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Project Delivery Method Alternatives: What Owners Need to Know

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Project Delivery Method Alternatives: What Owners Need to Know

There are many ways for a design project to move from concept to completion, especially considering the variety of functions that learning environments serve. Selecting the right project delivery method is an integral part of the design and execution of smarter places for learning.

The right delivery method will vary based on your priorities, the type of project and the level of complexity involved. Each method has strengths and weaknesses. Based on our 60 years of collaborating with owners and construction professionals, here are some of the advantages and disadvantages of the primary delivery methods in use today.

Design-Bid-Build

Design-bid-build places your design needs at the forefront, providing ample time to develop design options from which the best solution can be identified, refined and construction documents completed before procurement of construction services. The most common ways in which Design-Bid-Build is delivered are with a General Contractor, Multiple Prime Contracts and Construction Manager as Agent (CMa). Each approach follows the same primary steps of project design, competitive bidding and construction. There are however subtle differences in decision-making with each delivery method.

General Contractor

In this design-bid-build delivery, the owner selects an A/E to design the building. Following completion of the design process and construction documents, a single General Contractor (GC) is then selected by the owner through a competitive bidding process. The owner holds a single construction contract for all work with the GC.

 Advantages

  • Single construction contract/point of responsibility by the GC
  • The GC is responsible for site supervision and coordination of all construction work
  • The GC is responsible in the event of subcontractor non-performance
  • The GC is responsible for subcontract scope assignments and coverage gaps that may occur when creating these assignments

 Disadvantages

  • The GC includes a mark-up on all subcontractors
  • Smaller and potentially less skilled subcontractors may be selected by the GC
  • The Owner is relying upon the skill level of the GC’s on-site supervision for the coordination of activities
  • There may be an increased risk of getting a lesser quality GC due to public bidding statutes

Multiple Prime Contracts

This design-bid-build delivery is similar to a General Contractor. The difference is that the project is bid in separate packages typically defined by construction trades, and bids are awarded to multiple prime contractors. The owner holds a separate contract with each prime contractor, and the Contractor for General Trades (typically a General Contractor) is assigned responsibility for coordination during construction.

 Advantages

  • Generally attracts higher quality mechanical, electrical and other trade contractors, necessitated by prime contractor bonding requirements
  • Reduces costs associated with General Contractor mark-up
  • Individual prime contractors can be held more accountable for non-performance
  • The prime contractor for general trades is assigned on-site construction schedule and coordination responsibilities for all work

 Disadvantages

  • Non-performance by one prime contractor can affect other contractor’s work/schedule
  • Contingency funds must be set aside for potential gaps between bid packages
  • Each prime contractor is responsible for assigning on-site supervision of its own work, and individual skill levels may vary greatly
  • Increased risk of claims and finger-pointing between contractors

Construction Manager as Agent (CMa)

In this design-bid-build delivery, the owner hires the Construction Manager as Agent (CMa) through a qualifications-based selection process that occurs at the beginning of design. The CMa provides estimates during design, assists with bidding and coordinates with prime contractors during construction. The owner bids and holds all prime contracts for construction.

 Advantages

  • The Owner can select the CMa at the beginning of the project
  • The CMa provides pre-construction services, including estimating and constructability reviews
  • This method may attract more bidders to each contract category, with numbers of construction contracts typically ranging from 15-20
  • As a result of smaller contract sizes, non-performance by one contractor may have less impact on other contractors

 Disadvantages

  • The additional administrative burden of 15-20 separate construction contracts
  • CMa fees may not be recouped through competitive bidding of smaller bid packages
  • Greater possibility of gaps in work assignments with the increased number of contracts
  • The CMa on-site personnel may observe and document construction work, but have no contractual authority to reject non-conforming work

Construction Manager as Constructor (CMc) – also referred to as Construction Manager at Risk

In the Construction Manager as Constructor delivery, the owner hires a Construction Manager at the beginning of design through the best value selection process where qualifications and fees may be considered. The CMc provides a Guaranteed Maximum Price (GMP) either prior to or following bidding. The CMc bids to prequalified subcontractors then executes a single contract with the owner for all construction work.

 Advantages

  • The owner can select their primary construction professional (CMc) at the beginning of the project
  • The CMc provides pre-construction services, including estimating and constructability reviews
  • It may be possible to attract more bidders to each contract category, with numbers of construction contracts ranging from 15-20
  • The owner and CMc may pre-qualify subcontractor bidders, thus limiting less than qualified subcontractors
  • As the primary construction contract holder, the CMc is responsible for establishing subcontract bid packages and is responsible for any gaps that result

 Disadvantages

  • The CMc is interested in limiting risk, and the Guaranteed Maximum Price may include significant contingencies if established prior to competitive bidding
  • In the process of minimizing risk, important components and/or features may be “value-engineered” out of the project as a result of estimates in the earlier design phases
  • CMc contracts often allow the CMc to use their construction contingency included in the GMP to cover the cost of scope gaps they missed or to correct non-compliant work
  • Allowing to CMc to self-perform work may inhibit competitive bidding by other subcontractors

Design-Build

At the onset, an architect or engineer is hired by the Owner as Design Criteria Developer for the Design-Builder selection process.  Design-Builders are then chosen through a qualifications-based selection process and are given the opportunity to offer a proposal in response to the Design Criteria.

Proposals are scored by the Owner’s Technical Review Committee based upon a previously published scoring system that is a combination of qualitative and cost considerations.  The successful Design-Builder enters into a contract for all design and construction work.

Advantages

  • Single point/contract for all design and construction following selection of the Design-Builder

 Disadvantages

  • Requires a longer schedule with many more steps than other delivery processes as dictated by statutory requirements
  • The owner is required to work with three separate teams during the selection process, resulting in significantly increased time and staff commitment
  • Two architects will be involved in the process (Design Criteria Developer and the Design-Build Architect), with overlapping activities and increased costs
  • The Design-Build Architect may or may not have significant experience in the design of educational facilities
  • The contract is agreed upon in advance of completed construction documents resulting less Owner control over product and system selections
  • The owner must select from the Builder/Architect combinations that have been offered and cannot mix and match
  • Without offering a substantial stipend of more than $25,000 to each of two losing Design-Build teams, competition and interest in participating in this process is waning

 Choose the Right Process for Your Projects

It is important to note that in all delivery processes, contractual protections are present so that the owner can be assured that the project will be delivered within the stated budget. The opportunity for changes in work as a result of unforeseen conditions, conflicts in the design, and owner-requested modifications can occur in each case and are effectively managed by incorporating appropriate contingency funds.

To better understand the differences as well as the advantages and disadvantages of each, you need to consult a design professional that has experience in all delivery methods to discuss your particular project needs and arrive at the one that is best for your project

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