CM 520
Construction Procurement Systems

Course Introduction

Welcome

Welcome to Construction Management 520. This is a required course for the Certificate Program in Heavy Construction Project Management and for the online learning Master of Science in Construction Management or Master of Science in Civil and Environmental Engineering program. Course material covers the different types of contracts and delivery methods used in the construction industry. You will have ten weeks in which to complete all course requirements.

Is this Course for You?

You should possess an undergraduate degree in either construction management or civil and environmental engineering before seeking enrollment in this course. It is assumed you are familiar with the construction industry and the roles of the project owner, designer, and general contractor. This course is not about writing contracts. Crafting contract language requires legal expertise, which is beyond the scope of this course. The purpose of this course is to provide the skills and knowledge needed to be able to prepare an acquisition plan for the procurement of a construction project.

Course Requirements

Required Text

Collier, Keith. Construction Contracts, 3^rd edition, Prentice Hall, 2001. ISBN 0137559275.

Technology Requirements and Skills

See the Online Student Handbook for the technology requirements and skills necessary for this course.

Overview

This course is a study of the different types of contracts and delivery methods used for the procurement of construction projects. Procurement means the selection of the designer and builder for a specific construction project. It involves:

• inviting prospective firms to participate;
• evaluating the information they provide in response to the invitation; and
• awarding contracts to the selected firms.

Since selection of the project delivery method and contract type are made by the project owner, the perspective for most of the course is that of the owner. The contractor's choice is whether or not to pursue a project based on the risks involved, the need for additional work, and the likelihood of making a profit on the project. Lesson Seven, however, addresses general contractor procurement decisions regarding subcontractors and suppliers.

Objectives

When you have completed this course, you will be able to:

• describe the basic organization of design and construction contracts, and the topics addressed in each primary contract document;
• explain the major issues to be considered in developing design and preconstruction services contracts, and prepare scopes of work for them;
• distinguish between alternative pricing techniques used in construction contracts, including the allocation of risk in each technique, and the project attributes that should be considered when selecting the method of pricing;
• distinguish between alternative project delivery methods, including the advantages and disadvantages of each method, and appropriate contract pricing techniques for each;
• describe the basic organization of subcontracts and supply contracts, and outline the major decisions to be made when developing such contracts;
• explain the contract procurement process and the basic decisions to be made in procurement planning; and
• prepare an acquisition plan for the procurement of a construction project.

Elements of the Course

Lessons

The course is organized into eight online lessons to be completed in the ten weeks allocated. The time allocated for each lesson is Monday through Sunday. Two of the lessons cover two weeks, and the remaining six only one week. See below for Lesson Topics.

Reading

The reading assignments provide a general discussion of major teaching points of each lesson. You should read the online lesson narrative first, and then read the referenced sections of the textbook. After completing the reading assignments, you should answer the discussion forum questions.

Study Questions

Study questions appear in a sidebar box at the end of each lesson. These ungraded questions are for your personal review of the material presented in that lesson. Use them to make sure you understand and can apply key concepts. If you find you cannot answer a question to your satisfaction, review the related reading and lesson parts, or contact your instructor for clarification.

Discussion Forum

An online discussion forum will be conducted each week to discuss questions posed in the assignment for each lesson, and to address any of your questions. Each of you is expected to provide a written response, or posting, to each of the questions posed in the assignment by the due date listed on the course schedule.

Once all student responses are posted, each of you is expected to review the responses of all others, and then post a discussion of at least one other student's response by the due date listed on the course schedule.

It is assumed many of you will use the weekend to prepare your case studies. The reasons for requiring participation in the discussion forum during the week are to motivate you to:

• review the online lesson, and do the required reading before the weekend;
• think about the issues addressed in each assigned reading; and
• ask any questions while your instructor is available. The instructor may not be available during the weekend.

Case Studies

Each lesson includes a case study. These case studies contain a scenario used to provide a context for applying the major teaching points of that lesson. There may be multiple acceptable answers to individual case study questions. The answers to some case study questions may not be found in the specific reading material for the individual lesson. You are expected to apply your basic knowledge of the construction industry when responding to case study questions.

