Final exam schedule kingsborough

For a $10 million office building project, the design documents are 60% complete. The owner has

decided to bring a construction management firm onboard to assist in the preconstruction and

construction phases of the project.

The owner advertised the Request for Proposals (RFPs), received written proposals from two (2)

potential firms, Firm A and Firm B. Both the firms are equally qualified in terms of experience,

references, financial capability etc. and have worked with the owner successfully on previous

projects.

Firm A is proposing a cost-plus-fee contract with 10% fee on top of its estimated cost of $250 per

hour. On the other hand, Firm B is proposing a CM-at-risk style contract with a guaranteed

maximum price (GMP) of $7 million.

The remaining design of the project is expected to complete in the next 6 months and the

construction duration of the project is expected to be 24 months. The completion of the project

on schedule is very important to the Owner and needs to be strictly obeyed by all the parties.

For your information, construction typically costs about 80% of the total project cost.

1. Based on the above scenario, which firm should the owner award the contract for the CM

services? Explain your answer from owner’s perspective of managing risk and weighing in

advantages/disadvantages of each approach. (Word Limit: 300 words)

2. If base rate for a Resident Engineer is $100 per hour for Firm A and $150 per hour for Firm B.

What will be their billed labor rates for Resident Engineer based on cost plus fee contract

with 10% fee?

3. If the owner proceeds with Firm B (CM-at-risk) what are the possible advantages and

disadvantages of this approach from owner’s perspective? (Word Limit: 250 words)