In this video, Jim explains why payment and procurement methods are also independent of the project delivery method, and describes how a project owner can use many combinations of payment methods and procurement methods with the various project delivery methods.
- Just like the management methods discussed earlier, methods for procurement and payment of services are independent of the project delivery method. Professional services and construction services can each be selected based on qualifications, or on price, or on a combination of both. These services can be negotiated, or they can be bid out. Payment can be based on a fixed price, whether that's a lump sum or a fixed unit prices. It can be based on a guaranteed maximum price, or it can be based on actual costs plus a markup.
Like I said, these methods of procurement and payment are independent of the project delivery method. But you will see as we progress through this course that each method does tend to lend itself more to one method than another. An owner's experience and their confidence in the processes and the company's involved may also play a role in the decision. Selecting a company based on qualifications versus price might require an owner to take a more active management role in the different processes. Before we move on and see how all of this fits together to influence the project delivery method, I do want to mention job order contracting in this section.
I'm going to say that job order contracting, or JOC, is really just another method of procurement that is being used more and more by owners who know that they'll have multiple projects to complete during a given period of time. In this method, the owner will select a company or companies to provide professional and construction services, and they'll issue an open, multiproject contract. This allows the owner to just go through the selection process once, as opposed to doing it each time a new project comes online.
You'll tend to see job order contracting used in situations where an owner knows they'll have multiple projects, usually smaller in size, that need to be completed during a budget cycle. For example, I just worked with a client bidding for a job order contract to complete various upgrades and renovations to multiple transit station sites during that agency's upcoming fiscal year. Again, I want you to think of this as a procurement method and not a project delivery method. A job order contract can still be based on either qualifications or prices, payment can still be fixed price, guaranteed maximum price, or cost plus.
And I can still elect to use any of the four delivery methods that I outlined earlier. Now that we've discussed management methods, procurement methods, and payment methods, and we've outlined the basic types of project delivery methods, let's continue on and take a closer look at those delivery methods and how each one affects the design and construction process.
- 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