DIF New York Construction LLC

Constructability Review [ Pre-construction bids review]

Based on studies conducted worldwide, dozens of articles which can be found in the internet and based on my professional career as a civil engineer and a project manager, I can determine with no hesitation that poor bid documents, is the major reason, for most of the construction projects failures worldwide.

The bids documents significantly influences on two major topics, of any construction project: Time and Budget and indirectly affects the quality of work, in the project.

In this article, we will explain, what is included in the bid documents, how this bid documents can significantly affect the three main measurements of any construction project Time, Budget and Quality.

And in the end how can we solve this problem in the service that we established which called Pre-Construction bid review.

1. What is the definition of the service called Pre-Construction Bid Review?

Pre-Construction Bid Review by engineers it means, the ability to audit any construction project in the bid stage, in order to improve them dramatically by finding contradiction between documents, uncompleted drawings, unprofessional contract, budget which doesn’t reflect the reality of the project, all these issues and others which usually caused later to budget overrun, time delays etc.

This service can be applied for various project`s methods including al the process of “Design Build” projects in which it is important to follow the various stages of the bid process, including examination of the initial bid material followed by examination of the various contractors' proposals and a comparison between them, both technically and financially.    

1. What is included in the bid documents?

The bid documents consist of the following documents:

The drawings- usually the architectural drawings the structural drawings, electrical , plumbing, HVAC[Heating, ventilation, and air conditioning] and when we are dealing with infrastructure project we have also site plans and landscape , these are the basic drawings we have many other professions and it change from projects to project.

The scope of work- document which should describe the work as much as possible, general provisions, the site, relationship between the different roles, liability, permits from the authority, what included in the project price and what is not and many other provisions.

Specifications –describe the essence of the materials and how the work should be done in details in the various construction professions

The contract- the contract between the client and the contractor is very important, as well to describe the assignments and obligations of the contractor, and should be clear and precise.

Bill of quantities or unit prices-there are some countries or places, which use a complete documents with all the amounts of materials and prices which determine together the project cost. In other places like in NYS, they have only few units prices in the scope of work which can be used if more jobs has to be done, then they have new prices ready for use in advance.

1. What are poor bid documents?

In NYC, there is a very bad method for construction, called Fast Track which invented to Save time seemingly for the project, but it is doing the contrary. In this method, the construction manager is issuing incomplete drawings for the site [they have percentage of the reediness of the drawings, 60% 70% etc.] this is an example for poor bid documents.

The project`s drawings have to be totally complete in the stage of the bid, In each of the various professions and not only this, they have to be coordinated one to each other. That means the HVAC contractor can`t hang a big unit in the ceiling, if there is not enough space and place above the architect drooping ceilings, if this issue will not be completely coordinate before the start of the project, it can be a disaster for the project.

This is because, it can be cause to a total reduction of the lowered ceiling, on the entire floor, or manufacturing of a new HVAC unit, or any other Improper improvisation, which will impair project quality.

Incomplete drawings means incomplete information, about the building, that means missing items, items which theirs quality don’t clear and don’t defined enough. Such as drywall which appear in the drawings but doesn’t defined what kind of drywall the architect wants. Later the architect would finishes to develop his drawings and can determine that the wall will be in a high quality, with double partitions on each side with plywood and insulation, much more expensive than a regular drywall, that the contractor priced in his proposal.

 This situation leads to many consequences: first, loss due to higher prices because the contractor is giving a new price after the contract signed, second this is an increase in the budget.

Moreover, any changes in the architectural drawings during the project, needs updates and changes in the other engineering drawings, which means more changes in the other systems and more change orders and more budget. For different type of partitions usually needed new type of electrical outlet etc. and more money for the consultants whom also invest extra time.

These changes during the project, always caused a lot of delays, by waiting for a new plans from the engineers. New materials, which sometimes have longer leading time and sometimes when the whole process didn’t coordinate enough, all the project is waiting for the new drawings which cause for a crucial time lose, this is also cost money.

In the system that we found here in NYC, most of the CM getting money for the hours their team invest in the project as long as the project continue, therefore there is a direct link between any delays in the projects, to financial losses for the client.

