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The Design-Bid-Build method of construction is a traditional approach where the project Owner selects an Architect/Engineer to accurately describe the project, including all requirements in plans, specifications, and bid documents. The Contractor is then chosen by hard bid, select bid or a negotiated percentage fee basis.
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a. Hard Bid
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The project Owner advertises for bidders and accepts the bid from the lowest qualified bidder.
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b. Select Bid
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The project Owner, often based on the Architects/Engineers' recommendations, selects a group of subcontractors to bid on the project. The lowest qualified bid is usually accepted.
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c. Negotiated
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The project Owner negotiates with the Contractor based on a percentage fee basis.
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Below is a Comparison Chart that Defines the Contractual Relationship
Between the Competitive Bid and Negotiated Contract
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Competitive Bidding
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Negotiated Contract
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1.
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Potentially more risk for Owner
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1.
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Potentially less risk for Owner
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2.
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More risk for Contractor
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2.
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Less risk for Contractor
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3.
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Sets up a TRIANGULATED relationship among Contractor, Architect/Engineer, and Owner
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3.
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Sets up a TEAM relationship among Contractor, Architect/engineer, and Owner
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4.
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Contractor must select lowest cost bids to receive contract
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4.
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Contractor can work with owner to emphasize quality and service
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5.
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Changes in the work are made for any inconsistency or omission to the plans
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5.
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Changes in the work are generally made in plan development
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6.
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No contractor involvement during planning stage
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6.
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Heavy involvement of contractor during planning stage
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7.
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Price and schedule are the deciding factors
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7.
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Decision based on experience, quality, reliability, on-time completion schedule, creativity, customer service, and price are factors
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8.
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Makes the assumption that the quality will be the same no matter who works on the project. Contractor has no choice but to select the low bid subcontractor or risk not getting the job.
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8.
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Choose subcontractors on the basis of work and track record
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