Construction Information Technology Blog

Construction Bidding Court Case #3 – Forms

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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.

An essential requirement to ensure you are conducting a fair and equitable bidding process is making certain that all bidders receive the same information and documentation in an equal and timely manner. Doing so will ensure a successful bid process and minimize costly risks that could result in the loss of the low bidder to clerical error and/or a coinciding court claim by one of the bidders.  While it sounds basic and obvious, the nature of a paper-based bidding process is such that control over what documentation is in the public domain is out of the bid authority’s hands and an unintentional error by one of the bidders could cost the owner a low bid’s disqualification, as the following Court decision illustrates:

The Bid Documents:

• The Owner issues Addendum 1 which has a bid form with non-negotiable prices for pre-selected materials and a $400,000 contingency – Pre-Printed on the form.
  
  
• Subsequently Addendum 2 is issued:

1. The Owner was able to negotiate lower prices for pre-selected materials and that was reflected on an amended bid form – containing pre-printed contingency allowances.
2. Instructions to bidders made use of the addendum 2 bid form mandatory.

The Bid Submission:

As a result of the issuance of Addendum 2, bidders had 2 paper bid forms in their possession.

• Contractor 1 used the Addendum 1 bid form for its submission and Contractor 2 used the Addendum 2 bid form.  If Contractor 1 had used the Addendum 2 bid form it would be low.

  

• The Owner sought declaration that Contractor 1’s bid  was “materially compliant”
• It was obvious what Contractor 1’s new price would be given the pre-printed form.
• The price of the pre-selected material was not one over which the bidders had any control.  This fixed price was a mandatory component of the total bid price.

The result is that the “otherwise” low bidder lost an opportunity because it used the wrong bid form and, the Owner ends up paying more for the work because it had multiple bid forms in the open marketplace.  It is further unfortunate that both the owner and the bidder spent considerable time, effort and money in court on an issue that can be effectively eliminated.

Today’s solution:

PlanSource’s Online Bidding module ensures there is only one bid form available to bidders at any given time.  Whenever a change is made to the bid form, or any part thereof, the bid calling authority deletes any previous version of the bid from the system ensuring that all bidders complete the same bid form and all bids are submitted compliant and on an equal basis.

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.

Construction Bidding Court Case #2 – Mandatory Site Visits

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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.

In some instances an owner will determine that bidders must attend the site in order to familiarize themselves with the unique site conditions so they can prepare a bid that will include any distinctive characteristics.  If so, instruction to bidders will include a “mandatory” site visit so bidders can review site conditions and ask any questions they may have regarding the bid requirements.  Whether or not contractors consider these visits to be material to the acceptance of their bid, failure to comply may lead to rejection of their bid.  The following case study illustrates the importance of attending mandatory site visits.

Instructions to bidders required:

“A mandatory site tour for general contractors will be held on [date] at 8:00 a.m. beginning at [Building 1] and immediately followed by [Building 2].  Agents must register their presence with the owner of the site tour stating the name of the contractor they represent. Failure to attend and register will lead to the non-acceptance of the tender by the owner.”

The following sequence of events transpired:

• Contractor attends at 8:15 but group already gone to Building 2.  Contractor Shows up at B2, goes on tour, and declines offer to have tour go back to B1.  Goes back on his own next day, then submits bid on time and otherwise compliant.
• Owner returned bid, unopened, because of failure to attend first site visit with everyone.  Contractor sues.

The Contractor presented the following arguments to the Court:

1. Because it attended the site tour and signed its name and then returned to visit the first site, albeit the next day, it complied with the mandatory site visit requirement.
2. The mandatory site visit clause was ambiguous because it did not say that the potential bidder had to attend the entirety of the site visit

So, even though the contractor submitted its bid price on time and made the effort to complete the other requirements at a later time, the bid submission was deemed non-compliant and was therefore rejected.  A more unfortunate result is that both the owner and the bidder spent considerable time, effort and money on an issue that can be effectively eliminated.

Today’s solution:

The PlanSource Bid Module allows the bidding authority to require contractors to “pre-registrator” their intention to bid.  This places the contractors name on a “bidders list” in the bid module.  After conducting the mandatory site visit and taking attendance, the bid authority can then check those conformed bidders who did not attend the visit and bar them from submitting a bid eliminating the requirement to return an unopened bid and creating the environment for the contractor to litigate.

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. 

Construction Bidding Court Case #1 – Faxed Bid Amendments

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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.

As technology has evolved, owners have amended the bid submission process to accommodate bidders to ensure they (owners) receive the most competitive pricing within the specified time period. A prime example of such an accommodation is the advent of the fax machine and the subsequent adaptation of accepting amendments to a bidder’s submission by fax. In this situation the bidder would submit a completed bid form in a sealed envelope as per the instructions to bidders well in advance of the specified closing time. This would ensure the bid is submitted on time. The bidder then continues to work on their bid and make last minute adjustments to their price. Once they reach their final price, the bidder adjusts the bid previously submitted by sending an amendment by fax to a number designated in the instructions to bidders.

