Comparing And Evaluating Subcontract Quotations For Formworker And Concretor Work

Tender Budget Information

It is very important to select the best subcontractor when implementing a construction project because subcontractors play a very vital role in successful completion of these projects (Hartmann, et al., 2009); (Marzouk, et al., 2013). This task involves evaluating and comparing four quotations submitted by four different companies for formwork and concrete works. The purpose of this evaluation is to select the best subcontractor (in terms of cost and completion time) for the formwork and concrete works on the Strathfield Apartment project. The builder (Best Constructions Pty Ltd) has prepared an original tender budget for the works and will be the basis of the quotation evaluation.

Constructions Pty Ltd budget estimate

The budget for the formwork and concrete works estimated by the builder is provided in Table 1 below

Table 1: Budget estimate by Constructions Pty Ltd

Item Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Quantity	Unit	Unit Price ($)	Total Cost ($)
Formwork and concrete costs	1	PC	484,388.20	483,157
Liquidated damages	0	Days	4,500	0
O/H costs	65	Days	2,000	130,000
Total				613,157

Assumption: there are eight hours in a normal working day and the concrete work will require 12 concrete pump setups.

The budget for the formwork and concrete works estimated by the Ultimate Concrete Services Pty Ltd is provided in Table 2 below

Table 2: Budget estimate by Ultimate Concrete Services Pty Ltd

Item	Quantity	Unit	Unit Price ($)	Total Cost ($)
Concrete and reinforcement works	1	PC	305,520	305,520
Formwork requirements	1,994	M2	92	183,448
Additional concrete pumps	4	No	750	3,000
Labour cost	560	Hours	68	38,080
O/H costs	70		2,000	140,000
Liquidated damages	5	Days	4,500	(-22,500)
Total				647,548

It is important to note that Ultimate Concrete Services Pty Ltd will complete the work five days late. Therefore the liquidated damages cost equivalent to $22,500 will be deducted from its total cost as shown in Table 2 above.

The budget estimate by Ultimate Concrete services Pty Ltd also excludes the following items that will have to be supplied by the builder: all hoisting facilities except those required for concrete placement; all lunch, toilet and change facilities; and curing concrete surfaces.

Assumption: there are eight hours in a normal working day, and a total of 12 concrete setups will be required for the concrete work.

The budget for the formwork and concrete works estimated by the Professional Formwork and Concreting Services Pty Ltd is provided in Table 3 below

Table 3: Budget estimate by Professional Formwork and Concreting Services Pty Ltd

Item	Quantity	Unit	Unit Price ($)	Total Cost ($)
Concrete testing	527	M3	8	4,216
Place and finish concrete slabs	527	M3	48	25,296
Concrete pump setups	12	No	500	6,000
Termite control	684	M2	6	4,104
50mm sand blinding	684	M2	4.30	2,941.20
Place only membrane	684	M2	7	4,788
S&P and strip formwork	1,310	M2	110	144,100
Labour cost	424	Hours	70	29,680
O/H costs	53		2,000	106,000
Liquidated damages	0	Days	4,500	0
Total				327,125.20

Professional Formwork and Concreting Services Pty Ltd will complete the work earlier than the stipulated deadline hence there are no liquidated damages.

The budget estimate by Professional Formwork and Concreting Services Pty Ltd provided in Table 3 above excludes the following: supply of concrete, S&P steel reinforcement, curing of concrete, supply of membrane and workers’ shed accommodation.

Assumption: there are eight hours in a normal working day, and the company will use 12 concrete setups to complete the concrete work.

Comparison of Quotations

The budget for the formwork and concrete works estimated by the Quality Concreting Pty Ltd is provided in Table 4 below

Table 4: Budget estimate by Quality Concreting Pty Ltd

Item	Quantity	Unit	Unit Price ($)	Total Cost ($)
Formwork	1	PC	115,800	115,800
S&P and finish concrete works and reinforcement	1	PC	305,400	305,400
Additional pump setups	4	No	750	3,000
Labour cost	560	Hours	75	42,000
O/H costs	70	Days	2,000	140,000
Liquidated damages	5	Days	4,500	(-22,500)
Total				583,700

Quality Concreting Pty Ltd will complete the work five days late. Therefore the liquidated damages cost equivalent to $22,500 will be deducted from its total cost as shown in Table 4 above.

The budget estimate by Quality Concreting Pty Ltd provided in Table 4 above excludes the following: concrete testing, supply of hoisting facilities, curing of concrete, sand blinding, termite control, removal of rubbish, and S&P ‘Fortecon’ slab underlay.

