Methods of Project Delivery for Construction “Lessons Learned” November 2007 Presented by: Mary K. Crites, AIA Parkhill, Smith & Cooper, Inc Introduction Owners Desired methods for: Faster time Less Cost, and earlier confirmation of cost Improved quality Less Conflicts/Litigation Major variables in delivery selection include: Time sensitivity Cost Quality Allocation of Risk Lesson #1: No single “best” method for all projects Lesson #2 : Impact of each variable is different depending on the method and NO Method delivers fastest, cheapest, & highest quality. Lesson #3: Selection of Delivery Method should occur before A/E selection Competitive Bidding (design-bid-build) Advantage Potential for lowest construction price because: Contractor Competition Defined Scope during bidding because design complete Separate contracts enables A/E to be Owner Representative during Design & Construction Competitive Bidding (design-bid-build) Disadvantages Construction price not finalized until after design & bid Re-design & re-bidding may be required to meet budget Early change order can reduce scope Provides “lowest” price WITHOUT respect to Contractor qualifications or Contractor workmanship Linear schedule, Construction difficult prior to design completion Limited contractor input during design Competitive Bidding (design-bid-build) Least Suited when: Project is complex &/or large Scope subject to change Quality is important factor Best Suited when: Project is not subject to change Lowest price is most important Quality is less important Project is small in scale & not complex Lesson #4: Quality is important- don’t have a dirt Contractor build a Courtroom!! Competitive Sealed Proposal (CSP) Advantages Defined scope during bidding w/design complete Separate contracts enables A/E to be Owner representative during Design & Construction Potential for “best value”-combination of price and qualifications Owner determines what selection criteria are important Owner may negotiate with selected GC prior to award Competitive Sealed Proposal (CSP) Disadvantages Construction Price not finalized until after design & bid Re-design & re-bidding may be required to meet budget Negotiation prior to award can reduce scope Linear schedule, Construction difficult prior to design completion Limited contractor input during design Competitive Sealed Proposal (CSP) Least Suited when: Scope subject to change Cost is most important Best Suited when: Scope less subject to change Price AND quality are both important Lesson #5: Selection Criteria can be very sensitive, and subject to interpretation. Determine point system prior to proposal Construction Manager-at Risk (CM-R) Advantages Separate contracts enables A/E to be Owner representative during Design & Construction Prime Contractor selection heavily based on qualifications Allows contractor input during design phase Roles & responsibilities = team approach (Owner, A/E, CM-R) Proposals/selection of sub-contracts open to Owner & A/E Can have non-linear schedule, construction can start prior to design completion Construction Cost can be established early with GMP Construction Manager-at Risk (CM-R) Disadvantages Difficult to determine validity of: Costs associated with general conditions CM-R may “self perform” portions of work, no competitiveness in pricing UT System now requires audit at completion to determine validity Contractor may increase GMP because of higher assumed risk Final Price usually not established until after completed design Construction Manager-at Risk (CM-R) Least Suited when: Project is small Cost is most important Best Suited when: Project is large &/or complex Scope subject to change Price AND quality are both important Lesson #6: Contractors are risk averse, very early GMP’s result in less SF or higher cost. Design-Build (D-B) Advantages Single overall point of responsibility D-B selection usually weighted towards qualifications Heavy contractor input during design phase Can have non-linear schedule, i.e. construction can start prior to design completion Early cost guarantee may occur; could be higher cost- cover risk Design-Build (D-B) Disadvantages Difficult to determine validity of scope vs cost Contractor may increase budget/GMP or Price to cover risk D-B A/E unable to be Owner representative during design and construction. Contractor typically “controls” AE. Selection of sub-contracts not open to Owner Design Criteria package critical- or you may get no windows! Requires high level of sophistication in Owner staff Who will certify DB pay application? DB AE less involved during CA, & does not represent Owner Design-Build (D-B) Least Suited when: Scope is difficult to clearly define from the outset Cost is most important Best Suited when: Scope clearly defined in Design Criteria Package Minimum quality is acceptable Lesson #7: Owner needs to realize impact of this method a. AE as a “sub” limited in role of “protecting Owner” b. Owner needs experienced staff/consultant to monitor project c. quality only as good a design criteria package Lesson #8: My preference is to be Owners AE, represent Owner, monitor DB Job Order Contracting (JOC) Advantages: Potentially faster delivery time if JOC on-board Owner could augment their own maintenance staff Disadvantages: Cumbersome to verify cost when multiple trades/materials used May not be competitive Job Order Contracting (JOC) Least Suited When: Multiple trades required Large or medium or complex projects Price sensitive Best Suited When: Schedule sensitive Small repairs Not price sensitive Lesson #9: Ronald Reagan’s rule applies: “trust but verify” - Detailed pricing MUST be reviewed for accuracy, or you too can be charged for stainless steel duct work! Construction Manager-Agent (CM-a) Advantages Could save Owner some General Contractor costs Allows Owner to phase construction Can evaluate each sub-contractor bid separately Disadvantages Owner assumes higher risk, no guarantee of cost Least Suited when: Owner is risk averse Best Suited when: Owner willing to assume risk Lesson #10: Never ask client to assume more risk. Some clients to save money will assume this risk. My experience is that they usually regret it! Most Observations Key points to remember: Selection of method should occur early More “unknowns” represent more risk, when Contractor assumes more risk = increased Price Crites Preference of methods: CSP (generally under $5 million) CM-R (generally over $5 million) Selection depends on size and complexity No one delivery method is best for all projects!!
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