What every Owner should know about Construction Delivery

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
What every Owner should know about Construction Delivery
LEAN Construction Primer

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.

Financial transparency

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


What every Owner should know about Construction Delivery

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