Introduction
When it comes to construction projects, there are number of different delivery methods to choose from. Each have their own pros and cons, and each have their rightful place in the industry. This brief article will review some of the major project delivery methods and demonstrate why hiring a construction management team is likely beneficial to your project.
Delivery Types
In Canada, common delivery methods have standardized contracts that are overseen by the Canadian Construction Documents Committee (CCDC). Regardless of how you approach a new project, it is important to have all parties agree upon a rigorous set of terms and conditions. Using a CCDC contract as a template is a good place to start.
There are many project delivery methods to choose from. The three most common methods for privately funded projects are:
- Design-Bid-Build
- Design Build
- Construction Management
Design-Bid-Build (CCDC2 – Stipulated Price Contract)
Design-Bid-Build is the most common project delivery method for construction and is often referred to as the ‘traditional method’. DBB may also be referred to as “Stipulated Price”, because before construction begins, a set price for construction is agreed upon by all parties. But, as we’ll see, DDB projects often exceed the agreed upon budget.
With DBB, the owner hires an architect to design the project and tender out the construction to a general contractor. The architect acts as the owner’s representative and generally supervises the construction phase to make sure the contractor is meeting the standards set by the design.
The advantage to DBB is that, due to the extended involvement of a certified design professional, it places the most emphasis on design detail and quality. Because contracts are secured with competitive bidding, the upfront costs can be lower than other methods, although additional expenses are often incurred as construction progresses. This is due to a few inherent disadvantages of DBB. With DBB, designers and builders don’t collaborate; the design is complete before contractors have a chance to review it. This can lead to discrepancies between design and execution, resulting in additional cost. If the design team makes a mistake or omits important information on the tender documents, the owner may be forced to agree to a change order for the project to continue. Change orders are agreements to change the scope of work after the original contract has been signed and are usually negotiated separately from the original contract. This means that change orders often impact the cost, timeline, and quality of the finished product. The lack of collaboration between the designers and builders often results in an increased need for change orders. The general contractor is incentivized to have change orders approved because they receive additional revenue. The bid process in the beginning is usually quite competitive and results in attractive costs. However, once construction starts, a major change order can leave the owner at the mercy of the contractor.
Design-Build (CCDC14 – Design-Build Stipulated Price Contract)
Design-Build offers a simplified approach for owners. Instead of hiring a designer and contractor separately, design-builders take on both roles, resulting in a singular contract.
In most cases, the owner will request proposals from design-builders. A preliminary design is often provided by the owner as a starting point for these proposals. The owner then reviews the different proposals and chooses the best fit. A proposal consists of a price, and likely alterations to the design. A budget and scope are agreed upon and the design-build team begins work.
The advantages of choosing D-B include shorter timelines, and fewer errors/price increases. D-B often results in lower costs due to the stream-lined process.
D-B presents some variables that the owner must carefully consider. A design builder caries immense responsibility and influences every aspect of the project. The builder may sacrifice design quality and detail to make construction more cost effective. Because D-B offers less oversite for the owner, it is important for the owner to hire a qualified and trustworthy team.
Construction Management (CCDC5B – Construction Management Contract – for Services and Construction)
Essentially, a construction manager (CM) acts as the owner’s representative and is involved in all stages of a project. Construction management can be viewed as an add-on to other project delivery methods rather than a separate process. A CM’s principal responsibility is to deliver a building project on time, on budget, and to meet the owner’s expectation of product quality and performance. A CM’s involvement in the project can vary depending on their expertise and the owner’s desired method of project delivery. For example, a CM team may simply oversee the work of a general contractor or take on that role themselves by individually hiring and managing the different subtrades during construction.
A good construction management team has multi-disciplinary expertise and should be able to provide substantial input at every stage of the project, reducing discrepancies between the design and construction phase. A CM team provides value engineering to a project and guides all decisions to strike the best balance between quality and cost, based on the owner’s parameters. Because CM’s work on every stage of a project, some stages can be executed simultaneously, reducing total project time.
Hiring a CM team is one of the best ways to improve the efficiency and quality of a project, but it is extremely important for the owner to do their due diligence before choosing a team. Like design-builders, a CM is responsible for almost all aspects of a project. An in-experienced team will likely have the opposite of the indented benefits of hiring a CM.
Conclusion
There are many ways to go about delivering a construction project. Each of the established delivery methods have their own pros and cons and are suited for different situations. With whatever method a project owner chooses, hiring a good construction management team is almost always going to result in reduced cost, shorter timelines, and improved quality.