President's Letter: Choosing Project Delivery
2 months, 1 week ago
By Tim Seibert, P.E.
President, Carl A. Nelson & Company
Our experience tells us that there can be significant misunderstanding with regard to project delivery methods by owners, designers and contractors and how to select one for a project. We have significant experience in all the various delivery methods. The goal of our Spring 2021 newsletter is to describe the Design-Build and Construction Management project delivery methods and how, based on our experience, they might work for you.
The four major project delivery methods in general use today are as follows:
- with a general contractor
- with the owner acting as general contractor with multiple prime construction contracts
- Qualification based selection on a cost-plus fee basis with a guaranteed maximum price to be established after design, sometimes in phases. This is sometimes referred to as Integrated Project Delivery (IPD).
- Using bridging documents to solicit fixed price design-build bids covering detailed design and construction
- Construction Manager at Risk (CM@R)
- Construction Manager Agent or Advisor (CMa)
In Design-Bid-Build, the owner contracts with a design firm and/or self-performs engineering to complete construction documents, with which the owner solicits fixed price bids from a general contractor to perform the construction work. In this situation, the general contractor would solicit bids from specialty subcontractors and contract with and manage those subcontractors. Also included under this method is the situation where the owner contracts for individual construction disciplines separately, sometimes in a phase approach as design is being completed, and the owner manages and coordinates the multiple prime contracts.
Design-Build is a method where the owner contracts with one entity for both design and construction as a single point responsibility. One design-build procurement approach is to solicit design-build proposals off nothing more than a project idea or business need. Proposals are evaluated primarily on a qualification basis including the fee proposal. The contract would be a cost plus a fee type with a guaranteed maximum price to be established after design, sometimes in phases if fast-tracking is necessary to achieve the project objectives. Typically, for work not being self-performed by the design-builder, specialty subcontractors would be solicited through a bidding process managed by the design-builder and approved by the owner. Another design-build procurement method is to employ a third-party consultant, usually not the design-builder, to develop bridging documents which would include a preliminary space program and at least schematic plans in enough detail to solicit fixed price bids to complete the detailed design and construct the facility.
Construction Management delivery is a method where the construction manager provides both pre-construction services, in collaboration with the owner-contracted designer, and construction services. In the at-risk type, the construction manager would hold the specialty subcontracts for work not being self-performed by the construction manager. In the agency/adviser method, the trade contracts for the construction work would be held by the owner and managed by the construction managers. In the agency/adviser method, the construction managers typically would not self-perform any actual construction work but would only manage and supervise the work.
Selection of the project delivery method can be driven by company practices and policies and for public owners, laws and regulations regardless of the effectiveness of the delivery method. In some organizations, the practices and policies that drive decision-making are designed for purchasing commodities for manufacturing operations and might not always be appropriate for acquiring project related services and products.
The selection of a project delivery method can have a significant impact on the success of a project and as such has been the subject of multiple research projects with statistically significant results. One of the better studies out of Penn State University looked at 351 projects across a range of project types and locations and a summary of the results shown in the accompanying chart correlates to our experience.
Based on the research, design-build is usually the best delivery method which explains why it has been the fastest growing delivery method for the last 25 years even though not all organizations are allowed to use this delivery method.
The primary reason we see for the success of design-build is the early buy-in of the customer's business goals by the design-build team with the construction and design professionals collaborating holistically to meet our customers' objectives. For public owners, Construction Management agency is the best delivery method to obtain a collaborative approach to project success.
Click the cover image to go to the e-edition.