Construction Information Technology Blog

What makes construction procurement different?

Posted by Dave Robertson on Jun 17, 2013 8:20:00 AM

If you are looking to buy a computer, a chair, or a car you can typically see it, touch and try it before you make the decision to part with some of your hard earned money and make the purchase. That is one of the key factors making purchasing construction so different. The purchaser has a vision and a plan for a built asset and needs to find an efficient way to buy a complex custom fabricated piece of work that doesn’t exist yet.

The next significant difference when buying construction is the many varied contractual methods to work through including; stipulated or lump sum pricing, unit price contract, design build, construction management, construction management at risk, design-build-operate contracts and many other possible contractual variations. And of course, once you begin to look at contracts it is very important to understand the legal environment related to the various contract provisions. For example: Does the entity purchasing the constructed asset have a duty to treat all the bidders equally? Can the entity have a preferred constructor but get pricing from others to ‘keep the preferred constructor honest’?

traditional construciton procurementThe common requirement for bid security is another key factor distinguishing construction purchasing. The requirement for submitting bid bonds or other bid security is primarily a construction related activity. Like everything else in this complicated process it has to be done on time and be done right as large sums of money are at stake.

Now, just to add a little excitement to the process, add in the fact that in most construction projects there are a multitude of consultants, contractors, subcontractors and suppliers all bound together through a web of bid submissions and the resulting contracts. In many cases the entire pricing/bidding process occurs in a time restricted environment that adds just a bit more pressure to the entire procurement.

Today the vast majority of this activity happens in the traditional, error prone paper based submission process. However, there is change in the wind. Online technologies offer impressive new tools that bring enormous value and efficiency to this entire process. The inherent risks of errors and omissions are significantly reduced or in many cases eliminated. It is only a matter of time until this ‘new way’ of managing the bid submission process becomes the standard. 

construction procurement2

Topics: Construction documents, Risk management, Construction bidding, Construction industry

Is Construction ready for electronic procurement?

Posted by Dave Robertson on Dec 21, 2012 7:00:00 AM

That was the key question posed to a group of industry experts participating in a panel discussion at the Construct Canada conference on November 29th, 2012.

Gordon Stratford, director of design for HOK, a global design, architecture, engineering and planning firm said, “We should just get over it and get into electronic procurement and do it well because it has the capabilities, if done well, to have a lot more checks and balances than the manual way does.

Stephen Bauld, President of Purchasing Consultants International stated that true e-procurement, picking up and submitting the document electronically, is going to be a game changer and has the ability to remove geographic barriers.

Regular readers of this blog will know that we are strong advocates for the use of electronic procurement systems to streamline and remove risks from the bidding process. To read complete coverage of the panel discussion and see a video prepared by the Daily Commercial News on the event follow this link.

eprocurement construction

Topics: Construction documents, Electronic document management, Construction industry

Construction Bidding Court Case #5 – Alternate Prices

Posted by Dave Robertson on May 24, 2012 9:45:00 AM

Learn how PlanSource could help construction professionals to significantly reduce the risk of costly delays or claims arising from errors or omission from real court cases.

The traditional bidding process for construction projects involves a considerable amount of paperwork and information being shared between owners, contractors, and sub-contractors. Typically, bid documents and various addenda are issued during the bidding process before the bid closing date. Instructions provided in these documents are specific and require each bidder to comply implicitly or their bid submission will be rejected as non-compliant.

At times however, the issuance and distribution of addenda can cause uncertainty or misunderstanding among bidders as to the proper procedure or requirement for completion of the bid form. The following court case illustrates how such uncertainty created by a poorly issued addendum caused the bidders to be non-compliant with the language governing the submission of the bid:

  • The Instructions to Bidders required submission of complete package in sealed envelope.

  • The project was for the construction of an apartment building

  • Bid documents were distributed to the bidders and then various and numerous addenda were issued for both general and mechanical items.

  • The instructions to bidders contained the following instructions:
    • “Base Bids on strict compliance with Drawings and Specifications and include all costs for the project.”
    • “Without limiting the generality of the foregoing, any Bid may be rejected for being incomplete including completion of the Appendices, …, having alternative or separate prices omitted …, failure to use specified materials or systems or installers or installation methods, … or any other non-conforming, non-responsive and conditional Bids.”

