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Abstract: Project Delivery

The traditional, low-bid Design-Bid-Build (DBB) process favored for most of the 20th century became increasingly problematic; in the 1990s, owners implemented partnering programs (quite successful in some cases but not universally effective). New proposed methods to increase project team collaboration were developed, including the Design-Build (DB) process and alternative project delivery methods (e.g., Construction Manager at Risk [CM@R]). Other methods and approaches followed (e.g., construction manager with bidding of fees and general conditions; DBB approach with assistance of an agency  construction manager; and current leading-edge Integrated Project Delivery [IPD]). Before any approach is attempted, legal counsel must ensure that state law allows it. Project delivery method choices are based on project type, size, schedule, budget conditions, and owner project management skills and political conditions.

Project Delivery Option Overview

This section briefly summarizes the advantages and disadvantages of a number of design and delivery methods. (1) DBB is a traditional delivery process with design, bidding, and construction in separate sequential steps. The construction contract is  awarded  to  the lowest bidder. This method has advantages (e.g., familiarity, owner control, direct approach) and disadvantages (e.g., adversarial process, quality control, unclear pricing, no  expediting,  time-consuming redesign).  (2) In DB, design and construction are  provided under a single DB contract initiated at project beginning, and contract award is based on price and qualifications. This method has advantages (e.g., single point of responsibility, less adversarial process, guaranteed maximum price, expediting, quality control) and disadvantages (e.g., pre-planning,  full documentation, less owner control, trust relationship required, legal considerations). (3) A CM@R works with the owner and architect/engineer to complete  the project within the agreed-on GMP amount. This method has advantages (e.g., collaboration, expediting, competitive pricing, less adversarial process, price transparency, owner control, design-change flexibility) and disadvantages (e.g., fast-track construction risks, costly design changes, mutual trust required, legal considerations).  (4) Construction management with bid  of fees and general conditions is performed by a construction manager (CM)  selected  based  on  lowest bid and general conditions. This method has advantages (e.g., collaboration, expediting, owner control, design- change flexibility) and disadvantages (e.g., past performance considered in selection,  limited  cost savings, fast-track construction risks, mutual trust required, legal considerations). (5) For agency construction management with DBB, an agency CM is hired as a consultant to  represent  owner  interests during the construction phase. This  method  has  the same  advantages  and  disadvantages  as  the  DBB process but accrues the additional advantage of agency CM industry experience and incurs the additional disadvantage of an agency CM with no direct accountability (and added fee costs of an agency CM). (6)With multiple prime contracts, multiple direct owner-contractor prime construction contracts are bid for various trades as needed to complete the entire scope of construction. This method has advantages (e.g., required method under some state procurement laws, reduced markups, expediting) and disadvantages (e.g., no single point of responsibility, quality control, owner responsibility for conflicts and inefficiencies, lack of transparency, potentially adversarial process, time- consuming redesign, legal considerations). (7) Negotiated construction contracts refer to private sector project construction performed by an often informally selected general contractor whose contract is developed through a negotiation process. This method has advantages (e.g., informal process expediting or termination, terms and conditions favoring the owner) and disadvantages (e.g., generally not legally available to public owners, quality control, potential perceptions of favoritism). (8) Cost-plus, time-and-material, and unit- price contracts do not establish the total construction contract amount in advance but instead use the actual documented construction costs or preestablished unit prices. This method has  advantages  (e.g.,  less  reliance on accurate estimating, reduced change-order–related conflicts, open-book  processes,  compatibility  with phased completion levels) and disadvantages  (e.g., difficult project budget management, legal considerations). (9) Job order contracting entails open- ended construction contracts with general  contractors and subcontractors, selected through a fee markup bidding process, that perform multiple  small-scale projects under the open-end contract. This method has advantages (e.g., expediting, construction price negotiation, less adversarial process) and disadvantages (e.g., small to medium size applicability, careful documentation, legal constraints). (10) Privatized design- build-finance is characterized by turnkey design, construction, financing, and possibly facility operation by  a private sector developer, with varying levels of involvement by the public owner. This method has the same advantages and disadvantages as DB,  with additional advantages (e.g., lease payments over time, design and control inclusion in the ground lease) and additional disadvantages  (e.g.,  less  design  control, quality and maintainability, low potential developer profit). (11) IPD is an emerging delivery method that attempts to increase project team collaboration and use  of new technologies. This process has the benefits of a more collaborative process and  the  same  advantages and disadvantages as CM@R, with additional advantages (e.g., shared responsibilities, risks, time savings, error reductions, nonadversarial collaborative relationship) and additional disadvantages (e.g., need for new contract forms, lack of familiarity).

Additional Information and References Design-Bid-Build. Although this traditional project delivery method is still appropriate for many types of

projects, it has a number of challenges that have led to the exploration of alternative delivery methods.

Design-Build. This approach, now one of the most widely used methods, began to gain popularity with the growth of DBIA and in response to issues with traditional DBB projects. DB projects are generally competitively selected, can be fast-tracked, and can be very effective for horizontal construction projects. The design professional assigned to the contractor can find it difficult to fully represent owner interests.

Construction Manager at Risk. The CM@R method provides most of the benefits of DB while keeping the design professionals on separate contracts, directly with the owner. The CM is at risk because of the responsibility to hold contracts, assume performance risk, and provide a cost guarantee. Successful CM@R and DB processes require a more collaborative trust- based approach.

Job Order Contracting. These programs allow smaller projects to be completed more quickly and efficiently through open-end construction projects.

Privatized Design-Build-Finance Projects.  Also  known as public-private partnerships, these creatively assembled projects use the private sector to complete projects that also benefit the public sector.

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