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Construction Contracting: A Practical Guide to Company Management, 8th Edition

Book Description

The definitive contracting reference for the construction industry, updated and expanded

Construction Contracting, the industry's leading professional reference for five decades, has been updated to reflect current practices, business methods, management techniques, codes, and regulations. A cornerstone of the construction library, this text presents the hard-to-find information essential to successfully managing a construction company, applicable to building, heavy civil, high-tech, and industrial construction endeavors alike. A wealth of coverage on the basics of owning a construction business provides readers with a useful "checkup" on the state of their company, and in-depth exploration of the logistics, scheduling, administration, and legal aspects relevant to construction provide valuable guidance on important facets of the business operations. This updated edition contains new coverage of modern delivery methods, technology, project management, plus sample contracts and documentation.

The field of construction contracting comprises the entire set of skills, knowledge, and conceptual tools needed to successfully own or manage a construction company, as well as to undertake any actual project. This book gives readers complete, up-to-date information in all of these areas, with expert guidance toward best practices.

  • Learn techniques for accurate cost estimating and effective bidding

  • Understand construction contracts, surety bonds, and insurance

  • Explore project time and cost management, with safety considerations

  • Examine relevant labor law and labor relations techniques

  • Between codes, standards, laws, and regulations, the construction industry presents many different areas with which the manager needs to be up to date, on top of actually doing the day-to-day running of the business. This book provides it all under one cover - for the project side and the business side, Construction Contracting is a complete working resource in the field or office.

