Project Delivery System

A fundamental truth in construction is that every project is unique. As a result, every project presents new challenges as well as new opportunities for owners, designers and constructors. In recent history, the predominant delivery system for construction projects has separated the design and construction portions of the project, but several others are used as well. A number of studies have been performed which have attempted to quantify the relative benefits of each approach. Some useful results have been obtained, but overall the results have been inconclusive. The selection of a delivery system depends upon a number of factors including the general project requirements, the experience level of the owner, budget, time constraints and many others. Careful selection of a delivery system that best suits the project is perhaps the most important decision an owner will make on a project. The extra attention and effort put into the initial phases of the project can yield a smoother, faster, safer and ultimately more profitable result.

Historically, a number of different delivery systems have been used on construction projects. The four main systems used today are known as: Design-bid-build, CM (construction management) agency, CM at risk and Design Build.

The design-bid-build method is performed in the three distinct phases of design, construction and commissioning, with little overlap between the first two in particular. This process begins when an owner retains an architect to develop a design which meets their performance and budget specifications. An important note is that there is typically no constructor involvement during the design process and that the cost estimates provided by the architect are often very rough. The inherent lack of constructor input during the design process is a key weakness of the design-bid-build delivery method. In fact, constructor involvement begins following the completion of the design documents in a process of competitive bidding. The complete construction documents are made available to a number of competing contractors and the one who returns the lowest cost for responsible completion is awarded the project. The main benefit of this delivery system is that it removes any appearance of impropriety in the awarding of contracts. It has also been traditionally believed that the design-bid-build method yields the lowest possible cost. Recent successes of alternative delivery methods however, have challenged this assumption. The design-bid-build approach provides a transparent and simple to understand delivery system best suited for inexperienced owners or agencies legally bound to its use. (AGC, p.74)

Construction Management (CM) changes the traditional method described above by bringing the owner and the constructor together early in the project. There are two types of CM, with agency CM being the oldest and CM at risk, which has gained wide acceptance in recent years. In agency CM, the process still begins when an owner retains an architect, but as the design nears completion, an expert is brought in to evaluate the design for constructability and to provide a cost estimate. Under CM agency, the CM acts only as an expert opinion to the owner and carries no real authority during construction. To address this shortcoming, CM at risk was developed. Under this system, the CM plays a role much like the agency CM during the design phase, but becomes the contracting agent when bid requests go out. Additionally, the CM prepares a guaranteed maximum price, or GMP, and shares all of the pricing information from contractors with the owner. Typically best suited for an owner who either has significant experience in construction or significant time to invest in the process, either CM method provides the expertise of the constructor early in the process. (Gregerson, p. 63)

The Design-Build delivery system is also commonly referred to as the "master builder" approach. Under this system, an owner retains a single firm which accepts the responsibility for providing all of the design and construction services needed to complete the project. A key strength of this approach is that it creates a team based atmosphere in which all parties work together toward a common goal. Also, the design build delivery method allows for construction to begin before the design documents are complete. With careful management and decision making, this system can produce shorter timelines and potentially even lower costs. Due to the nature of the design build methodology, it is best suited for very well experienced owners who are in a strong financial position and are able to focus on the project. (AGC p.129)

A number of studies have been performed in an attempt to quantify the relative strengths and weaknesses of the various project delivery methods. Due to the unique nature of construction projects though, no single best approach has been identified. However, several important conclusions regarding construction costs and schedules have been made.

In 1997, the Construction Industry Institute completed a two year study designed to compare the traditional design-bid-build system with alternative delivery methods such as design-build and CM agency or at risk. The most striking conclusion of the study is that the design-build system yielded the best overall control of cost. In terms of schedule duration, both the design-build and CM delivery systems yielded equal results, while the design-bid-build system resulted in an overall duration increase of over four percent. (Olson, p. 10,11) Overall, the design-build method has the potential to yield the greatest benefit to owners, but is certainly not the best choice for every project. The variables involved are simply too numerous to allow for a simple side by side comparison.

The project delivery system selection process is an inherently unique and personal process. As a result, guidelines intended to facilitate the single best method for a given owner on a given project must also be unique and personal.

A number of guidelines related to owner involvement, budget, project requirements and overall duration are listed below and are intended to facilitate the decision making process. In application of the following guidelines, it is of paramount importance that the needs and characteristics of the owner be carefully and actively