Disaster Recovery Project Management

Bringing Order from Chaos

Randy R. Rapp

• Publisher: Purdue University Press
• Year: 2011
• eBook ISBN: 9781612491677
• Topic: Technology & Engineering
• Subtopic: Construction & Architectural Engineering
• Index: Technology & Engineering

The scope of disasters ranges from man-made emergency to natural calamity, from a kitchen grease fire to a hurricane or volcanic eruption. It may be just one house that is destroyed, or perhaps a whole infrastructure system is threatened. While each type of event requires a very different scale and type of immediate response, the project management challenges that face restoration and reconstruction professionals after the emergency phase is complete are remarkably similar. Using insights acquired through decades of real-world experience, as well as from his academic research and teaching responsibilities, the author explains pertinent requirements and methods for the contractors and other professionals who bring order from chaos. The first section of the book surveys the managerial skills required to confront the range of disasters that might be encountered and the different project environments involved. The second section examines the details of project management and administration, from materials management to health and safety. The third and final section provides an overview of restoration techniques, from restorative drying to debris management and demolition. This is the first systematic presentation of the tools and skills needed for disaster recovery project management. It is designed primarily for contractors (both large and small firms), although it will also be of value for those who might hire them, the communities they serve, and their organizational partners in the disaster recovery effort. Those who are new to disaster restoration and reconstruction will find the volume particularly useful. Focused on informing the management of projects that recover the built environment, after emergency conditions sufficiently stabilize, the volume supplements and complements books devoted to conventional construction or emergency relief management.

SECTION II

PROJECT MANAGEMENT AND ADMINISTRATION

This section captures the main project supervision requirements and processes that the recovery project manager should know and control. The discussion usually emphasizes processes, functions, and demands for larger projects. The size of projects increases their complexities and challenges. Lessons learned about work of greater scope can be adapted as needed for smaller restoration projects.

Whether by formal instruction or practical experience, the reader should already have some knowledge of the construction project subjects. The chapters briefly discuss elemental ideas and then explain some special concerns and peculiarities of the subject for disaster recovery work. Adapting conventional construction management precepts to restoration and reconstruction seldom requires drastic rethinking of what a reader experienced in construction probably already knows. However, the management nuances between conventional and recovery projects can make the difference between rendering mediocre decisions that merely satisfice and good decisions that contribute to a competitive advantage.

CHAPTER 4

BIDS, PROPOSALS, AND DELIVERY MECHANISMS

BIDDING

Routinely in the public sector, and usually in the private sector, the lowest responsive and responsible bid is accepted by the owner as the firm-fixed price basis for contracting the work.

Unlike public owners and agencies, private owners usually have significant latitude in deciding what they will or will not accept with regard to responsiveness and responsibility. The decisions and procedures established in the public sector have evolved to provide an open and competitive environment that merits consideration by private owners and their agents, if the owners wish to develop and maintain a reputation for fair and impartial treatment of their competitive bidders. This will improve their chance of getting as many bidders as possible on their work. Jobs with more bidders usually offer lower prices than jobs with few.

Disaster recovery contractors may encounter any of three methods of soliciting construction work: sealed bids; competitive proposals; and other-than-competitive proposals. The main reason to negotiate is to be sure offerors understand what they must do to successfully perform the work. A prequalification process might be required in any case. Prospective bidders then submit relevant experience of their key personnel, similar projects that the company has completed, and current financial statements. If they meet minimum requirements, they are allowed to advance in the process.

Sealed Bidding

Disaster professionals may encounter requests for sealed bids under a number of conditions. Competitive bidding serves multiple purposes. It gives all bidders an equal chance to bid. It fosters competition to obtain the best work at the lowest price, thereby saving owners cost for the work. Owners choose sealed bids if economic conditions for the likely bidders should result in multiple bidders for the work, so that suitable competition is assured. A rule of thumb is that five or six capable bidders offer sufficient competition. Sealed bids reduce the effect of favoritism and help control collusion. Sealed bids usually require a longer bidding process, which is not always in the interest of owners. Such a bidding period could be ridiculous for disaster restoration work that should promptly restore water and fire damage, but longer-term reconstruction after immediate restoration might be determined by sealed bid. Sealed bids are better when the criteria for awarding the contract are predominantly price-related, and when the work and the conditions under which it is performed are not drastically out of the ordinary. There is then no need to discuss other terms of the bids with offerors.

Sealed bid opening is formal and follows a predetermined and open process. It is open to all who wish to compete, while private bidding may be closed or restricted to a smaller set of possible bidders. Public bids are delivered in sealed envelopes, although a fax or e-mail can suffice in the private sector. Late bids are not accepted. There can be a few exceptions, but timeliness of bid receipt by the owner’s agent is rigorously enforced. Also, an acceptable bid must be responsive, and the bidder must be responsible. Thus, the lowest responsive, responsible bidder is usually selected.

If all bids are too high, the owner might reject them and invite an array of new bids, probably after the scope of work is reduced to assure affordability. Just because the owner thinks none of the bids received are reasonable does not necessarily justify switching to negotiated bids. If prices are unreasonable but a low bidder is selected, then negotiation with the low bidder is permissible.

Even during the disaster recovery phase, public entities may view the procurement process as a good opportunity to provide employment to disadvantaged minorities, females, and the disabled. Small business set-asides are not uncommon. Bidding enterprises residing in selected localities may be given an advantage, too. An out-of-town contractor seeking some of the disaster recovery work in a stricken region may find that partnering with a local firm is good for competitiveness.

Responsiveness

To be responsive, the bid must conform in all pertinent respects to the terms and conditions of the invitation to bid (ITB). A responsive bidder adheres rigorously to the terms and conditions of the solicitation to ensure that it is administratively correct. The contractor offers to perform without exception whatever is called for by the invitation to bid. The bidder’s offer cannot place exceptions or conditions on what the ITB requests. Failure of the offer often comes from incompleteness or missing assurances or certifications.