    Table of Contents

    1. Title Page
    2. Copyright
    3. Chapter 1: The Construction Industry
      1. 1.1 Introduction
      2. 1.2 The Construction Project
      3. 1.3 Economic Importance
      4. 1.4 The People Involved on a Construction Project
      5. 1.5 Construction Categories
      6. 1.6 Project Financing
      7. 1.7 The Contract System
      8. 1.8 Project Delivery Methods
      9. 1.9 Types of Construction Contracts
      10. 1.10 Forms of Construction Contract Award
      11. 1.11 Forms of Negotiated Contracts
      12. 1.12 Basic Elements of Agreement in the Various Types of Cost-Plus Contracts
      13. 1.13 Competitive Sealed Proposals
      14. 1.14 Other Forms of Contracts
      15. 1.15 Small and Disadvantaged Business Enterprises
      16. 1.16 Seasonality in Construction
      17. 1.17 Licensing
      18. 1.18 License Bonds
      19. 1.19 Building Codes
      20. 1.20 Contractor Organizations
      21. 1.21 Management Practices in Construction
      22. 1.22 Business Failures in Construction
      23. 1.23 Summary and Conclusions
      24. Chapter 1 Review Questions
    4. Chapter 2: Business Ownership
      1. 2.1 Introduction
      2. 2.2 Alternative Forms
      3. 2.3 Construction Contracting Firms
      4. 2.4 The Individual Proprietorship
      5. 2.5 The General Partnership
      6. 2.6 Establishing a Partnership
      7. 2.7 Liability of a General Partner
      8. 2.8 Dissolution of a Partnership
      9. 2.9 Subpartnership
      10. 2.10 The Limited Partnership
      11. 2.11 The Corporation
      12. 2.12 The Foreign Corporation
      13. 2.13 Stockholders
      14. 2.14 Corporate Directors and Officers
      15. 2.15 The S Corporation
      16. 2.16 Employee Stock Ownership Plan (ESOP)
      17. 2.17 Limited Liability Company (LLC)
      18. 2.18 The Joint Venture
      19. 2.19 Summary and Conclusions
      20. Chapter 2 Review Questions
    5. Chapter 3: Company Organization
      1. 3.1 Introduction
      2. 3.2 Organization Basics
      3. 3.3 General Considerations
      4. 3.4 Principles of Organization
      5. 3.5 Responsibility, Authority, and Delegation
      6. 3.6 Making the Organization Work
      7. 3.7 Summary and Conclusions
      8. Chapter 33 Review Questions
    6. Chapter 4: Project Design and Contract and Bid Documents for a Project
      1. 4.1 Introduction
      2. 4.2 The Architect-Engineer
      3. 4.3 Designers' Professional Associations
      4. 4.4 Selection of the Architect-Engineer
      5. 4.5 Services Provided by the Architect-Engineer
      6. 4.6 Fee for Design Services
      7. 4.7 Responsibility to the Owner
      8. 4.8 Liability to Third Persons
      9. 4.9 Statutes of Limitations
      10. 4.10 Contractor Input into Design
      11. 4.11 Project Description—Communicating the Design
      12. 4.12 Announcing the Project to Contractors
      13. 4.13 Project Manual
      14. 4.14 Bid Documents
      15. 4.15 Instructions to Bidders
      16. 4.16 Contract Documents
      17. 4.17 Summary and Conclusions
      18. Chapter 4 Review Questions
    7. Chapter 5: Cost Estimating and Bidding
      1. 5.1 Introduction
      2. 5.2 General
      3. 5.3 Types of Estimates
      4. 5.4 Preliminary Considerations Prior to Commencing the Estimate
      5. 5.5 Set-Asides
      6. 5.6 Qualification
      7. 5.7 The Decision to Bid
      8. 5.8 The Bidding Period
      9. 5.9 Prebid Meetings
      10. 5.10 Work to Be Self-Performed and Work to Be Subcontracted
      11. 5.11 Site Visit
      12. 5.12 Project Time Schedule
      13. 5.13 Preparing the Estimate
      14. 5.14 Estimating Labor Cost
      15. 5.15 Estimating Equipment Cost
      16. 5.16 Indirect Costs
      17. 5.17 Subcontractor Proposals
      18. 5.18 Markup
      19. 5.19 The Lump-Sum Recap Sheet
      20. 5.20 The Unit-Price Recap Sheet
      21. 5.21 Bid Changes
      22. 5.22 Finalizing the Estimate
      23. 5.23 The Proposal
      24. 5.24 Bidding Procedures
      25. 5.25 Submission of Proposals
      26. 5.26 Responsive Bid and Technicalities
      27. 5.27 Bid Spread
      28. 5.28 Out of the Money