Assumption: there are eight hours in a normal working day, and the company will use 12 concrete setups to complete the concrete work.

The budget for the formwork and concrete works estimated by the P&W Concreting Services Pty Ltd is provided in Table 5 below

Table 5: Budget estimate by P&W Concreting Services Pty Ltd

Item	Quantity	Unit	Unit Price ($)	Total Cost ($)
Suspended formwork	1,310	M2	95	124,450
S&P steel reinforcement	79.05	Tonnes	2,200	173,910
S&P and finish 32MPa concrete	527	M3	198	104,346
Labour cost	576	Hours	67	38,592
O/H costs	72	Days	2,000	144,000
Liquidated damages	7	Days	4,500	(-31,500)
Total				553,798

Weight of steel reinforcement = 527 m³ x 0.15 tonnes/m³ = 79.05 tonnes

P&W Concreting Services Pty Ltd will complete the work seven days late. Therefore the liquidated damages cost equivalent to $31,500 will be deducted from its total cost as shown in Table 5 above.

The budget estimate by P&W Concreting Services Pty Ltd provided in Table 5 above excludes the following: supply of membrane, curing of concrete, testing of concrete, supply of workers sheds, hoisting of materials, and removal of rubbish.

Professional Formwork and Concreting Services Pty Ltd has the lowest bid ($327,125.20) and will complete the work 12 days earlier than the stipulated deadline. However, the company has excluded very essential items in its budget estimate. Including these items will exceed the estimated budget by the builder. Therefore the company is not able to offer the required materials and services for the job hence not suitable for the formwork and concrete work package. P&W Concreting Services Pty Ltd has the second lowest bid ($553,798) and will complete the work seven days late than the stipulated deadline. The company has also excluded some items in its budget but the items can be provided by the builder from the other works being performed on the project. If the items are included in the budget, the company’s estimate still would not exceed the builder’s estimate.

The budget estimate for Ultimate Concrete Services Pty Ltd is $647,548 and the company will complete the work 5 days late than the stipulated deadline. The company has also excluded some items though they can be easily provided by the builder without incurring much cost. However, the company’s estimate already exceeds the builder’s estimate even before adding the excluded items. Hence the subcontractor should not be considered for the job.

Documents and Procedures for Managing Subcontractors

The budget estimate for Quality Concreting Pty Ltd is $583,700 and the company will complete the work five days late than the stipulated deadline. The company has excluded some items that are essential and will have to be provided by the builder from external sources. This may lead to further delay and additional costs.

Therefore each of the four subcontractors have exclusions i.e. items that they have not included in their budget estimates. But considering the cost, time and the ability of the company to complete the required works adequately, the most suitable subcontractor for the formwork and concrete works package is P&W Concreting Services Pty Ltd.

Subcontractor pre award interview

Below is a set of questions that can be used to interview the lowest tenders in search for a suitable subcontractor to perform particular work in a construction project:

Pre Award Subcontractor Interview Template

1. Are you contented with all the general and special conditions of the contract?
2. What is the size of your workforce?
3. Do you have adequate experts to perform this work and are you able to increase the number of workers if need be?
4. How many projects are you working on currently?
5. How many projects have you completed in the past two years?
6. Have you performed this kind of work before?
7. What was the total revenue of your company last year?
8. Are you able to complete the work within stipulated deadline?
9. Do you have all the required plant/equipment to perform this subcontract? If no, how will you get the missing plant/equipment?
10. Have you included all the works specified in the tender documents and are you able to complete them to the required standards?
11. How do you ensure total compliance to applicable code of practice?
12. What pricing method have you use to create your budget estimate?
13. What safety plan do you use to minimize safety risks on and around the site?
14. Do you have insurance cover for your employees and plant/equipment?
15. How many litigation cases do you have now?
16. What quality control and assurance systems do you apply?
17. Are you in a position to start executing the work immediately?
18. Do you have any waste reduction and management approaches?
19. Do you have all the necessary licenses to practice as a subcontractor in this region?
20. Can you work on weekends and public holidays if need be?
21. From the information in the tender document, have you created a work schedule for the contract?
22. What innovative products or services do you have?
23. Is there anything special you will need from the company to improve your performance and efficiency?

Signed by:

Builder (or representative):                                                            Date:

Subcontractor (or representative:                                                   Date:

Criteria for selecting a new subcontractor

It is very important to evaluate a subcontractor comprehensively during selecting process (Ng & Skitmore, 2014). Some of the criteria to use for the selection process include the following:

Workforce: the company should have adequate skilled, semi-skilled and unskilled employees with the necessary academic qualifications and skills set to perform the work (Abbasianjahromi, et al., 2013).