The project`s scope of work

When issuing a bid with incomplete drawings, it means you have also incomplete scope of work, because “the work” described, first of all in the drawings and If the plans are of a low level, the scope of work, can`t be complete as well. For example, if there is no decision yet, what kind of marble, will be performed in the new fancy bath, the architect will not issue a plan for it and this will not appear fully, in the scope of work. However, after the architect will issue the new plan with the special marble, which can be found only in Italy, in a specific mountain, it is a very big problem, because this mission demand a trip to Italy, for few professionals with a big cost and time consuming.

It can be a situation that the drawings are excellent, but still the scope of work can be written negligently. These findings are our day to day work, when we checks projects and we are doing generally, a construction internal audit and specifically, when we do the service, pre-construction bid review.

Specifications

 The specification can not be completed, if the drawings are incomplete. it is not unusual, that the specification are in contrary, or not similar to the drawings. This usually happen because the consultants unfortunately doing “copy” “past” from other projects, and forget that they changed the materials and other differences and changes they have.

It becomes a mess when there are differences in the same provisions and instructions about the same topics, between the drawings, scope of work, specifications and the contract.

This mess, is solved by our bid review, which we do by our professional engineers, with years of experience.

In our time, especially in NYC construction industry, we notice that there is a lack of real professionals, mostly in the big Construction Management companies.

Traditionally this was and should be their job, to check the bids to find these contradictions and to improve the quality of the drawings and the other documents.

However, the fact is that usually they don’t have civil engineers in their team, which involved full time in the projects even if they receive millions of dollars for every project.

Instead of engineers, they are hiring people, with a low construction education, like financial, marketing, or people with education of two years, in construction management study.

This type of education is not sufficient for being in charge on big construction project.

This is not enough even for 3 million dollar project, however we can’t tell why but this industry accept this abnormal situation.

Something that sound very clear and simple, for any ordinary person outside the industry, that engineers have to manage construction projects, doesn’t  implemented in theory, in the prestigious construction market, in New York.

This is a fact, as evidence, we can see the amount of projects, with budget deviations and gaps in the schedules.

For that reason, our construction internal audit, more important, to solve a crucial issues which don’t be treated, by a team that don’t have real qualification.

.Contract review

The contract doesn’t depend on how complete is the drawings and usually doesn’t depend on the rest of the documents, however, it is very important to check, that the other documents in the project, such as the scope of work, do not contradict the contract. Contradiction between the contract and other documents, usually used by the contractors, to get more money, sometimes they have justifications for an extra payments and sometimes they don’t.

In both cases, it doesn’t matter, if claims arising out from those contradictions, justified or not, the budget increase, as a result of those mistakes.

Contradiction between the documents

Poor bid documents are not only incomplete documents; they are also contradiction and discrepancy between them.

Contradictions and discrepancy means, for example,  that the air condition ducts, can not pass above the drop ceilings, ignoring the fact, that in their track, they are facing a big beam which blocks their passage.

These kinds of issues also cause delays, design changes, budget overruns and damage to project quality, since sometimes, the contractor has to dismantle, or even break structures in the projects, what is cause to decrease in the product quality.

1. The project quality

Poor bid documents effect also indirectly or even directly, on the project quality.

How can poor bid documents can cause damage, to the project quality?

Changing in the drawings during the project, can cause not once to disentail of walls and systems, or even breaking elements, when breaking and disentail occurred, it is not unusual that it can make a long term damage for the structure.

1. Summarize

The result of poor bid documents makes damage to the project components: budget time and quality.

As already explained, incomplete drawings and documents leads to crucial budget overrun, delays in the schedule and huge losses to the owner of the project, who can be a private owner or developer, or governmental and any other authority.

A specific very professional pre construction bids review, can fix so many problems that it is hard to explain why it is still taking so long to establish this service in all the projects.

The money and time that this service is saving to most of the projects usually estimated between 10%-20% from the project value and this is not a sales trick.

Therefore a fee between 0.3%-0.6% of the project value for this service, Is a "cancel out" fee for the client.

1. The cake phrase

To each of the readers who isn’t a construction professional, we can compare bid documrnts to a preparation of a cake.

Incomplete drawings – means we forgot to put inside two eggs

Incomplete specifications- means that maybe one items which the cream consist of it, is not in the right amount or by wrong from different material.

Incomplete scope of work- means that we didn’t describe in what baking dish to bake the cake and how many degrees the oven should be heated.

Bad contract means- that the owner of the bakery, agreed that his cook would take a week off every month, which means the business is not selling cakes in this week or selling not fresh cakes.