Project

Each of you is required to identify a construction project to review as your own case study. The project selected should be one that is completed. You are required to submit a one-page description of the project that describes:

• the project;
• the procurement method used in executing the project; and
• why you selected the project for analysis.

The written report should not exceed twelve pages in length. It must contain as a minimum:

• a description of the project;
• an analysis of the procurement method used, and the rationale for selecting that method;
• an analysis of problems encountered in executing the project;
• your recommendations regarding the type of procurement method to be used in the future on similar projects; and
• a description of what you learned as a result of analyzing the project.

Final Examination

The final examination contains a set of scenarios with questions similar to those asked in the discussion forums and case studies in the course. You will be expected to write short answers to each question directly in the examination booklet. No materials, textbook, or notes may be used during the final examination. You will be allowed two hours in which to complete the examination and return it to the proctor. The proctor will then mail the examination to the instructor for grading.

Consult the "Examinations" section of the Online Student Handbook for information on the process of selecting a proctor and scheduling an exam.

Lesson Topics

Lesson One: Introduction and Construction Contracts

This lesson examines the organization of construction contract documents, focusing on the agreement and general and special conditions

Lesson Two: Design, Preconstruction Services, and Time-and-Materials Contracts

This lesson examines design and preconstruction services contracts, determining appropriate pricing strategies, and preparing scopes of work. It also discusses time-and-materials contracts that may be used for consultant services.

Lesson Three: Lump-Sum and Unit-Price Contracts

This lesson examines lump-sum and unit-price contracts. It addresses risk allocation in each method of contract pricing and project characteristics to consider when selecting which of the pricing methods to use.

Lesson Four: Cost-Plus Contracts

This lesson examines cost-plus contracts, including alternate techniques for structuring the contractor’s fee. It addresses risk allocation in these contracts, and project characteristics to consider when deciding to use a cost-plus contract. It also discusses cost control techniques for managing cost-plus contracts.

Lesson Five: Construction Management Contracts

This lesson examines the construction management project delivery method, including both agency construction manager and construction manager-at-risk. It also discusses the procurement process and the advantages and disadvantages of each method.

Lesson Six: Design-Build Contracts

This lesson examines the design-build project delivery method, and alternative methods for awarding design-build contracts. It also discusses the advantages and disadvantages of the delivery method, and project attributes that make a project suitable for design-build procurement

Lesson Seven: Subcontracts and Supply Contracts

This lesson examines subcontracts and supply contracts used by general contractors. It also discusses the preparation of scopes of work and methods for awarding these contracts.

Lesson Eight: Procurement Strategies and Contract Formation

This lesson examines both the bid and the negotiated processes for awarding contracts. It applies the concepts learned in previous lessons in the preparation of an acquisition plan for a project and discusses the major issues to be considered in preparing contract documents.

Lesson Nine: Exam Preparation Lesson

This lesson discusses the content and format of the final examination, presents some study tips, and reviews procedures for proctoring the test.

Assessment

Information on submitting assignments and grading.

Study Tips

• The reading assignments provide a general discussion of major teaching points of each lesson. You should read the online lesson narrative first, and then read the referenced sections of the textbook.
• After completing the reading assignments, you should answer the discussion forum questions. You may not find specific answers to all questions in the reading assignments. Many of the questions require you to apply the concepts discussed in the reading assignments to hypothetical construction applications. objective is to understand the major concepts and be able to apply them in realistic scenarios.
• After completing the discussion forum questions and reviewing answers from other students and the instructor's responses, you should answer the case study questions. These case studies require you to apply the concepts learned in the lesson in the context of the situation described in each case study. Often, there is more than one correct answer to some of the case study questions, but your choice may be limited based on your answers to preceding questions in the case study.
• The text contains an excellent glossary of terms used in this course. You should refer to this glossary if you do not understand the meaning of the contracting terms we will use.

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