Monday, December 2, 2013

What Constitutes a Public Construction "Project"?

In bidding public construction projects, it is important for government agencies to be strategic in structuring what work is and is not included in a project.

What is a "project"?  Generally, a project can be defined in many different ways, and the appropriate decision will resolve around very specific circumstances of the work. Here are a couple of factors to consider in how to structure a project:
  • Characteristics of a project:  A project generally involves the same type of work, performed at the same time, and at the same location (or the same type of work at multiple locations). 
  • Cost of a project:   Some public agencies, such as second class cities in the State of Washington, have a definition of what costs are included in a public works project.  RCW 35.23.352 states that "the cost of a separate public works project shall be the costs of the materials, equipment, supplies, and labor on that construction project."
  • Combined project:  Combining work that may otherwise be bid separately may result in additional subcontractor markup costs.
  • Separate projects:  Bidding the work as separate projects may result in additional mobilization costs, increased coordination efforts by the agency between multiple contractors, safety issues on site, and accountability of performance issues associated with multiple contractors. 
  • Know the market:  In making the decision whether to combine work or bid work separately, it is important to understand the contractor market in your area.  What contractors perform what type of work?  What is their availability?  Would they be more likely to bid a combined or separate projects?  Talk with some of the contractors and solicit their opinion to help inform your decision.
When splitting a project is not appropriate:  It is not appropriate to break apart a "project" and bid component parts separately if the purpose is to create a small enough project that is valued at less than certain bidding thresholds.  Examples would include the following:
  • Small Works Roster:  In Washington state, RCW 39.04.155 states that "the breaking of any project into units or accomplishing any projects by phases is prohibited if it is done for the purpose of avoiding the maximum dollar amount of a contract that may be let using the small works roster process or limited public works process."   A Small Works Roster may be used to bid projects less than $300,000, and the Limited Public Works process (which is part of the Small Works Roster) may be used to bid projects less than $35,000.
  • Work performed with agency forces:  Some public agencies, such as second class/code cities in Washington have dollar limits, below which they use agency employees to perform public works.  RCW 35.23.352 states the following:  "The restrictions in this subsection do not permit the division of the project into units of work or classes of work to avoid the restriction on work that may be performed by day labor on a work that may be performed by day labor on a single project."

Mike Purdy's Public Contracting Blog
© 2013 by Michael E. Purdy Associates, LLC

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