      29. 5.29 The Acceptance Period
      30. 5.30 Rejection of Proposals
      31. 5.31 Withdrawal of Bid by Prime Contractor
      32. 5.32 Withdrawal of Bid by Subcontractor
      33. 5.33 List of Subcontractors
      34. 5.34 Contingencies Allowances and Subcontract Allowances
      35. 5.35 Disclaimers and Waivers
      36. 5.36 Bid Ethics
      37. 5.37 Bid Depositories
      38. 5.38 Bid Rigging
      39. 5.39 Unbalanced Bids
      40. 5.40 Complimentary Bids
      41. 5.41 State Preference Statutes
      42. 5.42 Scheduling Bid Dates
      43. 5.43 Scope Bidding
      44. 5.44 Range Estimating
      45. 5.45 Introducing Probabilistic Determinations into the Estimate
      46. 5.46 Computer-Based Estimating
      47. 5.47 Summary and Conclusions
      48. Chapter 5 Review Questions
    8. Chapter 6: Construction Contract Provisions
      1. 6.1 Introduction—Construction Contracts
      2. 6.2 Contract Clauses
      3. 6.3 Rights and Responsibilities of the Owner
      4. 6.4 Duties and Authorities of the Architect-Engineer
      5. 6.5 Indemnification
      6. 6.6 Rights and Responsibilities of the Contractor
      7. 6.7 Subcontracts
      8. 6.8 Subcontract Provisions
      9. 6.9 Contract Time
      10. 6.10 Liquidated Damages
      11. 6.11 Extensions of Time
      12. 6.12 Acceleration
      13. 6.13 Differing Site Conditions
      14. 6.14 Owner-Caused Delay
      15. 6.15 The Agreement
      16. 6.16 Letter of Intent
      17. 6.17 The Notice to Proceed
      18. 6.18 Acceptance and Final Payment
      19. 6.19 Termination of the Contract
      20. 6.20 The Warranty Period
      21. 6.21 Summary and Conclusions
      22. Chapter 6 Review Questions
    9. Chapter 7: Contract Surety Bonds
      1. 7.1 Introduction
      2. 7.2 Basic Elements of Understanding
      3. 7.3 Forms of Contract Bonds
      4. 7.4 Bid Bonds
      5. 7.5 Performance Bonds
      6. 7.6 Payment Bonds
      7. 7.7 Statutory and Common-Law Bonds
      8. 7.8 The Miller Act
      9. 7.9 Claims for Payment
      10. 7.10 Contract Changes
      11. 7.11 Bond Premiums
      12. 7.12 The Surety
      13. 7.13 Indemnity of Surety
      14. 7.14 Investigation by Surety
      15. 7.15 Rationale for Requiring Construction Bonds
      16. 7.16 Bonding Capacity of Contractors
      17. 7.17 The Surety Agent
      18. 7.18 Default by the Contractor
      19. 7.19 Contract Bonds and Type of Contract
      20. 7.20 Subcontract Bonds
      21. 7.21 Contract Bond Alternatives
      22. 7.22 Additional Surety Bonds
      23. 7.23 Summary and Conclusions
      24. Chapter 7 Review Questions
    10. Chapter 8: Construction Insurance
      1. 8.1 Introduction
      2. 8.2 Risk Management
      3. 8.3 Construction Risks
      4. 8.4 The Insurance Policy
      5. 8.5 Contract Requirements
      6. 8.6 Legal Requirements
      7. 8.7 Analysis of Insurable Risks
      8. 8.8 Construction Insurance Checklist
      9. 8.9 Project Property Insurance
      10. 8.10 Builder's Risk Insurance
      11. 8.11 All-Risk Builder's Risk Insurance
      12. 8.12 Named-Peril Builder's Risk Insurance
      13. 8.13 Builder's Risk Policy Premiums
      14. 8.14 Provision of Builder's Risk Insurance by the Owner
      15. 8.15 Subrogation
      16. 8.16 Termination of Builder's Risk Insurance
      17. 8.17 Contractor's Equipment Floater Policy
      18. 8.18 Property Insurance
      19. 8.19 Crime Insurance
      20. 8.20 Liability Insurance
      21. 8.21 Commercial General Liability Insurance
      22. 8.22 Bodily Injury and Property Damage Liability Insurance
      23. 8.23 Contractor's Protective Public and Property Damage Liability Insurance
      24. 8.24 Completed-Operations Liability Insurance
      25. 8.25 Contractual Liability Insurance
      26. 8.26 Third-Party Beneficiary Clauses
      27. 8.27 Personal Injury
      28. 8.28 Exclusions from Commercial General Liability Policy
      29. 8.29 Property Damage Liability Exclusions
      30. 8.30 Automobile Insurance
      31. 8.31 Professional Liability Insurance
      32. 8.32 Umbrella Excess Liability Insurance
      33. 8.33 Wrap-up Insurance
