Because of financial, organizational and time constraints, various project delivery methods have evolved to fit particular project and owner needs. Most delivery methods used today are variations of three methods: Design-Bid-Build, Construction Management at Risk, and Design-Build and with so many to choose from, a thorough understanding of the benefits of each is required.
In today’s U.S. construction market, the various project delivery methods are as follows:
Construction Manager as Adviser (CMa)
Construction Management at Risk (CMAR)
Bridging Method of DB
Integrated Project Delivery (IPD)
Public Private Partnerships (P3)
Job Order Contracting (JOC)
How the project will be designed and constructed and the project delivery method used, are some of the most important decisions made by every owner embarking on a construction project. Each of these project delivery methods carries a different level of risk for the owner and none of these delivery methods is right for every project. For each situation, there will be advantages and disadvantages in the use of any specific method.
The owner needs to carefully assess its particular project requirements, goals, and potential challenges and find the delivery method that offers the best opportunity for success. A brief description of each of the mentioned project delivery methods is listed below:
Construction Manager as Adviser (CMa) provides advice and expertise on constructability, cost, schedule, and construction methodology to the Owner and the Project Team beginning early in the project life cycle, and remains an adviser to the Owner throughout the project. The CMa assists the Owner in hiring the construction team, and sometimes in hiring the design team, but remains an advisor, not a constructor, during the construction phase. The CMa does not assume financial responsibility for the final constructed cost of the project and does not directly perform any of the construction work. The CMa must have extensive knowledge of construction practices, costs, and trends for input to the Owner, and the project team, throughout the project.
Advantages: Advisory CM is a fee-based service in which the CMa is responsible exclusively to the Owner and acts in the Owner's interests at every stage of the project. The CMa can offer advice, unaffected by any conflicting interest.
Disadvantages: The primary disadvantage of the Agency CM system involves the relationship among the Design Professionals, CM, GC, and Owner because the CMa, is a fourth party to the relationship.
Construction Management at Risk (CMAR) delivery system is similar in many ways to the Design-Bid-Build system, in that the Construction Manager at Risk (CMR) acts as a GC during construction. The CMR holds the risk of construction performance and guarantees completion of the project for a negotiated price when the design is between 50-90% developed.
Advantages: The ability to “fast-track” early components of construction prior to full completion of design.
Disadvantages: Advisory relationship with owner is not present during the construction phase, as the CMR is in an “at-risk” position during construction.
Design-Build (DB) project delivery system has grown in popularity, and is seen in the industry as a solution for addressing the limitations of other methods. For an owner, the primary benefit is the simplicity of having one party responsible for the design and construction of the project.
Advantages: DB can produce a project more quickly than a conventional DBB. There is a single point of accountability for design and construction. Cost efficiencies can be achieved since the contractor and designer are working together throughout the entire process.
Disadvantages: Less design control and involvement by the owner and stakeholders. Owner must be highly responsive in decision making to take full advantage of the speed of DB. The owner does not receive the benefit of the checks and balances that exist when it contracts separately with a designer and a general contractor.
Bridging Method of DB, in conjunction with the owner, uses a Design-Build Contractor (DBC) but also adds a third party, the Owner’s Design Consultant (ODC) who creates the schematic plans and performance criteria, enhancing Owner input. The DBC completes the rest of the construction documents and assumes all the risk.
Advantages: Cost and time savings can be significant if the Bridging process is managed correctly. Owner obtains a firm price for the construction in less time with less design cost as compared with typical DBB pricing. Reduced exposure for the owner to contractor initiated change orders and claims. Owner has an opportunity to retain the desired level of control of the design and quality of construction.
Disadvantages: Due to the unique nature of Bridging, some of its advantages are negated if not set-up and managed correctly.
Integrated Project Delivery in its contractual sense requires a multiparty agreement among the prime players in the design and construction process, which are the owner, designer, builder, and key subcontractors.
Advantages: The owner gains all the advantages of DB or CMAR. The entire team’s interests are aligned with the project goals making the chance of success, once underway, extremely high.
Disadvantages: Actual agreement on the criteria and the final IPD contract can be very difficult and can take an inordinate amount of time and effort. IPD contracts have not yet been tested in law, so the result of a failure within the team is unpredictable.
Public Private Partnership (P3) is used when a private entity or consortium of investors provides some or all of the capital and a commitment to deliver a completed project for the public sector in exchange for revenue the project is anticipated to generate.
Advantages: Targets alternative revenue and funding sources to close a funding gap. Transfers risk to the private sector. Not subject to capital budget allocations or voter referendums. Accelerates construction starts. Reduces construction cost and interest rate risks.
Disadvantages: The proposal process can be very expensive for all involved. A high level of expertise is required to execute a P3 project.
Job Order Contracting (JOC) is a way for organizations to get numerous, commonly encountered construction projects done quickly and easily through multi-year contracts, using unit pricing and preset costs.
Advantages: Reduces unnecessary levels of engineering, design, and contract procurement time along with construction project procurement costs by awarding long-term contracts for a wide variety of renovation, repair and construction projects.
Disadvantages: Not used for major new construction, it is best for minor construction, adjustments, renovation, repair and maintenance of facilities.