Common Construction Project Delivery Methods: Which One is Best for You?
If you’ve got a construction project ahead of you, you’ll soon realize (if you haven’t already) that it will involve a variety of services. Because every project is different and people have differing preferences in how the project is managed, there are different construction project delivery methods from which to choose.
Because delivery methods continue to change and evolve, it’s important to go over all the different aspects of each of the most common delivery types and find out which one is going to be of the most value to you.
Why choosing the right project delivery method matters in construction
There are many factors to consider before selecting a project delivery method. The following are some of the most important:
Owner controlHow hands on do you want to be with your project? The delivery method you choose can either grant you great control over the entire project, or limit it and allow a construction manager to oversee everything. Owner control options will vary per delivery method.
Owner relationshipsEach delivery method will establish different relationships with each party involved. This can include interpersonal relationships as well as contractual relationships. Often, the relationship between the owner and the architect is the most important, as the architect, in some delivery methods, will be in charge of the project.
Project budgetAmong the most important aspects of a construction project is the project budget. One of the reasons the design-build method of delivery is so important is that there is great insight into the budget by the owner at all times.
Project scheduleAfter budget, project schedule is among the most important aspects of a construction project. The design management requires that there is a great deal of oversight of schedules to ensure that each phase of the project is completed on time and that the next phase and all necessary materials needed to complete the phase are in place.
Owner riskEach delivery method comes with varying owner risk. For example, in the construction manager at risk method, the construction manager oversees the project and accepts the risk of meeting deadlines and staying on budget. Owner risk is most often associated with financial and liability risks.
Commonly used project delivery methods
To get a better idea about how your project will proceed, you need to know what role you will play in it, whether it’s to be heavily involved or have someone else manage the entire project, as each delivery method has different degrees of owner involvement. The following are some of the most common delivery methods being used today:
Fastest growing and popular method for delivering construction projects.
The owner will manage one contract with a single point of responsibility. The owner is not responsible for risk in this method as it is all conveyed to the design-build contractor. Furthermore, any disputes between the architect and contractor are internal and not something the owner has to deal with.
Projects are often well defined at the outset, which can improve value by reducing waste and preventing scheduling issues.
This is one of the most traditional and best understood methods.
The owner is responsible for selecting an architect, and together they determine the scope of the project. Generally involves two contracts, one with the architect and one with the contractor.
It’s a traditional method of project delivery and involves the design phase, the bidding phase and the construction phase.
Construction Management at Risk (CMR)
This model is one where the builder and designer are separately contracted.
Builders are integrated into the design phase, which allows them to bring their expertise to offer more cost-effective solutions to the planning phase.
The construction manager commits to deliver the project with a guaranteed maximum price, which is based on building plans and the timeframes in which they are to be completed, which are all laid out in the planning phase.
This method is defined by many contracts among all entities that have a hand in the project.
Owners often have financial control over the project, but the construction manager faces no financial risk. The owner also has a great deal of insight into every aspect of the project from beginning to end. However, the construction manager will act as an agent of the property owner.
It’s most often the case that owners who choose this delivery method seek to be heavily involved, but acknowledge that they don’t have the resources to directly manage the project themselves, which is why the construction manager is empowered to such a great degree.
Integrated Project Delivery (IPD)
One of the more recent delivery types, IPD seeks to minimize construction waste, scheduling errors and quality issues.
All participants in the project are often brought together to collaborate to ensure the owner is getting all the value possible. There is also collaboration between cross-functional teams during every phase of the project.
It’s the collaborative approach that prevents waste, but it also ensures a more smoothly run project from beginning to end.
Key advantages & disadvantages when choosing project delivery methods
By defining and prioritizing your project, you get a better idea of which method to use. Obviously, you want to choose the method that will lead you in the right direction, which is the lowest cost, least delays, fewest changes and best outcomes. Check out some of the advantages and disadvantages to each method:
The reason this delivery method is catching on so quickly is that it is so simple. You can work with the designers to make your vision come to light, and the construction team has input as well, which brings more informed decisions to the table. There are no subcontractor contracts to worry about and communication is flawless throughout the project.
Be careful in regard to transparency and bidding, because some owners who have chosen this method have found that because bidding isn’t competitively farmed out, prices were high. Also, this method also disrupts the usual checks and balances of other methods, particularly in that the design team must answer to the contractor.
For a chance at the lowest total construction cost, owners often choose the design-bid-build method. Another perk is that owners will retain control of the design and all the procurement laws are well defined. Obviously, the owner has low first cost associated with bidding, and because the owner works closely with a design team, all construction documents are prepared in advance of the bidding process, which means the planning has been meticulous, in most cases.
On the down side, owners are going to be responsible for all final cost changes. This process also involves the highest amount of litigation and the contractor has no input on the project. Another criticism of this method is that when you get a low bidder, you might also be getting low quality. Finally, this model has proven to have issues regarding the frequent change orders.
Construction Management at Risk
The reason to choose this method is for control over design, getting the contractor involved early and having some flexibility in the price of the project. Basically, because of the early involvement of these parties, the owner is getting better cost feedback and there is more time for the contractor to explore options that might offer cost savings. Choosing this method usually results in a good collaborative effort, which will be a benefit in keeping the project on schedule.
Some of the negatives associated with this method include that any changes made to the project will be on the shoulders of the owner, and the architect might not accept changes from construction management. Finally, owners are in charge of finding the construction management entity to take over the project, but not everyone is going to know the appropriate qualifications to look for in a qualified construction management team.
People go this route when they want to control the design, have the contractor involved early and get low bids. This method also involves permitting the owner to divide the work into smaller phases, which often gives more firms a chance to bid. The increase in competition often results in lower bids. Owners generally find that they have more control in this setup, because the owner is responsible for setting the schedule for bidding.
Unfortunately, some owners have experienced a situation where they don’t know the final cost of the project until the prime contract is arranged. And because there is a lack of overall authority, there can be some management conflicts throughout the course of the project. And because the owner might not have adequate management experience, there is often a gap in collaboration, which can lead to scheduling mishaps.
Integrated Project Delivery
The advantage here is that there is a single point of responsibility, because the architect and contractor are one in the same, which leads to increased transparency. All the experts are involved in designing and construction through every phase and they share accountability. Saving time is also a perk in choosing this method, as the integrated approach can hasten the delivery of each phase of the project. Faster delivery often means lower costs.
The disadvantage is that while this method sets the stage of collaboration, trust isn’t a given in every relationship. Team members can’t just automatically begin to trust each other, and this means that the owner still needs to work on the relationship between the architects, contractors and themselves. Finding financing isn’t always easy using this method, either, because lenders might not be familiar with this method. Finally, if local contractors and designers are unfamiliar with this method, they might refuse to participate.
Choose the design-build company for your next construction project
At New Concept 180, we’ve operated as a design-build contractor since day one. We know that our clients have options in choosing their contractors for construction projects, and we offer our clients who have chosen the design-build method of project delivery the most seamless construction services from the design phase through completion of the project. Contact us and let’s talk about your project.