Construction Project Delivery Methods – which is best for your project?
Updated: May 21, 2021
In the Design/Bid/Build (DBB) project method, the owner deals with an designers and builders in discreet steps of the project. With this approach, the design is usually completed prior to bidding out the construction phase of the project. There are also separate contracts, specifically one for the design team or teams and one for the construction contractor(s). This method has been used more than the others historically, but that is changing as owners see the newer methods advantages and disadvantages.
One advantage of this method is that the design is completed before going out for contractor bids. The owner can then get competitive bids, and since the design has been completed, the construction contract can safely go to the lowest bidder (with a guaranteed maximum price i.e. GMP) knowing that the entire scope is known. Another advantage is that the design process can get started sooner because the contract process is simplified.
A disadvantage of this method is that it can be more contentious between the designers and builders and thus can be subject to a higher risk of litigation.
A Design/Build (DB) project is one in which the design and build stages of the project are the responsibility of one firm or a collaboration of firms, but in any case, the owner only has one contract. It is most often used with larger more complex projects. There are several advantages of a design build approach to a project. First, the owner has a “one stop shop” during the project for design and construction concerns. This makes accounting, communication, and problem solving all easier than with other approaches. The contract negotiation process however is more complex and can take longer.
Another advantage of DB is an accelerated design/construction schedule. This method is more efficient and reduces the finger pointing that often goes on between the design and construction teams. Because it is more efficient and takes less time, it can theoretically cost less. Problem solving is enhanced in the DB process as well. Without architects or contractors playing the finger pointing game, you can get right down to solving the problem because everyone is on the same team from the beginning. Cost containment is another possible advantage. If the scope is well defined and agreed upon by everyone up front, meeting the budget then becomes the responsibility of the DB firm.
Other disadvantages include the fact that the checks and balances inherent in approaches with separate contracts are more difficult to achieve. Since the designers and builders are on the same team, there is the potential to hide issues from the owner. Also, some smaller firms that specialize in construction or design only, may be shut out of the bidding process, so you may have to deal with bigger firms which have more overhead and hence may be more expensive.
Construction Management at Risk (CMAR) & Construction Manager/General Contractor (CMGC)
Construction Management methods (CMAR and CMGC) are closely related so I will discuss them together. These methods combine aspects of the DB and DBB methods. Here, the design and construction contracts are separate, but the builder is much more involved in the design process. The contractor is brought on board early in the design process to consult with the design team. In CMAR, the construction manager’s role during the design process is to control the risk to the project’s total cost by suggesting alternative solutions to the design team. They have a vested interest in this because they will be held to a guaranteed maximum price by the owner. This helps the owner control costs from the beginning.
In CMGC, the contractor is still brought in early in the design process to help control risk and costs, but the guaranteed maximum cost of construction is then negotiated as the design is being finished. This gives the owner more control over the design, but potentially less control over costs. One big advantage of this method is that the project can be completed faster. Since the GC is on board early, as soon as their Guaranteed Maximum Price is negotiated (often at the end of the design development phase) and their contract finalized, they can begin getting their subcontractors on board, purchasing long lead items etc, so that when the design is complete and the permit in hand, they can hit the ground running.
With both methods, the contractor acts as the eyes and ears of the owner on the project to help reduce their own risk in terms of cost overruns. This relieves the owner of some management functions during the project.
One disadvantage of these methods is that they can cause more friction between the owner, designers, and contractor so the owner can expect to have a bigger role diffusing these situations if they arise. Another possible disadvantage to the owner is that because the contractor is constantly trying to control costs, there can be a tendency to take shortcuts if the owner is not diligent.
Construction Management Multi-Prime (CMMP)
CMMP, as the name suggests, involves multiple contracts between the owner, architect, engineers, a construction manager, general contractor, and possibly sub-contractors. After the design is complete, the owner hires a construction management firm to find and subcontract out the construction. The owner still holds all of the contracts, but they are negotiated by the construction manager. This method has the potential to reduce the General Contractors overhead and profit (because they are not holding the contracts), but also adds the expense of hiring a construction manager. The contracting is more complex and introduces inherent conflict among the players since each has a separate contract with the owner and each will be looking out for their own interests more than the interests of the project.
In conclusion, each of the methods described here have their own advantages and disadvantages. Each owner and each project is unique and the method used for one will not be the best method for all. Each project manager will need to assess their project, the importance of cost, schedule, and complexity and make the right choice for their project after weighing the pro’s and cons of each method.