as high as 25 per cent at the beginning of the project before starting the Pre-Design Phase; and could be as low as 3 per cent before starting construction.

The amount of contingency has a direct relationship to the amount of known information in connection with the project. The less amount of information known the greater the contingency. And conversely, the greater amount of information known the lesser amount of contingency is needed.

Calculate a Budget/Estimate with or without markup:

See Budget for Savings and Understanding the Estimate

This calculator can be used with the Preliminary Budget/Estimate calculator or as a stand-alone calculator. This calculator has the following optional features:

Calculate Mark (useful for contractors and vendors)
Calculate contingency (useful for building owners, contractors and vendors)

Calculate General Requirements:

See Budget for savings and Understanding the Budget

General Requirements are often overlooked or not completely tabulated and these costs are frequently substantial depending on the size and overall scope of the project.

Therefore, this calculator includes a list of the most commonly used tasks and activities within the following categories:

Calculate a Preliminary Budget/Estimate:

See Budget for savings and Understanding the Budget

This calculator has the following features:

1. It is organized in a format substantially paralleling the MASTERFORMAT published by The Construction Specifications Institute (CSI). The numbers of MASTERFORMAT are organized into 16 basic groupings of related construction information called "divisions." The CSI numbers and titles of the divisions are:

NOTE: To make the form more flexible we have excluded the Division numbering in the Calculator.

2. The form has an optional OVER or (UNDER) Budget/Forecast column for calculating and determining if you're actual or committed costs are OVER or (UNDER) your original budget amounts.

3. The form makes it easy to gather costing information from a list menu containing the following options:

Should I require a bond for my project?

Recognize that a bond adds cost to the overall project costs. It is like an insurance policy for the purpose of guaranteeing the contractor(s) performance to complete work and insure that the contractor pays his employees and material suppliers with the money you pay the contractor.

If you have pre-qualified the contractor (see How do I Screen and Qualify Contractors?) and you are comfortable with his/her capabilities you may want to save the cost of the bond.

Tip!

Regardless if you decide to purchase the bond or not it is a good idea to determine if the contractor is Bondable, what his/her Bonding Rate is, and what his/her Bonding Capacity is.

Bondable - What does it mean?

A contractor is bondable when a rated surety company has given the contractor a written statement of bond ability. Before issuing such a statement the surety company conducts their own background check on the contractor before they make a commitment to provide a bond to the contractor. When the surety company is satisfied that the contractor is a good risk the contractor becomes bondable.

Bonding Rate - A Useful Contractor Qualifying Tool:

When the contractor becomes bondable the amount the surety company charges the contractor for the bond is called the bonding rate. This bonding rate is based on the risk factor the bonding company places on issuing the bond to the contractor. The higher the risk to the bonding company the higher the bonding rate.

And conversely, the lower the risk to the bonding company the lower the bonding rate.

The bonding rate is a good guide for comparing contractors by looking at their bonding rates you can generally tell if the contractor has a good track record.

Example: Contractor A has a bonding rate of 1% (one per cent) whereas contractor B has a bonding rate of 3% (three per cent). Contractor A has a greater experience level and capabilities than contractor B as viewed by the Bonding Company. Also, contractor A's bond will cost you 2% less than contractor B's bond.

Bonding Capacity - Why is it important?

The bonding capacity is the dollar amount the bonding company is willing to guarantee for all bondable and non-bondable work the contractor has on hand based on the experience level and capabilities of the contractor. Example: The bonding company determines that the construction company qualifies for a bonding capacity of $2,000,000. The contractor has work on hand, contracts totaling $1,000,000 ($500,000 requiring bonds and $500,000 not requiring bonds). In this example the contractor has a bond surplus of $1,000,000 for any future work requiring a bond.

