Project Delivery Flexibility
Which project delivery method is best for your project?
Superior, cost-effective, and timely project delivery is foundational to the progress of the architectural, engineering, and construction (AEC) industry.
As a core element shaping every project’s outcome, contract methods and delivery models play a critical role in project progression in determining respective levels of stakeholder engagement.
As such, industry stakeholders — including owners, engineers, architects, contractors, and subconsultants — share a collective goal to continuously advance delivery methodologies. We collaborate to identify new and innovative solutions that accelerate, optimize, and enhance project delivery processes.
Accomplishing this goal requires an in-depth understanding of the full spectrum of delivery approach types and their associated risks and benefits. With more than 40 years of experience of demonstrated engineering and design excellence, Affiliated Engineers, Inc. (AEI) brings unmatched project management and leadership across the entire continuum of delivery models, which are described throughout the remainder of this page.
Design-Bid-Build
Perhaps the most familiar and traditional of delivery model types — Design-Bid-Build — so heavily dominated the AEC industry that all other methods have been described as Alternative Project Delivery (APD) approaches.
A traditional Design-Bid-Build approach completes the project in phases:
- The owner initially hires the design team — an integrated group of architects, engineers, planners, and specialty subconsultants — and together, these firms work through the preliminary schematic design and design development stages, culminating in 100 percent Construction Documents (CDs).
- The complete construction set is then issued for bid to multiple contractors.
- A contractor is selected and hired by the owner.
- During the construction phase, the architect and engineer provide responses to Requests for Information (RFIs), review submittals, and report on field observations as they relate to the construction documents.
- Once the construction documents are issued, the design is considered complete unless the owner requests scope modifications.
Owner Benefits
- Offers clear contracting – there is no blend of responsibility. Since Design-Bid-Build is the most traditional model, most project parties clearly understand their scope.
- Results in accurate construction bids because the design is 100 percent complete.
- Provides options through detailed bids from multiple contractors; owners are not locked in early on.
- Retains control of design.
- Creates clarity as procurement laws are well defined.
Owner Risks
- Re-design, value engineering, or designing multiple options can be costly and less efficient.
- Linear sequence of work makes Design-Bid-Build typically the longest delivery approach.
- Owners are responsible for any final cost changes.
- Tend to result in most occurrences of litigation.
- Contractor has little to no input beginning in the early stages.
- Low-bid environments can incentivize competing contractors to omit costs for any items that could be argued to be ambiguous in the documents. This can lead to contentious change order disputes during construction.
Best if:
- Owners desire clear delineation between contractors and design professionals
- Owners do not need to engage or select a contractor before the design is 100 percent complete
- Low-bid awarding is legally required in your jurisdiction
Project Examples:
Construction Manager at Risk
While similar to Design-Bid-Build, the Construction Manager at Risk (CMAR) model aims to bring a construction manager on board during the design phase. The intent of engagement at this stage is to include the Construction Manager (CM) for critical cost and constructability feedback before construction would commence. Under most CMAR contracts, CM services provided during the design phase are limited and do not pose any financial risks to the CM until an official contract to provide construction services is signed.
Typical characteristics of the CMAR model include:
- Two independent contracts (design team and contractor) to the owner
- CM selection is based on qualifications and fees
- Open book on costs (subcontractor and supplier payments) and procurement process
- Provides flexibility to price the project
- Subcontracts are contracted under the CM
- Bonding can be for the entire scope of the work (GC and subcontractors)
CMAR's primary difference from Design-Bid-Build is in the early involvement of the construction manager (and potentially certain major subcontractors as well). Having the contractor engaged during a significant portion of the design ideally provides significant constructability input that ultimately informs the final design. In a CMAR project with excellent communication, there should be fewer budget surprises since the CM has been a part of the overall design progression. Should the process go astray, the owner retains the right to terminate the CM prior to construction and hire another firm in a more traditional manner.
Although some CMs may engage MEP subcontractors during the design phase, it is most common that the CM will directly bid the MEP systems requiring similar deliverables under CMAR as is custom with Design-Bid-Build delivery methods. Working under CMAR, however, brings key opportunities for the design team to discuss the following:
- Design team BIM coordination expectations.
- Assignment of scope such as mechanical supports.
- Phasing of renovation projects.
Owner Benefits
- Retains control of design.
- Supports early contractor involvement.
- Provides flexibility to price the project.
- Increases likelihood that projects enter the construction phase on budget.
Owner Risks
- Owners are responsible for changes.
- Architect/engineer teams may not take input from CMs contracted to the owner during the design phase.
Best if:
- Owners want the benefit of early CM involvement to address cost management, schedule, constructability, or phasing.
- This delivery method is sometimes a trade-off, giving up aggressively competitive initial cost.
Project Examples:
Design-Build
The Design-Build model is becoming increasingly popular for some clients. In our experience, its popularity is extremely regional. The method puts the contractor at the forefront of the project from early on. The engineer/architect teams are hired by the contractor, who is hired by the owner. This allows the contractor to influence design decisions, such as construction strategy and cost-savings measures. It also allows the contractor and design engineers/architects to collaborate earlier on in the design, resulting in efficiencies gained through simpler long-lead packages and optimized schedules.
One key item for the owner to recognize is the assignment of the Engineer of Record (EOR) – the party responsible for signing off on the drawings and therefore taking legal ownership of the design. In traditional Design-Bid-Build methods, the EOR is always the engineering/architectural firms; however, in Design-Build, the EOR risk and responsibility can fall either on the contractor (if they have professional engineers on staff) or the engineering firm. Due to the critical legal implications this contract method poses, roles and responsibilities need to be clearly defined for each scope of work.
