Project Delivery 101: Four Different Models
1. Design-Bid-Build (Traditional)
This is probably what most builders are most familiar with. The owner contracts with an architect to design a building that meets the owner’s needs. (The architect subcontracts to engineers and other design consultants as necessary.) Once the architect has produced the design documents (drawings and specifications) the owner puts out a Request for Proposals/Bids to various general contractors. General contractors (GCs) then provide the price for which they judge they can do the work, with the designer answering the contractors’ questions as necessary. The owner then evaluates the proposals — with the help of the designer — and selects the contractor to construct the building. The owner then signs a contract with the GC, completely separate from the contract with the designer.
Since contractors compete with one another to bid on the project, this method has the advantage of incentivizing GCs to keep costs down so as to win the project competition. So long as this cost-cutting doesn’t result in standards lower than the owner wants, this is a benefit to the owner.
In practice, however, because the GC doesn’t give input during the design stage, conflicts can arise between the design documents and the reality of construction in the field. This means design changes and cost overruns are common.
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In a design-build project, the owner contracts with exactly one entity — either a single company or a temporary collaborative team formed for the purpose of the specific project. That entity is responsible for the entire project from beginning to end. The team will include the designers, GC, and subcontractors. The design and construction professionals are integrated into one team from the beginning, so changes in pricing are minimized. This is because the construction experts give input to the design experts during the design stage, so design begins within the owner’s budget — rather than being adjusted to fit later.
Design-build also has the potential to speed up the entire process because it eliminates the bidding and contractor procurement part of the process. And, again because the construction professionals have shared their knowledge of real-world construction, schedule changes should also be minimized.
Since the design-build team is contractually (and, hopefully, ideologically) collaborative, they all have to work together to solve problems and deliver a project that meets the owner’s needs in terms of cost, quality, and schedule.
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3. Construction Manager at Risk
On this model, a construction manager (CM) acts as an agent for the owner, overseeing the entire project. The CM has a contract with the owner, guaranteeing that the price of the project will come in under a specified amount. They agree to take the risk of absorbing the cost of any amount over that. This type of project delivery has obvious benefits for an owner who is inexperienced with construction, and who is confident they can trust the CM to have the owner’s interests at heart. It reassures the owner that they will not have to pay more than the specified amount. Having a single point of communication for subcontractors also means that payment to them is quicker.
A potential drawback is that, because the CM is responsible for cost overruns, they may be tempted to cut corners on workmanship or use inferior materials to reduce costs or withhold payment to subs. (Not that this problem doesn’t apply to some other models too.) This is why it’s important for the owner to know the CM is trustworthy and to communicate their values on the project (i.e. where they’re willing to compromise in order to reduce costs).
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4. Integrated Project Delivery
This involves a single, multi-party contract between all the key players on a project, not just the owner, architect, and GC. It can include, for example, the architect’s consultants and the owner of an electrical sub-contracting company. All parties share the risks and rewards, information is shared, costs are guaranteed, and there are signed waivers of liability between parties. At the planning stage, all the parties give input. This means the design team can take into consideration constraints highlighted by, say, the electrical subcontractors. This helps the owner get what they want and keeps costs down by designing within constraints from the beginning. The builder provides information about scheduling, cost estimating, constructibility, and so on. These factors can influence the design of the building earlier in the project than with a traditionally delivered project.
This is the most collaborative form of project delivery. Since all members of the team share the risks and rewards, any problem-solving is done while keeping in mind what’s best for the project as a whole — not just what’s best for an individual member. On a traditionally-delivered project, the success of one participant (e.g. greatest profit for least time expenditure) may be detrimental to the project and/or to other participants. Traditionally, project participants are incentivized to ‘succeed’, even if it results in project failure. IPD ties individual financial success to project success so that a project participant’s motivation to improve its own financial interests results in behavior that benefits the project.
Technology really helps with this collaborative process. Building Information Modeling [BIM] is three-dimensional digital representation of the proposed building, linked to project data, and accessible by all members of the team. This provides a platform for team collaboration during design and construction.
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