Procurement & Phasing Experience

Project Manager, Caterpillar’s Development & Learning Center, Panama

Overall responsibility for CM team providing consulting services on commercial building installations from planning and design phase through final project closeout. Oversight of budgets and project controls systems, bid and award of subcontracts, procurement, prepare strategies for procurement and phasing, quality control.  Managed installation of systems and transition to turn-over and occupancy.

Senior Project Manager, Projects, US Government and US Navy Facility Engineering Commands

Managed a US. Navy project to complete technical data surveys for two US Navy Facility Engineering Commands (FECs) in the US. Extensive documentation and reporting were required   for the coordination and compilation of data into a formal technical document to the client. Project responsibilities included proposal management for CONUS and OCONUS projects.  Managed the efforts to set up project reporting, including the project execution plan for an $800M multi-year program management contract for the U.S. Government.

Senior Project Manager, Wyeth Pharmaceutical Expansion, Canada

Responsibilities included the procurement and construction activities required for a pharmaceutical manufacturing facility expansion. Project required integration of a new expansion into the existing facility.

Senior Project Manager, Gorman Rupp Industries Phase 2, Mansfield, OH

Responsible for the design, procurement and construction for a 450,000 square foot manufacturing complex. Established project mobilization, budget, and procurement of subcontract services; outlined permitting requirements to allow environmental applications through the U.S. Government, State of Ohio and the City of Mansfield to proceed.

Senior Project Manager, U.S. Dept. of Defense, Iraq/Kuwait

Responsible for design/build projects completed for the U.S. Military in Iraq and Kuwait under cost-reimbursable and firm-fixed-price contracts.  Projects were of large-scale industrial types, and were executed under difficult circumstances that ranged from high voltage transmission lines to sweet water canal and pumping station refurbishment, medium voltage distribution systems including substations, dam repair and underground sanitary repairs. Specific projects included:

  • 400kV 260-KM long high voltage transmission line repair, Baiji/Baghdad, start to finish fast track project directly managed to successful repair and energizing;
  • Sadr City underground sanitary sewer repair, deep point repairs up to 6 to 8-meters deep, high pressure jetting of large diameter UG pipe;
  • Basra Sweet water canal repair, 220KM long with two lift stations, 8 cubic meters per second flow, deep excavations for embankment repair, complete rework of standby power, 1 cubic meter per second pump rebuild, etc.
  • Adhaim Dam; assessment of existing incomplete project, completed engineering study to determine stability and work required to complete the project;
  • Diyala Governate medium voltage electrical distribution system including substations;
  • Kuwait/Iraq Border Crossing Facility, design/build firm fixed price fast track directly managed from start to finish, on time and under budget. Extreme conditions in remote location.

Project Manager, LSP Organization, Bronx, NY

Managed subcontract work required to expedite construction at a health care facility.  Priced changes initiated by the owner or required due to field conditions, maintained close coordination with the owner, and conducted negotiations with the subcontractors.

Regional Operations/Project Manager, Lucent Technologies, Delco Electronics, Johnson Controls, General Electric, General Motors

Overall responsibility for design/build projects (for Lucent, Avaya and Global Crossings) in Argentina, Brazil, Chile, Egypt, Mexico, Venezuela, and the US.  Work involved design and construction of facilities for manufacturing, corporate offices, warehousing, etc.  Projects were executed under fixed-price and cost-reimbursable contracts.  Responded to clients’ demands and expectations, ISO 9001 compliance requirements, reporting, etc.

Procurement & Phasing

CONSTRUCTION PROCUREMENT METHODS

Once project delivery method is selected, the owner faces the decision of how it will procure construction services. A number of factors influence this decision. Government owners often fall under laws that dictate how they must make purchasing decisions.

Other influences include the political, economic and social environment, the owner’s experience and expertise in construction and construction procurement, the size, complexity, location, and uniqueness of the project, the timing of the project and whether schedule compression is needed, and cost considerations such as how much price certainty the owner needs.

Construction procurement is generally divided into four types: lowest bid, traditional, integrated, and, negotiated and managed.

Traditional procurement aligns most closely with the traditional project delivery method, design-bid-build. The owner buys construction services separately from design work, tenders for construction bids after design is complete, and the construction bidder knows all the project specifications before bidding.

The most common procedure in this case is competitive bidding with the lowest bidder winning. It’s often called low bid or lowest bid procurement. Governments and other public entities commonly use this method because laws, drafted in response to bribery scandals, require them to prove they received the best possible price in a process free from corruption. In those cases, bids are opened and reviewed publicly.

