PERFORMANCE BOND-BUT NOT JAMES BOND

Performance bond will not do miracles as James Bond but it will really make your job and life less stressful especially in the current financial problems all over the world. Last week I had several talks with contractors/vendors who were very eager to receive 100 % advance payment before ordering supplies but nobody wanted to hear about presenting performance bond ( I don't mention advance payment guarantee now). And the explanations were "we are too famous, we are with a strong position on the market"! Famous, strong-GMC, Lehman Brothers were also famous and strong just 10 days before collapsing!

Why do we need performance bonds? They are hedge against potential lien claims and failure to complete the work. When do we receive them? Right after award of the contract, before starting any works.

Under a performance bond, the surety has an obligation to the client for any additional costs to complete the contract due to the contractor's failure to comply with its contract requirements. The most common reason for a contractor not completing a contract is insolvency-very likely nowadays. Therefore, sureties are interested in the contractor's financial condition as well as other qualifications before writing a performance bond. Generally, a contractor's ability to take a large contract is a function of bonding capacity, as the bonding company will only risk a slight increase over previous bond amounts.

The position of the main contractors is the same when they want a performance bond from their subcontractors. Main contractors must obtain bonds from their subs that are of the same form and not less than the guarantee that the main contractor is giving the client under the client's own bond.

The performance bonds are written in the amount of 10-100 % of the contract price (what is your experience with these percentages). 

So, it's up to you if you want to count on the contractor's record of performance and not to obtain a performance  bond or ask for  receiving a performance bond and have a trouble-free job.

PM &TEAM MEMBERS

Do you really manage your project?
http://www.youtube.com/watch?v=Vkd7JGl0-90

VALUE ENGINEERING DEFINITION AND CONCEPT

An article about the origin of this term and how different it is from Quantity Surveying

VALUE ENGINEERING CONCEPT

The concept evolved from the work of Lawrence Miles who, in the 1940's was a purchase engineer with the General Electric Company (G. E. C). At that time, manufacturing industry in the United States was running at a maximum capacity to supply the allies with arms. There were shortages in steel, copper, bronze, nickel, bearings electrical resistors, and many other materials and components. G. E. C wished to expand its production of turbo supercharger for B24 bombers from 50 to 1000 per week.

Miles was assigned the task of purchasing the materials to permit this. Often he was unable to obtain the specific material or component specified by the designer, so Miles reasoned, "if I can not obtain the product, I must obtain an alternative which performs the same function".  Where alternatives were found they were tested and approved by the designer. Miles observed that many of the substitutes were providing equal or better performance at a lower cost and from this evolved the first definition of value engineering.

 VALUE ENGINEERING DEFINITION

Value Engineering can be defined as an organized approach to providing the necessary functions at the lowest cost. From the beginning the concept of value engineering was seen to be cost validation exercise, which did not affect the quality of the product. The straight omission of an enhancement or finish would not be considered value engineering. This led to the second definition : 

Value Engineering can be defined as an organized approach to the identification and elimination of unnecessary cost. Unnecessary cost is cost which provides neither use, nor life, nor quality, nor appearance, nor customer features.

HOW DIFFERENT IT IS FROM QUANTITY SURVEYING

The following tasks are undertaken by quantity surveying practitioners (in UK) and are not considered to form any part of value engineering:

- Producing contract documents including the bill of quantities;

- Analyzing complex projects into manageable work packages;

- Planning and controlling cost;

- Valuing work in progress and exercising cost control during construction;

- Evaluating tender bids and contractual arrangements;

- Preparing valuations for insurance purposes and advising on insurance claims; 

- Sub contract documentation;

- Settlement of final accounts;

- Advice and settlement of contractual disputes and claims;

- Advising on taxation grant and financial matters;

- Schedule resources;

- Planning and programming design and construction work;

- Use of network analysis techniques;

- Project and construction management.