Plant and equipment: the company should have the necessary plant/equipment to perform the work (Abbasianjahromi, et al., 2016). The plant/equipment may either be owned or leased.

Experience: the company’s previous works should be evaluated as it provides essential information about the company’s capability to perform the work at hand (Ulubeyi, et al., 2017). Companies with vast experienced in similar projects should be preferred.

Reputation: the reputation provides useful information about the company’s professionalism and the kind of relationship it builds with its partners and clients. A bad reputation should always be a red flag.

Certification: the company should have the necessary licenses and permits to operate business in the region as this shows that it has all the qualifications in that field (Abbasianjahromi, et al., 2018). This information can be requested from the company or obtained from relevant regulatory agencies.

Litigation cases: it is also important to check the number of solved and ongoing litigation cases that the company has had over the past years. This gives vital information about the possibility of conflicts and disputes (Akintan & Morledge, 2013). Companies with less litigation cases should be preferred.  

Financial records: the company selected should have a stable financial record as this shows that it can meet some of the fundamental financial needs (Polat, 2016). The financial information can be obtained from the company’s financial reports or relevant financial institutions where the company makes its transactions.

Workload: it is also important to ensure that the company’s current workload does not affect its capability to perform the work.

Quality assurance: the company’s quality assurance and control systems should be evaluated to ensure that they guarantee high quality of the final products or services.

Safety: it is also recommended to select a company that has a comprehensive safety control and management plan to ensure safety and health of people on and around the site.  

Innovativeness: innovation is very important today as it helps in reducing waste, costs, time and carbon footprint. As a result, it is important to look at some of the innovative concepts or systems that a company adopts in its operations.

Values and ethics: the company selected should also have an accepted code of ethics and b guided by values such as transparency, accountability, client satisfaction, sustainability, etc. This information can be obtained from the company’s websites, brochures, performance reports, etc.

Since the potential subcontractors are not currently on the company books, there is limited information about them. However, information about the company’s qualification, previous work history, credit checks, etc. can be gathered through the following approaches: requesting the subcontractor to share relevant documents such as registration or incorporation certificate, licenses, permits, project completion certificates, project handover certificates, company awards, recommendation letters and annual reports; seeking information from relevant government agencies; gathering information from company websites and social media networks; and requesting information from pertinent financial institutions.

The most suitable subcontractor can be selected from a group of subcontractors by using a matrix where scores are awarded to different criteria that are used to evaluate the shortlisted subcontractors. Below is a template that can be used to rank and select a new subcontractor. The best subcontractor is the one that has the highest total score.

Criteria	Weight	Score	Remarks
Workforce	10
Plant/equipment	10
Experience	10
Reputation	10
Certification	10
Litigation cases	10
Financial records	10
Workload	10
Quality assurance	10
Safety	10
Innovativeness	10
Values and ethics	10
Total	120

The role of communication in successful implementation of projects cannot be overemphasized (Reyes-Martinez & Chileshe, 2011). The following are some of the communication methods that can be used by subcontractors on site to share information with other stakeholders:

Phone calls: this is the process where the subcontractor makes a phone call directly to whom he/she wants to communicate with. The process involves immediate responses.  

Electronic: this is a commonly used formal process of communication between subcontractors and other stakeholders. It mainly involves sharing information, including documents, drawings, presentations, etc. through emails (Richards, 2018).  

Teleconferencing and video conferencing: teleconferencing involves use of telephone conferencing system whereas video conferencing involves use of video conferencing system where those communicating see each other on a TV or computer screen.

Site meetings: this is where the subcontractor organizes for a meeting with other stakeholders to discuss issues arising or progress of the report. In this process, participants attend the meeting physically.

Print media: this involves printing the materials containing information to be communicated, such as progress report or site meeting resolutions, and sharing them with relevant stakeholders.  

Letters: this is where the subcontractor writes a letter and sends it to other stakeholders. It may take more time for the subcontractor to receive responses when using letter depending on the delivery method.

Poor subcontractor performance: Procedure

Some of the necessary steps to take before conducting an interview about unsatisfactory work by a subcontractor are as follows: review the contract documents; evaluate the documents submitted by the subcontractor about her qualifications; identify areas where the subcontractor’s performance was poor; identify potential factors that may have contributed to the poor performance; establish potential laxities of the subcontractor; determine quality assurance; control and management systems that the subcontractor was using; use the gathered information to prepare a poor performance report; and invite the subcontractor to attend the planned interview.   

