Once you have reduced your list of potential contractors down to three or four proponents you will need to ask them to submit proposals for constructing your home or building. This is a very important step in the course of your project. It is where most of your costs, the overall quality, and the schedule will be contractually fixed.
In order to call for bids you will need to provide the proponents with very clear, complete and coordinated bid documents that fully describe the scope of work. Furthermore, your bid documents will need to describe what is needed to assure compliance with requirements posed by authorities having jurisdiction over your project, including building code compliance. These
documents are comprised of two distinct categories of information: the bidding documents and the contract requirements. The bidding documents describe the rules governing the preparation, submission, receipt and acceptance of bids. While the contract requirements are the actual administrative and technical parameters the contractor will need to fulfill in the course of completing the project.
An Architect, along with the engineering/specialist consultant team, and your lawyer, will assist you in preparing these documents as part of their professional services on the project.
With your list of preferred contractors and the bid documents ready you will be able to begin the formal procurement process. Presuming you already know that all of your preferred contractors are able to successfully construct the project, the only remaining unknown will be the price of construction. As such your aim will be to choose the lowest bidder.
Legal Principles Over Competitive Bidding
The bidding process replaces negotiation between the owner and the contractor. The law of competitive bidding is unique to Canada and it confers rights and obligations to all parties where an owner receives binding offers simultaneously from multiple bidders for the same work.
In general, the bidding process proceeds through a sequence of two distinct contracts known as Contract A (the bidding contract) and Contract B (the actual construction contract). Contract A is created between the owner and each bidder that submits a compliant bid. Once the owner accepts a particular bid the bidder is obligated to enter into Contract B in accordance with the terms of their bid. In turn the owner is obligated to treat all bidders fairly and equally in line with the terms of the bid documents.
The Bidding Documents
The bidding documents are normally composed of several key components including:
Bid Solicitation Letter – a letter of invitation which is sent to invited bidders. It includes:
- The name and location of the project.
- Name of the owner.
- Brief description of the work.
- Time and place for receiving bids.
- How and where to obtain the bid documents.
- Bid security requirements.
- Special qualification requirements.
- Use of a bid depository if applicable.
- Location and time of the mandatory pre-bid meeting if one is scheduled.
Instructions to Bidders – This document specifies the bidder’s and owner’s rights and obligations with respect to the bid call. It includes:
- Owner’s legal name and address.
- Telephone numbers, fax numbers, and emails of the person authorized to receive enquiries.
- Time and place for receiving bids.
- How and where the bid documents will be received.
- Procedures for how bidder’s proposed product substitutions may or may not be considered during the bid period.
- Instructions for method, form and completeness of bid submissions.
- Instructions for methods of modifying bids prior to bid closing time.
- Number of days the bid is to be irrevocable and open for acceptance by the owner. Usually 30 days.
- Disclosure of criteria and preferences that will be applied in selecting the successful bidder.
- The means by which bid documents may be modified through addenda.
- Confirmation of the owners intent to respond to common bidding irregularities such as receiving late bids, missing signatures etc.
- Any special rights the owner reserves such as the privilege not to accept any bid under special circumstances or to negotiate with the lowest bidder in the event of changes to the project (for instance financing problems that come up during the bidding process).
- Type and amount of required bid security.
- Requirements for pre-bid meeting attendance.
- Requirements for use of a bid depository.
- Any mandatory qualification requirements.
- Instructions relating to submissions of alternative, unit or itemized prices.
- Basis for determining the lowest bidder when alternative prices are requested.
- Any unusual process requirements.
Information Made Available to Bidders
All pertinent site conditions need to be revealed to the bidders. These include:
- Site geotechnical reports.
- Information on existing buildings or structures.
- Environmental assessments, permits and approvals.
- Toxic and hazardous materials locations and data.
- Easements and other site restrictions.
Bid Form and Bid Form Supplements
The bid form is project specific and includes information such as:
- Name and location of the project.
- Bidder’s company name.
- Bidder’s address and contact information.
- Owner’s name and address.
- Bidders declarations such as price, agreement to perform the work and schedule.
- Supplements such as the list of subcontractors, alternate prices and substitutions.
