Why Choosing the Right Delivery Method Matters in Construction
In late 2017, rideshare giant, Lyft, released a brand campaign with the tagline “It matters how you get there.” Although construction and car services are two very different industries, the same sentiments are valued; the journey is just as important as the end result. While a project’s ultimate goal is a successful completion, the steps it takes to get there are critical to profits and project’s life cycle. That’s why choosing the right project delivery method is an important first step before construction begins.
Before launching a construction job, a company should set course by exploring project delivery methods and selecting one that best meets its unique needs. No one model is perfect; all have benefits and drawbacks. Nonetheless, there’s most likely an optimal delivery method for your company or project. By choosing the right one for your project, overall risk can be reduced, and budget and schedule can be better managed.
Many methods of project delivery exist, but most are variations of the five models we’ll describe below. But first, we’ll first dive deep into the selection factors you should consider to make an informed decision about your project delivery method.
Factors to Consider Before Selecting a Project Delivery Method
Before selecting a project delivery method, you probably will have a basic understanding of why and what you are building. However, having a firm understanding of the foundations of your project before selecting a delivery method will aid your final decision. In general, start comparing the criteria that are most important to your project’s success:
- Budget: how much to spend
- Design: what the final project will look like and how it will function
- Risks: exposure to danger, financial loss and harm to the brand
- Schedule: a timetable for completion and payments
- Owner Expertise: company’s experience in similar projects
Nobody knows a company’s needs and capabilities better than the officers and managers of the company itself; so start discussing these factors with your team as soon as possible.
Set budget as soon as possible, then discuss it with potential design and construction team members to learn whether the figure is realistic. During this process, consider how much wiggle room is available for change orders, most likely an inevitable occurrence once a project is underway and can be costly if not well planned. When estimating budget, remember that your architect and contractor likely will build some construction software costs into their budgets. Keep in mind that while these tools might be an upfront cost, they are designed to speed up delivery and reduce costs.
You might have a basic idea of how your project will look, but it’s important to visualize both the general design and functionality of your building. How do you want your campus and floorplan to flow? Are you looking for innovative designs and complex over form and function? Buildability will depend, in part, on the kind of design and construction team you choose. Also, think about unique features of your construction site, including existing landscaping and the overall look of adjacent properties.
Too many construction risks can result in increased costs and even project failure. Therefore, a thorough risk evaluation should be conducted before a project begins. One key question to answer regarding risk concerns is who will be liable for design problems that result in dangers during and beyond construction? Additionally, if you’re considering a project delivery method in which your in-house team will be heavily involved in administering the project, consider your responsibility for reducing gaps in construction services and stages.
Accurately estimating a construction schedule is crucial for project performance. Keep in mind that schedule and cost are closely tied to each other; speeding up construction translates to increased costs. What kind of timing is necessary to meet your expected schedule and costs? Sometimes owners require the ability to fast-track construction before all drawings and support plans, such as engineering documents, are complete. Furthermore, sometimes schedules are estimated too ambitiously, setting up a project for an inevitable overrun and unhappy stakeholders. Regardless, it’s much easier to avoid disputes and claims if plans are firmly in place before breaking ground
Finally, consider your company’s level of familiarity with construction, especially a project similar regarding scope and size, as well as how many staff members are capable of helping to oversee the process. Be aware that some construction delays are caused by bottlenecks at the owner level. Ensuring that the project has the right amount of personnel, in addition to having the expertise, will set the project up for smooth sailing and success. While extensive expertise is not critical to a project’s success, it will certainly help indicate what type of delivery method is needed.
5 Basic Project Delivery Methods in Construction
Now that you have prioritized and evaluated your selection criteria let’s explore the most common types of project delivery methods. The main participants in a construction project are the owner (and/or owner’s rep), the architect and designers and the contractor. Depending on the delivery method you choose, these roles may overlap a bit.
Design-bid-build refers to the sequential phases of this project delivery method, which sometimes is called “traditional.” DBB begins with the selection of the architect who designs a project before the owner selects a general contractor following submittal of construction bids. Building is the final stage of delivery. During the design and planning phases, the owner can expect two contracts: one for design and one for construction.
Benefits of DBB
Design-bid-build is the most familiar and widely used project delivery method. Generally, it is also the lowest in price, at least up front. It offers owners plenty of opportunities to providing input about building appearance and function because the designer/architect works directly with the owner. The GC also works directly for the owner.
The architect’s design must meet a professional standard of care defined by organizations such as the American Institute of Architects and the insurer providing errors and omissions coverage for the designer. The GC is responsible for following the designer’s plans. As a result, this provides a clear process for litigation, if necessary.
Drawbacks of DBB
Due to the architect and GC not collaborating during the design phase, there may be little collaboration with the GC about materials and construction techniques called out in drawings. This can slow the construction process or create the need for change orders. Furthermore, since the owner approves the designer’s drawings, consequently they bear the liability for any misalignment of plans and construction specifications.
Another drawback of DBB is that the project duration tends to be longer due to the “in-series” nature of the delivery method.
As of recent years, design-build has been gaining momentum as a popular project delivery method. As a more straightforward delivery method for owners, it also minimizes risk. However, it’s also the model in which owners have the least input in design, construction management and choice of subcontractors. In the design-build model, the design and construction are handled by one firm. The owner only needs to form one contract to cover architecture, engineering and construction.