Interview template

Below is a template that can be used to conduct a subcontractor performance interview about unsatisfactory work:

Poor Subcontractor Performance Interview

Project name:

Project number:

Project location:

Subcontractor name:

Subcontract no:

Subcontract type:

Subcontract value:

Completion date:

Project progress (%):

Date:

1. Do you have all the necessary contract documents?
2. Did you guarantee high quality work at the start of the contract?
3. Do you have all the qualifications to perform this contract?
4. Have you been receiving the support you needed from the builder and other stakeholders?
5. Has the builder breaches the contract in any way?
6. Describe the construction methods you have been using in this project
7. Do you have qualified, full time site supervisors?
8. What quality and cost control measures have you put in place?
9. Do you have any training plan for your employees?
10. What measures have you put in place to ensure that your employees understand the importance of good performance?
11. What are the factors that have made you perform poorly in this project?
12. Have you ever discussed these factors with the builder? If no, why?
13. What performance management system are you applying?
14. Is there a way you can improve performance of the already completed and planned work?
15. What are you going to do differently to improve your performance?

The staffs to interview when investigating the poor performance of subcontractors include: representatives of the subcontractor including consultants, financial officer, site manager, safety manager, supervisor and foreman; and representatives of the builder including site engineer, quality manager and supervisor.

Action plan

If a subcontractor performs poorly, it is very important to develop an action plan that will improve performance of the current and future contracts. Some of the activities that can be included in the action plan include: vet potential subcontractors more comprehensively so as to determine their actual competency of executing the contract; ensuring close supervision of ongoing work; asking the subcontractor to provide weekly progress report; dividing the contract into milestones and ensuring that each milestone is approved before proceeding to the next one; improve communication, collaboration and cooperation between the builder and subcontractor (Tan, et al., 2017); ensuring that the subcontractor adopts an efficient quality assurance and control system; and ensuring that the subcontractor is aware of severe penalties in case of poor performance.

Details of monitoring

One strategy of preventing poor performance from happening again is to develop a monitoring plan. The monitoring should basically involve a follow up aimed at ensuring that the measures included in the action plan are implemented effectively. Key performance indicators should be determined and evaluated against the works done by the subcontractor. This will ensure that all works are done in accordance with the specifications, codes and standards in the contract documents thus preventing poor performance.

Unsatisfactory performance meeting

Below is a template that can be used to record a meeting between a builder and subcontractor about unsatisfactory performance, together with examples of agreed solutions

Poor Performance Meeting Template

Project name:

Project number:

Project location:

Subcontractor name:

Subcontract number:

Subcontract type:

Subcontract value:

Completion date:

Project progress (%):

Venue:

Date:

List of attendees:

Absent with apology:

Absent without apology:

List of agenda items: contract conditions; performance requirements; factors that contributed to poor performance; why the subcontractor failed to prevent these causes; effectiveness of quality assurance and control systems used by the subcontractor; effects of the poor performance; persons responsible for the poor performance; and action plan to prevent poor performance in the future.

List of agreed solutions: increase supervision of work; provide weekly progress report; evaluate performance of each milestone before proceeding to the next one; enhance communication and collaboration of stakeholders; use more efficient and effective quality control systems; develop ad adopt an efficient risk management plan; and ensure that all works are done in accordance with the requirements in the contract documents.  

Next meeting date:

Signed by:

Builder (or representative):                                                                              Date:

Subcontractor (or representative):                                                                   Date:

Others:                                                                                                              Date:

Evaluation details

Every work performed by the subcontractor should be evaluated to determine if it has been done in accordance with the contract requirements. The performance of the subcontractor should be evaluated by the builder’s representative such as project manager, site manager, job supervisor or quality manager. The items to be considered when performing overall performance of the subcontractor include: personnel (number and qualifications), understanding of contract conditions, workplace health and safety (WHS), adherence to applicable standards and codes, workmanship quality, communication level (Assbeihat, 2018), collaboration and cooperation, consultation level, cost, completion speed, waste control, payment claims, non-compliance remedies, number of conflicts/disputes, innovativeness, and sustainability targets.

Evaluation template

The template below can be used in evaluating the overall performance of a subcontractor. The aim of the evaluation is usually to determine areas where the subcontractor failed, factors that may have led to the failure and how to improve the performance moving forward.

