Engineered Lumber

     Lumber is incredibly valuable in the construction industry.  It is used to frame residential construction, many apartment complexes and some light office / industrial projects.  There are several steps in the process of creating useable lumber from cutting down trees through processing in the lumber yard.  The following surveys types of "engineered lumber" that are ultimately incorporated into construction projects. 

     Engineered Lumber: Engineered lumber is lumber created by a manufacturer and designed for a certain structural purpose. Categories of engineered lumber include:

     Laminated Veneer Lumber (LVL): LVL comes in 1 ³⁄₄ inch thicknesses with depths such as 9 ¹⁄₂, 11 ⁷⁄₈, 14, 16, 18, or 24 inches, and are often doubled or tripled up. They function as beams to provide support over large spans, such as removed support walls and garage door openings, places where dimensional lumber isn't sufficient, and also in areas where a heavy load is bearing from a floor, wall or roof above on a somewhat short span where dimensional lumber isn't practical. This type of lumber cannot be altered by holes or notches anywhere within the span or at the ends, as it compromises the integrity of the beam, but nails can be driven into it wherever necessary to anchor the beam or to add hangers for I-joists or dimensional lumber joists that terminate at an LVL beam.

     Wood I-Joists: Sometimes called "TJI","Trus Joists" or "BCI," all of which are brands of wood I-joists, they are used for floor joists on upper floors and also in first floor conventional foundation construction on piers as opposed to slab floor construction. They are engineered for long spans and are doubled up in places where a wall will be aligned over them, and sometimes tripled where heavy roof-loaded support walls are placed above them. They consist of a top and bottom chord/flange made from dimensional lumber with a webbing in-between made from oriented strand board (OSB). The webbing can be removed up to certain sizes/shapes according to the manufacturer's or engineer's specifications, but for small holes, wood I-joists come with "knockouts," which are perforated, pre-cut areas where holes can be made easily, typically without engineering approval. When large holes are needed, they can typically be made in the webbing only and only in the center third of the span; the top and bottom chords cannot be cut. Sizes and shapes of the hole, and typically the placing of a hole itself, must be approved by an engineer prior to the cutting of the hole and in many areas, a sheet showing the calculations made by the engineer must be provided to the building inspection authorities before the hole will be approved.

 

     Finger-Jointed Lumber: Dimensional lumber lengths typically are limited to lengths of 22 to 24 feet, but can be made longer by the technique of "finger-jointing" lumber by using small solid pieces, usually 18 to 24 inches long, and joining them together using finger joints and glue to produce lengths that can be up to 36 feet long in 2×6 size. Finger-jointing also is predominant in precut wall studs. It is also an affordable alternative for non-structural hardwood that will be painted (staining would leave the finger-joints visible). Care must be taken during construction to avoid nailing directly into a glued joint as stud breakage can occur.

     Glu-lam Beams: Created from 2×4 or 2×6 stock by gluing the faces together to create beams such as 4×12 or 6×16. By gluing multiple, common sized pieces of lumber together, they act as one larger piece of lumber - thus eliminating the need to harvest larger, older trees for the same size beam.

     Manufactured Trusses: Trusses are used in home construction as a pre-fabricated replacement for roof rafters and ceiling joists (stick-framing). It is seen as an easier installation and a better solution for supporting roofs as opposed to the use of dimensional lumber's struts and purlins as bracing. In the southern US and other parts, stick-framing with dimensional lumber roof support is still predominant.

Construction Insurance

Insurance is the keystone for managing financial risk in the construction process.  Insurance will not eliminate risk, rather it shifts most of the risk to a professional risk bearer, such as an insurance company.  Insurance coverages can be very complicated and each construction project and contract presents its own unique circumstances and challenges.  Some insurance coverages are required by statute.  Others are called for by the Owner in the contract.  Even when not required, contractors will often purchase coverage for certain risks to obtain an indicia of security and peace of mind.  While not exhaustive, the following lists types of construction insurance.

All-risk builder's risk insurance: Protects against all risks of direct physical loss or damage to the project or to associated materials caused by any external effect, with noted exclusions.

Named-Peril builder's risk insurance: Protection for the project, including stored materials, against direct loss by fire or lightning.  A number of separate endorsementsto this policy are available that add coverage for specific losses.

Bridge Insurance: This insurance is of the inland marine type and is often termed the "bridge builder's risk policy." It affords protection during construction against damage that may be caused by fire, lightning, flood, ice, collision, explosion, riot, vandalism, wind, tornado and earthquake.

