Join Jim Rogers for an in-depth discussion in this video Alternative project delivery methods, part of Construction Management Foundations.
- The construction industry has traditionally been configured to deliver projects using that Design-Bid-Build method of project delivery that we've talked about so far. And the steps that we've described so far in this course have really described the roles that each entity plays in the construction process under that type of project delivery scenario. Now this has historically cast the Architect in the role of the Master Builder who oversees the construction process and works with the Owner from inception to handoff.
Under that scenario the General Contractor didn't become engaged in the process until after the design was completed and they were asked to review the documents and submit a bid. Most often there would be several General Contractors who would submit bids to the Owner, and the Owner would commonly choose the lowest priced bid and hire that General Contractor to build the project. Now as the industry has evolved over the years, we really began to recognize some inherent problems with this project delivery method.
And we had the opportunity to discuss this with several industry professionals. - In an ideal world, the Contractor and the Design Team would be at the table on the same day, starting the project at the same time, and functioning as a well oiled team. So that you get some real-time budget feedback, every time you start to draw something. So there should be that feedback loop between the Architect and the Contracting Team, understanding schedule implications, scope implications, cost implications, of the way the design is evolving.
And that really, in our role on the pre-construction side, it's not to tell the Designer what to design, it's to tell them the impact of the design decisions that they're making, on the overall construction process, and the cost and schedule of the final outcome. So the industry really has evolved from a traditional, what we call a Hard Bid Environment, where the Contractor doesn't put a price to the documents until they're finished, to what we just talked about on the pre-construction side as a more integrated project delivery where we've got the Architect and the Engineers and the Contractor working together from the very beginning of the job.
Different types of projects benefit differently from that project, or from that process. If you have a project that's very prototypical, prototypical hotel, or a prototypical drugstore, or something that gets built almost the same way over and over and over again, the value of that pre-con process is not as high as it would be as if you've got a one-of-a-kind hundred million dollar, very sophisticated, laboratory building, right? And those are sort of the two ends of that spectrum.
There's everything in between. But we do see the highest value of that collaboration when we're looking at very unique projects. Projects that require a lot of innovation, something that's never been done before, something that's never been done before in that place, even. And that's where we see those big payoffs, in the Integrated Project Delivery process. - So over the course of my career, I've been able to watch a transition in project deliver methods. So for Public Projects we've gone from Design-Bid-Build to Integrated Project Delivery which includes CMARs, Construction Manager At Risk, and Design-Build.
So in the old method, it was a credibly adversarial. So the Architect would put together a set of drawings that become the contract, and then they would go out and the low bidder, regardless of their qualifications, would get the project. And some Contractors were great and, but other Contractors we're bad actors in that field. So there was actually Estimators that would do what's called The Gray Areas. So there's no such thing as a perfect set of drawings.
It just doesn't exist. Owners can't afford 'em, and it wouldn't make sense to put that much effort into them. So the people would bid the gray areas and know that after the contractors let, after they got the contract, they would be able to get Change Orders to make up the difference and get the project built the way it was intended, and that the way they could tell from the drawings that it was intended. So under the Integrated Project Delivery method, the Contractor is at the table with the Architects, with the Engineers, with the Owner, from the very beginning.
And they have a stake at it. They're selected just like other professionals, through qualifications based, it's not based on fees any longer, and they're there to help the team and they provide a number of things. Cost Estimating, Quality Control on the documents, Constructability, and so they're another expert, another voice, at the design table with us. And over the 15 years that we've been using that process for Public Projects here, it's been amazing to watch the quality and the professionalism of the Contractors rise to take advantage, and honestly the projects are better, the outcomes for the Owners are better, the value that they get for their money is better.
It's been a, it's been really fantastic to watch. And it was something that the Architects honestly fought at the very beginning. They were afraid they were going to lose control. And what they found is, is that they have another partner at the table. And they're able to deliver their services more efficiently and at a higher quality. - So as we heard, a common issue under Design-Bid-Build is finding out that the project's going to cost way more than the Owner's budgeted, or it's going to take longer to build than they expected.
And as materials and methods have become more complex and structures have become more complicated and diverse, we've seen a rise in these issues. Now why is this? Again, quite simply, the Architect is just already being tasked with keeping up with more and more regulatory issues. And they're faced with Owners that are demanding more sophisticated structures. They just can't be expected to keep up with the ever-changing costs and methods of construction. This is where the Construction Manager is being pulled in to lend their expertise on things like Cost and Constructability, early on in the design phase.