  • 4 days before bid close two new addenda were issued:
    • The first addendum asked to: “Provide alternate pricing for Metal fence that is shown and detailed on the drawings listed above. … List original fence design price in the Itemized Prices section and list the alternative in the Alternative Prices section”
    • Mechanical Addendum #1 changed the sanitary risers schematic drawing. In that changed drawing, a note provided:
      • BASE BID: INCLUDE UTILITY ROOM FLOOR DRAINS
      • ALTERNATE BID: DELETE UTILITY ROOM FLOOR DRAINS

  • The problem with the issued addenda is that they did not include changes in the Alternative Prices section of the bid form for the bidders to enter the information required by the addenda for either fence or drains.

  • non compliant bidsContractor 1 having not received any bids for  the requested alternates wrote “TBA” for prices.

  • Contractor 2 did not provide alternate prices either and eventually it was awarded the contract.

  • Contractor 1 sued the Owner for awarding to a non-compliant bidder.  The Court agreed that the fact that the bid form was not amended to allow for the requested alternate prices did not change the requirement of the bidder to respond to the request and the Owner did award to a non-compliant bidder.  However, since Contractor 1’s bid was also non-compliant for failing to include the requested alternate prices there was no legal remedy.


In this illustration the Owner created the setting for the bidders to fail by not including an area in the bid from to provide their alternate prices.  This caused a conflict with the bid form and the instructions and both bidders failed to comply with the requirements of the instructions.

Today’s solution:

Using the PlanSource Online Bidding module, the Owner is able to enforce the Alternative Price requirement and bidders would not be able to submit their bids until they responded as directed.  This eliminates the ability to submit a non-compliant bid and avoids the costly and time consuming court action that resulted in this example.
 

Click here to learn more about the PlanSource online bidding module.

Our thanks to Mike Demers, Partner with the Vancouver, British Columbia, Canada law firm of Jenkins Marzban Logan for providing the synopsis of this court decision. Mike’s practice at JML is focused on construction related matters. This includes advising clients on tendering, construction contract drafting, dealing with on-going project disputes, builder’s liens and, finally, the resolution of claims through trial, mediation or arbitration proceedings. Mike also provides advice on non-union employment matters for both employers and employees and general corporate and commercial litigation services.

Topics: Construction documents, Risk management, Construction bidding, Court cases

P3 Datarooms and the Internet

Posted by Dave Robertson on Oct 14, 2011 8:00:00 AM

There is an increasing trend in North America towards the Private Public Partnership (P3) model for the construction of public infrastructure. Typically the processes used to select the successful proponent include Requests for Expressions of Interest, Requests for Qualifications and Requests for Proposals, all followed by some sort of evaluation and selection process. The projects themselves typically tend to be large ones as they need to meet the market test of being “interesting” enough financially to be worth the significant risk and expense of participating in the selection process.

The organizations that compete for these opportunities are usually joint ventures of companies who do finance, design, construction and operation of the asset or facility. The consequence is that these are highly collaborative efforts requiring large teams of people to access and work with large amounts of data and documentation. That is where the Dataroom comes in. In order to provide all the proponents with equal access to the large volume of background documentation necessary to the process, Owners need to assemble it in a central location that is secure yet still accessible by those involved in the response.

dataroomsWe have been fortunate enough to have been involved in a large number of these types of projects and have been able to identify a few critical requirements for datarooms. They have to be absolutely secure with controlled access. They need to be easily accessible with minimal administration, which rules out many network dependant options. They require an easily reviewed audit trail that can quickly demonstrate exactly who saw what and when. Finally, they need to be able to support virtually any type of file format to make sure everything necessary is shared. Given these criteria, a web accessible document control system that meets these critical requirements is an obvious solution.

 

 

Topics: Construction documents, Online prequalification, Online planroom

Top 5 reasons Construction lags other industries in using the internet

Posted by Dave Robertson on Feb 17, 2011 8:12:00 AM

Massive amounts of commerce and business activities have moved online. Everything from banking and insurance to purchasing materials and services can be conveniently accessed over the internet. People and the companies they work for are reaping huge efficiencies from creating new and better ways to access information and services. Generally, the construction industry has lagged others in making use of this tremendous resource. So what are some of the commonly stated reasons for this resistance to going online?

