Project Delivery Methods

Project Delivery Systems

Traditional

Pure Construction Management

Construction Management at risk

Design / Build

Modified CM Design/Build: Design Subcontracted

CM Oversight Design/Build

Multiple Primes

Design-Built-Operate-Transfer (BOT)

Turnkey

Most Common Delivery Methods

Traditional Delivery Method

Traditional Delivery Method

Design professional in charge of the preparation of design and

contract documents

Competitive bid or negotiation with contractors after design

complete

Contractor in charge of the delivery of the completed project (may

decide to subcontract)

The contractor is the only one responsible for the execution of work

Sequential Construction Process

Collaborative relationship between A/E (Chosen on Qualification

Basis) and Owner

Lump-sum bids commonly adopted.

Traditional Delivery Method

Different participants with different Interests:

Owner: Quality and value product, delivery schedule, site

safety

Contractor: Profit, construction time, relationships,

reputation

A/E: Profit, aesthetics, relationships, quality, recognition

Traditional Delivery Method

General Contractor Responsibilities

Still responsible for a large portion of work (particularly public jobs

with bidding)

For larger jobs, GC doesnt do much of work (sometimes <10%)

Contractor designs temporary structures (Engineer needs to stamp)

Traditional Delivery Method

Subcontracting
GC manages most subcontractors

Exceptions: Tenant subcontractors

Overhead at each level

Handles submittals

Get bids from subcontractors (bid shopping a danger; no formal

guarantee of award of contract)

Bidding here is typical

Can be large number of subcontractors

Responsible for failure

Shop drawings typically produced by subcontractors

Problem: Things can fall through the cracks

Traditional Delivery Method

Subcontracting

Motivations to GC to Subcontract:

No In-house ability

GC overstretched

GC lacks familiarity with local conditions

Need to get warrantees

Laws and regulations (assign subs to contractor)

Due to specialization, more efficient, cheaper

Sometimes GC provides equipment to subs

Tensions (e.g. how quickly, many subs on site)

Subcontractor management very important for productivity

Traditional Delivery Method

Role of Architect/Engineer

Typically negotiated contract

Recruited on service rather than commodity basis

Financial stability, other factors critical

Sometimes have design competition

Dont want to push too low:

Poor design

Poor personnel

No time for double-check

Contrast

Price of design has small impact on overall price

Quality of design has big impact on overall price

Traditional Delivery Method

Role of Architect/Engineer II

Sometimes do own value engineering (dangerous)

If estimates off, may be required to redo design at own expense

Carry errors and omissions experience

Limited participation in construction process

Typically observes construction

Review shop drawings with disclaimers

Do not want to direct construction methods

May put suggestion in contract documents

Traditional Delivery Method

Advantages

Well known method (courts, companies)

Flexibility during design (vs. design-build)

Cost defined early (when bidding)

Good contractual protection for the owner

Open bidding procedure very easy

Owner not too involved in the construction process

Trusting relationship between A/E & Owner

Good if uncertainty exists, primarily in design

Traditional Delivery Method

Disadvantages
Design not reviewed before construction

Miss opportunities for major time/cost savings

May yield changes due to constructability problems

Sequential and linear process preventing from overlapping of

tasks and money saving

Few interactions among the participants

Construction cant start until design is complete

Difficult for complex projects

Traditional Delivery Method

Changes Difficult

Owner can be at contractor's mercy

(Role of on-call contractor)

Design Fixed after construction starts

Sometimes contractors seek changes to make $

C.M. Delivery Method

C. M. Delivery Method (Pure Agency)

The Owner hires both a design firm and a construction management

firm before the beginning of the construction of the project

Typically CM selected based on quality

Many variations are possible in the delivery method depending

mostly on when the management team is hired and its skills

Started in late 1960s

World Trade Center

Madison Square Garden

May recommend A/E

Check billings

C. M. Delivery Method
Tasks
Pre-construction
Constructability, value engineering, estimation, alternatives,
schedule, financing, manage designer, early procurement

Field supervision
QA, Targets met, invoice checking, coordinate work of contractors,
change orders, payments, claims, inspections for design
requirements, sometimes safety

C. M. Delivery Method
Lessens Owners Responsibility

Project control

Job meetings

Management meetings

Reports (operational and annual)

Administrative tasks

Budgets

Drawing approval

Oversight

Quality assurance

C. M. Delivery Method
Pure (Agency) C.M.

Great flexibility in the schedule and for changes

Market competition for subcontracts

Trust relationship with the Contractor

Small financial risks of PCM and high risk of loss of reputation

PCM Generally paid a Fixed Fee (professional)

