Building Order

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Lecture was elaborated with the help of grant
project of Ministry of Education, Youth and
Sports, FRVŠ n. 2005 Innovation of Subject
Financing of Building Order

• Building Order

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Subject of a Building Activity

• Activity of a building company is based on a
  realization of building orders
• Building order
• Supply of outputs, works and services for purpose
  of creating of new building object or adapting of
  an existing object
• A result of a building order realization can be
• New building newly created building object
  having a character of long-term tangible property
  and creating a compact or at least technically
  separate part of a building
• Reconstruction of an object construction work
  including interference with building
  constructions
• Modernization of an object construction work
  substituting existing parts of an object by more
  modern parts and increasing availability and
  usability of an building object
• Extension of an object additional building

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Kinds of Building Production

• Building production it is possible to divide into
  following kinds
• Basic structural production
• Includes supplies of building works realized own
  workers or sub suppliers
• These supplies it is possible next to divide into
  following kinds of production
• Main building production
• Includes supplies of building works realizes
  mainly on fabric (foundations, horizontal and
  vertical constructions etc.)
• Associated building production
• Includes professions and handcrafts
• Subsidiary production
• Includes preparation of resources and facilities
  needed for basic structural production, e.g.
  production of intermediate products and
  production of building materials

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Kinds of Building Orders According to the Investor

• From the aspect of a investor character (or
  sources of financing)
• it is possible to distinguish following kinds of
  works
• Public order (state or institutions of public and
  self administration (towns, regions) or other
  organizational parts of the state)
• Private order
• Individual orders (investors are usually in a
  form physical persons that dont realize the
  order in the frame of own business activity)
• Orders in the frame of a business sphere
  (investor is in the form of private person that
  realize the order in the frame of own business
  activity)

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Public Order

• Law n. 137/2006 Coll., about public orders
• Public order is realized based on agreement
  between submitter (public institution) and one or
  more contractors. Subject of public order is the
  delivery of supplies, services or realization of
  building works. Public order is based on the
  written agreement (7).
• The submitter can be public, endowed or sector
• Public submitter the state, municipal
  authorities or allowance organizations financed
  by state
• Endowed submitter physical person or
  corporation, which submits the public order
  financed from more then 50 by public sources
• Sector submitter person, which realizes one of
  relevant activities (e.g. gas industry, power
  supply, supply of heat or water)

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Classification of Public Orders according to the
Subject

• According to the subject are divided into
• PO for supplies 8
• PO for services 10
• PO for building works 9
• Public order for supplies
• Its subject is the purchase of goods
• Public order for building works
• Its subject is the realization of building works
  including relevant project works and engineering
  activity
• Public order for services
• - PO, which is not PO for supplies or PO for
  building works

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Classification of Public Orders According to the
Supposed Value

• According to the supposed value are public order
  classified in following way
• PO exceeding the limit
• PO not exceeding the limit
• PO of low extension
• Financial limit in the case of public orders is
  defined by implementing regulations, which
• define the financial limit according to the
  particular categories of submitters and according
  
• to the kind of public order.
• PO not exceeding the limit
• Supplies and services min. 2 000 000 CZK without
  VAT, building works min. 6 000 000
  CZK without VAT not reaching the financial limit
• PO of low extension
• Less then 2 000 000 CZK without VAT in the case
  of supplies and services, less then 6 000
  000 CZK without VAT in the case of building works
• No duty to award this kind of order according to
  the law
• The public order must not be divided into small
  parts with smaller extension

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Procurement of Public Orders

• Law about Public Orders defines these kinds
• awarding procedures
• Open proceedings 27
• Close proceedings 28
• Parley proceedings with declaration 29
• Parley proceedings without declaration 34
• Competition dialog 35
• Simplified proceedings 38

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Kinds of Awarding Procedures