1.     If it is on the internet I have lost control of my information

online controlControlling access to project information and documents is essential. If they are simply placed on an open website or an uncontrolled FTP site then the perception is true and there is little control. The reality is that the document control technology available to the industry today far surpasses the control of the traditional paper based process of managing and distributing project information. Permission based access, detailed access reports, access receipts and other available features actually provide the content owner greater control of their information than is possible from virtually any other access option. Using the right internet based systems actually gives greater control of your information.

 

2.     Fear of changing long established practices that have proven to work

construction online system reduce riskThe Architectural, Engineering and Contractor communities have established common tools and techniques for tracking and managing documents and information. Transmittals, waybills, logs and other records have become the established means to track and control who had access, what they had access to and when it happened. All of this is critical information in the event of a claim for extra costs or delays in a project. Some people are concerned about the risk of changing the system and creating gaps in the process that will cause problems. In reality, using the right online systems actually automates all of this activity with no possibility of gaps or errors in the records.  The result is a better process that actually reduces administration and more importantly reduces the risk of errors or omissions that could lead to problems or claims.

 

3.     The perception that the industry “isn’t ready” for digital documents

online technologyThis is the weakest of the five reasons we have identified. It is quite simply no longer true. There are very few companies that are seriously in business that are not connected to the internet. Email is pervasive. Google searches for business related information is so commonplace that google has become a verb. It may be true that there are still people who are not comfortable going online, not unlike those who still insist on seeing a teller at the local bank. However when given no option other than online access they quickly figure out how to do it and they never look back to the old way because the benefits to them are so powerful.

 

4.     The perception that working with a large drawing cannot be done effectively online

easy online takeoff toolsThis is an understandable but incorrect perception. It relates more to a resistance to change than anything else. Virtually every full format document on a project was created using computer based technology that its creator did using a computer screen. Everything from onscreen takeoff to field review of shop drawings are easily conducted using the right online tools. Undoubtedly there are times when a full format document is required or preferred. Today’s technology doesn’t preclude paper copies but gives the option of printing the information that is required and using digital copies when appropriate.

 

5.     Concern that the internet is too slow to work effectively with large files

fast efficient online systemThis is a legitimate concern but is one that is quickly being erased by more efficient means to manage the digital size of documents along with increased access to high speed internet service via both hardwire and wireless service providers. Using the right systems that integrate tools that more efficiently handle these files adds to the ability to efficiently work online. If your approach is to simply transfer files in emails or via FTP batches then you are likely experiencing problems. If you use more intelligent systems to manage this process your challenges will be greatly reduced.

 

There are few legitimate reasons left why using online technologies cannot bring substantial benefits to a project and the companies working on it at the design, bidding, construction and operational phases. I encourage you to carefully evaluate the technology choices you make as you move towards using the internet to avoid turning these five concerns into truths rather than the myths they really are.

Topics: Construction documents, On screen takeoff, Online tools, Construction industry

Digital workflow is more efficient for construction projects

Posted by Dave Robertson on Jan 5, 2011 6:29:00 AM

In a recent Journal of Commerce article that I read the author reports on a recent presentation by a document-management expert that discussed the premise that “The construction process from bid to design is paper-based, but adopting current technology can help move companies into a digital workflow”. Sasha Reed, director of account services with Bluebeam Software Inc. says that “When you look at specifications, drawing revisions and how many parties that can get shipped to, it is a no-brainer — there is a lot of paper in this industry. That was not necessarily a bad thing years ago, but with the technology in place now, we do not have to generate as much paper as we did before.” I couldn’t agree more.

Bluebeam is a company that, in their words, “makes smart simple solutions for paperless workflows that leverage the pdf format.” They are absolutely on the right track for providing effective tools that the construction industry can use to manage the growing use of pdf formatted documents for project documentation and communication. 10 years ago virtually every page viewed using our technology was a scanned image. Today, less that 15% of the images posted to our system are scanned. Digitally created pdf’s are the predominant format used. The business case and resulting efficiencies from using digital workflows are overwhelming.

digital workflow for construction documentsThe key issue from my perspective is how to effectively integrate all the various document management activities that are now able to be performed using digital tools. In particular, there is a challenge moving 100% to digital workflows when the reality there are still some unaddressed paper based activities or even more challenging, processes where only some of the parties are using the digital tools with others who are still committed to paper. These are key considerations that our PlanSource technology helps to manage. It is designed to effectively manage and control all documents whether they are the result of a digital workflow or not.