The following tasks are undertaken by Quantity Surveyors, and are involved in value engineering practice:

- Preparing and administering maintenance programs;
- Forecasting expenditure flows;
- Advising on cost limits and preparing budgets;
- Advising on cash flow forecasting;
- Advising on life cycle costing;
- Cost analysis;
- Cost benefit analysis;
- Estimating;
- Evaluating alternative designs;
- Undertaking feasibility studies;
- Investment appraisal;
- Measuring and describing construction work but only in terms of cost planning.

PMP CERTIFICATION HANDBOOK

For all interested in pursuing PMP certification: http://www.pmi.org/en/Certification/~/media/PDF/Certifications/pdc_pmphandbook.ashx

RAPID DELIVERY AND REVISION OF PLANS

A Happy New Year to all followers and readers of this blog. I hope it will be interesting for you to read the articles this year too. I will appreciate your comments and advises.

I want to start this year articles by using an article published in CE News on future of design and approval process which I think will reduce time frames of projects and number of claims send by contractors due to design omissions, deficiencies, and ambiguities.  

Orangevale is a small but densely populated, unincorporated community in Sacramento County, Calif. The Sacramento Metropolitan Fire district retained KASL Consulting Engineers of Citrus Heights, Calif., to design a new fire station that would serve this growing urban area in a sustainable way. KASL utilized Bentley’s computer modeling technology to prepare, analyze, visualize, and rapidly revise the site/civil design.

Project Metro Fire Station No. 29 stormwater management, Orangevale, Calif. Civil engineer KASL Consulting Engineers Product application Bentley Systems’ CivilStorm and InRoads software allow quick analysis and design of sustainable site stormwater system.

Completed in early 2009 at a capital cost of $4.5 million, Metro Fire Station No. 29 is a 12,800-square-foot, single-story fire station with enough paved area for three drive-through bays and a back-in bay for the battalion chief. The facility also features a standby generator, truck wash building, and plenty of paved parking.

The project’s most significant design challenge was the requirement to limit stormwater runoff from the site to pre-development levels. The rapid shedding of stormwater by new impermeable areas is a factor common to all urban development projects. But at this site, the community required sustainable stormwater control and low-impact development methods to be used. No heavy metals, oils, or other contaminants could be allowed to enter the stormwater drainage system. In addition, the stormwater management structures had to be aesthetically pleasing and fit into the landscaping plans.

KASL knew that sophisticated tools and techniques were needed to balance these many requirements. The firm decided to deploy civil information modeling (CIM) software from Bentley to efficiently create and change the site designs. “This was a pilot project for us. We have been producing digital terrain models and 3D surface models for a while, of course. But this time, we started to utilize civil information models to hydraulically design and produce our 2D plan and profiles for the site’s underground utilities,” explained KASL Principal Derek Rayner, P.E. “This worked very well, even though many of our partners on this project were a little behind the curve on the use of 3D models.”

Rayner found that using the CIM models to drive design and plan production resulted in substantial cost savings for the client, mainly in reduced design fees. “One major benefit is when changes are required, the tools allow for a quick remedy without undue additional cost,” he said. “Modeling also provides the client with a better picture of the finished product prior to its being built.”

KASL used CivilStorm to dynamically design and analyze all stormwater structures, including a detention pond, outlet, and other utilities. Accurately modeling every aspect of the stormwater system, CivilStorm performed a full range of analysis necessary for verifying hydraulic capacity and demonstrating stormwater compliance.

KASL used CivilStorm to perform a full range of analysis necessary for verifying hydraulic capacity and demonstrating stormwater compliance.

CivilStorm was used in conjunction with InRoads to develop landscape contours, determine earthwork quantities, produce the design, and model the underground utilities in 3D. The resulting stormwater design was sophisticated and sustainable, including grassy swales used as bio-filters, mechanical filters for stormwater runoff from pavement, and an on-site detention pond to reduce peak flows.

