Project Delivery Methods: A Best-Fit Perspective
(04/07/2009)

Hunt

Jansen

Winkler

No single delivery method is right for every project. Some applications are better suited for one type of project compared to others.

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Each participant in a project team has a set of criteria on any project their organization or firm takes on. Owner imperatives include a predictable outcome in terms of cost and schedule, a publicly defensible investment of taxpayer monies, and a process that minimizes claims and litigation during and after construction.

The owner is also obligated to ensure a fair and competitive procurement process that attracts the maximum number of qualified firms and yields the best value for price (not necessarily the lowest price). In some cases, all of these criteria may not be fully met on a specific project, and the owner must strike a balance in selecting the appropriate delivery method.

The architect and builder share some common criteria, such as potential for profit, maximization of employee productivity, project location, workload backlog, and name recognition with a successful or high-profile project. However, their goals diverge on issues such as level of design development, accuracy of conceptual estimating and risk management.

When the decision is made to take a project from concept to reality, the owner holds all of the risk associated with the project and the delivery method the owner uses is the means of spreading that risk across the project team.

Design/Bid/Build

Design/bid/build can provide several advantages from the perspective of government owners. Washington State Department of Corrections uses DBB to deliver 98 percent of projects, primarily because it has been the method used for a long time and elected officials understand the process.

The competition in the contractor bidding process is also often considered the best way to maximize value for each public dollar spent because it can maximize the number and size of companies that are able to compete for a project.

The end user, code officials and the public have the opportunity to review and comment on the final product prior to execution of the construction contract. DBB also provides a complete design and hard bid cost upfront, which allows officials to feel more comfortable about meeting budget schedules in the legislative appropriation process while avoiding budget surprises at the end of the project.

Wash. DOC collaborated with Integrus, Hunt/Lydig and Rosser to deliver the 2,048-bed Coyote Ridge facility.

For the architect, contracting directly with the owner and developing the program, concepts and budgets yields the opportunity to discover the project’s unique requirements before the contractor is brought on board — an advantage for unique or complex projects that require significant levels of advanced work prior to construction.

Contracting directly with the owner can also allow the architect to perform the role of owner representative in monitoring builder/contractor compliance with quality and design criteria and financial criteria through billing and change-order review. The owner and architect jointly develop the program early in the design process, which can eliminate the need for additional owner consultants to develop program and bridging documents. 

For many builders, DBB is the traditional bread and butter work on which they were founded. Profit potential is the advantage and typically all information regarding costs, margins and bid processes are closely guarded secrets never shared with the owner.

There are also disadvantages to DBB, and while advance programming prior to the contractor joining the team is a positive, the builder joining the team late can also be viewed as a disadvantage as the early involvement of the contractor helps during cost estimating and design.

DBB does not accommodate fast-track construction very well unless there are multiple bid packages, which can lead to multiple contracts that create greater management and coordination risk for the owner and architect. 

The structure of the advantages listed above creates the potential for the relationships between the owner, architect and builder to become adversarial. The low-bid method encourages cost cutting that can yield a lowest quality for lowest price scenario — particularly during times of labor and materials cost escalation — and can also create to a greater risk of contractor claims due to project changes from either unforeseen conditions or owner requests.

With DBB, once the hard-bid contract value has been established, unless the owner expands the scope, every dollar that changes hands is a dollar that someone loses. 
Construction Manager at Risk

The construction manager at risk delivery method is ideal for larger projects where the builder and architect can be brought together during the design phase to work through complex cost, schedule and sequencing issues. Washington DOC typically uses CMAR for high cost projects in constrained locations.

CMAR offers the opportunity to develop carefully planned and sequenced bid packages and a series of alternates for each project phase, which also allows the owner to prioritize building costs while providing an opportunity for increased building value. Construction can be under way on the early packages while design is still ongoing on the later packages.

Although most contracts make the architect and builder responsible to each other for deliverables and comments, each is still directly contracted with the owner, which requires a greater level of involvement on the part of the owner’s representatives. CMAR is generally better suited to the owner that has staff experienced in constructing new facilities and able to provide on-site representation during design and construction.

The selection of the builder or construction manager typically includes a qualifications-based component early in the CMAR process, which allows the owner, architect and contractor to develop project requirements and development strategies before the guaranteed construction cost is finalized. A fair guaranteed maximum price can be negotiated with the construction manager early in the planning process and the close collaboration can help develop relationships that are not contentious.

As with DBB, the CMAR approach does not require extraneous owner consultants to develop program and bridging documents, and the architect can still monitor quality assurance and builder performance.

