Methods of Project Delivery for Construction Lessons Learned

1
Methods ofProject Deliveryfor
ConstructionLessons Learned

• November 2007
• Presented by
• Mary K. Crites, AIA
• Parkhill, Smith Cooper, Inc

2
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

3
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

4
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

5
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- dont have a
  dirt Contractor build a Courtroom!!

6
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

7
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

8
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

9
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

10
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

11
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 GMPs result in less SF or higher cost.

12
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

13
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

14
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

15
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

16
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 Reagans rule applies trust
  but verify - Detailed pricing MUST be
  reviewed for accuracy, or you too can
  be charged for stainless steel duct work!

17
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!

18
Most
19
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!!