      34. 8.34 Owner's Liability Insurance
      35. 8.35 Subcontractors' Insurance
      36. 8.36 Group Insurance Plans
      37. 8.37 Employee Benefit Insurance
      38. 8.38 Certificates of Insurance
      39. 8.39 The Principles of Workers' Compensation
      40. 8.40 Workers' Compensation Laws
      41. 8.41 Administration of Workers' Compensation Laws
      42. 8.42 Workers' Compensation Benefits
      43. 8.43 Additional Provisions of Workers' Compensation Laws
      44. 8.44 Workers' Compensation Insurance
      45. 8.45 Workers' Compensation Insurance Rates
      46. 8.46 Workers' Compensation Deductible Plan
      47. 8.47 Workers' Compensation Self-Insurance
      48. 8.48 Employer's Liability Insurance
      49. 8.49 Nonoccupational Disability Insurance
      50. 8.50 Unemployment Insurance
      51. 8.51 Insurance Claims
      52. 8.52 Social Security
      53. 8.53 Summary and Conclusions
      54. Chapter 8 Review Questions
    11. Chapter 9: Business Methods
      1. 9.1 Introduction
      2. 9.2 Financial Records
      3. 9.3 Accounting Methods
      4. 9.4 Accounting for Long-Term Contracts
      5. 9.5 Percentage-of-Completion Method
      6. 9.6 Percentage-of-Completion Capitalized Cost Method
      7. 9.7 Completed-Contract Method
      8. 9.8 Financial Statements
      9. 9.9 The Income Statement
      10. 9.10 The Balance Sheet
      11. 9.11 Financial Ratios
      12. 9.12 Significance of Ratios
      13. 9.13 Construction Equipment Acquisition
      14. 9.14 Equipment Management
      15. 9.15 Equipment Depreciation
      16. 9.16 Straight-Line Depreciation
      17. 9.17 Accelerated Depreciation
      18. 9.18 Modified Accelerated Cost Recovery System (MACRS)
      19. 9.19 Procurement
      20. 9.20 Discounts by Vendors and Suppliers
      21. 9.21 Title of Purchases
      22. 9.22 A Contractor's Right to Check on Project Financing
      23. 9.23 Payment to the General Contractor
      24. 9.24 Payment Requests for Lump-Sum Contracts
      25. 9.25 Payment Requests for Unit-Price Contracts
      26. 9.26 Payment Requests for Cost-Plus Contracts
      27. 9.27 Final Payment
      28. 9.28 Payments to Subcontractors
      29. 9.29 Direct Payment
      30. 9.30 Backcharges
      31. 9.31 Payments to Material Suppliers
      32. 9.32 Cash Flow
      33. 9.33 Cash Forecasts
      34. 9.34 The Mechanic's Lien
      35. 9.35 Release of Lien
      36. 9.36 Assignment of Contracts
      37. 9.37 Marketing
      38. 9.38 Employee Motivation
      39. 9.39 Substance Abuse Programs
      40. 9.40 Job Site Crime
      41. 9.41 Employee Training Programs
      42. 9.42 Summary and Conclusions
      43. Chapter 9 Review Questions
    12. Chapter 10: Project Management and Administration
      1. 10.1 Introduction
      2. 10.2 Project Organization
      3. 10.3 The Project Manager
      4. 10.4 The Project Superintendent
      5. 10.5 Field Engineer
      6. 10.6 Owner Project Representative
      7. 10.7 Job Site Computers
      8. 10.8 Aspects of Project Management
      9. 10.9 Field Productivity
      10. 10.10 Project Administration
      11. 10.11 Project Meetings
      12. 10.12 Schedule of Owner Payments
      13. 10.13 Shop Drawings
      14. 10.14 Approval of the Shop Drawings
      15. 10.15 Quality Control
      16. 10.16 Total Quality Management
      17. 10.17 Materials Management
      18. 10.18 Expediting
      19. 10.19 Deliveries
      20. 10.20 Receiving
      21. 10.21 Inspection of Materials
      22. 10.22 Subcontractor Scheduling
      23. 10.23 Record Drawings
      24. 10.24 Disbursement Controls
      25. 10.25 Job Records
      26. 10.26 The Daily Job Log
      27. 10.27 Claims and Disputes
      28. 10.28 Claims in the Construction Industry
      29. 10.29 Alternative Dispute Resolution (ADR)
      30. 10.30 National Construction Dispute Resolution Committee (NCDRC)
      31. 10.31 Arbitration
      32. 10.32 Arbitration Procedure
      33. 10.33 Mediation
      34. 10.34 Mini-Trials
      35. 10.35 Dispute Review Boards
      36. 10.36 Neutral Evaluation
      37. 10.37 Settlement Conferences
      38. 10.38 Partnering