Responsiveness is adjudged as of the time of the bid, not later, and the evaluation period of the bids is stated in the ITB for public and private work. Whether the apparent low bidder is awarded the contract depends first on responsiveness, which is assessed on the face of the bid at the time of bid opening. Anything submitted after opening cannot be considered in this determination. Timeliness of bid submission is a significant responsiveness issue. The bid is submitted when the bidder physically relinquishes control of the bid documents to the owner or owner representative. A tender that is just seconds late is adjudged nonresponsive.

Insignificant irregularities might be ignored by the owner, but favoritism has no bearing, since this condition is objectively determinable on the basis of fact, the requirements of which can vary from private owner to owner or public agency to agency. An informality or abnormality may be tolerated if its effect on price, quantity, quality, or schedule is immaterial when compared to the scope of contract work. If the defect is insignificant and can be corrected or waived without hurting other bidders, then it may be ignored. That is, if the irregularity is a matter of form and not substance, then it can be overlooked. The owner or its agent must ensure that the winning bid complies with all judicial decisions or statutes pertaining to the process. Even a minor and seemingly insignificant discrepancy may result in a bid that is not responsive, if it violates a requirement of statute.

Whether or not any variation is material depends on whether or not its acceptance gives the bidder any advantage over other bidders, if ignored. Thus, many of the responsiveness issues one might confront will somehow relate to issues of bid price. For example, if an addendum were unrecognized in the bid price, the bid would be nonresponsive if the owner’s estimate of the addendum cost would raise the price to that of the second-lowest bid. On the other hand, if the estimate of the addendum cost would be less than the price gap between the lowest and next-lowest bidder, then the bid could still be considered responsive. In this case, the lowest bidder would be offered the chance to amend its price to show the estimated cost increase, if the bidder wants the work. An excessively unbalanced or low bid might be cause for rejection.

A binding signature missing from the bid will make it nonresponsive, unless it is clear from the bid documents—for example, from an accompanying and properly prepared bid bond—that the bidder unequivocally intends to be bound by its submission. A missing or improperly prepared bid security (bond or check) with the bid will be cause for rejection.

Responsibility

Responsibility gets to the issue of whether or not the bidder seems able to reliably accomplish the work. Responsibility includes review and analysis of the bidder’s financial capacity, technical qualifications, organizational management, experience with the required work, facilities and equipment, and integrity. Minimum requirements for some of these might be specified in the ITB. The adequacy of the responsibility of a bidder may be determined either before (prequalification) or after bid opening. That is, as with responsiveness, the matter of bidder responsibility is adjudged from information available at time of bid, but it is also commonly evaluated after the bid is submitted. The owner examines bidder characteristics crucial for project success. Sureties provide bonding for contractors on the basis of many of the same parameters, but usually after more detailed examination of their applicants.

Bidding Documents

Three types of documents are commonly encountered with regard to sealed bidding. The invitation to bid (ITB), instructions to bidders, and the bid form are complementary, interrelated documents.

Invitation to Bid (ITB)

An owner or the owner’s agent invites bids to attract numerous bidders, so that fair and open competition is engendered. Contract costs are lower when more bidders seek the offered work. Good ITBs are simple and concise while communicating information such as the project title and location; owner and designer names; time and place of bid submission; type of contract; how to obtain bidding documents; and required bonding. The bidder wants to know if the scope of work is within his or her expertise and capacity, as well as if there is time to prepare a proper bid. One normally associates ITBs with firm-fixed price contracts and traditional, design-bid-build (DBB) project delivery where contract price is the driving selection concern.

Instructions to Bidders

This document lays out in detail how bidders should prepare their tenders. It provides extensive information backing up what is required by the ITB. The instructions for completing the bid form, how the site shall be examined, procedures to modify or withdraw a bid, award of contract, rejection of bids, and other subjects may be discussed. Substitution of “or equal” materials and equipment, corroboration of financial capacity, and subcontractor qualification are often included, too.

Bid Form

A bid form includes elements that meet all requirements for a bidder to form a legal offer to perform the work. The project itself is clearly and uniquely identified. The name and address of the party receiving bids and the bidder are stated. The bidder confirms that all bidding documents to include addenda were obtained and considered in the bid, and that he or she visited the site. The bidder states unit prices, if required. All major bid proposals and alternate prices are listed. He or she states the time period in which he or she shall complete the work, as well as the conditions and specified time within which he or she agrees to formally contract. The bidder affixes his or her signature and, if needed, his or her seal.

SURETY BONDS

Surety bonds and insurance companies both provide risk reduction, but they do so through different mechanisms. Sureties look at each bond applicant in great detail to determine the applicant’s capital, capacity, competence, and character (the “4Cs”). This close look is required, since the surety practically places itself in the same position as the cosigner of a loan. If the contractor does not do what the contractor says it will, then the surety must step in and make good on the contractor’s promise by hiring and paying another contractor to do the work, up to the financial limit of the bond. The surety has the right to recover from the contractor any monies it must pay against the bond, if there are sufficient assets remaining after the contractor reneges on its promise to the owner. A surety grants bonds only to those applicants that it deems will fully execute their promises.

The contractor must have the capital, the financial resources, to perform the work. It may be at least a month after the work begins before any progress payment is disbursed to a contractor. Without adequate financial resources, em...

Table of contents

• Cover
• Title
• Copyright
• Table of Contents
• Preface
• Section I. Introduction to Disaster Recovery Project Management
• Section II. Project Management and Administration
• Section III. Restoration Techniques
• Afterword
• Bibliography
• Glossary of Terms, Abbreviations, and Acronyms
• Index