1. Project Delivery Methods Part I

2. What is A Project Delivery Method? The owner’s selection of the organizational structure of the project. Three popular structures: 1.Traditional (Competitive Bid) 2.Design/Build 3.Construction Manager Includes the selection of a team to manage project from design through construction Also includes selection of contract arrangements Ie: Lump Sum, Unit Price, Cost Plus A Fee, etc.

3. Three Most Common Delivery Methods Traditional Design/Build Construction Management Each has its own specific risks, incentives and capabilities.

4. Owner’s Order of Priorities Will Dictate Best Delivery Method Certain contract types will serve specific goals better than others. Some typical owner’s goals: To achieve project completion within time allowance To build a high quality project To finish the project within budget

5. The Traditional Project Delivery Method Owner Architect/Engineer General Contractor Sub TWO PRIME CONTRACTS:

6. Traditional Project Delivery Owner hires a design professional Design professional prepares design drawings & specifications. When design is complete: Owner initiates bidding process or, Negotiates a private contract with prime contractor Contractor is responsible for execution of the work Owner may hire representative for quality assurance Owner’s rep is often the design professional at this stage

7. Advantages of the Traditional Project Delivery Method to The Owner Well defined relationships & responsibilities Traditionally, MOST risks of construction performance lies primarily on contractor Open bidding (IF COMPETITIVE BID) gives owner the lowest price available Owner has minimal involvement in construction phase (MAY OR MAY NOT BE ADVANTAGE!)

8. Disadvantages of the Traditional Project Delivery Method to The Owner Design & construction phase are linear (finish to start relationship) Design must be complete before bidding begins (lag time) Reduced interaction between designer & constructor Unforeseen conditions may require costly renegotiation of the contract for changes (CHANGE ORDERS)

9. Design/Build Method Owner Design Consultant (Architect/Engineer) Design Build Firm Subcontractors & Suppliers

10. ADVANTAGES TO THE OWNER Less complicated structure for the owner One responsible party throughout entire project (single point of contact) Design phase & construction phase can run parallel = time savings Enhanced communication & constructability

11. DISADVANTAGES TO THE OWNER Early estimates are usually not realistic because: Design & construction phase overlap Scope of project may vary as design progresses Owner loses the “representative” option in the field….which means….. No system of “checks & balances”

12. Construction Management Approach Owner Architect/EngineerGeneral Contractor Sub ConstructionManager Resident Field Engineer

13. Advantages of Construction Management Structure to the Owner: Owner hires CM firm & designer in preconstruction phase: Allows input by CM during design phase Leads to “value-engineering” & collaboration Best product for the $$ “Team” approach Quality assurance is provided by CM firm Changes during construction are simpler due to close communication between designer & CM

14. Implications of Contract Changes Construction contracts are entered into before the work is performed. The contract is based on an “estimate” and a set of working drawings & specifications. Sometimes, conditions change (or are discovered) that require changes to the contract.

15. Some Examples: Scope of the project increases or decreases due to owner’s requirements Unforeseen conditions are present that were not known at the time of execution of the contract. Omissions in the drawings/specifications that must be accounted for.

16. The type of contract will dictate the way changes are handled. For example: Cost Plus Fixed Fee: Changes in cost of project are automatically absorbed. Fixed Price Contracts: Contract will require modification to fairly account for price change

17. Changes are a REALITY! Changes cost the project (owner) money, especially on competitively bid jobs Contractor will often negotiate inflated prices when changes occur (PROFIT) Preparation and a competent design/construction team is paramount! Constructability reviews, etc.