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Delivery Process - Is the Fox Guarding the Hen House

February 7, 2017

It has been said that there are as many opinions as there are experts, and when it comes to the best delivery process for your construction project everyone has their own opinion. There are people that will try to sway you towards one method or another, so being well informed is your best option to determining which process is right for you. Our goal is to describe the different types of construction delivery processes without bias. Below describes the different delivery processes and explains the pros and cons for each.

Design-Bid-Build:

This method is the predominant process used for public projects. In this method the owner engages an architect to design the project from schematic design through construction drawings and specifications. Once completed, the bid package is advertised or distributed to interested general contractors in a single prime scenario. The final bids are collected from each General Contractor and the owner determines the best price and fit for the project and a General Contractor is selected. The General Contractor is responsible for executing contracts with the various subcontractors. The General Contractor is responsible for constructing your facility in accordance with the architect’s construction drawings. In this scenario the architect represents the Owner during the construction administration phase of the project. The architect will determine that the project is being constructed as the design intended using the materials and methods that are documented in the drawings and specifications.
 

Pros:

  • It is possible to get the lowest price because there is a competition for the project and usually the General Contractor with the lowest price wins the award.

Cons:

  • In some instances sub-standard subcontractors are used in order to bring the price down so that the General Contractor can win the award

  • Adversity between the General Contractor and the Architect can arise when the General Contractor feels that they are being micro-managed or the Architect feels their designs are not being followed.

  • The true cost of the project is not known until the bid is complete. If the project it over budget and changes are required to reduce the cost, this will result in additional design time. In most cases there are additional fees as a result of the redesign and re-bid.

  • It is believed that more change orders are a result of this type of delivery process.

 

Design-Build:

The design-build (DB) project delivery process is where an architect is selected for the project and a General Contractor is selected for the project before the project begins. There are several ways in which this type of team can be assembled.

  • A General Contractor is selected first and they recommend architects for the owner to interview and select. In this scenario the General Contractor is considered the project leader with the architect as a sub-consultant.

  • Or an architect is selected first and they recommend a General Contractors for the owner to interview. In this scenario the Architect is considered the lead point of contact.

  • The third way is a General Contractor/Architect team is assembled. They are interviewed and selected as a pre-organized team.

In a Design-Build process, the team will establish a lump sum or Guaranteed Maximum Price to complete the design and construction of the facility. Once underway, the DB team is then responsible for the design and construction of the project. Since the design-build team is working together from the onset, cost information is compiled early and value engineering can proceed concurrently if it is determined the budget is not being met. The process will still proceed as a standard project progressing from Schematic Design through Bidding. The general contractor will formally bid the project at the end of construction drawings but it is assumed that they will already be very close to the actual project cost. In order to receive the best value it is important that the Owner, architect and the general contractor work together with complete transparency.
 

Pros:

  • Budgets are developed early in the project so if adjustments are needed it is addressed long before the formal bid, often saving time and helping to manage expectations.

  • There is a single point of accountability for design and construction.

  • Cost efficiencies can be achieved since the contractor and designer are working together

  • Change orders may be reduced and arise primarily from owner changes.

Cons:

  • It is imperative that the owner stay involved throughout the process. Some DB firms exclude the owner in the process therefore limiting the checks and balances necessary to receive the best project.

  • The Owner must be highly responsive in decision making to take full advantage of the pace that a DB team can offer.

  • It is important that the Architect fully represent the Owner during the construction administration phase so that the construction quality and design intention are followed.

  • In situations where the General Contractor has an architect on staff or the architect/GC team is very close, make sure you don’t run into a “Fox guarding the hen house scenrio”. There are many reputable General Contractors with architects on staff, but there are also firms that will use this as a way to influence the design to their benefit or cut corners during the construction phase without the Owner being fully aware of the consequences.

  • Since you are working with a Guaranteed Maximum it should be determined how any cost savings is distributed if the project is under budget. Is it a split between the Owner and the General Contractor? Does the Owner receive all of the savings? Does the General Contractor receive all of the saving? This should be determined when the original contract is signed so it is not a issue at the end of construction.

Negotiated or Invited Bid:

This method is similar to the Design-Bid process but with subtle differences. The main difference is that the architect is selected first and usually the Schematic Design or Conceptual Design is completed before the General Contractor is interviewed or selected.

The Owner will select between 3 – 5 General Contracting firms to be invited to submit a proposal that will outline their fees, general conditions, schedule and Guaranteed Maximum Price for the project based upon the preliminary plans that have been developed by the architect. The Owner will then interview the General Contractors. Once the Owner has completed the interviews and has the General Contractors proposals a selection can be made based upon both cost and fit.

Once the General Contractor is selected the Owner will issue a Letter of Intent to award the project and pre-construction pricing will begin. The architect and the General Contractor will work closely with the Owner finalizing Schematic Design and then on through the Design Development and Construction Documents resulting in the formal bid. In this scenario the architect will be the Owners representative during the construction process to oversee the project construction.
 

Pros:

  • The General Contractor is brought on early to assist with the pre-construction cost information so the design is constantly massaged to meet the budget.

  • The Owner will work closely with representatives of for the architect and for the General Contractor so that there is a team approach to the project.

  • Important cost information is known before construction begins ex:  fees, general conditions, final savings distribution and the GMP.

Cons:

  • It can be somewhat like a forced marriage. You are selecting an architect and then a General Contractor and putting them together. Most situations are positive, but from time to time there may be conflicts between the two firms.

  • The Owner must be highly responsive in decision making to take full advantage of the pace that a team can offer.

An educated Owner is key to a successful project. Whichever process you deem appropriate for your project, make sure you complete your due diligence. An informed Owner will ask for and follow up on references, past performance, budgets met and any past litigation. Visit projects similar to yours and do your research.  Constructing for your future should be an enjoyable process be prepared and be informed!

 

 

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