      39. 10.39 Lean Construction
      40. 10.40 Summary and Conclusions
      41. Chapter 10 Review Questions
    13. Chapter 11: Project Time Management
      1. 11.1 Introduction
      2. 11.2 The Critical Path Method
      3. 11.3 General Considerations
      4. 11.4 Project Planning
      5. 11.5 Precedence Notation
      6. 11.6 The Precedence Diagram
      7. 11.7 Example Problem 1
      8. 11.8 The Network Format
      9. 11.9 Project Scheduling
      10. 11.10 Activity Durations
      11. 11.11 Time Contingency
      12. 11.12 Example Problem 2
      13. 11.13 Network Computations
      14. 11.14 Early Activity Times
      15. 11.15 Project Duration
      16. 11.16 Late Activity Times
      17. 11.17 Total Float
      18. 11.18 The Critical Path
      19. 11.19 Free Float
      20. 11.20 Least-Cost Project Shortening
      21. 11.21 Time-Scaled Networks
      22. 11.22 Significance of Floats
      23. 11.23 The Early-Start Schedule
      24. 11.24 Bar Charts
      25. 11.25 Resource Scheduling
      26. 11.26 Progress Monitoring
      27. 11.27 Progress Analysis
      28. 11.28 Schedule Updating
      29. 11.29 Fast-Tracking
      30. 11.30 Computers and Time Management
      31. 11.31 Delay Claims
      32. 11.32 Summary and Conclusions
      33. Chapter 11 Review Questions
    14. Chapter 12: Project Cost Management
      1. 12.1 Introduction
      2. 12.2 Project Cost Control
      3. 12.3 Data for Estimating
      4. 12.4 Accounting Codes
      5. 12.5 Job Cost Accounts
      6. 12.6 Monthly Cost Reports
      7. 12.7 Project Overhead
      8. 12.8 Labor and Equipment Costs
      9. 12.9 Cost Accounting
      10. 12.10 Labor and Equipment Budget
      11. 12.11 Cost Accounting Reports
      12. 12.12 Labor Time Cards
      13. 12.13 Time Card Preparation
      14. 12.14 Measurement of Work Quantities
      15. 12.15 Forms of Labor Reports
      16. 12.16 Weekly Labor Cost Reports
      17. 12.17 Equipment Cost
      18. 12.18 Equipment Time Cards
      19. 12.19 Equipment Cost Reports
      20. 12.20 Other Equipment Charges to Projects
      21. 12.21 Cost Information and Field Supervisors
      22. 12.22 Cost Control
      23. 12.23 Information for Estimating
      24. 12.24 Computer Application
      25. 12.25 Summary and Conclusions
      26. Chapter 12 Review Questions
    15. Chapter 13: Labor Law
      1. 13.1 Introduction
      2. 13.2 History of Law of Labor Relations
      3. 13.3 The Norris-LaGuardia Act
      4. 13.4 The National Labor Relations Act
      5. 13.5 The Labor Management Relations Act
      6. 13.6 The Labor-Management Reporting and Disclosure Act
      7. 13.7 Coverage of the National Labor Relations Act
      8. 13.8 The National Labor Relations Board
      9. 13.9 Representation Elections
      10. 13.10 Employer Unfair Labor Practices
      11. 13.11 Union Unfair Labor Practices
      12. 13.12 Charges of Unfair Labor Practices
      13. 13.13 Remedies
      14. 13.14 Union-Shop Agreements
      15. 13.15 Prehire Agreements
      16. 13.16 Union Hiring Halls
      17. 13.17 Secondary Boycotts
      18. 13.18 Common Situs Picketing
      19. 13.19 Subcontractor Agreements
      20. 13.20 Prefabrication Clauses
      21. 13.21 Jurisdictional Disputes
      22. 13.22 NLRB Jurisdictional Settlement
      23. 13.23 Voluntary Jurisdictional Settlement Plans
      24. 13.24 Payments to Employee Representatives
      25. 13.25 Political Contributions
      26. 13.26 The Civil Rights Act of 1964
      27. 13.27 Executive Order 11246
      28. 13.28 The Age Discrimination in Employment Act
      29. 13.29 The Davis-Bacon Act
      30. 13.30 Davis-Bacon Administration
      31. 13.31 The Copeland Act
      32. 13.32 The Fair Labor Standards Act
      33. 13.33 The Contract Work Hours and Safety Standards Act
      34. 13.34 The Hobbs Act
      35. 13.35 Immigration Reform and Control Act
      36. 13.36 The National Apprenticeship Act
      37. 13.37 The Drug-Free Workplace Act
      38. 13.38 Family and Medical Leave Act
      39. 13.39 Americans with Disabilities Act (ADA)
      40. 13.40 ERISA
