Construction services in North America can be structured in many ways, allowing stakeholders the freedom to select a Delivery Model that best suits their needs. Each way of delivering these construction services has its own set of advantages and disadvantages revolving around cost, time, risk, trust, and control. The model that is selected signals to the stakeholders the tone of the contract and each party's responsibilities. For these reasons and many more, selecting the right project delivery model is a critical step in the construction process. In this post, we will discuss five common types of construction delivery models.
Design-Bid-Build (D-B-B) Construction Delivery Model
Design-Bid-Build is the most commonly known and most traditional construction delivery model. Under this model, owners sign a contract with a design team who is responsible for the complete set of drawings, specifications and other construction administration services including the development of the bid package used for selecting the General Contractor (GC).
Once the bid package is completed, it is sent out by the owner or design team rep for General Contractors to bid on. GC’s will provide their proposals to the owner and design team for evaluation and selection. Once selected, the GC will sign a separate contract with the owner. The GC’s responsibility is to construct what has been laid out in the plans and specs by the design team. This delivery model is most typically utilized by cities, municipalities, and large organizations such as schools and hospitals.
Advantages:
+ In a competitive market, owner may achieve lower project costs than other delivery models
+ Greater cost certainty with fix price contracts
+ Tried and true process that is commonly understood
Disadvantages:
- Upfront design cost is expensive before construction costs are known
- Potential for cost overages and expensive change orders for scopes of work that are missed during design or the improper specification of materials
- Less collaboration and teamwork between design team and construction team
Design-Build (DB) Construction Delivery Model
Design-Build is a common delivery model where the owner will contract a single firm to be responsible for both the design and the construction of a project. There are multiple variations of Design-Build contracts. In some cases, a fixed cost for the design and build are established up front along with a distinct scope of work. In other cases, the design cost is fixed up front with the construction cost being fixed once the drawings are further developed. Typically, the prime Design-Build contract is held with either an architecture firm or a general contractor but in either case, a subcontract will tie the two firms together unless the general contractor has the capability of completing the design in house.
Design-Build contracts are becoming increasingly popular among business owners and organizations as they allow an owner to have a single point of contact throughout the process. They also enable greater input from the subcontractors during design which produces efficiencies, and the process is generally quicker since the full bid package/process is not required.
Advantages:
+ Single point of contact with whoever holds the contract
+ Greater collaboration between Design Team and Construction Team
+ Often a quicker process than Design-Bid-Build
Disadvantages:
- Difficult to compare Design-Build proposals apples to apples
- Requires the owner to know their needs up front
- Requires a high level of communication between stakeholders
Construction Management (CM) Construction Delivery Model
Construction Management contracts are used when an owner wishes to have the builder act as their representative during both the design and construction stages of a project. The construction manager is not responsible for the project’s design, but they will typically sit in on meetings during all stages of the design for the purpose of providing consultation on cost, material, schedule, safety, and constructibility of any working drawings.
Beyond consultation during design, the construction manager is also responsible for overseeing the construction of the design. There are different variations of CM which will incentivize firms to hit the owner’s budget and schedule but typically CM is structured as a Cost+ contract – meaning the owner pays for the real cost of construction + an agreed upon percentage for the construction manager’s overhead and profit. This delivery model is unique from the others in that it is open book management. Owners should receive monthly invoices outlining all the costs of construction with backup information available if required.
Construction management as a delivery model is often used for large, complex projects where the budget, scope, or timelines are difficult to define. It is also used on projects that are reoccurring or with multiple phases.
Advantages:
+ Open book management
+ Highly collaborative
+ Greater flexibility
+ Client focused
Disadvantages:
- Requires a high level of collaboration and communication
- Less cost certainty for stakeholders
Public-Private Partnership (PPP or P3) Construction Delivery Model
Public-Private Partnerships are, as the name suggests, a project where a public organization partners with a private organization to complete a joint project. In Ontario, P3’s leverage the expertise and competitiveness of the private sector to successfully expand, modernize and replace Ontario's aging infrastructure. Hospitals, affordable housing, sporting facilities, roads and bridges are all examples of P3 projects. Under P3s, the project owner establishes the scope and purpose of a project, while design and construction work is carried out - and often financed - by the private sector. Typically, only after a project is completed will the province complete payment to the private-sector company. In some cases, the private sector will also be responsible for the maintenance of a physical building or roadway.
Advantages:
+ The combination of public money and private expertise makes large & complex projects possible
Disadvantages:
- Not a delivery model accessible to the private owners
- Projects are government dependent which may change as governments change
Project Management (PM) Construction Delivery Model
Project Management is another unique delivery model much like Construction Management with the added responsibility of overseeing the design. In project management, the Project Manager is the single point of contact with the client. They are responsible for ensuring that the needs and requirements of the client are communicated to the design team and are captured in the design. The Project Manager is responsible for generating construction budgets and schedules for the client to review as information becomes more available. The Project Management Firm typically bases their fee on a Cost+ basis with various cost sharing incentives negotiated up front to motivate the Project Manager to hit budgets and schedules. The costs of the project are managed open book so that the client can review all costs pertaining to the project.
Once construction begins, the Project Manager will either hire a general contractor or manage the construction in house if they have the skill and expertise. Project management as a delivery model is often considered when a project is complex, the scope is undefined, or flexibility is required.
Advantages:
+ Owner flexibility
+ Single point of contact
+ Open book management
+ Greater focus on owner priorities
Disadvantages:
- Requires a high level of collaboration and communication with the Project Manager
- Less cost certainty for stakeholders
*Note, this blog is intended to provide general information on various construction related topics. Contact your local construction professional for advice related to your own projects. Should you have any questions or concerns, feel free to contact us at info@baribeauconstruction.com.
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