Jim describes the goal of the design-bid-build method of construction project delivery as getting the best price to construct a project according to a set of completed construction documents. In contrast, the goal of some alternative project delivery methods (APDMs) is to achieve the best value for the project owner.
- When choosing a project delivery method, a project owner really needs to consider their goals and their desired outcomes. They need to factor in things, like how involved they want to be in the process and how much control they want over that final design. They also need to weigh cost versus scope. Design-Bid-Build was always meant to take a completed set of drawings, put it out to bid, and get the lowest price. I've said several times that this is still the predominant delivery method in construction, but that doesn't mean that it's always the best method, or that it always works.
Success really relies on complete, well-drafted plans and specifications. When the contractor submits a price based on plans and specs, and then finds out, later, that those plans and specs don't work, it sets up a conflict. The contractor may end up submitting a change order request based on faulty or lacking design documents, and that is not always going to sit well with the designer. So, the owner gets to play referee. I had the opportunity to ask an architect about his take on this particular limitation of Design-Bid-Build.
- So, in the old method, it was incredibly 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, but other contractors were 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 them 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. - Now, remember, on many projects, when the owner needs to be involved in the design process, and they have the time to properly play out the sequential process of Design-Bid-Build, and the documents are well-drafted, this delivery method works fine.
On other types of projects, like the example I used earlier of a spec office building where the owner doesn't need a lot of detailed control over the design, and they want to reduce the overall design and construction timeline, the Design-Build method might be a better fit, and it can really work well to eliminate those requests for changes and the battles that can ensue in Design-Bid-Build. Another consideration is that the goal of Design-Bid-Build is often described as getting the project built at the lowest price.
Used correctly, the goal of the Construction Manager At Risk method can be described as getting the owner the best value for their money. On a project that has budgeted money set aside, the CM At Risk method can really help an owner achieve the best value for their money by forcing the owner, the designer, and the contractor to work together, from start to finish, to decide how to best achieve the owner's goals and where in the project to spend their money. If you look back at the example we heard in one of our interview clips earlier in the course, the contractor was able to give the owner an almost immediate estimate on the cost of a decision made by the architect.
The three parties were then able to sit down immediately and really talk through the owner's actual goals to determine that there were less costly options that still met their goal. This money, this savings was then able to be used in other elements of the project. This same sort of collaboration can also help save money when all three parties are on board at the same time by allowing the parties to agree in advance to specify specific materials and products in the design rather than spending time developing performance criteria in the specifications and then going through products of middles later to see if they comply.
And then, of course, there's true IPD, where all of this type of collaboration and savings is contractually mandated to ensure that all the parties are working towards the good of the overall project, and not just acting in their company's best interest. Owners have a broad choice these days when it comes to selecting a project delivery method, and the construction industry needs to recognize that it's not always going to be Design-Bid-Build. This brings me to one of my often-used statements, which is "this means there are going to be changes", and, again, the construction industry, in general, has not been one to embrace change very well.
Stick with me and let's take a look at what some of those changes might be.
- Payment and procurement methods
- The design-bid-build method
- The design-build method
- Construction manager at risk (CMAR)
- Integrated project delivery (IPD)
- Selecting a project delivery method
- Procurement laws
- Delivering the best value to the owner
- Qualifications-based selection
- Changes in the way you are paid