There are many ways to deliver a project but the most widely used methods are (in alphabetical order):
Construction Manager – Agency Services (CMa)
Construction Manager at Risk (CMaR)
Integrated Project Delivery (IPD)
In many instances, there are variants of these delivery systems. There is no one approach for all projects, so it is critical that the Owner’s team thoughtfully considers the various delivery methods and determines which one will serve their best interest.
Please note that we have not covered all of the pros and cons for each of these delivery methods, so we invite our readers to share their thoughts and ideas and we will update this blog as we gather comments.
Construction Manager-Agency Services: The CM acts as an agent/consultant for the Owner. This is typically used when the Owner does not have the resources to handle the management of the development. This delivery method will accommodate a wide range of project sizes. This method is also used when the Owner wants a consultative arrangement only and accepts the risk of holding all construction contracts.
The advantages of the Construction Manager-Agency Services are:
- The Owner has direct control of all contracts.
- This method allows for accelerated construction.
The disadvantages of the Construction Manager-Agency Services are:
- The Owner has direct control of all contracts, as well as the direct risk
- A CMa carries no risk, the Owner carries all risk.
Construction Manager at Risk: The Contractor holds all the sub-contracts for the construction project. This project method is used when the Owner needs budgeting, scheduling and constructability services in early phases. This method generally has some form of a negotiated basis in the selection. It is used when the Owner wants to shed the construction risk or when the Owner wants the CMaR to drive the scope and cost in the early stages of development. It may also be used when the Owner has an established relationship with the CMaR, for large, complex multi phased projects.
The advantages of using the Construction Manager at Risk project delivery method are:
- The contractual/financial risk for sub contractors is held by the CMaR.
- There is a single point of responsibility for construction.
- This project delivery method allows accelerated construction and start with early bid packages.
The disadvantages of using the Construction Manager at Risk project delivery method are:
- There is an opportunity for adversarial relationships to develop ( Designer vs. Contractor).
- The determination of the final price might be pushed out further into construction, since construction may start before a final Guaranteed Maximum Price is agreed upon. (This may be both a pro and con.)
Design/Bid/Build: A familiar process in the market typically used in remodel/expansion or new development where the Owner generally takes a very active role in design and the Owner requires a hard bid process.
The advantages of the Design/Bid/Build project delivery are:
- The Owner has substantial control.
- The Owner has the ability to select all team members.
- With a complete set of bid documents, there is a greater ability to competitively bid the project.
The disadvantages of the Design/Bid/Build project delivery are:
- The process is sequentially “linear” and thus may take longer.
- There is an even greater opportunity for adversarial relationships to develop.
- This project delivery requires all construction documents to be complete prior to bidding and start of construction.
Design/Build: A single point of responsibility and accountability for new “Greenfield” developments, and standardized building design, where a faster schedule/turnaround may be required or where the project might be a highly financial driven development.
The advantages of the Design/Build project delivery are:
- There is a single point of contact.
- The design and construction team have aligned incentives.
- This project delivery will allow for accelerated construction
- This is a cost driven model
The disadvantages of the Design/Build project delivery are:
- The “checks and balances” within the team may not be as effective.
- There is a perception that there may be a greater opportunity/incentive for the Design Build firm to “cut corners”, since it is a financially driven model.
- The Owner may not have the ability to select what they believe to be the best team members from various firms.
Integrated Project Delivery (IPD): This delivery system is where the Owner, Architect, and Contractor all enter into one contract and work as a collaborative team to complete the project. The team as a whole shares the risks and rewards in the overall budget, schedule and quality of the project. All parties involved in an IPD have an incentive to meet the target schedule and budget goals and in some cases an incentive approach is established to reinforce these goals.
The advantages of Integrated Project Delivery:
- There can be cost savings to the Owner due to incentive programs to meet or exceed the established budget and/or schedule.
- Transparency through the process.
- Reduced risk of design and construction conflict and defects due to a teamwork approach.
- Faster project completion time.
The disadvantages of Integrated Project Delivery:Owners, Architects, and Contractors might be unfamiliar with IPD approach and therefore reluctant to participate.
- Owners, Architects, and Contractors might be unfamiliar with IPD approach and therefore reluctant to participate.
- It might be difficult to get all of the parties involved to agree to the same contractual terms.
- The Owner might have difficulty securing financing for the project because lenders might not be familiar with the IPD approach.