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Design-Build contracts
Main article: Design-build
Generally a General Contractor or Architect led project/program that requires a fluid interface between the design professionals and the constructor to eliminate potential costly design related change orders to a project/program. This delivery method is also a preferred process when the Owner doesn’t have the necessary in-house expertise to lead such a project/program.
The oldest delivery method used in the industry except for the Design Build (Master Builder) delivery model, when the owner has sufficient in-house expertise to manage with the Architect the project/program. This system is used to generate a low bid condition whereby the Owner can see the benefits of competitive pricing.
Comparative Note for CM Led Delivery Method:
A Professional Construction Manager should avoid giving this much control of a project to one entity. Historically it has been found to be in the Owners best interest to contract with an OR/CM individual or firm experienced in leading the Design-Bid-Build delivery system. From an Owners point of view there is value having the design team under the Owners direction and to have the drawings competitively bid and value engineered to the Owners benefit.
Risk Management is done from the Owners side by contracting with an experienced OR/CM who then customizes the overall project team and the team chemistry around the program requirements. Through the trust relationship engendered by the CM delivery model along with the knowledge and experience to implement superior project controls the CM ensures the Owners risk is minimized.
The design team delivers a complete set of documents instead of a working set of drawings that the GC needs for permitting and construction. Constructability reviews and drawing coordination is done with prospective bidders at no cost during DD along with possibly a peer review to compress permit review. No one bar none can move a set of drawings through a jurisdiction more effectively than the Owner of the project (i.e. OR/CM).
The General Contractor performs more efficiently through the CM to meet the overall project goals set by the Owner. Efficiency is increased because the CM speaks the same language and can promote any changes more effectively to the Owner. The improved fluidity throughout the project team with the CM in the lead gives the owner confidence improving overall cash flow. This helps the GC in their effort to accelerate and stack the trades when necessary.
As to schedule, you can phase Design-Bid-Build as easily as the D-B if the jurisdiction you’re working in allows utility relocation/construction in advance, same with sitework prior to building.
Best practices? Stay away from D-B, and recommend a traditional delivery model with an experienced OR/CM lead working directly for the Owner. This will save your Owner money, maintain Owner control of the project schedule, mitigate risk through Owner managed project controls.
From a contractor perspective D-B has tremendous business potential with little added risk. Owners who opt for this delivery process are generally government, larger corporations or municipalities who don’t have qualified staff to support projects of this scope and magnitude.
The decision of an Owner to proceed with a D-B delivery process generally comes from advice from an Architectural firm retained by the Owner during the preliminary planning stage of a program. Oftentimes the Architect for the Owner will establish the project requirements and prepare bridging documents that will then be used by the Design Build Contractor and their design team for final pricing and ultimately project delivery. It is generally recommended the Owner maintain a project Architect for the purpose of design review and to insure the Owners project requirements are met.
End of Comparative Note:
Design-Build sometimes compared to the “Master Builder” approach is one of the oldest forms of construction delivery procedures known. The Design-Build Institute of America (DBIA) takes the position that design-build can be led by a constructor, a designer, a developer or a joint venture, as long as a the design-build entity holds a single contract for both design and construction. Advocates of Design-Build contend that a single point of responsibility contract such as is common to this delivery process minimizes risks for the project owner and is better able to reduce the delivery schedule by overlapping the design phase and construction phase of a project than traditional delivery methods.
Most construction contract lawyers would agree that D-B with its single point responsibility carries the clearest contractual remedies for the clients because the DB contractor will be responsible for all of the work on the project, regardless of the nature of the fault.
Experienced Owners understand there is a cost associated with giving one entity this much control of a project. Not to mention the bias that is placed on the project design philosophy. To give the contractor who will be building a project control of design is a mindless endeavor.
The facts behind the D-B delivery process are as follows:
There is no such thing as one throat to choke on a construction program where numerous entities are involved. When the Owner finds something he doesn’t like or if something goes wrong the contractor will do their best to remedy the issue. If after a few times the Owner is not satisfied and everyone goes to law the Owner still pays. The arbitration process will wear most Owners down to a point of concession. Either way the Owner will ultimately settle for something less than what they deserved under a traditional delivery methodology. Rule number one for the Owner; never give control of your project away to the contractor.
