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Construction Project Delivery Methods

Presentation · October 2017

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Mohamed Darwish
The American University in Cairo
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 10/2/2017

Project Delivery Methods

By:
Dr. Mohamed Darwish

DELIVERY METHODS

•The term delivery method means the approach

used to organize the project team so as to
manage the entire designing and building
process.

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The owner needs to decide;

• Which designers to hire,
• When to hire them, and under what type of
contract.
• When to hire the construction professional,
and under what type of contract.

• Which organization gets hired first?

• Do both organizations report to the owner, or

does one report to the other?

In some cases companies offer both design

and construction services so that the owner
only has to hire one company.

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There are a number of proven strategies that

can be used to manage the process, each
offering distinct advantages and
disadvantages.

We will discuss the three most popular approaches:

Design-build

Construction
Traditional
management

Popular
approaches

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The Traditional Delivery Method

•In this arrangement the owner hires a design
professional who prepares a complete set of
contract documents for the owner for a design
fee.

•With a complete set of contract documents in

hand, the owner either negotiates a price with
a general con tractor or bids out the work.

•The general contractor is totally responsible

for delivering the completed project as spelled
out in the contract documents.

•The general contractor may subcontract out

parts of the project, with each subcontractor
reporting directly to the general contractor.

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The designer may be involved in overseeing the

construction work in the field; this depends on the
owner's needs and capabilities.

•In this delivery method no direct, formal

relationship exists between the designer and
the builder.

•They communicate only through the owner as

shown in the next figure:

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Traditional Approach
Provides contract documents
Pays design fee and pays either negotiated
price or bid price
Owner

Supplies Returns
contract completed
documents project

Designer Contractor

Designers and Subcontractors

Consultants and Suppliers

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Traditional Summary

•One of the major advantages of the traditional

arrangement is that the owner knows before
con-struction begins what the cost of the project
will be.

•To obtain this benefit, however. the owner gives

up the ability to fast-track the project.

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Traditional Summary - 2

•The owner also gives up the benefits of

contractor collaboration during the design phase.

•The firm, fixed price is only as good as the

contract documents.

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Traditional Summary - 3
•Changes to the scope of the project as well as design
errors or omissions can lead to project delays and an
increase in the contract price.

•On many projects the time issue may not be important

and the risks of changes in project scope may not be
that great, so it may make sense to get good price
com-petition and get a fixed price upfront.

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Traditional Summary - 4

•Projects that are not technically complicated or

have been built before are candidates for this kind
of arrangement.

•Many public projects are required to be built

under this arrangement.

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Traditional Summary - 5

•As the complexity of the project increases due

to the politics of the location, the technology
of the project type, or the need to speed up
the process, this arrangement begins to make
less sense.

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The Design-Build Delivery Method

•In the design-build arrangement the designer
and the construction professional are either
from the same company or through a joint
venture, form a single company for the
duration of the project as shown in the next
figure.

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Design-Build Approach

Owner
Pays total Returns
project complet
cost and ed
fee project
Design-Build
Hires Hires
Company

Subcontractors
Designers and Suppliers
and
Consultants

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•A joint venture is the legal binding of two

companies for the purposes of providing a
competitive advantage that would be dif-ficult
to attain alone.
•As an example, a design firm could form a
joint venture with a construction company to
offer a design-build service to an owner.

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•In the design-build arrangement the owner

contracts with a single company early in the
preconstruction stage, and this company takes
the project from conceptual design right
through construction.

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•The terms turnkey and design-manage are

also used to describe this process, although
they actually are slightly different variations of
the concept.

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Design-Build Summary - 1

•The design-build process benefits from the

smooth coordination that can occur between
the designers and builders within the same
company.

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Design-Build Summary – 2

•The owner gains the benefit of time and,

taking the process to the extreme, can
essentially tell the design-build firm what
project is wanted, go on vacation, and return
to a finished project.

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Design-Build Summary - 3

•The negatives are total project cost is not

generally known before construction begins,
and the owner can easily get left out of the
decision-making process, ending with a project
that is not optimal for its use.

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Design-Build Summary - 4

•The design-build arrangement makes sense on

projects of a highly technical nature where
very good communication and coordination
need to occur between the designers and
builders.

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Design-Build Summary - 5

•This delivery method also allows fast-tracking

and is attractive to industries faced with strong
competition and the need to get a new
product to market quickly.

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Design-Build Summary - 6

•The arrangement does not guarantee the best

possible price, although subcontracts can, still
be competitively bid with some sharing of cost
savings through an incentive clause.

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Design-Build Summary - 7

•Projects that may use this arrangement

include manufacturing plants, refineries, off-
shore oil drilling plat-forms, and other
technical projects that need good
communication between the designers and
builders and would benefit from a fast design-
build process.
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Construction Project Management

Delivery Method

•The owner hires both a design firm and a

construction project management firm early in
the preconstruction phase of a project.

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•Which firm is hired first as well as which

specific responsibilities each firm will handle is
variable and dependent on the level of
involvement of the owner as well as the
expertise of the designer and construction
professional see the next figure.

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Construction Project Management Approach

Pays management
Pays fee
design Owner
fee Advises owner on
Supplies subcontractor selection,
contract provides estimating /
documents scheduling support
Designer
Construction
Project
Returns completed Manager
project
Designers Provides
and contract
Consultants Subcontracto documents
rs and and pays bid
Suppliers price

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•This delivery method has a number of

variations such as:

 Program Management,

 Professional Management,

 Construction Management, and

 Professional Construction Management.

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•The difference between these arrangements is

a factor of:

 the expertise of the management team (i.e.,

whether the company is primarily a designer,

a builder, or a management consultant),

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 when the management team is hired (i.e.,

concept, design. or procurement stage), and

 what responsibilities the owner assigns to the

different parties.

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•As an example, the owner may want assistance

through the entire process, from programming
right through project completion.
•This type of assistance would include working
with user groups and assisting in designer
selection, as well as overseeing the construction
phase.
•This would typically be called a program
management delivery method.
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•In a construction management delivery

method the owner would do much of the
programming and designer selection alone,
and look to the construction manager to do
the work.

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Construction Project Management

Summary - 1

This arrangement offers significant advantages to

the owner provided the owner is willing and able

to stay active in the process and selects a good

designer and construction project manager who

are willing to work as team players.

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Construction Project Management

Summary - 2

This delivery method offers the cost

advantages of competitive bidding to the

owner as well as the opportunity to phase the

project.

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Construction Project Management

Summary - 3
•It is commonly used by real estate developers in
the commercial building industry.
•In some cases, the project will start with a
construction project management arrangement,
and as the design nears completion the
construction manager will negotiate a fixed or
guaranteed price with the owner and the project
will become a traditional arrangement.
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