Contract Construction

CONSTRUCTION METHODS AND PROJECT MANAGEMENT

CONCEPTS

Infrastructure can be defined as the basic facilities and installation needed for the functioning of the society Construction is typically carried out as project

A temporary endeavor undertaken to create a unique product

CONCEPTS New Construction Rehabilitation Retrofitting Maintenance Repair

CONCEPTS

Construction is a process that consists of the building or assembling of infrastructure

Site preparation Foundations Mechanical Electrical work Any other work necessary to complete the project

Construction Project includes all material and work necessary for the construction of a finished structure for occupancy by End Customer. ◦ ◦ ◦ ◦ ◦

CONCEPTS Large scale construction is a feat of human multitasking Managed by a Project Manager Construction Manager Design Engineer Construction Engineer Project Architect

Supervised by ◦ ◦ ◦ ◦

CONCEPTS

For the successful execution of project, effective planning is essential. Environmental Impact Scheduling Budgeting Construction site safety Availability of building materials Construction Delays Bidding

Considerations involves: ◦ ◦ ◦ ◦ ◦ ◦ ◦

TYPES OF CONSTRUCTION PROJECTS Residential Building Institutional and Commercial Industrial Specialized Industrial Constructions Highway Construction Heavy Construction

RESIDENTIAL CONSTRUCTION Includes houses, townhouses, apartments, condominiums, cottages, single unit dwellings and subdivisions. The housing designs are generally done by architects and engineers and the construction is executed by builders who hire subcontractors for structural, electrical, mechanical and other specialty work.

RESIDENTIAL CONSTRUCTION This type of project must conform to local building authority regulations and codes of practice.

Many new builders are attracted to residential projects because of its ease of entry in the real estate market. Highly competitive market with potentially high risks as well as high rewards.

BUILDING CONSTRUCTION Building construction is perhaps the most popular type of construction project.

It is the process of adding structure to real property. Most of the projects are room additions and small renovations.

BUILDING CONSTRUCTION Most new building construction projects are construction of sheltered enclosures with walk-in access for the purpose of housing people, equipment, machinery or supplies. It includes installation of utilities and equipment.

INSTITUTIONAL AND COMMERCIAL Covers a great variety of project types and sizes such as hospitals and clinics, schools and universities, sports facilities and stadiums, large shopping centres and retail chain stores, light manufacturing plants and warehouses and skyscrapers for offices and hotels.

INSTITUTIONAL AND COMMERCIAL Specialty architects and engineers are often hired for designing a particular type of building.

This market segment has few competitors because of the high costs and greater sophistication of institutional and commercial buildings as compared to residential construction projects.

INDUSTRIAL

Industrial construction is only a small part of the whole construction industry nevertheless it is a very important part of the industry.

These projects are generally owned by big, for-profit industrial corporations such as manufacturing, power generation, medicine, petroleum, etc.

SPECIALIZED INDUSTRIAL CONSTRUCTION This type of construction project usually involves very large scale projects with a high degree of technological complexity such as nuclear power plants, chemical processing plants, steel mills and oil refineries.

HIGHWAY CONSTRUCTION Highway construction involves the construction, alteration, or repair of roads, highways, streets, alleys, runways, paths, parking areas, etc. It includes all incidental construction in conjunction with the highway construction project.

HEAVY CONSTRUCTION Heavy construction projects usually involve projects that are not properly classified as either "building" or "highway." Examples of this type of project would be: water and sewer line projects, dams, sewage treatment plants and facilities, flood control projects, dredging projects, and water treatment plants and facilities.

CONSTRUCTION PROJECT PARTICIPANTS Owner Designer Contractor Subcontractor Government agencies Community Insurance Companies Banks

OWNER

Person, company or agency for which a project is being constructed Pays for the project and specifies the project requirements

DESIGNER

An individual, a single design firm or a group of different firms

Produces plans and specifications for what is to be constructed Can be single or team

GENERAL CONTRACTOR

Typically not involved with the design but is contracted by the owner to construct on the basis of the design developed by the designer

Engaged in a wide range of construction activities and execute most major construction projects

When they enter into a contract with an owner to provide complete construction services, they are called Prime Contractors

SUBCONTRACTOR

Construction projects can be extremely complex and the prime contractor may not have the expertise to complete all the required project tasks