Example: The bonding company determines that the construction company qualifies for a bonding capacity of $2,000,000. The contractor has work on hand, contracts totaling $1,000,000 not requiring bonds. The contractor wants to bid on a new $2,000,000 project requiring a bond which would increase his work on hand to $3,000,000. In this example the contractor has a bond deficit of $1,000,000 and will not be granted the bond unless the bonding company reevaluates the contractors capabilities and agrees to increase the contractor's Bonding Capacity.

Tip!

If you are requiring a bond ask the contractor to invoice you for it's direct Cost. You'll save a hefty mark-up. It is not necessary to include the bond cost in the contract schedule of values and incur the contractor's markup.

Insurance to Limit Liability:

What type of insurance should I have on my project? It is the writers opinion that every project you undertake should be properly insured. Generally, all construction contracts will have a section on insurance stating the property owners and the contractors insurance obligations under the contract.

IMPORTANT: Insurance procurement requirements written in a contract do not guarantee that the insurance has been procured, is valid, or coverage is in force. Therefore, it is very important to obtain Certificates of Insurance before construction begins. The following is a partial listing of types of coverage available and who is generally responsible for procuring it:

The PROPERTY OWNER is generally asked to procure and maintain in full force and effect:

Fire insurance with course of construction, vandalism and malicious mischief clauses attached; such insurance is generally the sum of at least equal to the contract price with loss, if any, payable to any beneficiary under any deed of trust covering the project. The policies may name the contractor and construction lender as additional insured; and if the owner fails to procure this coverage the contractor generally has the option of procuring the insurance as agent for and at the expense of the owner.

The CONTRACTOR is generally required to procure and maintain in full force and effect:

Worker's compensation and comprehensive liability insurance policies.

Limits of Insurance:

Worker's Compensation and Employer's Liability Insurance

The limits of worker's compensation are based on statutory requirements by the respective contractor licensing states. In California, for example, all contractors are required to procure worker's compensation insurance before a contractor's license is issued. There is one exception to this requirement. If the contractor has no employees, an exemption certificate must be submitted to the Contractors State License Board, certifying under penalty of perjury that he/she does not employ any person in any manner to be subject to Worker's Compensation laws of California.

You should contact the Contractor's License Board in your respective state to confirm this requirement.

Comprehensive General Liability Insurance

The limits of insurance are generally determined by the architect and/or the owner and are usually written into the specifications for the project. Your insurance requirements could look like this:

Certificates of Insurance:

Tip!

Always demand certificates of insurance from the contractor before he/she starts the work.

Tip!

Verify General Liability and Workers Compensation insurance certificates from the contractor prior to starting construction. Examine the policies expiration dates and be satisfied with the amount of coverage the policies offer; also insist on getting a copy of the certificate for your file. Otherwise, you may have considerable liability.

Architect, Designer and/or Engineer(s) Hiring Guidelines:

It is not uncommon to wonder if you really need an architect, engineer or designer for a particular project.

Screening Architects, Designers and Engineers:

Some of the core essentials that may form a basis for screening Architectural and Engineering professionals are found by completing a form.

Screening or qualifying a Construction Manager or Contractor:

You can screen and qualify Construction Managers or Contractors by collecting background information from them.

The following Contractor Qualification Statement questions should be completed by the Contractor and returned for your review. It is a good idea to obtain Qualification Statements from at least three contractors for your specific project and it is not uncommon to qualify six contractors for a given project. However, some contractors are reluctant to bid on projects when more than six contractors are bidding on the same project because they feel that their odds of being low bidder have been reduced. As an Owner your objective is to qualify contractors for your specific project. Therefore, you should develop reasonable bidding parameters based on the scope and budget for your project.

If you are performing a minor remodel you will probably want to qualify at least three contractors. And if you are planning to construct a new home of office building you probably want to qualify at least six contractors.

Upon qualifying the contractors you can establish your approved contractors list and from this list you either negotiate or bid your project.

The following is a partial list of questions contained in this Contractor Qualification Statement and a brief explanation of their importance:

SCHEDULING

Prepare a Schedule:

A Schedule forces you to plan when you want to start and complete the project and how you want it controlled.

