In this article, we will go over the different project delivery methods:
CONSTRUCTION MANAGEMENT AT RISK (CMR). It is also known as CM/GC.
Construction Management at Risk (construction manager as a team member) is a delivery method which necessitates a commitment by the construction manager to deliver the project within a guaranteed maximum price (GMP) which is based on the construction documents and specifications at the time of the GMP, including any reasonably inferred items or tasks. In the most basic terms, a CMR acts as an adviser to the owner, providing consultation and other professional services. Most often than not, the CMR also is involved in providing actual construction services depending on the available bidders and the their expertise. The risk comes into play partly with the CMR’s responsibility to work in the best interests of the owner, which includes managing and controlling construction costs. If costs go over the GMP then the CMR is financially responsible.
As a general rule of thumb, the CMR will offer the owner a GMP preceding the project bid. Included in the GMP is a contingency line that covers bid overages, reasonably inferred items and other project related items that may arise during the construction phase. By giving the owner the GMP prior to the bid, the CMR assumes the risk of bids coming in higher, for he/she is bound by contract to deliver the project based on the plan’s specifications and any additional allowances as defined in the GMP.
Design-Bid-Build (traditional low-bidder model) delivery method leaves much of the decision making up to the owner. The owner first selects a design firm to create contract documents that include project drawings and job specifications. The complexity of the project will determine what the design drawings will consist of, but usually are made up of civil, architectural, structural, mechanical, electrical, plumbing, and telecommunications.
Once the design drawings are completed, the job can either be advertised or delivered to companies to place their bid. After the general contractors painstakingly go through each document and calculate all of the costs involved, they will submit their bid to the owner. Most of the time there is a specific due date forth which these bids must be submitted. After the bids are reviewed by the owner, in most cases they will choose the lowest bid. Considering the general contractor has all the necessary licensing, insurance, and bond coverage, the job will be accepted, a contract signed, and the project should begin. Due to the fact that the design is considered a contract document, any and all changes (change orders) become the responsibility of the owner.
Design and Build (the turn-key method) is a delivery system that focuses on a single point of responsibility being solely placed on one firm. This is to say that they are entirely responsible for the design and construction of a project, from beginning to end. The DB system, like the CMR delivery system, is meant to minimize risk for the owner, while decreasing the delivery time by combining the design element with the the construction phase. Somewhat like the CMR system, the contractor takes full responsibility for the project.
Multi Prime is like the little brother of Design-Bid-Build but with some key differences, one being that instead of dealing with one contractor and/or builder, the owner contracts directly with separate specialized contractors for designated and specific aspects of a project. The MP delivery method involves owner, designer, and multiple prime prime and/or specialty contractors. The second big difference between MP and DBB is the owner has full control over the entire process. Note: Some states require this method be incorporated for public sector projects. As of the date this article was written, California still uses the lowest bidder wins method (source California Public Works Statutes, Chapter 9.2.2(b)).