Limit their activities to one or more construction specialties such as electrical works, plumbing, heating & ventilating or earthmoving Often employed by the prime contractor Referred to as Specialty Contractor

GOVERNMENT AGENCIES Often the owners of large projects

Necessary for the owners to get permission from government agencies to proceed with the construction

For large projects, getting permission from government agencies often take years of planning studies and environmental impact statements before actual construction can begin

COMMUNITY

Contractors are often asked to find innovative ways of conducting construction that minimize impacts to the neighboring community since people are sensitive to traffic delays or noise that caused by construction project

INSURANCE COMPANY

Contractors are required to have bid bonds as a condition of being allowed to bid

They must provide insurance, performance bonds and payment bonds prior to award of the contract

They service the liability and property insurance needs of contractors

BANKS

Provide working capital to contractors so the contractor can pay for materials, labor, equipment and overhead expenses until the contractor is paid by the owner

Provide both short – term and long – term financing to the project owners

CONSTRUCTION PROCESS STEPS IN PROJECT DEVELOPMENT PROCESS:

Recognizing the need for the project Determining the technical and financial feasibility of the project Preparing detailed plans, specifications and cost estimates for the project Obtaining approval from regulatory agencies. This involves ascertaining compliance with zoning regulations, building codes and environmental and other regulations

HOW CONSTRUCTION IS ACCOMPLISHED

THE PRINCIPAL METHODS BY WHICH FACIILITIES ARE CONSTRUCTED ARE: Construction employing an owner construction force Owner management of construction Construction by a general contractor Construction using a design/build contact Construction utilizing a construction management contract

CODES AND REGULATIONS Building codes

Provides minimum design and construction standards for structural and fire safety

Zoning regulations

Controls land use, limit the size, type and density of structures that may be erected at a particular location

CODES AND REGULATIONS Environmental regulations

Protect the public and environment by controlling such factors as water usage, vehicular traffic, precipitation runoff, waste disposal and preservation of natural resources

Safety Regulations Designed to protect both construction workers and the public

STATE OF THE INDUSTRY Construction Productivity Reducing Construction Cost

Good working planning Carefully selecting and training workers and managers Efficient scheduling labor, materials and equipment Properly organizing work Using laborsaving techniques such as prefabrication and preassembly Minimizing rework through timely quality control Preventing accidents through good safety procedure

CONSTRUCTI ON MANAGEMENT

ELEMENTS OF CONSTRUCTION MANAGEMENT

Refer to the contractual arrangement under which firm supplies construction management services to an owner Refers to the act of managing the construction process

POOR CONSTRUCTION PRACTICES

Project delays that increase labor and equipment cost and the cost of borrowed funds

High material costs caused by poor purchasing procedures, inefficient handling and/or loss

Increased subcontractor cost and poor contractor – subcontractor relations

High insurance costs resulting from material and equipment loss or damage or a poor safety record Low profit margin or a loss on construction volume

QUALITY MANAGEMENT

Ensuring that all elements of the work have an equal chance of being included in test samples

Verifying that test samples taken by the contractor and by other parties come from the same population

Analyzing the variations in the test results of material and processes sampled

Establishing acceptable levels of variation in sample results

Developing a payment schedule which rewards or penalizes the contractor depending on the level of quality attained in the construction product

Construction Career

CAREERS Unskilled and Semi-Skilled General site labor with little or no construction qualifications

Skilled

On-site managers whom possesses extensive knowledge and experience in their craft or profession

Technical and Management

Personnel with the greatest educational qualifications, usually graduate degrees trained to design, manage and instruct the construction process

PROFESSIONAL Architects Civil Engineers Building Services Engineers Project Managers Quantity Surveyor Structural Engineers

Planning and Scheduling

PLANNING and SCHEDULING

Planning must be done in order to perform any function with a minimum of wasted time and effort Schedule is nothing more than time - phased plan

Schedules are used as guides during the performance of an operation in order to control the pace of activities and to permit completion of the operation at the desired or required time

PLANNING and SCHEDULING Principal uses for schedules Before Starting

 Provides an estimate of the time required for each portion of the project as well as for the total project  Establishes the planned rate of progress  Forms the basis for managers to issue instructions to subordinates

 Establishes the planned sequence for the use of personnel, materials, machines and money

PLANNING and SCHEDULING Principal uses for schedules During Construction

 Enables the manager to prepare a checklist of key dates, activities, resources and so on.

