Construction Project Delivery

Project contracts depend on design and construction management methods and are usually determined by amount of risk the owner is comfortable with. Many General Contractors and Architect / Engineer firms utilize ‘standardized’ contracts developed by the Associated General Contractors of America (AGC) or the American Institute of Architects (AIA).  These base contracts are then revised to meet the needs of the Owner, Contractor, and Architect firm based on the specific project requirements. Construction Management Agency (CMA), a management process, can be implemented regardless of the project delivery method. With CMA, the owner utilizes a construction manager as its principal agent to advise on or manage the process over the life of the project, or specific phases of the project.

Common construction project delivery methods

Construction Manager at Risk (CMAR)

A project delivery method that requires a commitment by the contractor for construction performance to deliver the project within a defined schedule and price, either fixed or a Guaranteed Maximum Price (GMP). The contractor acts as consultant to the owner in the development and design phases, but as the legal equivalent of a general contractor during the construction phase.

Benefits:

• The owner gains the benefit of having the opportunity to incorporate a contractor’s perspective, experience, and input with planning and design decisions
• The ability to “fast-track” early components of construction prior to full completion of design
• Use of contractor provided preconstruction services for budget development, scheduling, and constructability analysis during the design phase

Drawbacks:

• A premium is placed on the proper selection of the contractor, based on the firm’s particular skills and experience, to provide the best value to the owner
• While the contractor provides the owner with professional advisory management assistance during design, this same assistance is not present during the construction phase, as the firm is in an “at-risk” position during construction

Design / Build (DB)

A project delivery method which combines architectural and engineering design services with construction performance under one contract.

Advantages:

• DB can produce a project more quickly than conventional Design-Bid-Build
• There is a single point of accountability for design and construction
• Cost efficiencies can be achieved since the contractor and designer are working together throughout the entire process
• Use of contractor provided preconstruction services for budget development, scheduling, and constructability analysis during the design phase
• Change orders would typically arise primarily from owner changes to the project’s scope

Disadvantages:

• Less design control and involvement by the owner and stakeholders
• Owner must be highly responsive in its decision making to take full advantage of the speed of DB delivery
• The owner does not receive the benefit of the checks and balances that exist when it contracts separately with a designer and a general contractor
• May be problematic when there is a requirement for multiple agency design approvals
• May be inappropriate if the owner is looking for an unusual or iconic design

Design-Bid-Build (DBB)

The traditional U.S. project delivery method, which typically involves three sequential project phases: The design phase, which requires the services of a designer who will design the project; the bid phase, when a contractor is procured; and a build or construction phase, when the project is built by the contractor. This sequence usually leads to the sealed bid, fixed price contract.

Advantages 

• Widely applicable, well understood, and has well established and clearly defined roles for the parties involved
• Most common approach for public owners having to comply with local, state, or federal procurement statutes
• The owner has a significant amount of control over the end product, particularly since the facility’s features are fully determined and specified prior to selection of the contractor

Disadvantages

• The process may have a longer duration when compared to other delivery methods since all design work must be completed prior to solicitation of the construction contract
• The designer may have limited ability to assess scheduling and cost ramifications as the design is developed, which can lead to a more costly final product
• The owner generally faces exposure to contractor change orders and claims over design and constructability issues since the owner accepts liability for design in its contract with the contractor
• This traditional approach, in some cases, may promote more adversarial relationships rather than cooperation or coordination among the contractor, the designer, and the owner
• If the owner uses the fixed price bidding and compensation method, the contractor may pursue a least-cost approach to completing the project and the owner may receive less scope or lesser quality than expected for the price, requiring increased oversight and quality review by the owner. If the owner uses the unit price bidding and compensation method, the contractor may pursue an increased-scope approach to maximize revenue from the contract, while providing the owner more scope than expected
• The absence of construction input into the project design may limit the effectiveness and constructability of the design. Important design decisions affecting both the types of materials specified and the means and methods of construction may be made without full consideration from a construction perspective