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The ABC's of Project Delivery

The ABC’s of Project Delivery.

 We have been asked on a number of occasions, “What’s the best way to build our project?” The answer, however, is not straight forward, but clients’ expect a definitive response. So, we answer with a series of questions. Based on the client’s answers, we can recommend one or two project delivery approaches that fit the client’s experience, funding, regulatory constraints and risk profile. Just be mindful, no client and no project are identical to prior projects. One size does not fit all clients and projects.

 The types of Project Delivery Approaches include:

 o  Traditional Design, Bid/Award, Construct.         The client retains designers and a contractor under independent contracts. It requires a set of fully coordinated and completed construction documents, which are bid and awarded to the lowest responsive bidder. All development activities are linear, normally resulting in the longest development schedule. Usually a lump sum general contract is used.

o  Construction Management.      The client retains designers and contractor by independent contracts. It allows early involvement of construction professionals in the project team to develop construction budgets, schedules, logistics and constructability while the design is in progress. Accordingly, development activities can be fast tracked, normally resulting is a shorter development schedule. The contract form can be a “CM At-risk, Guaranteed Maximum Price (GMP)” or a “CM Agency” where the client bears the full construction risk.

o  Design-Build.    The client retains one entity to design and build the project - the Design-Builder. It combines the risks of design and construction and allocates them to the Design-Builder. Critical to the success of the project is the client’s ability to be an active participant, providing the Design-Builder with timely information, direction and decisions. The client must be willing to accept that the designer works for the contractor. Trust in the project team is imperative. The client should consider retaining an owner’s representative with Design-Build experience, if the client does not have the expertise in-house. The Design-Build approach affords the client the ability to expedite the development schedule. The DBIA has developed contracts tailored for Design-Build projects.

o  Integrated Project Delivery (IPD).          IPD is not for all clients. IPD is premised on a three-party contractual relationship requiring the client to share the risk and rewards with the designers and the contractors. The project team, - client, designers, contractors - is assembled at the beginning of the development process and co-locates to facilitate real time communication/coordination during the design process. While there are opportunities to materially shorten the design and construction schedules, resulting in real cost savings, the cost of co-location can be substantial. Larger projects can absorb theses costs with a net benefit, especially when the client can commence its revenue generating operations earlier that other delivery approaches. Contracts, bonds and insurance are considerations which require special treatment to reflect the relationship of the parties.

 With the above in mind, it’s clear that one approach will not suit all clients. The client’s organization, its appetite for risk, in-house development experience and expertise, regulatory approvals and constraints associated with its business, lender requirements, ability to finance the preconstruction costs, the size and complexity of the project, the client’s willingness, if applicable, to share trade secrets and confidential information associated with and necessary to design the project, and other client specific matters must be considered. 

If you have questions, please do not hesitate to contact us – MCS can ask you the right questions and give you the best answers.

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