In competitive bidding, contractors are invited to submit their best bid by a deadline, and the owner compares bids against one another. This is called sealed bidding. Because the bids are all to build the structure according to the designs and specifications developed by the architect (i.e. the same product), the contractor who bids the lowest amount wins. In fact, the bid number may be the only piece of information reviewed.

However, this process does not work for all projects. In two-step bidding, a first round of review examines the technical qualifications of all the bidders. Bidders must show they have the skills and experience to handle the project. This is common in specialized structures. Because the financial and operational consequences of flawed or incomplete construction are damaging, it makes sense that an owner commissioning a hydroelectric dam, data center, or hospital would want assurances that the builder has demonstrated expertise in this type of project.

In two-step bidding, the owner creates a short list of those bidders who meet the technical qualifications. Bids from contractors who passed the first round move to the second round. Their proposals are called qualifying bids, meaning that they meet the requirements of the customer for technical expertise. (Other benchmarks can also be used, such as being able to build quickly enough to meet a specific completion date or to comply with government requirements for using a certain percentage of locally owned subcontractors.)

In two-step bidding, the lowest qualifying bid wins. The U.S. federal government uses this method to award indefinite delivery/indefinite quantity (IDIQ) construction contracts under federal acquisition regulations. IDIQ contracts cover an unknown amount of services over a set period of time. In construction, IDIQ is often used for architect and engineer services and job order contracting (JOC).

Job order contracting was developed in 1982 by Harry H. Mellon, then chief engineer in Europe for the U.S. Army, and it spread to all branches of the military and levels of government, including housing authorities and school systems. Under JOC, an owner gets a long-term umbrella contract that sets a unit price for common renovation, repair, or small construction jobs. When the need arises, the owner calls on the contractor to perform the work as agreed in the contract. This system creates efficiencies: Since owners do not have to identify contractors and negotiate contracts each time they need a job done, the work begins more quickly. And because prices are fixed based on work and materials over a larger cost base of multiple jobs, economies of scale are realized. Costs of procurement are also reduced. The Center for JOC Excellence has extensive education resources that explain the advantages of job cost contracting and how to get going with it.

Best value source selection is a procurement method in which buyers award contracts based on other factors as well as cost. The goal is to achieve the best combination of price and performance. In this process, the owner (usually a government agency) will define source selection criteria that add value to a bid. These can include past performance, more robust management approach, highly qualified key staff, or other factors. Using best value selection gives owners, who might otherwise be compelled by law to choose only on price, greater flexibility.

The implementation of best value selection can be similar to two-step bidding. In a best value selection process, bidders might first submit their qualifications based on the defined selection criteria; those that pass then submit technical and price proposals. Best value selection can also proceed in a single step process with qualifications, technical, and price proposals submitted simultaneously. A good guide on best value selection has been developed by the Associated General Contractors of America and the National Association of State Facilities Administrators.

Under negotiated procurement, an owner selects a contractor without advertising or competitive bidding. The U.S. government uses this method and negotiates with the potential builder on price and technical requirements. It awards the project to the contractor who makes the proposal most favorable to the government. The proposals are not publicly opened.

Unlike tendering (in which a proposal is accepted or rejected), in this method, contractors’ proposals are subject to further negotiations with project managers. After analyzing the proposals, they proceed with those that appear to meet broad technical and cost specifications. The two sides discuss the project details, objectives, conditions, schedule and cost, and then bargain over the variables. The contractor who offers the most attractive proposal wins. While the process is competitive, the competition may not focus on price, but rather on a range of factors such as technical ability. This method allows greater flexibility to finetune the deal in terms of management approach, technical solution to a problem and terms.

In private projects, the owner may go through this process with just a single bidder. Anderson-Moore Construction Corp in Lake Park, Florida argues that the negotiated approach offers owners greater value because the contractor can identify changes and cost savings before the project starts, eliminating the need for change orders.

U.S. federal negotiations favor sealed, competitive bidding procurement, but allow negotiated procurement in certain defined cases.

Sole source procurement, also known as single-source procurementdirect select, or a no-bid contract, is a non-competitive method you use when only one provider can fulfill the requirements of the project.

Government agencies can justify not using competitive bidding process in certain situations, such as emergencies or if, due to unique and complex specifications, only one contractor is capable of handling the project. Another reason would be if the new structure interfaces or connects with another specialized building, and the owner wants to make sure the two are compatible, like an expansion of a wastewater treatment plan using proprietary technology.

But sole source procurement can be vulnerable to abuse, so government buyers should proceed with caution.

In business, owners may decide on sole source procurement if, for example, they have a successful relationship with a contractor and want to replicate a prior contract or project. Private parties are not required by law to comply with competitive-bidding regulations unless they are receiving government funding, and they may feel the time and management effort saved with this approach offers strong business rationale.