DELIVERY MODELS GUIDE FOR CONSTRUCTION

When it comes to construction models, there are five common approaches — each with their own unique pros and cons, depending on your priorities as a project owner. Before starting any job, it’s key to explore what method will work...

When it comes to construction models, there are five common approaches — each with their own unique pros and cons, depending on your priorities as a project owner.

Before starting any job, it’s key to explore what method will work best. No one model is ever perfect, but by choosing the right fit for a specific project, you’ll reduce risk and ensure the project budget and schedule are more effectively managed.

At Quantus Consulting, we not only select the delivery method that best suits you and your project, but we often combine positive aspects from different methods to provide an appropriate, unique system to create assurance, transparency and “no surprises” — helping you reach the ultimate goal of project completion.

So, let’s talk about four common construction methods to help you get an upper hand, along with some key insight to help you pick the right method for your next project.

Design-Build

Design-build offers clients a straightforward delivery method with minimized risk. In this model, design and construction are both handled by a single firm. The design-builder then assembles a team that can deliver all the required services. So, the owner only needs to create one contract to cover architecture, engineering and construction.

What this offers is a single point of accountability for all services. This typically leads to reduced costs and faster delivery, since everything is managed under one roof.

The big question for owners who go with the Design-Build method: does a contractor have the capabilities to reach or exceed expectations? If you choose this method, you need to make sure you have a solid answer to this question.

3 reasons to choose Design-Build:

1. It’s a “one-stop-shop” solution well-suited for owners who might not have the time or expertise to manage a project.

2. It’s a way to mitigate cost risk, having one firm manage project design and build.

3. With a sole source of responsibility for project delivery, you’ll need to be comfortable with stepping back from the process, trusting the contractor to deliver. If successful, this model tends to lead to a shorter schedule.

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Construction Management

With the Construction Management (CM) method, the owner will retain a firm to act as its construction management representative. The CM rep, or construction manager, is responsible for managing all aspects of design and construction while ensuring the owner’s goals are met — including quality, scope, cost, and schedule.

You can think of a CM rep as an extension of an owner. A possible issue here is that if you choose your representative incorrectly, it can create communication challenges between yourself and all the contractors working on a project.

3 reasons to choose Construction Management:

1. You have full transparency into the process, trading off some cost risk to play an integral role in the project process.

2. You gain an expert consultant to coordinate and provide advice on all aspects of the project delivery.

3. If you have the appropriate time, expertise and risk tolerance, this is an effective method to ensure everything gets done the way you want it, with a construction manager that can focus on the day-to-day details.

Construction Manager at Risk / GMP

Very similar to CM, Construction Manager at Risk (CMR) is when a construction manager acts as a consultant to the owner during project design. Construction managers oversee subcontractors and have a high level of responsibility to ensure an owner’s needs are met.

The difference between CM and CMR is that with CMR, the construction manager takes on additional risk by providing provisions in the initial contract with fixed prices. So with construction manager is selected very early on in the process, giving an owner further clarity and control on a project’s expected costs.

3 reasons to choose Construction Management:

1. Similar to CM, you gain an expert consultant to coordinate and provide advice on all aspects of the project delivery.

2. If you have the appropriate time, expertise and risk tolerance, this is an effective method to ensure everything gets done right, with a construction manager that can focus on the details.

3. You have all the clarity you need on pricing very early on in the delivery process. A concern here is to ensure you establish accurate price budgets — too low, it may lead to limitations for the construction manager.

Lump-Sum / Stipulated Price / Fixed Price

A lump-sum is normally used to reduce design and contract administration costs. How it works is that contractors submit their prices directly to the owner instead of bidding on individual items.

For owners, it’s a common method for simple and small projects with a well-defined scope, or for construction projects where the risk is minimal, since the price is fixed and the cost of the work is firm. Risk is then mitigated to the individual contractors, as opposed to in Design-Build where risk is transferred to a single contractor.

3 reasons to choose Lump Sum:

1. Allows for pricing competition. However, take into account that schedules should accommodate for a longer overall time of delivery (especially without a construction manager and with various contractors taking on responsibility).

2. This model provides you with a fixed set of documents that clearly states all the specifications, details and pricing you need prior to construction.

3. This is recommended for simpler projects, as there is increased uncertainty when splitting responsibility between a number of contractors. If you’re not comfortable with any of the above delivery methods, this could be your best approach.