Construction Project Delivery Overview & Comparison

Construction Project Delivery Overview & Comparison
Construction Project Delivery Comparison

Construction Project Delivery Overview & Comparison

Design-Bid-Build

Traditional design-bid-build (DBB) delivery process with design, bidding, and construction in separate, sequential steps. Construction contract is generally awarded to the lowest bidder and/or lowest qualified builder, who then utilizes the subcontractors included in his or her bid.

Advantages
  • Process most familiar to public sector design and construction community.
  • Owner controls the design, which is completed under direct owner A/E contract prior to construction.
  • Direct way to provide competitive pricing for entire construction contract.
Disadvantages
  • Adversarial, change-order-oriented environments are common between owner, A/E, and contractor.
  • Planning, procurement, and project delivery is inefficient and disparate.
  • Time-consuming redesign and rebid, and over-budget, unsatisfactory outcomes are common.
  • Project cannot be expedited with a collaborative fast-track process; drawings and specs must be 100% complete to bid (though latter rarely occurs).
  • Construction contracts may be awarded to low bidders, without consideration to qualifications.
  • No contractor and limited A/E assistance with detailed estimating, plan checking, and constructability reviews during design phase.
  • General lack of technical and cost visibility and transparency. Bid shopping can occur and actual overhead and profit amounts are unknown.
  • Construction price is not fixed until after design and bid phases are completed, and original “lump sum” target cost is rarely met.

Design-Build

Design and build (DB) construction are provided under a single design-build contract initiated at the beginning of the project. A DB contract is awarded on the basis of price and/or qualifications.

Advantages
  • Single point of responsibility for both design and construction of the project.
  • A/E and contractor work together through all phases of the project.
  • Guaranteed maximum price (GMP) is fixed early in the design phase of the project.
  • Construction contract is awarded on the basis of design-build team qualifications and/or price.
  • Project can be expedited with fast-track construction, which can also reduce costs.
  • There is a less adversarial relationship between the owner, A/E, and contractor.
  • Change orders may be reduced versus DBB due to A/E-contractor collaboration and contractual relationship.
  • Designer and builder have a greater motivation than DBB to ensure owner satisfaction when selections are based on qualifications and performance.
Disadvantages
  • High initial set up costs make DB suitable only for major new construction
  • Not a fully collaborative multiparty agreement. Owners can still be at odds with designers and builders.
  • While high set up costs require larger projects, project types must be straightforward, where requirements can be fully documented at request for proposals (RFP) stage.
  • A major pre-planning effort is needed to prepare sufficient material for the request for quotations (RFQ)/RFP process.
  • Owner has less control (vs. IPD or LEAN Job Order Contracting) of design process, with the A/E typically working for the contractor.
  • Design changes can result in costly impacts to drawings or construction work in progress.
  • Disagreements related to intended quality of work are common.
  • Will not work any better than DBB if mutual trust relationships are not built.
  • May not be allowed some states.

Construction Manager at Risk

Construction manager at risk (CM@R) includes a construction manager who works with the owner and A/E through design and proposals and manages subcontracts to complete the work. The CM@R is required to complete the project within the agreed-upon amount, or else is at risk to cover the additional costs.

Advantages
  • Project can be expedited with fast-track construction.
  • Construction contract is awarded based on CM@R qualifications and past performance.
  • Construction work is competitively priced through low bids from prequalified subcontractors.
  • Change orders may be reduced due to A/E and contractor coordination through the design phase.
  • The owner controls the design, which is completed under direct owner A/E contract.
  • Suitable for complex building types.
Disadvantages
  • Not fully collaborative.
  • Contingency costs are higher due to the elevated risk for the construction manager.
  • Fast-track construction presents risks related to incomplete construction documents.
  • Design changes during construction are extremely costly.
  • No process to assure mutual trust relationships built for all parties.
  • Not allowed in some states.

Construction Management with Bid of Fees and General Conditions

Construction is performed through a CM, who is selected based on the lowest bid of fees and general conditions.

Advantages
  • A/E, owner, and contractor (CM)may work together through all phases of the project.
  • GMP may be fixed early, during the design phase of the project.
  • Project can be expedited with fast-track construction.
  • The owner can control the design.
  • Provides design-change flexibility for complex building types.
  • CM fee and/or general conditions amounts set through bid process.
Disadvantages
  • The lowest bid of fees and/or general conditions is not an indicator of CM capabilities or potential outcomes.
  • No sure path to cost savings. Fee and/or general conditions savings are much less than the cost of CM process inefficiencies.
  • Fast-track construction presents risks related to incomplete construction documents.
  • May not be allowed in some states.