Further on in the article it states “Reed recommends an FTP (file transfer protocol) site for document management of larger files. An FTP site is essentially a virtual storage room. It can provide the controlled access and security needed to download, upload and revise files.” This is the only point in the article that I would take issue with. In other blog posts here I have discussed the many weaknesses of using FTP sites to manage project documents. They are simply inadequate and certainly don’t do anything to bridge the ‘digital divide’ described earlier in this blog post. By all means, take advantage of the tremendous power of tools like Bluebeam, but to be fully effective you need to marry that power with effective document control technology to complete the picture.

Topics: Construction documents, Electronic document management, Saving money, Construction ftp, Saving time, Construction industry

Help your Subtrades and Suppliers to be profitable

Posted by Dave Robertson on Dec 13, 2010 8:35:00 AM

In some recent conversations with several Contractors I heard a position that I quite frankly don’t understand. The conversation was about why it is important to make it easy for Trade contractors and Suppliers to work with your company. The position taken was that they were only concerned about whether a process works for their firm. It is the other company’s problem to figure out how to work with them and it didn’t matter if it cost that company time and money. That’s just the price of being in business. Huh!

Naturally, your corporate systems have to address the needs of your company and personnel but that doesn’t have to exclude the possibility of making it better for those who work with you to benefit as well. Here are a few thoughts about how to be helpful at the bidding stage of a project:

help subtrades and suppliers
  • Send out invitations to bidin a timely manner to ensure they have adequate time to respond and provide you with a well prepared bid.
    • Allow them to receive the invitation via either email or fax based on what works best for their needs.
  • Provide them the ability to easily access documents and bidding information in a format they can work with whether that is viewing them online, downloading them, printing them on their own printer or sending an order to a reprographer.
    • Don’t force them to waste time and money driving across town to pick up a set of paper documents when they could easily download them at their convenience.
    • Don’t force them to ‘borrow’ a set of documents that they have to get scanned and copied at their expense of both time and dollars.
    • Don’t just post a mass of documents on some ftp site and force them to figure out what software they need to view them and work with them.
  • Provide immediate access to addenda and other supplementary information as soon as you receive it.

The way you interact with your Trades and Suppliers at the very first interaction on a project is a clear sign of what it is like to work with your company through the construction phase. If you want the best pricing it is important to demonstrate that you care about their time and costs and that you are interested in helping them be profitable on your projects.

Topics: Construction documents, Online bidding, Construction bidding, Construction ftp

How much does it cost to take your bidding systems online?

Posted by Dave Robertson on Oct 21, 2010 9:47:00 AM

Well ... how long is a string? Of course a real answer to this takes a lot more specifics about what systems and how you want to organize them. This is a question I am asked often and I can for the most part confidently say, “it won’t cost anything, in fact you will save money overall.”

The activities I am referring to in this case as bidding systems include; maintaining an accurate list of trade contractors and suppliers, issuing invitations to bid, distributing bidding documents, distributing addenda, quantity takeoff, tracking bid coverage and receiving and tabulating bids from contractors and suppliers. The current transition that is underway from doing much of these activities using paper based systems to digital systems is well underway. The result is a need for an effective way to perform these activities using digital systems that support the old paper based requirements when needed. If your online solution can achieve this then you are well positioned to experience some significant efficiencies.

cost of online biddingSo ... back to the question. How much? In the case of our company I can say that the expense line will range from zero to a few dollars per month per user of the system depending upon the features that you require. It is essentially volume based and you only pay for what you use. The part of the equation we rarely see addressed is what the value of the efficiencies is. How much would it have cost to print and distribute paper? What is the value of the time savings from being more efficient? What higher value work could be done by the personnel who used to manage processes that are now automated? What is the potential cost of claims, delays and other problems that arise after the fact if your systems don’t properly track who had access to what information and when?

The obvious moral of the story here is that the answer is only possible to determine if you have already done the work to determine the existing cost of the potential time, expense and risk avoidance. Our experience is that few people have done this and actually have a clear understanding of what it really costs to do all these activities. Do your firm a favour and give this some thought.

