he most important decision to be made at the beginning of the project is choosing a project delivery method. This is the method used to organize the services to complete the build. The delivery method selected will identify the professionals' contractual responsibilities and dictate the relationship between team members. Typically project teams are composed of a general contractor or construction manager, subcontractors, an architect, designers, attorneys, and a host of other vendors and consultants.
Choosing the right project delivery method reduces risk and ensures that the project will achieve the required goals for cost, quality, and timing. The four most common types of project delivery methods are described below, as well as their advantages and disadvantages.
- Design-Bid-Build (DBB)
- Construction Manager At Risk
- Integrated Project Delivery
1. Design-Bid-Build (DBB)
This is the most traditional project delivery method. An architect/ designer is selected and contracted. Then the design process for the custom home begins. Upon completing the construction documents (CDs), the CDs will be submitted to several pre-qualified construction firms to bid on the construction. Once the bids are received, they need to be reviewed and qualified to ensure each bid reflects the design in its entirety. Qualifying bids can be difficult as each contractor has their bid format approach. Each bid needs to be reviewed line by line to understand what is included and what may be omitted. Once each bid has been clarified by asking questions of the contractors, they need to be reviewed side-by-side to make the final selection. Once this is complete, the selected contractor can then be contracted.
The advantage of this method is the opportunity to test the open market in the competitive bidding process for construction. It most often results in the lowest total construction cost because construction firms compete for the business. The theory is that the project will be purchased at a wholesale cost in exchange for taking on the responsibility of managing separate contracts.
This method's disadvantage is that the design is completed with no input from the construction team if the architect/designer's construction documents are incomplete or require further development of various design details during construction, which puts the project at risk for budget increases.
While this method can get you the lowest total construction cost overall, we see this typically negated by change orders, which can exponentially increase the overall project budget.
In addition, if there is a problem during construction, the various vendors and consultants often protect their financial interests, regardless of the effect on the overall project. Utilizing this method, the owner bears the responsibility of resolving any conflicts and any additional costs that result from the conflict.
2. Design-Build (DB)
One company is responsible for both design and construction in this delivery method. The project owner contracts with the Design-Build firm and any other necessary vendors separately. The owner is responsible for identifying the working relationship between each vendor and coordinating those vendors' flow with the Design-Build firm. This method requires the owner to have a strong understanding of the quantitative or performance requirements of materials, and the overall level of design desired to ensure a favorable outcome.
The DB method has the advantage of reducing the owner's risk of incomplete or inaccurate design documents due to the design and construction being handled under one contract. This also allows construction to begin before design is complete by eliminating the competitive bid stage. If the schedule is tight, there is a considerable advantage to using this method.
Also, the construction team having input during the design phase can positively impact the outcome during construction by making recommendations related to construction options to achieve specific design details. This saves both time and money by eliminating design refinement or revisions during construction.
This delivery method offers no checks and balances between the design team and construction team as they are one. There is an opportunity for the team to interpret omissions or mistakes as a change order increasing the project's budget. The quality of design details and construction can also potentially suffer as any charge impacts the design-build firm's bottom line. Design-Build firms that are being considered should be researched and should gather references to reduce risk.
3. Construction Manager at Risk (CMAR)
In the CMAR delivery method, a construction manager (CM) is engaged who is contractually obligated to complete the project within a Guaranteed Maximum Price (GMP). In this method, design and construction are separate phases.
A Construction Manager is hired early in the design process. The CM will provide cost estimates throughout design and give recommendations for materials and construction methods that would save time and money. If costs add up to more than the owner's budget, design changes may be necessary. The CM and Owner will enter into a contract for the final GMP when the design and approved budget align.
The CM has relationships with each trade and can begin working on shop drawings early in the design process to eliminate revisions once construction has started. The stage is set for "fast-tracking" the project by beginning shop drawings during the design phase.
Once the contract is executed with the approved GMP, construction begins. The CM then takes on the responsibility to deliver the project within the GMP. If there are no further changes to the design, the CM bears any responsibility for costs that exceed the GMP.
The CMAR method is better suited for an Owner with experience in construction and can assemble a project team without going through a competitive bidding process. Since the CM is brought on early in the project before construction costs are known, owners need to rely on past relationships and a thorough vetting process before hiring a CM.
This method's advantage is having the construction team involved during the design phase. This minimizes the amount of design work that may need to be done during the more costly construction phase by having the contractors input on the best construction methods and materials to reach the desired aesthetic. Since this method eliminates the bid stage, you also have the ability to "fast-track" a project and begin construction before the design work has been completed.
Another advantage is that, If contracted properly, the CMAR is committed to working for the property owner's best interest. The owner's financial risk is also limited due to the Guaranteed Maximum Price.
The disadvantage of the CMAR delivery method is that you can run into disputes between your architect/designer and your CMAR over the feasibility of building a particular design element. Be sure not to confuse a CM with an Owner's Representative. The CM's role is strictly related to the project's construction. It does not address items that make up a total project, i.e., interior design/furnishings, owner's financials (total project budgets, funding, and payments), owner's insurance, owner's legal team, as well as other entities you will need to complete the entire project.
4. Integrated Project Delivery (IPD)
This approach was developed to promote collaboration within the project team. Rather than using a bid process to get the most from each team member, the IPD approach focuses on all the team members working together to maximize efficiency across the entire project.
All project team members such as the architect, contractor, and other professionals are party to a single multi-party contract with the owner. As a result, the project's risk and responsibility is spread equally among the team members.
As a result of the team members working as a virtual organization, you'll have input from various professionals that will improve the project's design. That's a benefit of the IPD method because putting a high level of effort into the planning for the project will result in better project outcomes.
The IPD method's disadvantage is that it usually only works well with sophisticated designers and construction managers. The owner will need to take an active role throughout the project to resolve disputes and ensure that the team members' collaboration remains at a high level of communication and cooperation among the team break down.
Dubrow Group Project Delivery Method Recommendation
Each project is unique, and it’s essential to be familiar with all the project delivery methods available to select the right one. Dubrow Group typically favors a blend of the CMAR and IPD delivery methods.
We have developed our own delivery approach for successful projects and pick the best of all methods based on your needs. We like the more collaborative approach used by the CMAR and IPD methods, and we will hire a CM if the project requirements favor this delivery method.
We recommend using several aspects of the IPD delivery method:
- We emphasize the Pre-Construction stage to pave the way for a successful project.
- We increase the effort in the design phase of Pre-Construction to obtain input from all team members, improving the design and streamlines the construction stage. The construction stage usually represents 60-80% of the total project cost; therefore, while we may spend more in the Pre-Construction stage, anything that streamlines the Construction stage will also reduce overall project costs.
- We can effectively assemble a project team without the standard competitive bidding process because we pre-qualify key members of the team, which allows us to award contracts based on merit as opposed to focusing on cost.
- We take the place of the owner, taking an active role throughout the project to resolve disputes and monitor collaboration.
If you would like to learn more or discuss what the best options might be for your project please feel free to contact us.
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