Contractor Planning for Fixed-Price Construction

(RS6-4, p. 5)

• Policy Planning
• Strategic Planning
• Tactical Planning
• Operational Planning

Planning facilitates the integration of the estimate, schedule, and other functional planning into a total control plan that can be used without reformatting during construction. (RS6-4, p. 11)

Good planning begins with the establishment of a planning culture in a company. This culture recognizes that planning is a team effort involving management at all levels. (RS6-4, p. 29)

Among construction contract types, the most challenging is the fixed-price contract. The contractor has the burden of determining the full scope of the project in terms of items with cost implications, and the burden of identifying and evaluating project risks. (RS6-4, p. 29)

In planning a fixed-price construction project, the contractor faces two milestones. First is the bid due date at which time the pricing and other bid submittals must be complete. Second is the mobilization date at which time planning must be complete enough to enable efficient initiation of construction. These two milestones must be treated as successive events in a chain of planning phases, each phase building upon and refining the planning of the previous phase. (RS6-4, p. 29)

Involvement of the field project manager in the initial estimating process helps bridge the planning gap between bidding the job and mobilizing to execute the work. This may not be possible, and therefore some positive method must be employed to convey to the actual field project manager and other senior project personnel the key provisions of the contract, considerations and decisions made during the planning process, and any management guidance that might influence the approach to managing the work. (RS6-4, p. 27)

Project Manager Letter of Instructions – Serves as a compilation of information, strategy, and instruction for project manager responsible for the project/contract.

Project Execution Plan – Planning applied to fixed-price construction that includes work breakdown, cost breakdown structure, project schedule, subcontracting plan, organization structure, responsibility matrix, etc. (RS6-4, p.12)