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Construction Documents

The contract documents define the work and the agreement between owner and contractor. They include the drawings/plans (what to build, graphically), the specifications (written instructions on the quality of materials and workmanship), the general and special conditions, the agreement, plus addenda (issued before bidding) and change orders (issued during construction).

Estimating turns these documents into a price. A quantity takeoff measures the work; the direct cost (labor, materials, equipment) is increased by a markup (overhead + profit) to give the bid price. During construction the contractor submits progress billings; the owner withholds a retention (commonly 10%) until completion.

$$\text{Bid}=\text{Direct Cost}\times(1+\text{markup}), \qquad \text{Net payment}=\text{Billing}\times(1-\text{retention})$$

★ Written Construction Instructions

Which contract document gives the written instructions describing the required quality of materials and workmanship?

The specifications. Drawings show geometry and location; specifications state quality, standards, and methods. Where they conflict, the contract's order of precedence governs. Final answer: specifications.

★ Bid Price from Markup

A project has a direct cost of P850,000. If the contractor applies a 20% markup, determine the bid price.

$$\text{Bid}=850{,}000\times(1+0.20)=850{,}000\times1.20$$
$$=\text{P}1{,}020{,}000$$

Final answer: P1,020,000.

★★ Markup Percentage

A winning bid is P1,200,000 against a direct cost of P960,000. Determine the markup as a percentage of the direct cost.

$$\text{Markup}=1{,}200{,}000-960{,}000=240{,}000$$
$$\%=\frac{240{,}000}{960{,}000}\times100=25\%$$

Final answer: 25% of direct cost.

★★ Progress Billing with Retention

A contractor's progress billing for completed work is P600,000. If the owner withholds a 10% retention, how much is the net payment for this billing?

$$\text{Net}=600{,}000\times(1-0.10)=600{,}000\times0.90$$
$$=\text{P}540{,}000$$

Final answer: P540,000 (P60,000 held as retention).

★★★ Current Progress Payment Due

A P8,000,000 contract is 45% complete. The owner retains 10% of the value of work done, and the contractor has already received P2,500,000 in previous payments. Determine the amount currently due.

Value of work done to date, then deduct retention and prior payments.

$$\text{Work done}=0.45\times8{,}000{,}000=3{,}600{,}000$$
$$\text{Earned (less retention)}=3{,}600{,}000\times0.90=3{,}240{,}000$$
$$\text{Due now}=3{,}240{,}000-2{,}500{,}000=\text{P}740{,}000$$

Final answer: P740,000.

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Exam Generator Problems

Additional board-style practice items for this topic.

Question Bank: w104

MSTE - Construction / Construction Documents / MSTE November 2019

These are written instructions detailing how the facility is to be constructed.

  1. plans
  2. estimates
  3. specifications
  4. bid documents
Construction specifications are the written instructions describing the technical requirements, materials, methods, and standards for constructing a facility. (Plans are graphical drawings; estimates give quantities and costs; bid documents are the package used for bidding.)
$\boxed{\text{specifications}}$

Question Bank: w222

MSTE - Engineering Management / Engineering Management / MSTE May 2022

A formal or legally binding agreement between two parties is referred to as:

  1. Deal
  2. Plan
  3. Meeting
  4. Contract
The correct answer is Contract. A contract sets out the rights and obligations of the parties and is legally enforceable. A deal is a more informal arrangement, a meeting is a gathering for discussion, and a plan is a proposed course of action.

Question Bank: w223

MSTE - Engineering Management / Engineering Management / MSTE May 2022

It occurs after the completion of construction and the resolution of the majority of punchlist and commissioning issues.

  1. Bidding
  2. Deal
  3. Turnover of a project
  4. Payment
The correct answer is Turnover of a project. Turnover occurs after construction is complete and most punch-list and commissioning issues have been resolved, when the completed project is handed to the owner or client.

Question Bank: w224

MSTE - Construction / Construction Documents / MSTE May 2022

This drawing has elevation as its vertical axis, and horizontal distance as measured along the centerline of the facility (or other reference line), as its horizontal axis.

  1. cross-section
  2. elevation
  3. profile
  4. horizontal view
The correct answer is profile. A profile drawing shows elevation on the vertical axis against distance measured along a centerline or other reference line on the horizontal axis. A cross-section is generally taken transverse to the length.

Question Bank: w227

MSTE - Construction / Construction Documents / MSTE May 2022

It provides the detailed requirements for the materials, equipments and workmanship to be incorporated into the project.

  1. estimates
  2. plans
  3. specifications
  4. bid documents
The correct answer is Specifications. Specifications give the detailed requirements, standards, properties, installation methods, tolerances, finishes, testing requirements, and workmanship for project components. Estimates give approximate costs and quantities, plans give graphical layouts, and bid documents are the package issued to bidders.