Agency Construction Management with Design-Bid-Build

Agency construction manager is hired as a consultant to help represent the owner’s interests during the construction phase of a DBB project.

Advantages
  • Same pros as noted for DBB process.
  • Agency CM can provide industry experience and estimating, scheduling, and project management expertise for the owner’s benefit.
Disadvantages
  • Same cons as noted for DBB process.
  • Agency CM has no direct accountability for the success of the construction process.
  • The owner must pay the fees of an agency CM in addition to the contractor’s fees for the construction work.
  • Agency CM must be committed to representing the owner first… as a result, same potential antagonistic environment as DBB.

Multiple Prime Contracts

Multiple direct owner-contractor prime construction contracts that are bid for various trades, or groupings of trades, as needed to complete the entire scope of construction.

Advantages
  • Construction methods required by the procurement law in certain states.
  • Can reduce markups of general contractors.
  • Can be preferred by some established subcontractors who have prime contracts with the owner.
  • Project can be expedited with fast-track construction.
Disadvantages
  • Construction is awarded to multiple low bidders, without consideration of their qualifications.
  • No single point of responsibility for the construction of the various trades related to the project.
  • The owner is responsible for conflicts and inefficiencies between the multiple prime contractors.
  • No contractor assistance with estimating, plan checking, and constructability reviews during design.
  • Bid shopping can occur and actual overhead and profit amounts are unknown.
  • Adversarial, change-order-oriented environment common, like DBB.
  • The construction price is not fixed until after the design and all bid processes are completed.
  • Time-consuming redesign and rebid is common, as is late, over-budget outcomes.
  • Is not legal in some states.

Job Order Contracting

Job Order Contracting is a fully collaborative indefinite delivery, indefinite quantity, long-term (one year, with up to four option years) construction method with general contractors and/or trades/subcontractors who are selected through a fee markup (co-efficient/factor) bidding process using a selected detailed unit price book (UPB), and who perform multiple projects through work orders. Based upon location, projects may include repair, renovation, and new construction.

Advantages
  • Expedites projects by eliminating project-specific bid phases and reducing design documentation requirements.
  • Properly employed, JOC is a highly collaborative environment that can consistently deliver quality, on-time, and on-budget outcomes.
  • Allows for construction price “negotiation” based on an established construction cost unit-price book. (Note: prices are non-negotiable, however, quantities and selection of line items can be revised prior to acceptance of contractor proposal).
  • Fully collaborative relationship between owner and awarded design/builder.
  • Can be utilized with single or multiple job order contracting (JOC) contractors.
  • Bid shopping is not allowed.
  • Performance-based reward system.
  • Fully cost and technical transparency.
  • Robust, proven, auditable, and compliant process.
  • Support, training, and technology for implementation and management is readily available.
Disadvantages
  • The owner must possess requisite leadership skills and technical competencies.
  • Poorly understood.
  • Organization must be committed to collaborative process that mutually benefits all parties.
  • Not suitable for major new construction. Works best on the typical numerous and ongoing repair, renovation, sustainability, and minor new build projects.
  • Allowable JOC total annual JOC Program size and individual JOC project size may be limited by jurisdiction procurement codes.
  • May not be allowed or be limited in some states.
  • JOC vendors basing their services upon a percentage fee of total annual JOC construction volume can provide highly costly.
  • JOC can be inappropriately applied to simply speed project procurements and/or approve projects that otherwise would not have been approved via traditional methods.

Integrated Project Delivery

Integrated project delivery (IPD) is a fully collaborative environment supported by a multi-party agreement. The owner, the design team, and the primary contractor and subcontractors collaborate on the design and construction of a project on an early and ongoing basis. The goal of the collaboration is to minimize conflict among participants and steer the project to a favorable outcome for all participants. Sharing of project risk/reward is a key feature of IPD.

Advantages
  • Expedites projects by assuring early and ongoing information sharing among all participants and stakeholders.
  • Can significantly reduce project costs and improve other outcomes for all participants.
  • Fully collaborative relationship between all parties throughout all phases.
  • Focus upon process improvement.
  • Overall cost savings.
Disadvantages
  • The owner must possess requisite leadership skills and technical competencies.
  • Poorly understood.
  • Organization must be committed to collaborative process that mutually benefits all parties.
  • High initial set up costs make IPD suitable only for major new construction projects.
  • Additional work required from all parties.
  • May not be allowed in certain areas.

A thorough understanding of this Construction Project Delivery Overview & Comparison is a first step towards consistent achievement of best value outcomes for all participants and stakeholders.