By Mike Kroeger, estimator
In order to find the right contractor for your project, you need to keep a few things in mind. It all comes down to experience, capabilities, confidence, trust and best value. In my on-going series on choosing a contractor, I will be touching on each one of these items.
The first step you need to take in choosing a contractor is deciding on your project’s delivery method. While this can be a daunting task, remember that we are here to help you in any way we can. If there is an area you would benefit from hearing more about, please don’t hesitate to call our office or email our staff.
There are several options for project delivery: Design/Build, CM-at-Risk, CM-Agent and Design-Bid-Build (Select List or Open Bidding). Within each of these methods, different elements can weigh in the selection of a contractor. Below I have listed the parameters for each method and also some potential pros and cons:
Project Delivery Systems:
Design/Build
Parameters: Single contract for Design & Construction; Design/Builder selected based on Qualifications & Fee Proposal; Budget defined at initial programming stages and checked at each stage of design; Guaranteed Maximum Price (GMP) amount established at design completion; Design/Builder hires subcontractors directly and assumes risk for their contract amounts; Project savings may return to Owner or be shared.
Pros: Budget controlled throughout process; Best method to get highest quality for given budget; Shorter overall Duration; Cost of design errors or omissions born by the Design/Builder.
Cons: Single source input past selection; Trust & Confidence in Design-Builder is critical to moving project forward; Not always lowest cost option.
Construction Manager–at–Risk (CM-at-Risk)
Parameters: Separate contracts for Design & Construction; Designer & Contractor selected based on Qualifications & Fee Proposal; Budget defined at initial programming stages and checked at each stage of design; Guaranteed Maximum Price (GMP) amount established at design completion; CM-at-Risk hires subcontractors directly and assumes risk for their contract amounts; Project savings may return to Owner or be shared.
Pros: Budget controlled throughout process; Good method to get highest quality for given budget; Shorter overall duration.
Cons: Single source input past selection; Relationship between Designer and CM-at-Risk is critical to moving project forward; Not always lowest cost option; Cost of design errors or omissions born by the Owner.
Construction Manager as Agent (CM-Agent)
Parameters: Separate contract for Design; Owner acts as Contractor; CM-Agent selected based on Qualifications & Fee Proposal; Budget defined at initial programming stages and checked at each stage of design; Final Project Cost is direct responsibility of Owner; Owner hires subcontractors directly with CM-Agent as facilitator; Owner assumes risk for their contract amounts; Project savings may return to Owner.
Pros: CM-Agent fee typically lower than typical General Contractor’s fee; Budget controlled throughout process; Average method to get highest quality for given budget.
Cons: Owner assumes all risk for cost; Not always lowest cost option; Cost of design errors or omissions born by the Owner; Owner assumes all responsibility for schedule.
Design-Bid-Build (Select List)
Parameters: Separate contracts for Design & Construction; Select List of General Contractors (GC) selected to bid based on Qualifications; GC selected based on Bid provided after design completion; Budget defined at initial programming stages but final cost not known until bids are received; GC hires subs directly and assumes risk for their contract amounts; Project savings go to GC.
Pros: GC Qualified; Multiple Cost inputs; Lower initial cost.
Cons: Final cost unknown until after design is complete; Can require Value Engineering to get project to budget; Cost of design errors or omissions born by the Owner as Change Orders; Schedule can be longer if budget is not met; Additional design costs may be required; Contract is adversarial.
Design-Bid-Build (Open / Public Bidding)
Parameters: Separate contracts for Design & Construction; Any GC can bid; GC selected based on Low Bid provided after design completion; Budget may or may not be defined at initial programming stages but final cost not known until bids are received; GC hires subs directly and assumes risk for their contract amounts; Project savings go to GC.
Pros: Multiple Cost inputs; Lowest initial cost.
Cons: GC may be unqualified; Bonds may be required to secure their performance; Final cost unknown until after design is complete; Can require Value Engineering to get project to budget; Cost of design errors or omissions born by the Owner as Change Orders; Schedule can be longer if budget is not met; Additional design costs may be required; Contract is adversarial.
Hopefully this list has helped you in your understanding of the different project delivery methods available to you. In Part 2 we will begin discussing what elements are essential in selecting contractors under each method starting with Design/ Build.
Please feel free to leave your comments and questions. We enjoy hearing from you!
Posted on
Thu, March 17, 2011
by Christina Beaird
filed under