The completeness of drawings produced by the D-B Contractors design team will be working drawings and will not be nearly as complete as what an Owner pays for in a traditional Design-Bid-Build delivery process. Once the drawings are approved by the reviewing officials and permits are issued then who will be responsible for reviewing and approving submittals? The design team working for the Contractor? No, most of the time the Owner will have their own design professionals reviewing the submittals as they come through the D-B Contractor.
As for mitigating risk to the Owner through the use of D-B, it’s true that single source contracting does place fault squarely on the D-B entity, but contractors aren’t going to simply write a check there will be a dispute process and the Owner will pay, the Owner always pays. That’s is why the industry came up with Construction Managers who can lead the overall process as a traditional Design-Bid-Build and keep everyone from risk through effective management of the various disciplines associated with project development and delivery.
Many Architects contend that an Architect led D-B is preferable to a Contractor led D-B, I would agree that Architects would be better qualified to the lead the design aspect of a project, but traditionally Architects and Contractors don’t always agree. Another reason the industry and academia came up with a professional Construction Manager who had the necessary skills and qualifications to fully integrate the project team and manage the entire process to the success of the Owner while keeping harmony among the team members.
One of the culprits for the rising popularity of D-B in recent years is the inability of the project Architect to communicate well with the General Contractors they work with. It’s a natural cause and effect like cats and dogs the Architect in order to meet is design intent must sufficiently enforce the project specifications and plans. While the interpretation of the plans and unfortunately sometimes the coordination of the construction drawings leave room for debate. While the issues are being discussed the contractor is pressing forward at the job site and scheduled activities are impacted. Without someone on the Owners team that is fluent in the language of design and construction and understands all the inherent motivators driving the team members, team chemistry is diminished. The Owner must have representation and it should be a single person who may or may not work alone but ultimately drives the project team members to their final destination without finding a bar ditch along the way. This most naturally falls to the professional Construction Manager. With this management system in place then profitability for all team members is enhanced and the Owners confidence is elevated through the various phases of a construction program so that all of the project team benefit.
The intent of this article is to state the pros and cons of D-B not bury it as a construction delivery, in the event there are still die-hards reading at this point the following are the main points to take away from this chapter.
Pros (Owners Perspective)
1.Single source contracting reduces risk to the project Owner. 2.Eliminates the need for Owner staffing of a project. 3.Provides opportunity through design phase to phase into construction components while design is ongoing. 4.Integrates design philosophy with construction techniques more completely than other delivery processes. 5.Single point of responsibility through design and construction. 6.Provides more complete design integration specialty subcontractors needed for the project’s success. 7.Contractor led D-B enhances constructability through design phase and drives design schedule with construction in view. 8.Perpetual business model for Contractor since Owner is tied to them for design and warranty items and sometimes operations.
Pros (D-B Entity)
1.Contractor controls design thereby controls quality and specification compliance. 2.Two stage pricing allows contractor to recoup any lost profit opportunity for design and construction components of the project. 3.Contractor has more leverage over Owner when changed conditions occur. 4.Opportunity for profit is greater than through other delivery systems. 5.Less chance of conflict with design team. 6.Improved capabilities for schedule compression saving time creating opportunity for profitability due to improved efficiencies. 7.D-B Entity has better control over entire design-build process including the Owner.
Cons (Owner)
1.D-B Entity assumes responsibility and control of design from Owner. 2.Working set of drawings versus fully detailed CD’s with no cost benefit to Owner. 3.Reduced design team accountability through submittal process. 4.No VE review through bid process. 5.Cost of D-B versus CM led traditional delivery 7%-15% more. 6.Risk shift component of a D-B project will still impact Owner. Perceived risk mitigation through D-B is not fully realized in practice. The risk mitigation of D-B versus other delivery methods is limited to design errors and omissions. 7.No pricing structure for change orders, both parties must act on good faith. 8.Design-build contracts typically do not allow for traditional unit pricing techniques because the design is often not defined enough to generate accurate quantities or even final unit price line item descriptions. 9.Design-build contracts typically utilize more contractor-controlled quality control processes because the design-builder owns the details of design 10.Owner is tied to D-B entity for warranty and design/plan needs. 11.Design-Build does not make use of competitive bidding where prospective builders bid on the same design. 12.Criteria to select contractor is subjective and difficult to evaluate and to justify later. 13.The design and price selected arouses public suspicion, true or not. 14.This can lead to loss of public confidence 15.Audit ability of the project is not as well defined as should be for accountability in a public venue. 16.Working documents are not as complete as would typically be for design-bid-build type delivery.
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