From Concept to Completion

Construction companies are offering more professional services than ever before, but project owners who don't understand their options may be spending too much or missing potential project enhancement opportunities. Construction methodologies have evolved, and for the better. Project owners can choose from among several processes to move from design concept to a completed building. Choosing the right project delivery method can ensure that you maximize value and reduce risk on your next commercial construction project. The three most common project delivery methods are: design-bid-build, construction manager-at-risk, and design/build.

Building projects require the involvement of many different people, but the three most significant participants are the project owner, the designer and the builder. How they work together is what distinguishes each of the three methods. Each project delivery method is governed by specific industry standard contracts that have been developed by the American Institute of Architects (AIA) to clarify the roles and responsibilities of project participants.

The differences in these three approaches are most obvious during the pre-construction, or design phase, of a project. It is during this phase that a qualified contractor can add expertise that ensures the design conforms to the owner's budget while avoiding costly pitfalls that can lead to unpleasant and sometimes expensive surprises during construction.

The fundamentals of project management during the construction phase have remained largely the same, although new technologies (web-based project management software, paperless shop drawing reviews, building information modeling, and building envelope performance testing) have led to some efficiency and quality improvements during the construction phase.

Design-Bid-Build

Design-bid-build is the tried and true project delivery method that most people think of when contemplating a construction project. The project owner first hires a designer to complete 100 percent of the construction drawings and specifications. When the design is completed, the project is put out to bid to qualified general contractors. The project owner then enters into a second contract, usually with the lowest bidding general contractor, who in turn owns exactly what is shown on the construction drawings and specifications.

This delivery method differs from the other two options in that the builder is not involved during the pre-construction phase and consequently the project owner may not be fully informed about the construction cost until the project has been fully designed and bid. This process can create conflict between the design and construction team on items that are subject to interpretation. Change orders can result if the drawings and specifications do not accurately depict the design intent. The general contractor does not have this background knowledge due to lack of involvement during the design phase. The design-bid-build process is perhaps the slowest path to get your project from concept to completion because of its linear approach and the need for design documents to be fully completed prior to bidding. The project owner also has no control over which subcontractors are selected to work on the project.

Design-bid-build is most common for public projects that require a low-bid selection process. The roles of both the design and construction teams are clear and the general contractor selection process is simple. However, fewer project owners are using this approach because of the added risk assumed by the project owner and lack of builder input during the design phase.

Construction Manager-at-Risk

Construction manager-at-risk (CM) is a process by which the project owner usually hires an architectural firm first, but then selects a construction manager partway through the design process. The CM is hired to provide pre-construction services for a fee and to manage construction phase services, usually for a fixed percentage of the overall construction cost. This delivery method has been gaining popularity with some project owners over the past decade because it reduces the risk of projects coming in over budget and promotes collaboration between the design and construction teams during the pre-construction phase.

Many public entities now favor the CM method because of their ability to determine the cost of construction before investing in fully designed construction documents. This is especially helpful when public projects must receive voter approval to raise funds through issuing municipal bonds.
While the design is taking shape, the CM will provide milestone cost estimates to allow the design team and project owner to make design adjustments in order to keep construction costs in line with the established budget. These estimates will often include a menu of alternative design options that can be selected to reduce cost and maximize value. These value engineering options can include savings in initial construction costs, operating cost savings, and future maintenance cost savings.

In addition to estimating services, the CM will also:
    Consult on the feasibility of construction of the proposed design,
    Identify building materials that require a long lead-time,
    Develop a master project schedule,
    Create a proposed phasing and logistics plan for complex projects, and
    Work with the design team to facilitate the coordination of all    major building systems to ensure issues are addressed before construction begins.
As part of the pre-construction services, the CM will competitively bid all portions of the project to qualified subcontractors and present a tabulated summary of these bids to the owner and architect for review against budgeted values. The CM will recommend subcontractors who offer the best value to the project, but subcontractor selection is ultimately the project owner's decision.

To help manage the budget, the CM prepares a document called the guaranteed maximum price (GMP) proposal, which serves as a contractual not-to-exceed price for all project construction costs. The GMP can be developed at any stage of design when all participants mutually agree on the scope of work and the cost estimate prepared by the CM.

After the GMP is accepted, the CM is at-risk to build the project, as designed, on time and for the GMP. This approach limits the potential for project change orders. The CM is expected to have accurately clarified any items in the design that could be subject to interpretation when preparing the GMP.

This process can allow a project owner to fast-track construction by releasing the contractor to order long lead-time items and begin early critical work while design details are still being finalized. This streamlined approach can result in project savings by capitalizing on seasonal pricing advantages and optimizing the sequence of construction. Effective planning, earlier phased completion and cost management improve efficiency and can lead to additional savings being returned to the project owner over the course of construction.

Design/Build

Under design/build, the project owner enters into a single contract for all design and construction services with the design/builder. The contractor will hire designers, or use in-house staff, allowing the project owner to have a single point of contact for all aspects of the project. This contractual arrangement puts all of the responsibility on the design/builder to develop a design that meets the needs of the project owner and can be built within the owner's budget. By fully integrating the design and construction professionals under one contract, the project owner greatly reduces the potential for disputes between the two parties.

Typically, the design/build firm will provide many of the same pre-construction services offered in the CM delivery model. This approach promotes the fluid exchange of ideas between the design and construction professionals.

This tends to help identify the best design solutions faster than other project delivery methods. It can also help reduce design costs because the architects and engineers need only develop the drawings to a level of detail needed for the construction firm to effectively bid and build the project.

In some instances a design/build team is selected based on the quality and cost of a proposed design. A project owner who is considering a design/build competition should plan to clearly communicate detailed project requirements to all competing design/build firms to avoid receiving proposals that do not meet their needs.

The advantage of this approach is a fast construction start. However, the lack of design feedback from project owners during a design/build competition can sometimes lead to a project that doesn't fully address the priorities of the client. For this reason, it is often best to select a design/build team based on the qualifications and experience of the team members and then work together to develop a design that meets the needs and budget of the client.

Preston Hunter is director of business development at Eckman Construction Company Inc. in Bedford. For more information, call 603-623-1713 or visit www.eckmanconstruction.com.