Overall Subcontractor Performance Evaluation

Project name:

Project number:

Project location:

Subcontractor name:

Subcontract number:

Subcontract type:

Subcontract value:

Completion date:

Project progress (%):

Date:

Evaluation item	Weight	Score	Remarks
Personnel (number and qualifications)	10
Understanding of contract conditions	10
WHS	10
Adherence to applicable standards and codes	10
Quality of workmanship	10
Level of communication	10
Level of collaboration and cooperation	10
Level of consultation	10
Cost	10
Completion speed	10
Waste control	10
Payment claims	10
Non-compliance remedies	10
Number of conflicts or disputes	10
Innovativeness	10
Sustainability targets	10

Signed:

Builder (or representative):                                                                            Date:

The outcome from this evaluation should be shared with the subcontractor because it will be useful in ensuring that the overall performance of the subcontractor is improved in the future.

The following are some of the items that have to be explained during site induction of contractors before actual commencement of project works: site layout, rules of the site, restricted areas, welfare facilities, traffic control plan, parking arrangement, signing in/out processes, site attendance reporting, communication protocol, signs and symbols, working hours, hazardous materials/substances, safety and health hazards, environmental protection, accident reporting processes, emergency procedures, evacuation procedures, fire assembly point, personal protective equipment, key personnel, representatives, behavior and conduct standards, disaster management, waste management, quality assurance and control, risk factors, work permits, professional qualifications, working at height, lone working, coordination, method statements, weekly and monthly reports, disputes and conflicts, early/late completion, and penalties, among others. The following paperwork should also be completed before the start of actual work: general and special conditions of contract, form of agreement, site information, works information, activities schedules, drawings, bill of quantities, etc. (Rodriguez, 2018).

References

Abbasianjahromi, H., Rajaie, H. & Shakeri, E., 2013. A Framework for Subcontractor Selection in the Construction Industry. Journal of Civil Engineering and Management, 19(2), pp. 158-168.

Abbasianjahromi, H., Rajaie, H., Shakeri, E. & Kazemi, O., 2016. A new approach for subcontractor selection in the construction industry based on portfolio theory. Journal of Civil Engineering and Management, 22(3), pp. 346-356.

Abbasianjahromi, H., Sepehri, M. & Abbasi, O., 2018. A Decision-Making Framework for Subcontractor Selection in Construction Projects. Engineering Management Journal, 30(2), pp. 141-152.

Akintan, O. & Morledge, R., 2013. Improving the Collaboration between Main Contractors and Subcontractors within Traditional Construction Procurement. Journal of Construction Engineering, Volume 2013, pp. 1-11.

Assbeihat, J., 2018. Reasons Behind Subcontractor’s Defaults In Construction Projects. International Journal of Civil Engineering and Technology, 9(4), pp. 327-338.

Hartmann, A., Ling, F. & Tan, J., 2009. Relative important of subcontractor selection criteria: evidence from Singapore. Journal of Construction Engineering Management, 135(9), pp. 826-832.

Marzouk, M., El Kherbawy, A. & Khalifa, M., 2013. Factors influencing sub-contractors selection in construction projects. HBRC Journal, 9(2), pp. 150-158.

Ng, S. & Skitmore, M., 2014. Developing a framework for subcontractor appraisal using a balanced scorecard. Journal of Civil Engineering and Management, 20(2), pp. 149-158.

Polat, G., 2016. Subcontractor selection using the integration of the AHP and PROMETHEE methods. Journal of Civil Engineering and Management, 22(8), pp. 1042-1054.

Reyes-Martinez, G. & Chileshe, N., 2011. Effectiveness of communication between contractors and sub-contractors: Practices, barriers and enablers. Adelaide, University of South Australia.

Richards, L., 2018. Methods of Communication Within a Business. [Online]
Available at: https://smallbusiness.chron.com/methods-communication-within-business-2931.html
[Accessed 15 January 2019].

Rodriguez, J., 2018. 10 Essential Contract Documents for Every Construction Project. [Online]
Available at: https://www.thebalancesmb.com/contract-documents-for-every-construction-project-844919
[Accessed 15 January 2019].

Tan, Y., Xue, B. & Cheung, Y., 2017. Relationships between Main Contractors and Subcontractors and Their Impacts on Main Contractor Competitiveness: An Empirical Study in Hong Kong. Journal of Construction Engineering and Management, 143(7), pp. 1-12.

Ulubeyi, S., Kazaz, A. & Arslan, V., 2017. Decision Criteria for Subcontractor Selection in International Construction Projects. Merkez, Turkey, Bulent Ecevit University.