Topics: Construction documents, Online bidding, Electronic document management, On screen takeoff, Risk management, Construction bidding, Saving money, Saving time, Online submittal

IPad’s on the Construction Site

Posted by Dave Robertson on Oct 14, 2010 8:35:00 AM

I have been watching with interest an ongoing conversation with a group of construction professionals about the utility of the new iPad device for the construction site. It’s safe to say that of the 120 or so posts so far the reviews are all over the map. The hawkers of technology and software that can run on the iPad are extolling the virtues. The onsite personnel like Superintendants seem to think it belongs 6 inches deep in their next concrete pour. The majority are in the middle recognizing that there are some benefits but that it will be some time yet before it is a commonplace tool.

The applications talked about provide access to project documents, RFI’s, shop drawings, change orders, punch lists and any number of other pieces of information and forms that are used onsite. Other than its physical size and undeniably cool interface what is the difference between this device and a laptop (ruggedized or otherwise). Not much. A laptop is slightly more difficult to pack around, but really who has a laptop on their person at all times when on the site?

If you are considering using online technology to improve access to information on site the device is a secondary consideration. There are several key factors to consider before picking a device:

  • ipad constructionDoes the software application you intend to use actually make your process better? Is it faster; more reliable than paper; does it automate routine but important activities; does it create an audit trail or some other form of log that can help reduce or eliminate claims? Why are you going digital in the first place?
  • If you are using it to access documents online, will it actually work? Are the documents properly prepared for the internet or are the file sizes so large that they will take forever to download? Would it be better to carry them on the hard drive of your laptop or on a DVD instead? Does the technology help ensure only the latest versions of documents are available? Are they organized well enough that you can easily find what you need?
  • Is it likely that your onsite personnel will carry a mobile device with them and find it easier to work with and use than paper? If it is a schedule, punch list, change order or other document can it practically be viewed on a small device?
  • If you actually need or want paper copies can you print them or order them to be printed?

If you know the application has merit then it is time to think about the right device. It will need reliable and fast internet connectivity; it will need lots of memory; it will need to be rugged enough to be on site in all weather conditions. You should be able to print from it. The device is of limited use if it can only be used in the site office.

Not to be misunderstood here, I am a big advocate of using online technologies to create efficiencies for the construction industry. There are many processes and activities that can be dramatically improved by going online. The key is the process has to be better. Introducing technology in the office or on the site is a waste of time and money unless there is an identifiable benefit. There are clear and definable benefits in the office environment but I am not convinced that the job site is quite ready for the iPad. It’s time will come no doubt, just not yet.

Topics: Construction documents, Electronic document management, On screen takeoff, Risk management, Online tools, Software management, Construction industry

Is your time worth anything?

Posted by Dave Robertson on Aug 20, 2010 7:15:00 AM

People love free. Whether it is hot dogs, concerts or software people are big fans of getting good value. Paying zero for something you value is usually a good thing. Consider Google ... it is ubiquitous and is so popular that it has become a verb in the common language. It is a great service, delivered for free to anyone who has access to the internet. It is designed so that the ads are not that invasive and as a result people are not deterred from using it. If you want additional services from Google they offer some that are paid and others that are free. Facebook, Linked In and other very popular web services use a similar business model.

Allow me to share a short anecdote about our experience with offering a free service. We recently launched a managed file transfer service. We allow full use of the very powerful online service called PlanSource FT for free up to certain limits beyond which it is a paid service. If you don’t exceed the limits it can be used for free forever as there are no time limits on the offer. The thinking on our part is to allow people to use it for free to enable them to experience the value it can deliver in helping them be more efficient. If it works well and they like it then we may get a new client for our paid services. Simple deal ... a completely free service within the limits provided ... no commitments ... no hassles.

Within weeks hundreds of people signed up to use the service. One morning we received an email from someone who was angry with us. He thought our tools and the service were great and stated that they would save him a lot of time and money. The problem was he needed to exceed the number of users that were provided for free and for that he would need to pay a nominal amount – less than $100. He was mad at us because instead of using the paid level of the service he had to spend “hours and hours” of his time emailing the documents to distribute them and even with all of that effort some people had trouble receiving them. So ... he thought our services delivered great value to him but that we ought to offer unlimited service for free. Hmmm ...

time worthIt appears that this is an example of someone who places no value on their time ... it’s ‘free’ and doesn’t cost anything. He places the same value on his time as he does on our service. I beg to differ and think his time has value and am happy that this experience is very rare as most people seem to feel the way I do about the worth of their time and effort.

Topics: Construction documents, Electronic document management, Online tools