Schedule Definitions

ITEM

DEFINITION

Activity The smallest work unit within a project; the basic building block of a project.

Bar Chart A Bar Chart shows the start and finish dates using horizontal lines to represent the activities duration.

CPM (Critical Path Method A planning, scheduling and control technique whereby a construction project is completely planned and scheduled and an arrow diagram drawn to show the interconnected individual tasks involved in constructing the project. CPM concentrates on the tradeoff between the cost of a project and the time needed to complete it.

Critical Path The set of activities that must be completed on time for the project completion date to be met. Activities on the critical path have no slack time.

Currant Date Line A vertical line on the chart indicating the currant date.

Duration The length of an activity, excluding holidays and other non-working days.

Finish Date The date that an activity or project is completed.

Gantt Chart The schedule of activities for a project. A Gantt Chart shows start and finish dates, critical and non-critical activities, slack time, and predecessor relationships.

Milestone An activity with a duration of zero (0) and by which progress of the project is measured. A milestone is an informational marker only; it does not affect scheduling.

PERT (Program Evaluating and Review Technique) A project planning and reporting that is useful in situations where it is difficult to accurately estimate the time needed for individual activities.

PERT Chart A type of flow chart showing the order and interrelationships of a project's activities.

Predecessor An activity that must be completed before another activity can begin.

Slack Time The flexibility with non-critical jobs that allows their start dates to be adjusted without affecting the project completion date.

Start Date The date that an activity or project begins.

Successor An activity whose start depends on the completion of one or more predecessors.

Tip! Request a construction schedule prepared by the contractor incorporating your completion date and your move-in date. Gives real meaning to the completion of your project.

My Project Organizer Calendar:

This calendar allows you to keep up-to-date on meetings, task deadlines, and other important events associated with a construction project. Each event can be made public or restricted to certain team members. Task deadlines are automatically linked to a project calendar. This calendar features a progress bar display alerting the users about the time remaining for a project deadline.

Click here to use Calendar

BIDDING

Bidding for Responsiveness, Dependability and Value:

The best way of insuring that you are getting the best value for you scope of work is the get competitive bids and/or estimates professional contractors, suppliers and resources.

It is important that all bids and estimates are based on the same information. Therefore, the following forms can be used to distribute the same information and then receive the same information in the same format. This make it very easy to compare and analyses the the bids and estimates that you receive.

Prepare and Submit RFPs:

RFP means Request for Proposal. This RFP form contains all the essentials for collecting costing and scheduling information associated with getting a bid or estimate. This form has the following features:

Send an RFP to a CLOSED group of bidders (a private bid list as selected by you); or

Send an RFP to an OPEN group of bidders (the RFP will be listed on our site and anyone can bid on it). Option of having bids returned directly to you using our BID FORM or sent directly to you without using our Bid Form.

Click here to view and try the form

Verbal Quotation Form:

Even though written communication is stressed and should be the rule of thumb many contractors (especially subcontractors and material suppliers) will give verbal quotations or cost proposals on the telephone. The FAX machine has helped enormously to minimize this practice.

However, when you do obtain verbal quotations it is extremely important to obtain all pertinent detailed information about the proposed transaction this information will become the Terms and Conditions written into the final contract agreement and/or purchase order between you and the respective subcontractor.

The Verbal Quotation form in this section has been designed to obtain that pertinent information necessary for defining and understanding the scope of work, terms and conditions, and limitations being proposed by the contractor or material supplier.

This form serves as a checklist for defining and understanding the scope of work, terms and conditions and limitations being proposed by the contractor(s) or material supplier(s).

The online version of the form can only be used after an RFP has been created and only the RFP creator can open the Verbal Quotation form to enter the data.

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PROJECT ADMINISTRATION & CHECK LISTS

My Project Organizer is a shard, secure workplace on Constructionplace.com for distributed project teams to administer and organize any size project. My Project Organizer enables the project team to communicate more effectively.

