The major steps in the construction contracting process include bid solicitation, bit preparation, bid submission, contract award, and contract administration. Before the bidding process can take place, the developers of the project must assess the requirements and feasibility of the project and have the plans approved and other necessary documents prepared so the contractors can proceed without delay. These activities constitute the project development phase of construction. For major projects development process includes the following steps:
- Gauging the demand or need for the project.
- Determining the technical feasibility of the project.
- Ascertaining the financial profitability if the investment
- Preparing detailed plans, specifications, cost estimate for the project.
- Obtaining approval from regulatory agencies, compliance with zoning regulations, adherence to building codes, and environmental and other regulations.
The smaller projects some of the above mentioned steps may be avoided, or established on a very informal basis. However, for large projects it might take years of tedious paperwork to get approval from municipal regulatory agencies.
How Construction is accomplished
- Developer utilizing in-house team
- Owner management of construction project
- Construction by hired general contractor
- Construction using a design build firm
- Utilizing a construction management approach.
Many large organizations or developers, as well as governmental agencies employ in-house construction divisions. Most of the time these forces are utilized to merely perform repairs, maintenance work for already existing projects, and often do not possess the manpower to undertake new construction projects. New ground up construction is more frequently carried out by hired contractors, which are managed by the in-house construction team. These hired contractors subsequently employ specialty contractors to complete smaller more specialized scopes of the projects such as electrical, plumbing or millwork.
This type of Construction by general contractor operating under a prime contract is probably the most common method of having a facility constructed. However there are other newer methods being employed for new ground-up projects. The first of these is design/build method or turnkey. Under this construction concept an owner retains a firm to both design the project and build the facility meeting all the specifications, hence at the end of the project the owner gets handed the keys to a completely functional facility. Such contracts are usually offered by firms that specialize in a particular type of construction and possess a standard design that they can slightly alter to meet the requirements of a particular client. Since the same organization is both designing and buildings the projects, coordination problems can be reduced and construction can commence before the final design is approved. This mitigates the risk of future delays which might cause unexpected expenses for the client.
Another less common form of construction management contract is known as Guaranteed Maximum price. Under this arrangement the construction firm guarantees that the project cost will not exceed a specific amount therefore reducing the future risk of the developer for unexpected budgetary changes. Under this procedure, most of the construction risk is transferred on to the contractor who is bound by the agreement to complete the project within given budget constraints. The construction contract in this instance is normally held by the construction management firm in charge of the projects in order to have the ability for meticulous control of specialty contractor expenses which will affect the total budget of the project.