Q: Could you outline some considerations in selecting a construction delivery methodology?
A: “The most powerful force ever known on this planet is human cooperation – a force for construction and destruction.” – Jonathan Haidt
When thinking about undertaking a construction project—whether a new greenfield facility or the renovation of an outdated or compromised building—one of the major considerations a facilities engineer faces is which construction delivery methodology to deploy. While many factors will
influence the decision of a “best fit” methodology, this column will present a high level overview of the major options and key factors to consider. Underlying each is a sense of human cooperation.
While there are several flavors of each delivery method, in today’s world we can comfortably group these variations on a theme into four categories:
Design-Bid-Build (DBB): This is the standard delivery method used for generations in the United States. In short, the owner retains an architect to design a building, which is then bid out for construction and finally built. Each segment of the sequence is relatively discrete, with both the architect and the contractor having a direct contractual relationship with the owner.
Construction Management At Risk (CMAR): In this evolution, the owner contracts with a construction manager who acts as an owner’s representative/consultant during the design phase, but then assumes the risk for construction, basically as a general contractor. During construction, all subcontractors work for the construction manager, without direct contractual relations with the owner.
Design-Build (DB): According to the Design-Build Institute of America (DBIA), “Design-Build is a method of project delivery in which one entity—the design-build team—works under a single contract with the project owner to provide design and construction services. One entity, one contract, one unified flow of work from initial concept through completion—thereby re-integrating the roles of designer and constructor.”
Integrated Project Delivery (IPD): The American Institute of Architects defines IPD as “A project delivery method that contractually requires collaboration among the primary parties—owner, designer, and builder—so that the risk, responsibility and liability for project delivery are collectively managed and appropriately shared.” In the design and construction world, you will hear reference to “IPD lite” and “full bore IPD”—each refers to varying degrees of entwinement among the contractual parties. In IPD lite, for example, the parties may not have waived all claims but are undertaking the project in the spirit of collaboration. Full bore IPD is a slang expression that generally references an IPD contract encompassing all major parties which often include the major subcontractors, with each a signatory to the contract, waiving future claims.
What’s a facilities engineer to do? Behind which contract door does the dream of a well-run project, or even a project that delivers the holy grail of completion ahead of schedule and under budget, become reality?
Things to think about
No two construction projects are alike. When considering which project delivery method to use, it helps to first identify the key driving factors, critical paths, and desired outcomes attached to the undertaking. Is the move-in deadline inflexible? Is there an absolute budget ceiling? Renovation or new construction? Employees who will be working on-site during construction? Tolerance for disputes and change orders? The unique characteristics of each project will point the way to the best fit delivery method.
Following are the fundamental items to ascertain before selecting a delivery methodology:
Design and function: The first and constant consideration is carefully identifying the type of building required, how it must function, and key program components. However you structure your team, you need to be sure the design and engineering firm is experienced and competent in your building type. A residential architect, however beautiful his/her house portfolio may be, has no business designing a clean manufacturing facility!
Budget: In the end, the proposed building must fit the budget. No way around that one. Everything traces back to the dollar: financing, risk assessment, building size, and scope. When developing your initial budget, be sure to include the total budget cost, including items like legal fees, regulatory approvals, design and engineering fees, furniture, moving costs, etc. For a detailed checklist, see my earlier column on budgeting for total project costs: http://www.cemag.us/articles/2011/03/askfacilities-guy
Schedule: The project timeframe will have an outsize impact on selection of delivery methodology. If you have a short lead time and a drop dead move-in date, you need to think hard and realistically about how to best deliver the project. Bringing a highly collaborative, experienced full team to the table from the outset can dramatically shorten the project delivery timeline. Several methods can accomplish that objective. Recently, SMRT Architects and Engineers delivered a 640,000 square foot LEED Gold hospital ten months ahead of schedule as part of an Integrated Project Delivery team. Among other schedule-cutting strategies, the architects and engineers handed off drawings to the contractors for detail work, major components of the building were pre-fabricated onsite, and the co-located team from designers to major subcontractors were working together under one roof for the duration of the project.