Gaining access to My Project Organizer.

There are two ways of gaining access to My Project Organizer:

My Project Organizer Roles

Role	Rights
Coordinator (Creator)	The first person to start and create the My Project Organizer service. The creator is usually the Coordinator. The creator may do the following: Assigns the Coordinator role to any other registered constructionplace.com person Assigns more than one Coordinator for a given project Creates the first project within My Project Organizer
Coordinator	Has full access to all content within a My Project Organizer. The coordinator is responsible for: Team Member Management and Invitations Creating groups within a team· Setting member permissions Managing settings, changes and status Controlling access to items and content
Team Member	Can create new items, and read and edit other Team Member items subject to permissions given by the Coordinator. A Team Member is also known as a Participator.
Observer	Can monitor activities and content in My Project Organizer, but cannot participate.

Protecting Property Against Liens:

Discharging of Lien(s) or Claim(s):

The following wording can be incorporated into a contract to protect your property against Liens or Claims:

If at any time there is evidence that a claim which is chargeable to CONTRACTOR or a SUBCONTRACTOR, is or may become a lien against the premises, OWNER may retain out of the contract price an amount sufficient to indemnify it against such claim or any lien growing out of such claim and against all costs and expenses (including attorney's fees) which OWNER incurs or may become obligated to pay in connection with said claim or lien or arising out of any action relating thereto.

If payment of the contract price has been made to CONTRACTOR hereunder CONTRACTOR shall immediately reimburse OWNER for all moneys, costs, expenses and disbursements (including attorney's fees) that OWNER may be compelled to pay to discharge such lien or claim on or against said property.

Procedure for obtaining lien releases during construction covering progress payments:

Commencing with the first progress payment request, CONTRACTOR shall submit a CONDITIONAL WAIVER AND RELEASE UPON PARTIAL PAYMENT covering all approved scheduled payments to respective subcontractors, material suppliers, and contractor's general conditions;

Commencing with the second progress payment request and all subsequent progress payment requests, CONTRACTOR, SUBCONTRACTORS and MATERIAL SUPPLIES shall submit via the CONTRACTOR appropriate affidavits and wavers and releases as follows:

Subcontractors and Material Suppliers shall submit UNCONDITIONAL WAIVERS AND RELEASES evidencing payment by the CONTRACTOR for all labor and materials covering the previous payment request; and

CONTRACTOR shall submit a CONDITIONAL WAIVER AND RELEASE UPON PARTIAL PAYMENT covering all approved scheduled payments to respective subcontractors, material suppliers, and contractor's general conditions.

Procedure for Obtaining Lien Releases Prior to Making Final Payment:

Contractor, Subcontractor and Material Suppliers shall submit via the CONTRACTOR appropriate affidavits and wavers and releases as follows:

Subcontractors and Material Suppliers shall submit UNCONDITIONAL WAIVERS AND RELEASES UPON FINAL PAYMENT evidencing payment by the CONTRACTOR for all labor and materials covering and associated with OWNER'S project; and

CONTRACTOR shall submit a CONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT covering all approved contract costs.

Project Administration Check List:

This form contains a very basic checklist of things to think about before starting your next project. These items may or may not be relevant to your project, but are intended to stimulate questions on how to set up project administration priorities for your next project. Constructionplace.com offers consulting services to assist in setting up project administration procedures.

Pre-Construction Meeting Agenda:

This form contains commonly used items to think about in preparation of holding a pre-construction meeting. Pre-construction meetings generally focus on items and activities requiring completion prior to the start of construction, and overall project expectations. The form can be modified to add some of your own descriptions.

Building Planners Check List:

This form contains commonly used resources, activities and functions used on construction projects. Use this form to create a working checklist of items associated with you next project. The form has the following sections:

Drawing Review Check List:

This form contains general items for checking a set of architectural drawings.

Site Plan Review Check List:

This form contains general items for checking a Site Plan of a set of architectural drawings.