Project Delivery Methods

The construction process—from conception to completion— is called the project delivery method. It’s duration and complexity are related to the project size. This overview describes and compares the three project delivery methods:

• Design-Bid-Build (most common)
• Design-Build (basic counterpart)
• Owner Agent (most effective)

Design-Bid-Build

The Design-Bid-Build method, is the most common delivery method.

It starts with the owner having a need. They hire a designer to design it based on needs, wants and wishes.

The design process usually runs smoothly and owners trust the Design Team is doing a good job creating complete, error free construction documents.

When done, the designer sends the plans out to contractors for bid, then compares, negotiates and helps by making a selection recommendation.

Each team has shared and separate team objectives that can help create balance between the teams (Team Objectives diagram).

The owner makes final item selections, often deferring to the designer’s recommendations and contracts directly with the contractor—with the designer managing the contract work (Stage 1 diagram).

The bidding and negotiation process will reveal some design errors, omissions, or discrepancies, as contractors ask questions. The more problems exist with the drawings, the greater the difference between bids. Construction reveals the rest as the winning contractor really gets into the details.

During construction, the designer usually provides construction administration services including contract management and construction monitoring.

Often, designers are contractually responsible for reviewing the bids and recommending the lowest bidder during the bidding and negotiation process, because they created the design.

Owners sign and agreement with the contractor who provides project management, and subcontractors. Occasionally, communicating with the owner about the variables affecting the contract time or amount.

Communication about design details go through the designer. Initially, discussions between the designer and contractor are common and direct, since they’ll have questions about details because of differences between the plans and hte site conditions. The process works well as long as there isn’t conflict between the architect and the contractor.

The method relies on the designer’s ability to self-manage their work, and their integrity in doing that.

If the Design Team spends too much time on the imaginative part of design, they won’t leave themselves enough time to properly complete the practical parts such as detailing, structural systems design, and construction administration.

This delivery method provides no checks and balances on the time management of the Design Team.

The resulting conflict of interest created by the Design Team’s self-management is difficult for owners to manage without an deep understanding of construction management or independent, objective expertise like and owner-agent.

The more the contractor’s questions relate to design problems, the more an architect has failed somewhere.

At some point, the contractor starts talking with the owner (Stage 2 diagram). This interaction may occur as early as contract signing, because the contract for construction is between owner and contractor with the architect appointed as the owner representative.

If there are design problems seemingly connected to architectural errors, omissions or deficiencies, the architect will want to accuse the contractor for sub-par work in order to avoid possible design and construction liabilities.

This communication pattern chips away at the working relationship between the architect and contractor, and communication moves toward contractor and owner and away from contractor and architect (Stage 3 diagram).

When communication breaks down between architect and contractor, that low-bid contractor, wanting to maximize profit, will sometimes blow things out of proportion to take full monetary advantage of any project changes.

This occurs because design and budget correlate. The contractor invariably starts communicating with the owner more if changes in the design arise.

At a certain point, there is a shift in the communication balance from being mostly between the Contractor Team and the Design Team, to mostly happening between the Contracting Team and the Owner Team (Stage 4 diagram).

Design-Build

The Design-Build delivery method is the basic counterpart to, and builds upon, the Design-Bid-Build Method.

Most people ‘discover’ the Design-Build Delivery method after being disappointed with Design-Bid-Build.

Although rarely chosen first, this method is popular because it appears to resolve responsibility and communication conflicts that can exist in the Design-Bid-Build method.

The Design-Build method combines the Design and Construction Teams in one team. The owner deals, negotiates, and contracts with the Design-Builder (Design-Build Team Objectives diagram) before the creation of a single construction document.

A design-builder can take the form of a single company, or a partnership formed by completely separate companies.

Sometimes an architect and contractor work together in the form of a joint venture partnership, and sometimes the design-builder is a single company.

The design-builder performs and self-monitors all of the responsibilities of both design and construction (Stage 1).