Your own level of expertise: This is a time to be brutally truthful in your evaluation of your own experience, compared against the size and complexity of the proposed project. Building a greenfield clean manufacturing facility isn’t a yearly event in most people’s careers. It’s what you don’t know that can be a career killer. Getting experts on board early, whether through design-build, construction management, or IPD, can save you a universe of headaches and costs.
Risk tolerance and risk assignment: Project construction is a risky undertaking. As the owner, it’s important to evaluate your organization’s level of risk tolerance, while also ensuring that potential risks are appropriately allocated and assumed by responsible parties.
How to decide
Every delivery method has its pros and cons, with attributes that may make it more applicable to a specific set of circumstances. While this column only allows a brief overview, below are some primary considerations for the four major delivery methods outline above.
Design-Bid-Build (DBB): While DBB is the “grandfather” of construction delivery methods, DBB generally is not the go-to when time is of the essence, as design documents must be fully developed before the contractor can be procured and construction begins. This tends to drag out project schedules. DBB can also lead to increased change orders, and the risk of conflict can be high as the designer, engineer, and contractor will each likely have independent contracts with the owner, and collaboration between the contractor and designer during the design phase is typically non-existent. While DBB offers clear roles among the parties and because of its long term use is generally well understood, the assessment of realistic schedule and cost may be more limited during the design phase, while the lack of contractor input can, in some cases, lead to issues of constructability later. The contractor may also opt for low cost selection of subcontractors, with the potential to undermine quality and scope.
Construction Management (CM): The two most cited advantages to CM are the ability to have a contractor’s input during the design phase, and the opportunity to compress the construction schedule when compared to DBB. In the first, the CM can assist with issues like constructability, projected cost, and materials. In the latter, the CM can undertake construction before the design is fully executed, and even detail segments of the design. The most cited pitfall is the potential for disputes over assumptions made about what is included in the guaranteed maximum price, and the handling of subcontractor bids—in short, transparency. Other common disputes involve completeness of design, quality of construction, and of course budget. Many contracts under this method include a provision that the construction manager’s books, including subcontractor bids, be fully open and transparent.
Design Build (DB): Design Build has grown in popularity, primarily because its simplified contractual structure allows projects to be completed more quickly, with the contractor and designer/engineer acting as a team under one owner contract, with the designer/engineer typically contracting directly with the contractor. With a single party accountable for project execution, and the contractor and designer/engineer working together as a team through the entire project, costs can be reduced. Additionally, constructability is addressed from the outset which tends to reduce change orders. In fact, most change orders are initiated by the owner. This structure, however, may put more responsibility on the owner, who must be decisive and respond to requests for information or decision in a timely manner as DB moves at a faster pace.
Integrated Project Delivery (IPD): The newest project delivery contender, IPD is constructed on a multi-party agreement with the owner, CM and general contractor, architect, engineer, and many times the major subcontractors, knitting these possibly antagonistic parties into a single, collaborative team. The goals are to optimize quality and efficiency from initial design concept through occupancy, while reducing schedule, time, cost, and waste. On the plus side, the team functions as a single entity, totally aligned to the project goals. Issues that arise during project
execution tend be viewed as “everyone’s problem to solve” without playing the blame game. IPD takes the best components of DB and CM, and expands the concept into a new arena. However, because the concept is relatively new, contract negotiations and establishing an insurance program can be challenging. Because success is so heavily dependent upon true collaboration, an uncooperative party can have outsized detrimental effects on the project. The team should move quickly to remove non-players. For more, see my earlier column on IPD: http://www.cemag.
Project delivery methods will continue to evolve, mutating as new technologies and materials enable different approaches and the barriers between designer, contractor, and owner continue to dissolve. For today’s facilities professional, staying up-to-date on the possibilities can mean smoother projects, significant savings in dollars and schedule, and a superior facility.
Richard Bilodeau, PE, is director of engineering at SMRT Architects and Engineers (www.smrtinc.com). His 30 year career includes plant engineering positions in clean manufacturing. Richard has engineered, designed, operated, and supervised the construction of numerous controlled environments and labs for advanced technology, life sciences, industrial, healthcare, academic, and corporate clients. Dick can be reached at email@example.com or TheFacilitiesGuy@smrtinc.com
This article appeared in the November/December 2014 issue of Controlled Environments.