Complex design geometry

The powerful regression analysis features in InRoads, combined with its element design capability, enable users to resolve complex design geometry efficiently and accurately in accordance with unique engineering design criteria. These played an important role in this project due to its various design challenges.

For example, the truck wash building presented some unique problems. Since by design the runoff water from the trucks was likely to be especially high in contaminants, the water needed to be routed directly to the sanitary sewer system to collect and treat for toxins before water ended up in the Sacramento River. On the other hand, designers did not want to overburden the sanitary sewer system with relatively clean rainwater. So drains in the truck wash building lead to the sanitary sewer system, and an all-weather cover built tall enough to accommodate ladder trucks routes rainfall to the stormwater system.

Site aesthetics posed another challenge to designers. Though just a single-story building, the fire station is nearly 30 feet high. Nearby residents wanted the visual impact of the station reduced. Also, KASL worked under a mandate to retain as many native oak trees as possible. Since existing above and below ground utilities passing through the site needed to be rerouted and a new 12-inch water main for Orange Vale Water Company had to be brought in, designers needed to find ways to move a lot of earth without destroying trees or making the fire station too prominent.

“There was a residential subdivision behind the new fire station site,” Rayner explained. “The design team had to consider the view from that area. We were able to use the digital terrain model and a SketchUp model from the architect to visualize the roofline appearance, and ended up going with a design that lowered the finished floor elevation considerably. Unfortunately, this meant that we ended up exporting quite a bit of soil, which we’re usually able to avoid when balancing the earthwork on our projects’ sites by comparing pre- and post-developed surface models (digital terrain models). But it was the right solution for this project.”

The KASL team developed the digital terrain model in InRoads and automatically generated design profiles with the utilities database. Utility interferences were detected and resolved with automatic tools from InRoads storm and sanitary tools. Since the software enabled rapid changes and revisions, the team was able to compare and contrast numerous utility designs and site geometries. To minimize tree loss — about half of the lot’s trees were ultimately preserved — and viewscape impact, KASL reconfigured historic drainage patterns, used cut slopes and retaining walls to lower the building pad, and excavated significant amounts of soil. Stormwater structures were also designed and placed with an eye to managing appearances.

Visualization communicates design aesthetics

To verify conclusions and communicate with the public, KASL imported its digital terrain model (surface models) into Google Earth and referenced in a 3D SketchUp model of the building provided by the architect. This combined site work, surrounding real-world information, and the proposed building into one visualization.

KASL combined site work, surrounding real-world information, and the proposed building into one visualization.

Together with ProjectWise and 3D PDF files, visualization proved to be an effective way to communicate rapidly developing information with all stakeholders. ProjectWise gives InRoads users the security to store, distribute, track, and manage InRoads data and models across unlimited users, offices, project team members, and locations. Rayner said that one enormous benefit of a model-based design approach is the assurance it gives designers.

“The tools give design engineers greater confidence. We know that changes are being captured in the model database and will automatically be reflected in all the plans.” Rayner added that another major source of savings resulting from the use of the model was reduced change orders during construction. “Because people are looking at a model when giving approvals, and because the plans are always up to date, there are far fewer surprises once site work begins.”

Once this relatively small project was completed, Rayner noted that KASL began to use model-based design routinely. “This project convinced us that this is the way to go. It saves errors and omissions, it automates and speeds up plan production, and now that we’re applying it on bigger jobs, we’re seeing far fewer design errors and more production out of our design staff.”

In fact, the only challenge that KASL is facing with 3D modeling is that customers are still relatively unfamiliar with it. “It’s fascinating where the technology is going. But not all of our clients and consultants appreciate it, and consequently it’s not a typical request on all our projects. We have to do some evangelizing,” concluded Rayner. “But it’s happening — more people are working with building information modeling, and as owners start to see the advantages of having CIM (site) models included with their BIM models for operating their facilities, they’ll start to demand it.”