 Provides a means for evaluating the effect of changes and delays  Serves as the basis for evaluating progress  Aids in the coordination of resources

PLANNING and SCHEDULING Principal uses for schedules After Completion of Construction  Permits a review and analysis of the project as actually carried out

 Provides historical data for improving future planning and estimating

Pre-construction activities

CONCEPT

Owners, both private and public, plan buildings and other construction projects to accommodate desired functional and spatial requirements

Planning, designing and completing construction is a complicated undertaking

Owners most often procure the services of an architect or an architect/engineering/contracting firm (AEC), to help in the development of project definition and feasibility, referred to as the predesign phase

PRE – DESIGN AND DESIGN DEVELOPMENT

In this phase, the architect, the other design consultants and the owner mutually determine the goals and objectives of the project

Early design efforts focus on establishing what is known as the design intent (statement that defines the anticipated aesthetic, functional and performance characteristics of the finished project)

PRE – DESIGN AND DESIGN DEVELOPMENT

Floor Plan Is a representation of a building viewed from above after a horizontal plane has been cut through it and the top portion removed

PRE – DESIGN AND DESIGN DEVELOPMENT

Building Section Gives a view of a building after a vertical plane has been cut through it and the front portion removed

PRE – DESIGN AND DESIGN DEVELOPMENT

Elevation Shows the exterior façade of a building, delineating geometries and the materials of construction

CONSTRUCTION DOCUMENTS Consists of two interdependent components: Construction Drawings

• Referred to as the working drawings, show the dimensional relationships between all aspects of the building, their form, sizes and quantities • Usually computer generated

• Basis on which the contractor generates cost estimates and are used to guide the actual construction of the building on site • Graphically indicate the relationship between elements

CONSTRUCTION DOCUMENTS Specifications

• Describe in writing more detailed information on the exact types of materials to be used and the ways in which construction processes are conducted.

• Spell out the specific types, qualities and properties of those materials and their installation

Project delivery process

CONSTRUCTION CONTRACTORS General contractors

Assume the responsibility for the construction of an entire project at a specific cost and by a specified date

Subcontractors Perform the required work within their technical areas

SELECTING THE CONTRACTORS

For publicly financed projects construction contractors are generally sought through a process of competitive bidding

In this method, qualified contractors are invited to the bid (invitation to bid) on the project on a competitive basis with the contract often being awarded to the contractor that submits the lowest bid

A variation of this process used more on privately funded projects is called invitational bidding wherein only preselected contractors are asked to provide bids on a project

SELECTING THE CONTRACTORS

An owner may decide on a contractor with whom they have worked on previous projects without seeking other bids and agree upon a negotiable contract.

Negotiated contract can have the advantage of bringing a contractor into the project in the pre-construction phase of the work, encouraging a team approach that incorporates design, construction and budget planning with owner involvement in a cooperative and coordinated effort.

PROJECT DELIVERY METHODS AND TYPES OF CONSTRUCTION CONTRACTS Three common methods Design-Bid-Build Design-Build Construction Management

DESIGN – BID – BUILD

Traditional method of project delivery that moves sequentially from conception of a project through its construction

The contract is usually awarded to the most qualified bidder who submits the lowest cost estimate Tends to produce longer overall project schedule Generally result in the lowest construction cost

DESIGN - BUILD

The owner contracts with a single party that completes all portions of the work from design through construction Assigns a single entity with full responsibility

The entity may be a construction company that has contracted with an architect or engineering firm for design services or one that maintains design professional as permanent members of the staff

CONSTRUCTION MANAGEMENT (CM)

The owner may hire construction manager to provide input during the design phase and oversight and administration of the bidding and construction phases

A successful construction manager needs to have an education in both the technical and management portions of construction, along with great deal of field experience.