Contradictions between documents - means that in the drawings we can see all the cake layers and we can notice that there is a layer of cream made from strawberries, however the specifications describes a chocolate cream.

Construction internal audit, or construction internal control, is the ability to take a specific construction project, check it in various stages and then to take effective measures to improve it .This is done by various types of services which can include a full comprehensive control of the entire project process, from the early beginning of the design through to its completion. This type of service is usually performed for auditors of cities or for auditors of very big projects.

Pre-construction bids review service solves the problem of unprofessional bid documents.

Reviewing the Contractor’s Application for Payment through a “Construction requisitions review” helps the client save money due to our findings of unjustified payments.

Quality reviews check and help  to improve the project’s  performance in  manycases where the contractor executing the project is not completing it to the highest quality standards.

Construction internal audit, or construction internal control, is the ability to take a specific construction project, check it in various stages and then to take effective measures to improve it .This is done by various types of services which can include a full comprehensive control of the entire project process, from the early beginning of the design through to its completion. This type of service is usually performed for auditors of cities or for auditors of very big projects.

Pre-construction bids review service solves the problem of unprofessional bid documents.

Reviewing the Contractor’s Application for Payment through a “Construction requisitions review” helps the client save money due to our findings of unjustified payments.

Quality reviews check and help  to improve the project’s  performance in  many cases where the contractor executing the project is not completing it to the highest quality standards.

A change order is extension to the work that wasn’t originally planned.

The bid documents that include the scope of work, specifications, agreement, and the drawings should completely describe the whole content of the work.

If the bid documents are not full and comprehensive, the project reaches a situation where not all the work is done, therefore need to issue a new change order.

We review change orders and have a great knowledge how to prevent them in advance and in case that they are a fact we know how to reduce the amount of unjustified change orders that many contractors issue with no real justification.

Pre construction bid’s review – service for contractors

We can provide contractors with a full report that indicates all the “holes” in the bids documents, which serves the contractors in two ways:

First, when they submit the bid, they will know in advance all the future reasonable change orders.

Second, if they win the bid, they will be prepared with full knowledge about the potential change orders that they can claim from the owner.

The change orders will be decent and justified, and they will be submitted in a professional way.

Therefore the contractors will look professional and honest and upright, because the CO’s will be fully documented and prepared by professionals.

The contractor who claims his change orders in the beginning of the project also saves both the client and  himself from many problems later, and saves time for both his client and for himself, and prevents delays in projects, because all the necessary updates in the project’s drawings and documents will be done at the beginning of the project, without pressure.

Both parties will benefit from that.

We have experience with more than 300 projects, valued in billions of dollars, which we submitted for our clients, who typically were governmental entities that wanted to improve their bids documents [drawings, specifications, contracts, scope of work] and thereby prevent future change orders.

 What we can do for contractors? - we can offer for them the same service for theirs benefit.

To summarize our mission is to fix the construction market from both sides and to lead it for a new era

Professionalism instead of shouting

Order instead of Chaos

Harmony instead of arguments

Based on our knowledge and experience we can accompanying any owner as his representative to manage the project for him and to use all our other services to accomplish a successful project that finished on budget and on time.

Construction Internal Audit-explanations

1. What is Construction Internal Audit?

Construction internal audit or construction internal control, is the ability to take a specific construction project, check it in various stages and then to take effective measures to improve him.This is done by various types of services which depends on the client`s wish and the specific project.

The service can include a full comprehensive control of the whole project process, from the early beginning of the design, until the completion. This type of service usually performed for city`s auditors or for auditors of very big organizations who want to study where were the failures, in order to improve their organization`s conduct for the future.

Pre-construction bids review service, which solve the phenomena of unprofessional bids documents.

Reviewing the Contractor’s Application for Payment- “Construction requisitions review” which helps the client to save money, due to our findings of unjustified payments for contractors.

Checking and help to improve the project quality of performance, in a lot of cases where the contractor executing the project, in a low performance quality.

1. Market failure- the construction internal audit is being done by accountants, not engineers.

The market failure in this topic is the fact that most of the construction internal audit is performed by accountants firms.

Why this happened? It happened because internal audit usually refers to the audit of the accounting aspects of companies. Those aspects are required to conduct an internal control to their operations.