So in these scenarios, which I'm going to refer to as Integrated Project Delivery Methods, the General Contractor's brought into the project at the same time as the Design Team, and they're paid to work wit the Design Team to help develop a Project Plan that's buildable and'll meet the budgeting constraints. In these methods of project delivery a Construction Manager who works for the General Contractor, gets tasked as that Master Builder. And they'll work side-by-side with the Design Team to provide input on things like materials and methods.
This really results in the ability to identify and quickly resolve issues early on in the Design Phase, instead of dealing with them during the Building Phase. And one of our industry experts gave us a great example of how this benefited one of his projects. - One of the big changes in the way Owners go out and get business from General Contractors. And the biggest shift has been gettin' away from that Design-Bid-Build mentality where you go out and you do Street Bids and it's really just about the cost.
Really, Owners got sophisticated, including the Government, believe it or not, and they realized that they really weren't getting value for what thought they were saving, when it came to that money. They were ending up with inferior projects. They were ending up with projects that they found out, after they put a years worth of effort into it, couldn't be built for the money that they had, and then they had to start all over again. They were finding that it just wasn't working and so something hada be done.
And so really the Construction Manager at Risk kind of came into the forefold. Started off with a lot of private companies and then moved into different Government Agencies. And really became the model of how to, how to get stuff priced, and built, in the quickest amount of time, with the most amount of partnership between all the entities. So you ended up with not necessarily the cheapest project from a dollar standpoint, but definitely the highest value project.
And that's really what everybody wants. So the business school's a great example. We started off with that project, coming in really about two weeks after the Architect had been chosen. And so in a real true, CM at Risk or a Integrated Project Delivery model, the Architect and the General Contractor and the Owner, are really partners. And they really start at the very beginning. And so we were able to find out very early on on that project, that the Skin that they wanted for the project, that the architect thought was great, and we all thought was great too, it was gorgeous, was going to end up costing almost 30% of the budget.
And that doesn't work. You can't have just the Skin on your building be a third of what the overall building costs. And so we found that out very, very early on, were able to work with the Architect, and then also with some Sub-Contractors, to come up with alternatives that were affordable and still provided the look and the feel that the Architect wanted. So we went from this extremely expensive $130 a square foot cladding, to a brick, a very interesting brick facade that has bricks that stick out and give a three dimensional flavor and shadowing and all this other great stuff, for $15 a square foot for the actual cladding itself.
Very, very affordable. Fit right in. I think it went, Skin went down to about 9% of the project. Which was really kind of where it should be. Those numbers probably don't work if people do 'em. (laughs) But it's okay. And then that's just a great example of what happens. Design-Bid-Build, they would have kept this Skin, they would have gone out on the street after eight months of designing and all the prices would have come back in, there'd be like: "We can't do it!" So we got to start all over again. Well this was all settled in a week and a half.
And the process kept on going and the design was on time, therefore the construction could start on time. - This is a great example of how by inserting the Builder and their Construction Managers into the process during that Design Phase, the Owner can save time and money by allowing the whole team to communicate early so that the project is in the anticipated budget range and is buildable in the anticipated time frame. One thing to keep in mind though, is that the Owner does expect the General Contractor to identify these issues during design, so that when a final cost is agreed upon, it doesn't change during construction.
This type of project delivery does place an additional burden on the General Contractor, as they really are expected to be experts. And this is where the term Construction Manager at Risk or MC at Risk, or CMAR, comes from, when describing this type of delivery method. But ideally this does result in a much smoother construction process as all of the construction issues can be worked out during the Design Phase. Now this is one of the trends that's really driving demand for knowledgeable Construction Managers.
Let's continue though and take a look at how some other changes, like changes in technology, are also contributing to that demand.
Whether you're a construction industry veteran looking to switch roles or a brand new construction manager trying to get your bearings, this course provides you with meaningful insights into this vital, evolving industry and your role in it. Instructor Jim Rogers explains how integrated project delivery methods work, how technology is shaking up old processes, and how lean productivity methods are being used at construction sites. Throughout the course, you'll get industry knowledge from Jim, as well as other experienced construction professionals.
- Modern construction industry overview
- The construction team
- Reviewing the many roles of the construction manager
- A day in the life of a construction manager
- Understanding how the industry is organized
- Working with alternative project delivery methods
- Understanding the role of technology in construction