Staff turnover is one of the most significant problems that can be encountered in CMAR. Project team members involved from the beginning of the process have an intimate knowledge of the project’s history and issues, and have spent time establishing inter-team relationships. New team members unfamiliar with CMAR often seek to stake out their territory or establish themselves as legitimate members of the team, which can create gaps in communication that can be very difficult to manage.

CMAR is a nontraditional method that requires a greater level of expertise in managing both architect and builder. For instance, the negotiation of a guaranteed price is more complex before completion of final documents when the construction manager, owner and architect may have different opinions of cost.

Once the guaranteed maximum price is established, most owners are not accustomed to the effort required to manage cost, contingency and savings distribution during design and construction.

Design-Build

Design-build, which represents about 2 percent of the total number of projects in Washington, is used for larger, complex projects and represents about 50 percent of the dollars spent in that state between 2004 and 2008.

DB is suited to straightforward projects, where the owner can present basic specifications to the design-build team and then let the project proceed with minimal oversight. DB also works well for extremely complex projects, where complete owner participation is required from development of an RFP document to an ongoing owner field presence of qualified staff. In neither case does DB place the owner in the position of mediating between designer and construction team.

The procurement process for a DB project can range from a qualifications-based assessment to a full design competition with proprietary meetings.

With regard to how much information the owner should provide, one school of thought is to provide a very thorough program document that lets the teams find their most creative, in-budget solution rather than locking them teams into one particular approach. The drawback is that a reliable conceptual estimate cannot be derived from a written program document, which runs the risk of encouraging great, but unaffordable solutions.

The alternate approach provides teams with a set of bridging drawings and program documents that outline the direction envisioned by the owner, which allows teams to immediately identify whether the program and budget are feasible. However, an overly prescriptive set of documents can eliminate the benefit of the creative competition.  The best approach lies somewhere in between, where the creative experts can provide the best information that fits into the budget. Typically, the owner hires a team of outside consultants to prepare the program/bridging documents and when necessary to provide advice throughout the procurement and design process.

The collaboration between owner, architect and builder to establish project parameters early in the process makes DB a fast and integrated delivery method, where the team continues to work together to create solutions that balance program considerations with function, schedule and budget constraints.

With a clear vision of the construction approach, the integrated DB team can work together in tailoring construction documents to meet specific project needs on a just-in-time basis. The focus during construction becomes one of implementation, where the complexities of the project still require an integrated approach for success. These goals are carried forward into the decision-making process during construction and progress meetings are conducted with a consistent base of knowledge that minimizes requests for information, change orders and field authorizations. Rapid response to issues ensures the schedule and budget are maintained.

DB poses one risk to the owner that is unique to this delivery system: the design-builder’s freedom to design and construct the project can create a significant deviations from the owner’s expectations in components or design, which can be particularly problematic when the contractor pursues cost savings that impose higher operation and maintenance costs on the owner. The owner can nullify this risk by providing greater specificity in the bridging documents and tighter enforcement of the most important project components during construction.

With DB, the architect contracts with the builder rather than the owner — the contractor is the architect’s client. Given the limited number of prison design firms, a designer may be working on a design-build project for one facility under direct contract to the owner and on a DBB project in partnership with a contractor at another facility, which can complicate existing relationships particularly with owners unaccustomed to DB projects.

On DB projects, separate consultants generally complete advance work that stipulate the desired program, conceptual layouts and technical specifications, meaning the architect of record does not have input into the project program.

Some subcontractors might have in-house design capabilities, which can create greater potential for design coordination issues for the builder or architect, while placing more of the coordination responsibility on the design-builder — usually the responsibility of the subcontractor. There also exists the inherent lack of traditional checks and balances unless the owner assigns staff or hires consultants to conduct quality assurance and oversight tasks.

Delivery Method Commonalities

All three delivery methods carry varying degrees of risk for each of the parties. Although it is often asserted that CMAR and DB reduce risk for the owner, this is only true if the delivery system is properly matched to the project. It is vitally important that all parties understand the differences between systems and that owners, contractors and designers accustomed to working with DBB educate themselves before working with either DB or CMAR.

While legal representatives for the owner, designer and contractor strive to allocate risk through contractual language, ultimately the best way to control risk is for all parties to have a well-communicated and documented understanding of the project and reasonable understanding and expectations of the other parties.

Although responsibilities and contracts must be clearly defined for liability reasons, the most successful projects with any of these delivery systems clearly benefit from frequent, continuous and collaborative communication between the owner, designer and contractor. 

David Jansen, MS, PE, is director of capital programs for Washington State Department of Corrections; Gerald Winkler, AIA, is president of Integrus Architecture; and Robert Payne is a construction manager with Hunt Construction Group.

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