Take over work of designer, GC, owner

PCM as facilitator/mediator in conflicts

C. M. Delivery Method
Pure (Agency) C.M.
Advantages

Great Flexibility for Changes

CM more objective, less partial

Less conflict between owner and CM

Small Financial Risks of PCM

Have both

Cost competition (for subcontractors - often 5-8% savings for

dealing directly with subs)

Fiduciary relationship with CM

One common reference point: The CM

Owner can get rid of particular subcontractor

Lessens owners responsibilities

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C. M. Delivery Method
Pure (Agency) C.M.

Disadvantages

Lower incentive for CM to reduce price, time

Owner alone takes risk on cost of project (no guarantee from CM)

Participants must all be cooperative and well communicating

High Risk of Loss of Reputation

C.M. @ Risk

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C.M. @ Risk

CM usually Guaranteeing Maximum Price: GMP to give the owner

security that the project will be built within budget

This is a big difference from pure CM

Fee typically 10-15%

Reduced Owner Risk

Risk-wise, between the DBB and the PCM System (VERY similar to
GC hired early)

Contractual Relationships between. CM & Subs

Performance bonds typical

C.M. @ Risk
Advantage

Reduces Owners Risk

CM at risk usually goes with Guaranteed Maximum Price (GMP)

Contractual Relationships between CM and Trade Contractors

Disadvantages

The GMP is a defined price for an undefined product

Bad during design: Design pressure

Tension (If CM is hired early: more price risk If CM hired late: less value
during design)

CM is no longer impartial (may argue against changes for own interest)

Risk of adversarial relationship with the A/E

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Design-Build

Design-Build

The Owner develops 20-30% design and hires a design/build firm

that will complete both design and construction

This firm can be a design/build firm but also a joint-venture firm for
this specific project

Possibility for the design/build company to hire subcontractors

Solicit work with RFP

Can be good for complex projects but need phased design to shield
parties from risk

One contractual team responsible for design and construction

functions

Owners with more emphasis on schedule despite less control and

more uncertainty of cost

Loss of control over design and flexibility in changes

Owner with enough knowledge about design/construction to

establish initial parameters, review proposals & monitor process

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Design-Build

Dominant method early in US history

Recent drivers

Downsizing of US corporations (outsourcing design)

Desire for single source of responsibility

Time pressure (desire to fast track)

Shortcomings of tightly defined architect role (constructability

issues, limited A/E oversight of construction)

Bridge Designer/Engineer

Serves as bridge between Owner and Design-build team

Preliminary design before DB team hired (Maybe up to 30%

design)

Monitors development of design and construction (Fiduciary with

owner)

Design-Build
Advantages

Allows Fast Tracking

May be good for some complex projects

Close coordination within team

Good interactions among participants

Single source of accountability and

Designer/contractor conflicts not exposed to owner

Easier incorporation of changes caused by field conditions

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Design-Build
Disadvantages

Pricing isnt possible at the beginning

Can be bad for complicated projects (Very important for owner to be closely
involved to specify important aspects of design up-front)

Fewer checks and balances

Changes in contract

Problems may be hidden until late (no A/E to watch)

May take a direction that the owner does not really want

Design-build firm can give high quote for changes

Fast tracked: Changes can lead to (Rework, Iteration, delay)

Owner responsible for Quality assurance

Package: Can not pick or get rid of individual team members

Design-Build
Pricing and Selection

More comprehensive selection process typical

Design/Price/Schedule/Team

Design competitions undertaken

Timing tension for when to recruit DB firm

Earlier recruitment: Greater risk and Risk premium (hard to

judge on qualification of D/B team)

Later recruitment: Less benefit from D/B (Limit creativity closer to GC, lower ability to fast track)

Often have segmented pricing (cost-plus design, fixed price or GMP

build)

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Modified CM Design/Build:
Design Subcontracted

CM Oversight Design/Build

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Other Delivery Methods

Multiple Primes

Allows owner time to raise money

Turnkey

Like DB but Contractor Financed (Very common in residential

housing)

Design-Build-Operate-Transfer (BOT)

Long-term financing (vs. DBO)

Can compete on size, transfer time, etc.

Owner/Agent (Owner does part of design)

Type of Relationships Among

Participants

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Advantages of Common Delivery

Methods

Disadvantages of Common Delivery

Methods

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