However, this process is not without its tribulations as the following Court decision illustrates:

The [Owner] sent out Invitations to Bid containing the following language with respect to faxed amendments:

• "Bids must be received before 2:00 p.m., local time, Monday, December 12, 2011 at the reception office of [Owner].  Bids received after the closing time will be returned unopened."
  
  
• "Revisions will be accepted by signed letter either delivered to the address stated in the Invitation to Bid or faxed to the fax number given in the Invitation to Bid."
  
  
• "For faxed revisions, the clock used for the official bid closing time shall govern. Where a faxed amendment is received at the fax number designated in the Invitation to Bid and the time of receipt is deemed valid, this faxed amendment will be accepted even if said fax is not at the location where the bids are opened."
  
  

• The bid form in the Bid Package contained a standard Faxed Bid Amendment Form as Appendix F. That Faxed Bid Amendment Form contained a pre-printed fax number (250-555-1234). That was the fax number at the location where all bids which were not faxed were required to be delivered.
  
  
• The Bid Package included a Contact List, where the Owner contact was listed as Mr. Greg Z. Bidders were provided with an address, a phone number, and fax number (250-555-9876). The fax number was a fax at Mr. Z’s office.
  
  
• [Contractor] sends in hard copy bid the day before and, a few minutes before close, faxes in a revision – To the 9876 number, not 1234 number.
  
  

So, the unfortunate result of this owner’s effort to accommodate bidders to ensure he receives competitive bids, is that they lose the lowest bid because the bidder is confused by the instructions to amend his bid by fax. A more unfortunate result is that both the owner and the bidder spent considerable time, effort and money on an issue that can be effectively eliminated.

Today’s solution:

Fortunately, technology continues to evolve and PlanSource’s online bidding module allows bidders to amend their bids right up to closing time without worry.  The online bid form is created by the owner and made available to bidders.  Bidders complete the form and submit it through the PlanSource application.  Bidders are able to withdraw their bids at any time prior to closing.  The withdrawn bid is returned to “draft” mode, changed and re-submitted.  This bid can be withdrawn and re-submitted any number of times prior to the bid closing time.

Benefits

Amendments can be made quickly and easily right up to closing time.  Bids are ALWAYS located at the designated closing location (online in the PlanSource application).  Bidders can submit their most competitive pricing and owners will never have to reject a low bidder because of a clerical mistake by the bidder.

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.  

Construction Technology Outlook 2012

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As we draw near the end of 2011, there are many predictions around the IT industry trend for 2012. The recently published "Nucleus Research Top Ten Predictions 2012" places emphasis on the rise of cloud computing (prediction #2). According to the article, cloud computing was proven to be nearly five times more productive than the traditional development in 2011. Furthermore, the article also states, “When companies do have money to spend, their two main choices are technology and people. A recent Nucleus survey found technology is winning hands down, with 50 percent of US companies planning to increase their technology spend in 2012 [Nucleus Research l106, Nucleus 2012 IT spending survey, September 2011].” Thus, many firms will look into increasing their productivity via technology adoption next year.

Another 2012 outlook by M/C Partners published in the TechJournal South titled “Top ten communications, tech, and media industry trends for 2012” also acknowledges the emerging enterprise adoption of cloud-based services (prediction #2). Consequently, this will “drive demand for network-based managed services that will provide critical monitoring and management of application and service performance across LANs, MANs, WANs and the public Internet.”

So the trend is clear. Businesses are moving towards cloud computing to take advantage of its many benefits including increased productivity, cost savings, accountability and sustainability. In today’s construction industry, online document control, online planroom, and online bidding are examples of cloud computing technologies that are increasingly adopted.

Green Construction at the Bidding Phase

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A few years ago most bidders would not have pictured themselves submitting their construction bids online in a paperless environment. It represents a major change from decades of travelling to closings, faxing bid amendments, last minute decisions and all the drama that comes with it. Today, this green construction technology has finally arrived. Online bid submission has the double benefit of being a sustainable process along with the benefits of substantially improved efficiency. Supported with a complete document management system and audit trail, it ensures a complete record of who saw what documents and when. This combination greatly reduces the risk of costly bid related errors or omissions.

A great example of an early adopter of this technology is the city of Prince George in British Columbia, Canada. It leads the way in the electronic tendering of capital projects closing many of the projects that have utilized the recently introduced Owner Bid Management and Bid Submission applications within BidCentral. BidCentral is powered by PlanSource and is a suite of services that was designed specifically for the construction industry and is modeled after the processes that have long been accepted as industry standards. The City of Prince George procurement team and the bidders involved in the bidding process gave BidCentral very positive reviews and recognized it as the new construction procurement standard (view video).