• Kinds of procurement proceedings
• Open proceedings
• Submitter calls on unlimited amount of applicants
  for the submitting of an offer
• Close proceedings
• Submitter calls on unlimited amount of applicants
  for the submitting of an application and for the
  presentation of a qualification, applicants
  fulfilling defined conditions are called for
  submitting of offers
• Parley proceedings with declaration
• Submitter announces to unlimited amount of
  applicants the idea to submit the public order in
  this kind of proceedings
• Parley proceedings without declaration
• Submitter announces to limited amount of
  applicants the idea to submit the public order in
  this king of proceedings
• Competition dialog
• Submitting of difficult orders, where the
  submitter is not able directly to define
  technical conditions or legal or financial
  requirements
• Simplified proceedings
• Submitting of public orders not exceeding the
  financial limit (in the case of building works
  deliveries not exceeding 20 mil. CZK)

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Qualifying Criteria

• Qualifying criteria are
• Basic qualification criteria
• No arrears of taxes
• Clean conduct-book
• No arrears of health and social insurance
• Not to be in the bankruptcy
• Professional qualification criteria
• Extract from Company Register
• Business license
• Economic and financial qualification criteria
• Balance sheet from past periods
• Amount of returns
• Insurance agreement (insurance of responsibility
  for lost caused to another person)
• Technical qualification criteria
• Reference buildings

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Criteria for Submitting of Public Order

• Basic criterions for valuation of particular
  offers
• Economic merit of the offer
• The lowest offering price
• The decision making according to the economic
  merit of the offer
• The offer is valuated according to the particular
  criterions solved by submitter
• The submitter must define for each criterion
  scales usually expressed in
• One of the criterion must be every time the
  offering price, next criterions are
• mostly
• Operating costs
• Requirements for the maintenance
• Technical, quality, ecological and functional
  characteristics of the subject of the order

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Submitting of Private Orders

• Tender, which features (the process, criteria,
  etc.) are chosen by investor (submitter) on his
  own
• For trouble free process of the (building) order
  must be concluded the contract for work created
  according to the Civil or Business Code

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Contract for Work

• Price is agreed in the agreement about price
  mentioned in the contract for work
• Parties to contract are investor (buyer) and
  supplier
• Contract is agreed in the sense of the business
  code (law n. 513/1991 Coll.)
• Terms of contract for work
• I. Parties to contract investor, supplier
• II. Subject of delivery building object,
  building work
• III. Time of delivery time of finishing of the
  delivery
• IV. Price of delivery
• V. Payment conditions the way of paying for
  deliveries
• VI. Qualitative and technical conditions
• VII. Realization of work
• VIII. Handover and takeover of building object
  way of handover
• IX. Responsibility for defects, guarantee,
  warranty claims
• X. Avoidance of contract
• XI. Sanctions
• XII. Next agreements

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Financial Difficulty of the Building Order, Budget

• Costs for building part are calculated as a sum
  of costs
• for particular building works
• materials not included in the building work
  (valuated as a specification)
• shift with materials
• For calculation is prepared the item budget

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Overview of Groups of Building Sections
Number Title of group of building sections
0 General construction and works
1 Earthworks
2 Foundations, special foundations
3 Vertical and complete constructions
4 Horizontal constructions
5 Communications
6 Construction of surfaces, floors
7 Associated building production (handcrafts, installations)
8 Pipage, conduction
9 Finishing works, demolitions
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Item of Budget of Building Part

• Numeral code of item (Classification of Building
  Constructions and Works)
• Description of item
• Measure unit
• Amount of item in measure unit
• Unit price in e.g. CZK per measure unit
• Totally per item
• Unit weight in tons
• Weight in tons totally per one item

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Costing Model (Formula)

• Unit price of building work
• Direct costs (DC)
• Direct material (M)
• Direct wages (W)
• Other direct costs (ODC)
• Machines and machinery (S)
• Indirect costs (IC)
• Overhead product costs (OPC)
• Overhead administrative costs (OAC)
• Profit (P)
• Price totally