THOUGHT LEADERSHIP
Which project delivery method is right for you?
A project delivery method (PDM) shapes how a capital project is organized, financed, procured, and managed. There’s no universal “best” PDM; instead, the goal is to select the one that best fits the project.
Choosing the right PDM
To begin, identify the potential PDMs available for your project by evaluating both external and internal constraints.
- External Constraints: These might include funding source requirements or, for public institutions, state procurement laws that may require or exclude certain PDMs.
- Internal Constraints: Consider your institution’s familiarity with certain methods, the capacity of staff to oversee contracts or collaborate with teams, and alignment with governance structures and approval processes.
By understanding these factors, you can narrow down the options and, from there, determine the best available path forward to meet your project’s goals and objectives. Below are brief descriptions of a few common PDMs and their implications for owners.
1. Design-bid-build (DBB)
A traditional method where the owner contracts separately with a designer to produce construction documents and later with a contractor to build the project based on competitive bidding.
- Cost/Speed: The sequential design-bid-build process results in a slower timeline than some alternative methods, but offers strong cost control and accountability through competitive bidding. However, bids must be based upon a well-defined scope of work in order to achieve this benefit— if the scope is not thoroughly defined and vetted before going out for bid, a low initial cost can easily be eroded by change orders later in the project.
- Scope Control/Flexibility: Owners have significant input during design, but flexibility for changes diminishes once construction begins.
- Risk Allocation: The owner holds separate contracts with the designer and builder, assuming risks related to coordination, design errors, and scope changes.
2. Design-build (DB)
The owner contracts with a single entity responsible for both design and construction. There are two variations of Design-Build. In Traditional DB, the owner provides a well-defined program and selects a design-builder based on a conceptual design and budget. Progressive DB is a two-step contracting process where the design-builder is first selected based on qualifications (step 1), and the owner collaborates on early design before finalizing cost and scope (step 2). In both cases, the price is typically established as a Guaranteed Maximum Price (GMP) based upon the scope as defined in the design documents at the time the GMP is established.
- Cost/Speed: DB is among the fastest delivery methods due to the overlap of design and construction phases. Owners must be prepared to provide timely design input and decisions to maintain these schedule advantages.
- Scope Control/Flexibility: Flexibility decreases as construction progresses due to reliance on early design decisions.
- Risk Allocation: The owner holds a single contract, reducing exposure to disputes between design and construction teams. But without the “checks and balances” of a separate design and construction team, the owner must be a more active participant and communicator to ensure that the DB team does not make significant decisions on their own that are out of alignment with the project’s goals or objectives.
3. Construction Manager at Risk (CM@R)
The owner contracts separately with a designer and a Construction Manager (CM). The CM provides preconstruction services during design and later delivers construction under a guaranteed maximum price (GMP).
- Cost/speed: Balances cost control (via GMP) and schedule efficiency (via the potential for overlapping design and preconstruction).
- Scope control/flexibility: Encourages collaboration during design, allowing scope refinement before the GMP is finalized.
- Risk allocation: The owner retains design risks but transfers construction-related risks to the CM.
4. Public-private partnership (P3)
A customized partnership where a private entity may not only design and build a project, but also finance, operate, and/or maintain it.
- Cost/speed: P3s often provide financial advantages, such as off-balance-sheet financing and streamlined delivery. They may also avoid triggering prevailing wage requirements in some cases.
- Scope control/flexibility: Private partners typically retain significant control over project decisions, limiting flexibility for the institution.
- Risk allocation: Financial and operational risks are often transferred to the private partner, though structures vary.
(For more insights on P3s, B&D’s Higher Ed P3 Resource Center offers articles, case studies, and other resources.)
Finding the best fit
Selecting the right PDM can help your institution achieve its project goals while navigating constraints and risks. At B&D, we bring extensive experience in helping universities evaluate delivery methods and tailor strategies to maximize project outcomes. Let us help you find the PDM that aligns with your institution’s needs and priorities.