Property Insurance on Contractor's Buildings: Affords protection for offices, sheds, warehouses, and contained personal property.

Contractor's public liability and property damage insurance: Protects the contractor from legal liability for injury to persons not in its employ and for damage to property of others, if the property is not in the contractor's care, custody, or control when such injuries or damage arise out of the operations of the contractor.

Surety Bonds

Bonding is routinely required on public projects.  The Miller Act prescibes the requirements for payment and performance bonds on federal projects.  Many states have statutes that enforce requirements similar to the federal Miller Act.  Whether or not private projects require funding is up to the parties involved in the project.  However, it is typical that Owners will require bonding projects greater than $15 million in value.

Surety bond: A contract among at least three parties: 1) The obligee - the party who is the recipient of an obligation; 2) The principal - the primary party who will be performing the contractual obligation; and, 3) The surety - who assures the obligee that the principal can perform the task.

How it Works:  Through a surety bond, the surety agrees to uphold — for the benefit of the obligee — the contractual promises (obligations) made by the principal if the principal fails to uphold its promises to the obligee. The contract is formed so as to induce the obligee to contract with the principal, i.e., to demonstrate the credibility of the principal and guarantee performance and completion per the terms of the agreement. The principal will pay a premium (usually annually) in exchange for the bonding company's financial strength to extend surety credit. In the event of a claim, the surety will investigate it. If it turns out to be a valid claim, the surety will pay it and then turn to the principal for reimbursement of the amount paid on the claim and any legal fees incurred. If the principal defaults and the surety turns out to be insolvent, the purpose of the bond is rendered nugatory. Thus, the surety on a bond is usually an insurance company whose solvency is verified by private audit, governmental regulation, or both.

Types of Surety Bonds: Several types of surety bonds are used heavily in the construction industry.  Types of bonds include:

    Bid bonds: Guarantee that a contractor will enter into a contract if awarded the bid.

     Performance bonds: Guarantee that a contractor will perform the work as specified by the contract.

    Payment bonds: Guarantee that a contractor will pay for services and materials.

     Maintenance bonds: Guarantee that a contractor will provide facility repair and upkeep for a specified period of time.

Miller Act:  Codified as amended at 40 U.S.C. §§ 3131–3134 the Miller Act requires prime contractors on some government construction contracts to post bonds guarantying both the performance of their contractual duties and the payment of their subcontractors and material suppliers.

Types of Construction Contracts

There are multiple types of construction contracts.  The type of contract to be used on a specific project depends on the preferences of the parties involved and the specific circumstances of the project. 

Lump Sum Contract: A lump sum contract, sometimes called stipulated sum, is the most basic form of agreement between a supplier of services and a customer. The supplier agrees to provide specified services for a specific price. The receiver agrees to pay the price upon completion of the work or according to a negotiated payment schedule. In developing a lump sum bid, the builder will estimate the costs of labor and materials and add to it a standard amount for overhead and the desired amount of profit. Advantages of this method include: 1) Low financial risk to Owner; 2) Known cost at outset; and 3) Minimum Owner supervision related to quality and schedule.  Disadvantages include: 1) Changes difficult and costly; 2) Early project start not possible due to need to complete design prior to bidding;  and, 3) Bidding expensive and lengthy.

Unit Price Contract: In a unit price contract, the work to be performed is broken into various parts, usually by construction trade, and a fixed price is established for each unit of work. For example, painting is typically done on a square foot basis. Unit price contracts are seldom used for an entire major construction project, but they are frequently used for agreements with sub-contractors. They are used for maintenance and repair work. In a unit price contract, like a lump sum contract, the contractor is paid the agreed upon price, regardless of the actual cost to do the work.

Construction Bidding

What is Construction Bidding?: Construction bidding is the process of submitting a proposal (tender) to undertake, or manage the undertaking of a construction project. The process starts with a cost estimate from blueprints and take off.

Bid Tender:  The tender is treated as an offer to do the work for a certain amount of money, or a certain amount of profit. The tender which is submitted by the competing firms is generally based on a bill of quantities, a bill of approximate quantities or other specifications which enable the tenders attain higher levels of accuracy, the statement of work.

For instance, a bill of quantities is a list of all the materials, and other work such as amount of excavation, of a project which have sufficient detail to obtain a realistic cost, or rate per described item of work/material. The tenders should not only show the unit cost per material/work, but should also if possible, break it down to labor, material and other costs. This provides credibility that the tender is feasible. Two types of bids are balanced bids and unbalanced bids.