CONSTRUCTION PROCESS

Prior to any work commencing on site, building permit must be secured

This permit is a certificate issued by the local governing authority having jurisdiction authorizing the construction of a project after a thorough review of the construction documents to ensure compliance with local building, safety and fire codes

SHOP DRAWINGS, SUBMITTALS AND MOCK - UPS

Shop drawings gives precise directives for the fabrication of certain components such as structural steel work, concrete reinforcing or pre-cast concrete components Shop drawings are substantially different from architectural drawings in style and content, including manufacturing conventions and special fabrication instruction

SHOP DRAWINGS, SUBMITTALS AND MOCK - UPS

Submittal process is an important and time-consuming step at the beginning of managing any construction project

Product data submittals are drawings, schedules, performance data and brochures that gives manufacturer’s information on the characteristics of a material and allow the architect to verify that he product under consideration will satisfy the requirements listed in the specifications

SHOP DRAWINGS, SUBMITTALS AND MOCK - UPS

Mock-up is a full-size model of a proposed construction system that is built in order to judge the appearance of an assembly, examine its construction details and test for performance under actual site conditions

CONSTRUCTION OBSERVATIONS

In addition to ongoing inspections by local building department officials, continuing inspections are conducted by representatives of the owner to ensure that the completed work complies with the guidelines set forth in the construction documents

If inspections find either materials or workmanship to be in noncompliance, the contractor is required to repair or replace the work at their own expense

CONTRACTOR REQUESTS FOR INFORMATION

The request for inspection is used to obtain clarification that the contractor cannot access through document review or other research

These requests often occur during the bidding phase, as the contractor examines the documents in detail for the first time.

Request for information must be processed quickly by the architect since the project schedule may be affected by unforeseen delays

CONSTRUCTION CHANGE DIRECTIVE (CCD) Also known as change order

Changes may be required for a number of reasons, such as previously unknown conditions, design omissions or errors, or changes in the scope of work

PROJECT CLOSE - OUT

When the contractor determines that the work is nearing completion, the architect or construction manager is asked to return to the site and conduct an inspection of substantial completion

The inspection occurs at a point when all major portions of the work have been completed but a number of final details have yet to be finished

Punch list is a listing of the remaining items to be installed or repaired

CONSTRUCTION SAFETY The general contractor is responsible for administering safety procedures on the construction site Detailed safety procedures are often specified in the general requirements division of the construction documents

CONTRACT CONSTRUCTI ON BIDDING AND CONTRACT AWARD

BID PREPARATION Construction contracting is a highly competitive business

A construction company must achieve a reputation for quality workmanship and timely completion while achieving a reasonable return on its capital investment

PROFIT is the principal motive for bidding on a construction contract

BID PREPARATION

REASONS WHY A CONTRACTOR MAY CHOOSE TO BID ON A PROJECT Keep their equipment in operation Prevent the loss of skilled workers and managers Desire for prestige Maintenance of goodwill with regular clients Maintain relationship with an owner

BID PREPARATION DETAILED COST ESTIMATE Direct Cost  Material Cost

 Labor Cost  Equipment Cost

Indirect Cost (Job Overhead)

 Made of the administrative and management expenses that will be incurred at the project site

BID PREPARATION DETAILED COST ESTIMATE Mark-Up General Overhead

 Covers the cost of all company activities not directly associated with individual construction projects

 Salaries of headquarters personnel (company officials, estimators, clerks, accountants, etc.)  Rent and utilities  Advertising  Insurance  Office supplies  Interest on borrowed capital

BID PREPARATION

Bid price is usually based on an analysis of the expected competition and the state of construction market in addition to the contractor’s estimate of the cost to execute that project

BIDDING PROCEDURE Solicitation Invitation to bid

Bid Preparation Eligibility requirements Technical documents Financial documents

Bid Submission Bid Opening Selection of the Lowest Qualified Bid Contract Award

BIDDING PROCEDURE

To ensure adequate competition, at least three bids should be obtained

Time allowed for bid preparation should be based on the size and complexity of the project and has suggested three weeks as a reasonable minimum time.

CONTRACT AWARD

Qualification of a contractor is the determination that the contractor possesses both the technical and financial ability to perform the work required by the contract

Prequalification

only contractors determined to be capable of performing are invited to submit bids for the contract require bonding

CONTRACT AWARD Bonds Bid Bond

o Guarantees that a contractor will provide the required performance and payment bonds if awarded the contract

Performance Bond o Guarantees completion of the project as described in the contract documents

Payment Bonds

o Guarantees the payment of subcontractors, laborers and suppliers by the contractor

SUBCONTRACT

These are contracts between a prime contractor and secondary contractors or suppliers

Used in building construction such as electrical, plumbing and HVAC

Subcontractors are responsible only to the prime contractor and not to the owner in the performance in their subcontracts

