What every Owner should know about Construction Delivery is that it affects success or failure more than any other element.
At a broad level, the following Construction Delivery Methods are available to Owners…
- Traditional Delivery Method- Design-Bid-Build
- Various Construction Management Delivery Methods
- Design/Build Delivery
- LEAN Collaborative Construction Delivery – IPD, JOC
Each has its associated contract types, which may include…
- Lump Sum or Fixed Price
- Unit Price
- Cost Plus Fee
- Cost Plus with a GMP ((guaranteed maximum prices, not-to-exceed price, NTE, or NTX)
The selection and appropriate application of any construction delivery methods is dependent upon the following factors…
- Owner’s experience, qualifications and capabilities
- Construction project size, form, function and complexity
- Time and sequencing requirements
- Budget and other factors
Design-Bid-Build
Most common
General Procedure
Owner first contracts Design Professional. Design completed prior to bidding/pricing and construction. Competitive bidding with selection being the lowest cost selection of the bidder compliant with the scope of work and associated the bid documents.
Pros
Well known.
Cons
No upfront collaboration of contractor
Unknown construction price until bids are received
Questionable collaboration between owner/designer
Risk dependent upon completeness and accuracy of construction documents within a relatively ‘ad hoc’ process
Inherently adversarial process
Prone to dissatisfaction, cost over-runs, and litigation
Construction Management Approach
Relatively common.
General Procedure
Involves multiple contracts and intensive professional management.
Pros
Reasonable communications among owner, designer, and CM firm, if owner all are transparent and capable.
Opportunities for cost savings and value engineering by having construction expertise involved earlier in process.
Cons
Cost effective for major new construction only.
Unknown construction price until bids are received.
Risk dependent upon completeness and accuracy of construction documents within a relatively ‘ad hoc’ process
Clear potential for conflict of interest – Assumes one entity, manages all facets of the construction effort including pre-construction services. During pre-construction the contractor is a CM and converts to GC after GMP is mutually agreed upon.
Design-Build Method
Somewhat known
General Procedure
A single entity provides both design and construction services per the bidding document and final signed contract documents. The contractor and designer work together for Owner based upon mutually agreed cost, schedule and scope of work.
Pros
Ability for fast track/phased construction
Three types of deployment – Contractor Led (subcontract design or joint venture) – Designer Led (subcontract construction or joint venture) – A single firm with both capabilities internally
Perceived higher quality
Generally reduced number of claims and/or litigation issues
Earlier cost identification
More contractor involvement and generally better documentation
Cons
Suitable for major new construction only
Not fully collaborative, can still bit one party against others
Level of owner involvement may not be required and fully defined
Unknown construction price until bids are received.
Risk dependent upon completeness and accuracy of construction documents within a relatively ‘ad hoc’ process
Clear potential for conflict of interest – Assumes one entity, manages all facets of the construction effort including pre-construction services. During pre-construction the contractor is a CM and converts to GC after GMP is mutually agreed upon.
Contractor is exclusively responsible for design risk
Scope development and selection can be ill-defined and problematic
Legal and professional issues
Not supported in some public and/or federal procurement areas
LEAN Collaborative Construction Delivery Methods
Not well know, applied, or understood
General Procedure
Long term multi-party agreement using LEAN construction processes within which the focus is upon outcomes, financial transparency, shared risk/reward, performance-based incentive.
Pros
Proven ability to consistently deliver approximately 90% of projects on-time, on-budget, and to the satisfaction of all participants and stakeholders.
Available for major new construction – Integrated Project Delivery, and renovation, repair, and minor new construction – Job Order Contracting – JOC.
Fully defined roles, responsibility, and required levels of collaboration and training. Includes the use of standardized construction tasks at line item cost detail.
Focus upon best value procurement
Available supporting technology, training, services
Cons
Generally requires significant internal “change management” for all participants. Fundamental difference in thinking and day-to-day activities versus traditional traditional construction delivery methods.
Owner must demonstrate high levels of leadership and competence across multiple domains.
Sometimes used improper by Owners to “bypass” the checks and balances provided by procurement/purchasing authorities (particularly in the State/County/Local Government Sectors).
What every Owner should know about Construction Delivery
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