Benefits of DB
When using design-build, firms have to meet the performance requirements specified in the owner’s contract. Therefore, the intensive collaboration of the designer and builder in one firm results in fewer change orders and litigation–saving costs. Furthermore, project delivery tends to be faster when using this method.Design changes can be vetted and executed faster in this type of delivery method.
Drawbacks of DB
In DB, owners give up a lot of their control over designs and have to be willing to let contractors make most of the decisions. Also, although they are not responsible for vetting architectural drawings in this delivery method, owners have to do their homework about selecting the right firm to execute the job and then form a detailed contract specifying performance expectations. If not, owners will not have as much confidence in the final construction cost due to the evolving design during construction.
Construction Management at Risk (CMR)
When owners need a defined completion date and price, construction management at risk might be the preferred project delivery method. During project design, a construction manager acts as a consultant to the owner. Then, similar to a general contractor, the CMR manager oversees subcontractors. The CMR also accepts risk for meeting the deadline and pricing promises. In return, the owner provides a fixed or guaranteed maximum price (GMP) or payment. Like DBB, the owner only forms contracts with two parties–in this case, the designer and the CMR manager.
Benefits of CMR
Similar to DBB projects, owners who choose CMR work directly with their designers. They also have access to the builder’s perspective from the outset. If done correctly, this helps lead to earlier awareness of costs and faster project delivery. Overall, owners get to lock in on a final construction cost earlier in the process, and subsequent changes can be clearly quantified and priced.
Drawbacks of CMR
In CMR, the owner is still liable for completeness, accuracy and details of the design plans. Disagreements with either the designer or the CMR manager can lead to schedule delays, increased costs and litigation.
In multi-prime, the project is divided into three phases–design, engineering and construction. When implementing MP, the owner forms separate contracts with the professionals heading the separate stages of the project. For example, one contract likely would encompass the architecture firm and its subcontractors for engineering and interior design. The owner would establish other contracts with the GC and trade contractors, such as plumbers and electricians. Each of these categories of contractors may oversee the work of subcontractors, such as a GC who manages carpenters and framers. Altogether, the main contractors are the “primes.”
Benefits of MP
With MP, owners who are experienced with the design and construction process gain greater control over their projects. MP may be the only choice for public sector projects in some states that require maximum control of contractors at all levels.
Drawbacks of MP
It’s tough being your own general contractor, but that’s what MP requires. Coordination of all the prime contractors makes it difficult to determine final cost until a project concludes. Additionally, poor coordination or communication with so many providers may create duplication and omission on orders. Finally, in this model, it’s difficult to direct contractors’ schedules.
Integrated Project Delivery (IPD)
Integrated project delivery is the most up-and-coming delivery method in construction with an emphasis on teamwork and collaboration. While implementing IPD, the primary goal of the integrated method is to spread liability, responsibility and risk (and rewards) among the stakeholders in a construction job. When paired with Lean construction management, waste and cost savings can be immense. Under IPD, the owner, designer and general contractor are all under one contract.
Benefits of IPD
If organized efficiently, all contracted participants in this process are available to an owner before a construction project breaks ground. Also, the owner provides similar incentives for the design and construction teams to align everyone’s goals and increase project success. Digital tools specifically designed for construction and team collaboration can magnify the success of a project overall and provide the most ROI.
Drawbacks of IPD
IPD is the new “kid” on the block and has the smallest market share at present, and can sometimes be on the more expensive side to implement up front. Given how many stakeholders are involved, getting the IPD contract right at the beginning of the process is time-consuming. Commensurate payment to team members doesn’t necessarily equate to equal effort. Moreover, owners who choose this method must be comfortable making gut-level decisions about whether the various team members will work well together.
A Matrix for Decision Making
In mathematics classes, instructors often stress the helpfulness of creating a picture or diagram when solving a problem. That’s exactly what many state departments of transportation do to make decisions about project delivery of complex heavy civil construction jobs. It’s an idea that companies can adapt to projects involving buildings as well as business campuses combining structures, landscaped commons and roadways.
For example, the University of Colorado at Boulder Transportation Construction Management program outlines the decision process as follows: First, consider the various delivery methods and outline your project goals and constraints. Second, assess “primary selection factors” such as delivery schedule, complexity, design level and cost.
Then, adopt a “pass/fail” mindset to evaluate:
- The experience and availability of staff
- The amount of oversight and control a method offers
- The experience and level of competition you can expect from contractors
For this last item, ask yourself who is available to do your job and what their preferences are regarding delivery methods.
Last of all, take a look at CU’s diagram for Project Delivery Method Selection by going to the blue click here button at the top of the page. Now you can start thinking about how to visualize your decision-making matrix.
Setting Up Your Project for Success with the Right Project Delivery Method
No two projects will ever be the same; meaning you need to choose the right project delivery method on a case-by-case basis. With careful evaluation of the criteria most important to your project’s success, as well as an in-depth understanding of the models available, you’re more likely to make an informed decision on project delivery that’s right for your unique needs. By intentionally selecting the optimal journey for your project, you’ll experience increased profits, complete construction on time and be able to move on to the next one quicker.