Bid Shopping is an unethical practice where the contractor attempts to obtain lower subcontract prices by negotiating with other subcontractors

CONTRACT CONSTRUCTI ON CONSTRUCTION CONTRACTS

CONTRACT ELEMENTS Offer

Is normally a bid or proposal submitted by a contractor to build a certain facility according to the plans, specifications and conditions set forth by the owner

Acceptance Takes the form of a Notice of Award

Consideration Takes the form of cash payment

CONTRACT TYPES METHOD OF AWARD

Formally advertised contracts and negotiated contracts Negotiated Contract is the one negotiated between an owner and construction firm, where all terms and conditions of the final contract are those mutually agreed to by the two parties

CONTRACT TYPES METHOD OF PRICING Fixed – Price Contract o Firm Fixed – Price Contract

o Fixed Price with Escalations

Cost – Type Contract o Cost plus percentage of cost o Cost plus fixed fee o Cost plus fixed fee with guaranteed maximum cost o Cost plus incentive fee

CONTRACT TYPES Firm Fixed – Price Contract Lump sum contracts

o Provides specified payment for completion of the work described in the contract documents

Unit price contracts o Specify the amount to be paid for each unit of work but not the total amount

CONTRACT TYPES Fixed Price with Escalation

Contains a provision whereby the contract value is adjusted according to a specified price index Reduce risk to the contractor during period of rapid inflation

CONTRACT TYPES Cost plus percentage of cost

Pays the contractor a fee that is a percentage of the project’s actual cost The higher the project cost, the greater the contractor’s fee

Cost plus fixed fee

The most widely used form of cost reimbursement contract Does not reward the contractor for an increased project cost but still fails to provide any incentive to minimize cost

CONTRACT TYPES Cost plus fixed fee with guaranteed maximum cost

Adds some of the risk of a fixed – price contract to the cost reimbursement contract because the contractor guarantees that the total contract price will not exceed the specified amount Contractor’s fee for this type of contract will be increased to compensate for the added risk involved

CONTRACT TYPES Cost plus incentive fee

Designed to provide an incentive for reducing project cost Contractor’s nominal or target fee is adjusted upward or downward in a specified manner according to the final project cost The contractor is rewarded by an increased fee if able to complete the project at a cost lower than the original estimate

CONTRACT CONSTRUCTI ON CONSTRUCTION DOCUMENTS

CONTRACT DOCUMENTS Agreement Describes the work to be performed Required completion time Contract sum Provisions for progress payments and final payment List the other documents making up the complete contract

CONTRACT DOCUMENTS Conditions of the Contract

Contains those contract provisions applicable to most construction contracts written by the owner Special Conditions contain any additional contract provisions applicable to the specific project

Plans Specifications

VALUE ENGINEERING (VE)

Is the analysis of a design with the objective of accomplishing the required function at a lower cost

When included in a construction contract, a VE clause encourages the contractor to propose changes in the project without affecting the ability of the facility to perform its intended function

The cost savings resulting form VE proposals accepted by the owner are shared between the contractor and the owner on the basis specified in the contract

CONTRACT TIME

The time allowed for completion of a construction project is normally specified in the contract along with the phrase “Time is of the essence”

If no completion time is specified, a “reasonable time” is allowed

If the project is not completed within the specified time, the contractor is liable for any damages (monetary loss) incurred by the owner as the result of late completion

CONTRACT TIME

Liquidated Damages clause in the contract may be used to simplify the process of establishing the amount of damages resulting from late completion

Construction contract normally contain provisions for time extensions to the contract due to circumstances beyond the control of the contractor owner – directed changes Acts of God Strikes

CONTRACT CONSTRUCTI ON PLANS AND SPECIFICATIONS

PLANS

Construction plans are drawings that show the location, dimensions and details of the work to be performed Site drawings Detailed working drawings

SPECIFICATIONS

Provide the detailed requirements for the materials, equipment and workmanship to be incorporated into the project

Two basic ways are method specification and performance specification

SPECIFICATIONS Method Specification

States the precise equipment and procedure to be used in performing a construction operation

Performance Specification

Specifies only the result to be achieved and leaves to the contractors the choice of equipment and method