      41. 13.41 Summary and Conclusions
      42. Chapter 13 Review Questions
    16. Chapter 14: Labor Relations
      1. 14.1 The Construction Worker
      2. 14.2 Employment in the Construction Industry
      3. 14.3 Employee Benefits
      4. 14.4 The Union Contractor
      5. 14.5 The Role of the Unions
      6. 14.6 Union History
      7. 14.7 Construction Unions
      8. 14.8 The Local Union
      9. 14.9 Local Union Autonomy
      10. 14.10 Union Work Rules
      11. 14.11 The Business Agent
      12. 14.12 Collective Bargaining
      13. 14.13 Patterns of Bargaining
      14. 14.14 Withdrawal from Bargaining Unit
      15. 14.15 The Bargaining Process
      16. 14.16 Labor Agreements
      17. 14.17 Geographical Coverage of Agreements
      18. 14.18 Project Agreements
      19. 14.19 National Agreements
      20. 14.20 The Federal Mediation and Conciliation Service
      21. 14.21 Employer Lockouts
      22. 14.22 Wages and Hours
      23. 14.23 Administration of the Labor Contract
      24. 14.24 Damage Suits
      25. 14.25 Prejob Conferences
      26. 14.26 The Merit-Shop Contractor
      27. 14.27 Sources of Open-Shop Labor
      28. 14.28 Apprenticeship Programs
      29. 14.29 Nonapprenticeship Training Programs
      30. 14.30 Supervisory Training
      31. 14.31 Present Construction Industry Status
      32. 14.32 Dual-Shop Operation
      33. 14.33 Union Reaction to Open Shop
      34. 14.34 Summary and Conclusions
      35. Chapter 14 Review Questions
    17. Chapter 15: Project Safety
      1. 15.1 Introduction
      2. 15.2 The Cost of Construction Accidents
      3. 15.3 Safety Legislation
      4. 15.4 State Safety Codes
      5. 15.5 Federal Health and Safety Acts
      6. 15.6 The Occupational Safety and Health Act (OSHA)
      7. 15.7 Site Inspections by OSHA
      8. 15.8 Penalties under OSHA
      9. 15.9 OSHA Hazard Communication Standard
      10. 15.10 Multiemployer Work Sites
      11. 15.11 Contract Safety Requirements
      12. 15.12 Work Injury and Illness Recording
      13. 15.13 Work Injury and Illness Rates
      14. 15.14 OSHA and Industry Trade Associations, Construction Companies, and Individual Workers Are Making a Difference
      15. 15.15 Economic Benefits of Safety
      16. 15.16 Safety Services of Contractor Associations
      17. 15.17 The Role of Management in Safety
      18. 15.18 The Company Safety Program
      19. 15.19 The Project Safety Plan
      20. 15.20 Owners' Requirements Regarding Safety Policies and Plans
      21. 15.21 The Field Supervisor
      22. 15.22 Accident Records
      23. 15.23 Protection of the Public
      24. 15.24 The Cost of a Safety Program
      25. 15.25 Summary and Conclusions
      26. Chapter 15 Review Questions
    18. Appendix A: Instructions to Bidders
    19. Appendix B: AIA Document B101-2007 Standard Form of Agreement between Owner and Architect
    20. Appendix C: Construction Specification Institute MasterFormat 2014
    21. Appendix D: AIA Document A201-2007 General Conditions of the Contract for Construction
    22. Appendix E: Supplementary Conditions
    23. Appendix F: Sample Lump-Sum Proposal Form, with Reference to Addenda, and Alternates
    24. Appendix G: AIA Document A101-2007 Standard Form of Agreement between Owner and Contractor Where the Basis of Payment is a Stipulated Sum
    25. Appendix H: AIA Document A102-2007, Standard Form of Agreement between Owner and Contractor Where the Basis of Payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price
    26. Appendix I: AIA Document A310-2010 Bid Bond
    27. Appendix J: AIA Document A312-2010 Performance Bond
    28. Appendix K: AIA Document A312-2010 Payment Bond
    29. Appendix L: AGC Document 655 Standard Form of Agreement between Contractor and Subcontractor
    30. Appendix M: AIA A401-2007 Standard Form of Agreement between Contractor and Subcontractor
    31. Appendix N: Construction Industry Arbitration Rules and Mediation Procedures of the American Arbitration Association
    32. Appendix O: Typical Construction Company General Ledger Accounts
    33. Index
    34. End User License Agreement