The design-builder does the Design Team’s job planning, detailing, and monitoring, as well as the Contracting Team’s job bidding and construction management.

While it’s easier to manage the separate teams, it also means managing a single potentially opposing team.

The main problem with this method is the owner wants to set a cost limit and the design builder wants to control their profit.

The design-builder can control  materials types, and the vendors they use.

The owner loses the competitive market advantage to find the best price, and have to rely on the design-builder to self-manage and monitor progress.

Like with the Design-Bid-Build Method, there are no checks and balances in this method, so the price the design-builder negotiates may not be the best or lowest price the owner could have negotiated.

In exchange for a guaranteed price, the owner gives up some control over construction and materials. In this way the owner can ‘ensure’ a price ceiling, assuming there aren’t new requirements during construction.

As long as plans differ from the site conditions and people are fallible, there will always be conflicts arising between design and construction (Stage 2).

Combining the Design and Construction Teams under one contract attempts to eliminate the natural conflict that arises when the teams are separate.

Both teams become liable for each other’s performance. However, it can also give them incentive to hide issues from the owner in order to defend each other.

Since owners generally contract with the design-builder for a Guaranteed Maximum Price (GMP), any items that cost more than expected, can often negatively affect construction quality (Stage 3).

During the design-build process, it is common for there to be many internal design and coordination meetings where the owner is not present. As a result, the owner may not know about the inter-team conflicts until it adversely affects quality.

Owner Agent

There is a third, less commonly known delivery method called the Owner Agent Delivery Method that can do what the other two methods cannot do. It can provide the owner with the best-lowest price based upon a concrete scope of work while requiring a clear outline of task ownership from the Design and Contracting Teams.

In this method, the owner hires a dedicated and independent construction professional with a solid understanding of project management systems to act as their consultant and agent. This injects an independent and objective construction professional in the scenario to avoid, negotiate, and mitigate the conflicts that naturally arise between the Design Team and Contractor Team.

The owner representative works with the owner to develop a complete project scope of work, budget, and schedule, while using their expertise in partnership with the owner, to manage both the designer and the contractor(s) (Stage 1).

The owner representative uses specialized tools to develop or prepare the project parameters including time, cost, and detailed descriptions.

The owner representative’s purpose is to safeguard the interests of the owner by maintaining project control—assuring the owner that the completed project will reflect their expectations.

When the owner approves the project, the owner representative (also known as the owner’s rep, or O.R.) invites, interviews, and requests proposals from multiple designers. Once the O.R. receives the proposals, they interview the architects in a fair, impartial and objective way to ensure selection of the best Design Team. The O.R. collects and answers questions, reviews and evaluates the proposals, provides recommendations, prepares the design contract and guides and manages the process based on the approved project design package (Stage 2).

When the approved design is complete, the O.R. performs a similar selection process as with the Design Team in order to select the Construction Team. The O.R. will direct and conduct a contractor search and create a list of pre-approved contractors, assemble the bid package, manage the bid process, and work with the winning contractor to execute the project based on the owner’s direction as detailed in the construction documents (Stage 3)

Following this delivery method, along with the Construction Conductor project management system, allows the owner complete control over the design process ensuring control of the construction process. In this way, the Owner Agent Delivery Method ensures owners can maximize the available money while minimizing the project costs.

TIP: This system is the most cost effective way to incorporate construction management expertise into your residential and light commercial project.

Comparing Delivery Methods

The diagrams in the preceding Design-Bid-Build, Design-Build, and Owner

Agent sections show the differences between the various project delivery methods.

The following matrix relates each delivery method to their level of cost and quality control. At the top of the matrix is “quality” and on the left is “control.”

Notice the following:

The Design-Bid-Build method provides greater quality control and less cost control.

The Design-Build method provides greater cost control and less quality control.

The Owner Agent method provides the greatest cost control and quality control.