Balanced Bid: On a unit-price project, a balanced bid is one in which the unit price for each bid item includes its own direct cost, plus its pro-rata share of the project overhead, markup, bond, and tax.

Unbalanced Bid:   An unbalanced construction bid refers to a situation where the bidder puts a high price on certain items and a low price on other items during contract bidding. This sometimes happens when bidders want to conceal pricing strategies from their competition or to gain more money at the start of a project.

Construction Cost Estimating

Overview: Construction estimating is the compilation and analysis of the many items that influence and contribute to the project. Estimating is done before work begins and requires evaluation of bidding documents and site conditions.  Estimating is a fluid process and there are as many different estimating procedures as their are contractors.  As with anything else in today's world, technology is vital to construction cost estimating.  The following discusses some basic aspects of construction estimating.

Lump Sum Estimates: Through this process, a fixed price is compiled, for which the contractor agrees to perform a prescribed package of work in full accordance with the drawings and specifications.  The contractor agrees to carry out its responsibilities even though the cost may prove greater than the stipulated amount.  This type of estimate is is applicable only when the nature of the work and the quantities involved are well defined by the bidding documents.  Lump sum estimating requires that "quantity surveys" or "quantity takeoffs" be made.  This would be a complete listing of all the materials and items of work that will be required.  Using these quantities as a basis, the contractor computes the costs of the materials, labor, equipment, subcontracts, overhead, contract bond and tax.  The sum total of these individual estimates constitutes the anticipated overallcost of construction.  A mark-upwill be added onto this number to derive the lump-sum estimate the contractor will bid as its price for doing the work.

Unit Price Estimates:  Unit price estimates can be compiled when quantities of work items may not be precisely determinable, but the nature of the work is well defined.  Price estimates are derived for each bid item for a particular job.  Quantity surveys, similar to those in the lump sum process, for each bid item.  The total project cost is arrived at by adding the totals of each of these amounts, but all estimated costs will be kept segregated by bid item to which they apply.

What is RS Means?:  RS Means is a division of Reed Business Information that provides cost information to the construction industry so contractors in the industry can provide accurate estimates and projections for their project costs. RS Means has become a data standard for government work in terms of pricing, and is widely used by the industry as a whole. RS Means is accessible online and it also integrated in a variety of cost estimating software packages to allow for fast and reliable estimating. Cost information is updated annually and is available online, via CD-Rom, or in book form.

Sustainable & Green Building Codes

Genesis of Green Codes:  The advent of green building codes and standards is a direct result of the wide-sweeping impacts of green building rating systems like LEED demonstrating that buildings really can be designed and built to lower operating costs, increase value, and reduce their overall impacts.

What is LEED?:  LEED (Leadership in Energy and Environmental Design) is a Green Building Rating System that assess the environmental performance of built projects across a spectrum of key criteria. From water and energy use efficiency to location, the impact of materials used, and more, LEED is intentionally designed to recognize buildings that go beyond minimum code compliance. While these minimums will vary from jurisdiction to jurisdiction, they should at the very least include the most current version of the model energy code as a mandatory minimum for all buildings.

LEED Certification:  LEED points are awarded on a 100-point scale, and credits are weighted to reflect their potential environmental impacts. Additionally, 10 bonus credits are available, four of which address regionally specific environmental issues. A project must satisfy all prerequisites and earn a minimum number of points to be certified.

 

The Green Building Certification Institute (GBCI) administers LEED certification for all commercial and institutional projects registered under any LEED Rating System. The United States Green Building Council (USGBC) administers the development and ongoing improvement of the LEED rating systems. USGBC is also the primary source for LEED and green building education and resources for project teams, such as reference guides, rating system addenda, workshops, online trainings and other tools to help you achieve success on your LEED project.

International Green Construction Code (IgCC): The IgCC is the first model code that includes sustainability measures for the entire construction project and its site — from design through construction, certificate of occupancy and beyond. The new code is expected to make buildings more efficient, reduce waste, and have a positive impact on health, safety and community welfare.  The IgCC creates a regulatory framework for new and existing buildings, establishing minimum green requirements for buildings and complementing voluntary rating systems which may extend beyond the customizable baseline of the IgCC. The code acts as an overlay to the existing set of International Codes, including provisions of the International Energy Conservation Code and ICC-700, the National Green Building Standard, and incorporates ASHRAE Standard 189.1 as an alternate path to compliance.