Earlier this month, BidCentral was honoured with the presentation of the TechGREEN Award by the Applied Science Technologists & Technicians of British Columbia. The TechGREEN Award winners are recognized for their contribution to a 'green' economy and sustainable society.  Click here to read the news release >>

P3 Datarooms and the Internet

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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.

We 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.

Bidding, Digital Documents and Blogs

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What do online bidding, digital documents and blogs have in common? Not much, except possibly this blog that attempts to discuss issues relating to those topics. There is a lot of noise today about social media, blogging and similar topics and how they are an essential element to every business. Does your construction related business really need a Twitter strategy? Probably not … but possibly.

For obvious reasons I pay attention to what is happening in the blogosphere, on the internet and in social media. If, by chance, your company is one of those interested in how to do blogging well or for that matter you have an interest in marketing I have a recommendation for you. Seth Godin is one of today’s most popular marketing and technology thinkers. He is a prolific blogger and is a great example of how to do it right in addition to that fact that his material is very useful. This is an example of his latest work.

Manu's funny brilliance aside, this collection of org charts might help you think hard about why your organization is structured the way it is.

Is it because it was built when geography mattered more than it does now? Is it an artificact of a business that had a factory at its center? Does the org chart you live with every day leverage your best people or does it get in their way?

You can check him out at http://sethgodin.typepad.com/seths_blog.

Is it better to lead or follow?

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There are a lot of companies selling technology services to the construction industry. Reading their websites often yield pitches like; “New”, “Innovative”, “Unique”, “Industry Leading”, and so on. In truth, a number of these companies are simply executing a ‘close follower’ business strategy. Few of them were actually at the leading edge of innovation in developing the core concepts and proving the markets for these new services or products. They may well however, be very good at picking up on a positive trend and taking advantage of it. Despite the patent laws, there is no rule in business that says the innovator is the only person or entity that can take advantage of their innovation or ideas.

This is on my mind as our company goes through the tedious and expensive process of patenting some of our company’s latest innovative work. We can protect our particular implementation but nuanced implementation of our concepts and ideas will inevitably come to market. We know this as we have observed others over the years whose feature set seem remarkably similar to what we offered … a few years ago.

There is no surprise, shock or dismay on our part when we see this manifest itself in the market. In many ways it is satisfying to know that we actually have an excellent track record of reading, understanding and implementing what the market needs and wants. Our clients benefit from having several years more of additional efficiency or new revenues as a result of working with our technologies. In our case when faced with the questions of whether to lead or follow the answer is clear … we choose to be leaders!

A whole lotta shakin goin on

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Lately, I have been doing a lot of traveling and meeting with a wide range of companies involved in the construction information technology sector.

This is a sector that barely existed 10 years ago, now it is expanding and changing very quickly. It is not a surprise that this is happening as construction is the largest single industry in the world and represents huge business opportunities. The surprise is how long it has taken to get to this stage.

When we deployed our first application over the Internet in 1997 ( now more elegantly described as cloud computing) there were many onlookers questioning why on earth we thought the Internet would have any place in moving and working with construction documents. Today it is well along in the transition to being the industry standard. Two key factors are driving this exciting transition. The current economic conditions are forcing companies to look for business efficiencies and an overall change in the trust level within the management community that the Internet is a safe and sensible tool to rely on, even for core business processes.

We recently merged our USA operations with Barryhund Administrators, a great new partner who were, like us, one of the pioneers in this sector of the construction industry. We are excited about the synergies and collective depth of experience we will be bringing to this dynamic and fast growing sector. As the industry moves into the Internet 'cloud' we will be there continuing to help lead the way.

A Planroom is a Planroom is a Planroom

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Everybody knows what a planroom is whether you call it a planroom, plansroom or plan room. It is a central repository where prospective bidders go to access documents and information for construction project opportunities. Groups of Contractors through Construction Associations and Builders Exchanges that they established were the historical originators of the practice of using planrooms some 100 or so years ago. Over the years some private enterprises got into the business and built up substantial physical infrastructure across North America to service this market.

In the marketplace today there are many players in the planroom business. This is particularly true since the major transition to working with digital files has taken place. The new players include software companies with new digital services, reprographic firms who are working to maintain a share of the printing market they have serviced for many years, FTP and other file management services as well as printer and scanner manufacturers. They’re everywhere!

The critical thing to consider when evaluating what your business is going to do to respond to the changes in the planroom business is to make sure that the solution you select doesn’t simply replace the traditional paper workflow with a digital one. Rather it is essential that you look for technology solutions that can improve the workflow, reduce your overall costs and effort and not the least solutions that reduce the inherent risks in the process. There are few things less productive than winning a contract and then entering into claims battles with Subs and Suppliers over what is actually included in the contract. Having the right technology can help you make sure you get better, more complete bids along with an ironclad audit trail that ensures the claims battles are avoided.