Therefore created an absurd situation in which big construction projects monitored by accountant firms which, concentrate on few unimportant accounting aspects instead of dealing with the huge delay in the project, budget overruns, unjustified payments for the contractors, and bad contracts etc.

In the best case scenario the accountant firm takes an engineer as a subcontractor to help them. Again, this engineer is not qualified to do that, because in order to do a real engineering audit you have to be specialized in a profession called construction internal audit or construction engineering internal audit and control.

We were very surprised to see that in a big bid that we participated in monitoring six billion dollars construction project for Columbia University, we found ourselves facing accountant firms and compliance firms.

It is true that there were other services which dealt with the effect of the project on the environment or connections with the community. However instead of taking engineering firm to monitor or check a six billion construction project, they took an accountant firm to do the construction internal audit, to check schedules, the project budget which consist of thousands of jobs, to follow about the permits, quality etc.

This is ridicules, it is like taking accountants firms to monitor the work in hospitals instead of to take physicians to do that, thus this absurd reality has to change.

1.  Our new services and how we managed to institutionalize them in the State of Israel

Everyone who deals with construction knows that every project is examined with three measurements time, budget and quality.

Most of the projects always failed in two of them, to meet the deadlines and the budget.

Quality is another question but we will not refer to as for now.

Ten years ago when we decided to begin improving this market, we decided to concentrate on two main issues that influence the budget and schedule the most.

These two factors are: Poor Bid Documents & Unjustified Payments for Contractors.

Both two factors also influence and depend on one another.

1. Pre-construction bids review service, which solve the Poor Bid Documents phenomena

From the beginning of my career, I felt that the main reason for the delays and budget overrun on construction projects was  poor bid documents.[for more explanation see pre-construction bid review article in our website]This means incomplete drawings, scope of work , specifications, contracts, bill of quantities and contradictions between these documents.

I realized from the beginning of my professional career that insufficient bid documents leads for most of the project diseases, such as delays, change orders, arguments and budget overruns.

With this insight in mind, we decided to establish a totally new and focused market to improve this problem. We generally called our services, construction internal audit or construction internal control and specifically to the bid’s improving process, we called “Bid Review”, or “Pre-construction bid review”.

With this new service, we went for various governmental offices and cities and after a long process, we convinced them to officially establish the service pre-construction bids review and to begin checking the bids documents, before they are releasing them to contractors for proposals.

This service went so well, that it actually became popular as the years went by all throughout Israel and we became the founders of this service, the leading company in this service.

Few years later I found a research of the ministry of housing and building with the “Technion Haifa –Israeli Institute of Technology” which indicates with no hesitation, that the main factor in construction project failure, is poor bids documents.

During the last ten years, we controlled and monitored the bids for around 300 projects and succeeded to officially establish, the construction internal audit by engineers and specifically the service of checking bid documents.

1. Reviewing the Contractor’s Application for Payment- “Construction requisitions review”

Our second main service, just as important is to review for the owner the requisitions for payments which the Construction Manager or the General contractor submitted for the owner/client confirmation.

We called this service Construction requisitions review or construction payment audit.

After hundreds of projects that we checked as third party review, we know how many mistakes and unjustified payments we can reveal.

When we came to United States, we were not sure what we can find here, however after few big projects which we already checked, we noticed that the issue here related to over payments to contractors is overwhelming.[see more in a detailed description of the service Construction requisitions review in our website] there are a lot of mistakes and unnecessary payments for contractors which are a part of the reasons why the projects exceed the budget.

In the good construction market we currently have sometimes the owner doesn’t understand this waste of money, however in bad times this unnecessary loss of money, can be all his profits!

1. The consequences of poor bid documents and unprofessional check, of the payments for contractors.

As mentioned above, there is a huge influence of both services on the projects

The poor bid documents and confirmation of the contractor’s requisitions.

The payments topic is easy to understand, if someone is not checking well or negligently the contractor’s invoices/requisitions/payments, he will pay much more than needed.

But you have to be very experienced, very professional and most importantly have a lot of confidence in yourself to check payment as third party review and determine and find the mistakes.

This self-confident you can acquire, if you have the luck to check many projects.

The second-topic poor bid documents, is harder to understand and it is explained in the case study about pre-construction bids review in our website.

Both of these services which can be done by professionals, can really save projects from failure! This is not an exaggeration, but a reality that is reflected in hundreds of projects that we have dealt with and save dozens millions dollars.