The Canadian construction industry employs a series of standard agreement documents for most methods of construction delivery. These documents are well established and have been developed over many years in consultation with the Canadian Construction Association, Construction Specifications Canada, the Royal Architectural Institute of Canada, and the Association of Consulting Engineering Companies – Canada. They are developed to be fair in representing the interests and obligations of all involved parties as well as adherence with legislative requirements. The standard documents include:
CCDC 2 – 2008 Stipulated Price Contract Standard prime contract between Owner and prime Contractor to perform the required work for a single, pre-determined fixed price or lump sum, regardless of the Contractor’s actual costs.
CCDC 3 – 1998 Cost Plus Contract Standard prime contract between Owner and prime Contractor to perform the required work on an actual-cost basis, plus a percentage or fixed fee which is applied to actual costs.
CCDC 4 – 2011 Unit Price Contract Standard prime contract between Owner and prime Contractor to perform the required work for a pre-determined, fixed amount for each specified unit of work performed. The total price is determined by multiplying the unit price by the actual, measured quantity of work performed for each specified unit.
CCDC 5A – 2010 Construction Management Contract For Services Standard contract between Owner and Construction Manager for which the Work is to be performed by Trade Contractors. The Construction Manager acts as a limited agent of the Owner providing advisory services and administering and overseeing the contracts between the Owner and Trade Contractors.
CCDC 5B – 2010 Construction Management Contract For Services and Construction Standard contract between Owner and Construction Manager to provide advisory services during the pre-construction phase and perform the required Work during the construction phase. At the outset, the Work is performed on an actual-cost basis, plus a percentage or fixed fee which is applied to actual costs. The parties may agree to exercise the following options: Guaranteed Maximum Price (GMP), GMP Plus Percentage Cost Savings, and conversion into a Stipulated Price Contract.
CCDC 14 -2013 Design-Build Stipulated Price Contract Standard prime contract between Owner and Design-Builder where the Design-Builder performs Design Services and Construction under one agreement, for a single, pre-determined stipulated or fixed price.
CCDC 17 – 2010 Stipulated Price Contract for Trade Contractors on Construction Management Projects Standard contract form between Owner and Trade Contractor to perform the Work for a single, pre-determined fixed price, regardless of the Trade Contractor’s actual costs. It is specifically for use where the project is performed under the CCDC 5A Construction Management method of contracting.
Any additions, deletions, or other modifications to a CCDC form should be clearly identified.
Division 1 of the project specifications manual. This will include:
- Summary of the work.
- Restrictions that will affect construction operations.
- Scheduling and phasing requirements.
- Payment procedures and cash allowances.
- Administrative requirements.
- Temporary facilities and controls.
- Broadly applicable quality requirements.
- Broadly applicable product and execution requirements.
- Other issues that affect the overall work.
Written specifications describing the technical requirements of the project. These describe detailed quality and performance requirements for products and for the execution of various parts of the work
Drawings and Schedules
Drawings are a graphic depiction of the scope of work, including locations and size of all components. Schedules are a useful method of depicting quantities and typologies of building components such as doors, windows, finishes, paint colours etc.
Modifications made to the bid documents after they were issued for bidding.
Calling for Bids
There are two general methods of calling for bids. The Open Bid Call and the Invitational Bid Call. Open Bid Calls are publicly advertised and open to all proponents. Invitational Bid Calls are open to preselected bidders.
Bidder Inquiries and Issuing of Addenda
It is essential that all bidders base their bids on identical information and that this information is made available to them at the same time. As such responses to bidder enquiries must be distributed through formal addenda which supplements or compliments the bid documents.
All bids should be received in a single location specified in the bid documents. They should be received by the person designated to do so in the bid documents and should be time stamped upon receipt. Late bids should always be considered non-compliant, while bid modifications or withdrawals should be allowed (unless specifically disallowed in the bid documents) prior to closing time.
Prior to contract award all bids should be evaluated for compliance with the requirements indicated in the bid documents. According to the law of competitive bidding non-compliant bids should be rejected.
All compliant bids must be evaluated fairly according to the criteria in the bid documents and no undisclosed preferences are to be applied. The contract should be awarded to the bidder with the most suitable bid, most often the lowest price.
Part One: Are you Covered?
Part Two: Qualities to Look For
References: Information in this article is referenced from the following sources.