SHOP DRAWING AND SAMPLES

Shop Drawings are drawings, charts and other data prepared by a contractor or supplier which describe the detailed characteristics of equipment or show how specific structural elements or items of the equipment are to be fabricated and installed

Samples are physical examples of materials, equipment or workmanship which are submitted to the owner for approval prior to their incorporation

CONTRACT CONSTRUCTI ON CONTRACT ADMINISTRATION

PROGRESS REPORTS AND PAYMENT Progress billing Made at an interval specified in the contract

Retention

A guarantee against defective work to ensure that the remaining work can be completed within the unpaid amount of the contract

CHANGES AND DELAYS Change Order Design modification initiated by the owner or designer Changed conditions

Consequential Cost

Changes or delay in one activity will necessitate changes in resource allocation or progress on other activities that result in additional project cost

CHANGES AND DELAYS Delays Beyond the control of either the contractor or the owner Those under the control of the contactor Those under the control of the owner

ACCEPTANCE AND FINAL PAYMENT

Punch List is a list of deficiencies to be corrected which is prepared at the final inspection Issuance of Certificate of Substantial Completion of Work Request for final payment Issuance of Final Certificate of Payment

The contract customarily provides a warranty against defective work for some period, usually 1 year

CLAIMS AND DISPUTES

Claim is a request by a contractor for a time extension or for additional payment based on the occurrence of an event beyond the contractor’s control that has not been covered by the change order

Examples of such events include unexpected site conditions, delays in delivery of owner – provided property and changes directed by the owner

CLAIMS AND DISPUTES

Claims are the unfortunate result of change orders that cannot be resolved or changed job conditions

Claims can lead to judicial action, resulting from the inability of the contractor and owner to reach an agreement

CLAIMS AND DISPUTES

Disputes are disagreements between the contractor and the owner over some aspect of contract performance

Disputes may involve such matters as substitution for specified materials, the responsibility for the delays in project completion and the effect of changes ordered by the owner

ALTERNATIVE DISPUTE RESOLUTION Partnering ◦ Philosophy of construction management based on trust

Mediation

◦ System of selecting neutral third party to assist the parties to reach mutually acceptable agreement

Arbitration

◦ Slightly closer to litigation in philosophy than mediation because the arbitrator imposes a solution on the parties to the dispute and the parties agree to accept the arbitrator’s solution ◦ Arbitrator is selected by mutual agreement

ALTERNATIVE DISPUTE RESOLUTION Mini trials

◦ Allow each side to present its position in the dispute and then a judge renders a decision

Project neutral

◦ Used in very large, highly technical projects ◦ A person (or team) that is hired before the construction contract is awarded and that participates in the project throughout the construction period

LIQUIDATED DAMAGES AND SUBSTANTIAL COMPLETION

Paid by the contractor to the owner if such amounts are required by the contract, and if the contractor exceeds the allowed contract time period.

The amount is determined before the contract is advertised and it is based on an estimate of actual costs the owner or the public would incur by late completion of work

LIQUIDATED DAMAGES AND SUBSTANTIAL COMPLETION In accordance with the RA 9184 and IRR

Payable by the contractor in case of breach thereof, the amount of liquidated damages shall be at least equal to one – tenth of one percent (0.10%) of the cost of the unperformed portion for every day of delay. Once the cumulative amount of liquidated damages reaches 10% of the contract amount, the Procuring Entity shall rescind the contract, without prejudice to other courses of action and remedies open to it

CONTRACT TERMINATION

Most contract contracts are terminated by satisfactory performance

Nonadversary methods of contract termination include mutual agreement and impossibility performance

CONTRACT TERMINATION

The principal adversary basis for contract termination is for breach of contract. Either the owner or the contractor may terminate a contract. The basis for termination by the contractor based on breach of contract usually the failure of the owner to make the specified progress payments or owner – caused delay of the project for an unreasonable period of time

CONTRACT TERMINATION

Termination by the owner for breach of contract is most commonly due to failure of the contractor to make reasonable progress on the project or to default by the contractor

When termination is due to breach of contract by the owner, the contractor is generally held to be entitled to payment for all work performed and the expenses of demobilization and cancellation of orders plus profit

CONTRACT TERMINATION

When termination is due to breach of contract by the contractor, the contract commonly permits the owner to take possession of the work site and all on – site equipment and tools owned by the contractor and to complete the project at the contractor’s expense.