COMPARING PROJECT DELIVERY METHODS

From the project delivery perspective, competitively bid contracts are required to be design-bid-build (DBB) contracts. Negotiated contracts can be viewed as DBB contracts although it Figure 4.4 Traditional versus phased construction.

is not unusual for design and construction to proceed in parallel (i.e., simultaneously) in a given situation. In other words, it is possible to use ‘‘phased construction’’ when working with negotiated construction contracts. A constructor involved in construction of a hotel building on a cost reimbursable basis can begin construction of the site excavation and subbasements while the roof-top restaurant is still being designed. For both competitively bid and negotiated contracts, the owner holds separate contracts with the designer or design group and with the construction contractor.

In the Design Build (DB) format, the owner enters into contract with a single entity—

the design builder. The basis of selection of the DB firm or consortium is normally on the basis of considerations other than least cost. Fast-tracking or phased construction is typical of DB contracts.

In both forms of the CM format, the owner holds multiple contracts. In the case of the Agency Construction Management format, the owner signs a management contract with the CMa, but holds contracts directly with the design and construction firms involved.

Selection of the Agency CM firm is based on issues other than total construction cost (e.g., quality, schedule performance) Fast-track construction is usual when using this format.

The CM at-risk format requires separate contracts for the design team and the CM at-risk firm (similar to the DBB format). Low total construction cost is not the basis for selection of the construction manager at-risk. Fast-track construction is possible when using this format. The major types of project delivery methods are summarized in Table 4.1.

REVIEW QUESTIONS AND EXERCISES

4.1 Name and briefly describe each of the two basic types of competitively bid construction contracts. Which type would be most likely used for building the piers to support a large suspension bridge? Why?

4.2 If you were asked to perform an excavation contract competitively with limited boring data, what type of contract would you want and why?

4.3 Name three ways the construction contract can be terminated.

4.4 Name two types of negotiated contracts and describe the method of payment and incentive concept.

4.5 What is meant by unbalancing g a bid? What type of contract is implied? Give an example of how a bid is unbalanced.

4.6 Why is cost plus a percentage of cost type of contract not used to a great extent?

4.7 Under what circumstances is a cost-plus contract favor-able to both owner and contractor?

4.8 Valid contracts require an offer, an acceptance, and a consideration. Identify these elements in the following cases:

(a) The purchase of an item at the store (b) The hiring of labor

(c) A paid bus ride (d) A construction contract

(e) The position of staff member in a firm Table 4.1 Project Delivery Method (PDM)

Contract Type Single or Multiple Contracts to Owners Selection Criteria Phased Construction DBB Competitively Bid Multiple-Design Contract

& Construction Contract

Low Construction Cost No Negotiated Multiple Design & Construction Low Cost or Other Possible

DB DB Single Contract with DB Firm Usually not Low Cost—

Based on Performance

Yes

CM CMa Contracts held by Owner—CM, Design,

Construction, and Vendors

Based on Performance Expectations

Yes CM at Risk Same as CMa above except CM and

Construction Contracts are Combined

Based on Performance Expectations

Yes

Review Questions and Exercises 77

4.9 Suppose you are a small local building contractor respon-sible for the construction of the small gas station in Appendix H.

List the specialty items that you would subcontract.

4.10 Visit a local building site and ascertain the number and type of subcontracts that are involved. How many subcontracts do you think may be needed for a downtown high-rise building?

Why would there be more subcontractors in a building job as opposed to a heavy construction job?

4.11 From the point of view of the owner’s contract adminis-trator, each different type of contract places different demands on supervision. List the significant differences that would impact the complement (number) of field personnel required to monitor the contract.

4.12 Visit a local contractor and determine the proportion of contracts that are negotiated against those that are competitively bid awards. Is this percentage likely to change significantly with small building contractors? Is there a difference between build-ing contractors and heavy construction contractors?

4.13 The first progress payment received by the contractor is signified by the first vertical segment of the income curve in Figures 4.1, 4.2, and 4.3. Why is this first payment shown at the end of the second month instead of at the end of the first month?

4.14 Some people feel that lump-sum contracts can foster a more contentious work environment than any of the other types of contracts discussed in this chapter. What is the basis for this perception? Do you think that this perception is true?

4.15 An architect and a general contractor join forces and win a DB project contract. What risks could this arrangement have, from the owner’s perspective? What advantages could this ad-hoc enterprise have, again from the owner’s viewpoint?

4.16 Comment on the advantages of the DB approach to project delivery that the Design-Build Institute of America (DBIA) provides on its Website (www.dbia.org).

Chapter 5