Drawbacks to the Design-Build setup include the need for the owner to select a contractor before the design is complete. This can give the contractor leverage over the price. Additionally, since the engineer/architect work for the contractor, there can be pressure for the engineer/architect to specify cheaper systems and materials, which can raise conflicts of interest.
For the Design-Build model to be successful, a great deal of trust and collaboration is required between the owner and contractor.
Owner Benefits
- Provides a single point of contact/responsibility for the owner under one contract.
- Integrated design team allows for iterations on designs that improve cost effectiveness.
- Can be a cost-effective approach.
- Allows for construction input during the design process.
- Identifies overlaps and gaps in scope during the pre-construction stage.
- Procures construction directly from the trades which can be a cost benefit.
- Improves schedule due to early resolution of design and construction issues.
- Packaging of work (long lead) can expedite construction start dates.
- Provides more control to ensure adherence to scope budget.
- CM as owner’s representative manages the construction in the owner’s best interest.
Owner Risks
- Owners typically must select contractor early on.
- Demands a well-defined scope and clear delineation of EOR responsibility for each scope.
- Owner is responsible for changes, overlaps, and gaps in scope.
- Creates exposure to CMs lack of proper oversight.
- Necessitates up-front program and performance criteria.
- Owner can be pressured for early decisions.
- Demands extremely clear contractual design criteria to ensure the owner is not forced to relinquish some control over quality.
Best if:
- The owner has a strong contractor relationship and trusts their ability to deliver a successful project.
- The owner wants to pursue a shorter overall project schedule.
- The owner can make design decisions quickly.
Project Examples:
Integrated Project Delivery
Integrated Project Delivery (IPD) projects aim to implement contracts that create a shared risk/reward system among contractors and designers based on financial outcomes of the project.
All major parties, including the Owner, Architect, General Contractor, Engineers, and major subcontractors sign the same contract and are equal partners. All team members' profit is fully at risk, and all parties receive the same percentage of their piece of the profit pool at the end of the project. In this arrangement, all parties either win together or lose together.
This method seeks to remove barriers affecting collaboration and innovation while aligning collective incentives for the project team.
Under the IPD model, there is a sole primary contract known as a multi-party agreement.
Owner Benefits
- Increases efficiency.
- Fosters open, easy collaboration among all project parties.
- Cultivates high-performing team behaviors and culture through enhanced collaboration, mutual trust, and clear communication.
- Minimizes cost overruns (unless true intentional scope adds from the owner). When the build team is financially impacted by added costs, problems find win/win solutions.
- Choosing the right team can create opportunities for financial incentives that drive down the overall price and project schedule.
- Creates open book design and construction costs that are collectively reviewed regularly.
Owner Risks
- The entire team needs to work together extremely closely.
- Requires a high level of owner involvement/engagement.
- Team legal entities may not be familiar with the multi-party contract.
Best if:
- The owner desires full engagement in the design and construction process.
- Trusted partners, experienced in this delivery method, can provide a strong head start.
Project Examples:
Public-Private Partnership
The Public-Private Partnership (P3) model involves a contract established between a government or public entity and a private corporation to fund, construct, or renovate, and typically operate and maintain public infrastructure. In return, the private entity will receive income that is generated from the project (for a pre-determined time period) in order to pay back, and eventually profit from, the initial investment.
Owner Benefits
- Expedites project schedule and can benefit from early completion incentives that increase efficiency
and potentially reduce change order costs. - Transfers financial risk from taxpayers to the private sector.
- Creates budget opportunities typically limited by government funding.
- Provides higher quality, innovative infrastructure solutions.
Owner Risks
- Creates a smaller pool of bidders which can decrease competition and result in less cost-effective partnership opportunities.
- Demands clear delineation of responsibilities and roles regarding project governance. Relies on political and legislative participation.
Best if:
- Owner lacks investment funds to initiate the project or lacks operational staff
Project Examples:
Additional Delivery Considerations
A recent model — Design-Assist — has been introduced throughout the AEC industry as a potential delivery methodology. As this strategy evolves, the conversation needs to rally around better definition of party ownerships, responsibilities, and deliverables as it currently widely varies from project to project and contractor to contractor.
While still very undefined and currently more of an industry buzz phrase, the Design-Assist concept does offer some key benefits. The intent of the Design-Assist delivery method is to enable the architectural/ engineering firm to take the design from a blank slate through concept or constructability details, though the extent of that detail is not yet standardized.
Typically consisting of separate contracts, under the Design-Assist model, the design firm is contracted directly to the owner while the contractor is left to serve as Engineer of Record (EoR). The single most critical driver of success on any Design-Assist project is clarity of scope and responsibility. Without clear clarification on the boundaries of design responsibility, scope gaps and pricing errors can arise.
Conclusion
While each delivery model presents its own unique advantages and disadvantages, successful project outcomes are more often determined by the qualifications and collaboration capacity of integrated architectural and engineering teams.
Having planned, designed, executed, and commissioned countless complex and large-scale building and utility projects worldwide, AEI has established itself as an industry leader and trusted partner in the client decision-making process. We take deep pride in collaborating with our clients to assess their overarching needs and goals, explore their options, define project structure, scope, mechanics, logistics, and budget constraints, helping them determine a framework that best suits their individual needs.
We help identify potential risks associated with each project, discover opportunities, and serve as a reliable resource from concept through completion and beyond, including developing the schedule, selecting and managing a robust team of consulting partners and industry experts, executing the design and delivery, and ultimately facilitating successful, energy-efficient facility operations and ongoing relationships with each and every client.
If you are interested in learning more about delivery types and identifying which model may best suit your needs, please reach out to us today.
