Construction Project Delivery Methods: A Historical Perspective

This article provides a historical perspective on construction project delivery methods, from the Master Builder approach to the rise of specialized design and construction expertise. It discusses the advantages and disadvantages of Design-Bid-Build, Competitive Sealed Proposal, Construction Management - Agent, Construction Management - At Risk, and Design-Build. The article also covers current and future trends in project delivery methods.

Construction Project
Delivery Methods

How we got here
(History)

The Master Builder of ancient
times was not an architect,
engineer, or general contractor,
but was instead a combination
of all three.

The Master Builder approach held
sway from the Middle Ages through the
early years of the Renaissance.
However, as the Renaissance
progressed, the functions of design and
construction began to diverge,
becoming separate tasks.

The Industrial Revolution encouraged
further separation between the design
and construction functions. Specialized
design and construction expertise was
needed to address unique production
and facility needs.

By the end of the nineteenth
century, the notion of the Master
Builder was long gone.

Most people would agree that cheaper
is not always better. Yet, during the
mid-twentieth century, it became law in
virtually every state in the United States
that construction contracts would be
awarded on the basis of lowest price, at
least in the public sector.

As price became the driving factor
for contractor selection, the
construction industry responded by
working hard to eliminate every
extra service or product that might
add an extra dollar to the project.

This “you only get what you pay for”
attitude set the stage for a progressive
deterioration of the design-contractor-
owner relationship. Change orders,
claims, and litigation became the
standard methodology for managing
risks and protecting profits.

“The way we have always done
things” is getting in the way of
“getting things done.”

Project Delivery Historical Perspective
1795
B.C.
Code of
Hammurabi
1456141240
B.C.
Brunelleschi –
quintessential
design-builder
Alberti – First
modern day
architect
1960s 1980s
Private Sector
Design-Build
Miller Act
Separation
Design &
Construction
Establishment
of DBIA &
MOP
1993
Passage of
Federal
Acquisition
Reform Act
1996
CURT
1st WP Calling
for Wholesale
Change
AIA-CC
IPD Model
DBIA
Designation
Program
Vitruvius – 1st
Doc. Of
Design &
Construction
Rise of
Professional
Societies
1850s
Public Sector
Design-Build
1935 2002 2004 2006 2011
Master Builder Separation Integration
Renaissance Industrial
Revolution Information Age
Brooks
Act
1972

Suddenly, a heated exchange took place between
the king and the moat contractor.

Project Delivery Methods

• Design-Bid-Build
• Competitive Sealed Proposal
• Construction Management – Agent
• Construction Management - At Risk
• Design-Build
CONSTRUCTION
CONTRACTING METHODS

DESIGN – BID - BUILD
What is it?
A system of contracting by which an architect is
retained, permit plans are drawn, bids received,
and a construction contract is awarded, usually
to the lowest and best bid.

Owner
Architect General Contractor
Sub ContractorsConsultants
MEP
Structural
Civil
DESIGN – BID - BUILD

COMPETITIVE SEALED
PROPOSAL
What is it?
A system of contracting by which an architect is
retained, permit plans are drawn, proposals
(with qualifications) are received and a
construction contract is awarded to the
contractor who has the combination of the best
price AND the best qualifications. Sometimes
called “Best Value” selection.

COMPETITIVE SEALED
PROPOSAL
Owner
Architect General Contractor
Sub ContractorsConsultants
MEP
Structural
Civil

CONSTRUCTION MANAGER –
AGENT
What is it?
A system of contracting by which a
Construction Manager serves as the Owner’s
agent to provide management, administrative
and technical services. All Contractors and
Subcontractors legally contract directly with the
Owner and are managed by the Construction
Manager-Agent.

CONSTRUCTION MANAGER –
AGENT
Owner
Construction
Manager
Architect
Sub Contractors Are
Direct With Owner

CONSTRUCTION MANAGER –
AT RISK
What is it?
A system of contracting by which the
Construction Manager provides technical
services as the design progresses and then acts
as a cost-plus general contractor assuming
responsibility for the construction of the project,
including the work of the sub-contractors.
Sometimes also known as CM/GC.

CONSTRUCTION MANAGER –
AT RISK
Owner
Construction Manager -
General Contractor
Architect
Consultants
Sub Contractors

DESIGN - BUILD
What is it?
A system of contracting by which one entity
performs architecture, engineering and
construction services under a single contract
with the owner.

DESIGN - BUILD
Owner
Design–Build
Team
Architect Contractor

Project Delivery Method Market Share for
Non-Residential Construction

Advantages & Disadvantages

DESIGN-BID-BUILD
ADVANTAGES
• Familiar delivery method
• Owner employs design team directly – has control (also
responsibility) over the design.
• The design team is impartial and looks out for the
interests of the owner.
• The design team prepares documents on which all
general contractors place bids. The bids are based on
complete documents.
• Provides perceived fairness to potential bidders.

DESIGN-BID-BUILD
DISADVANTAGES
• Failure of the design team to be current with construction costs
could cause project delays if the construction documents must be
redone to reduce costs.
• Redesign can be expensive and time-consuming if revisions are
required to reduce costs.
• Development of a “cheaper is better” mentality amongst the general
contractors bidding the project so there is the tendency to seek out
the lowest cost subcontractors. This can result in increased risk and
compromise the quality of construction.
• As the general contractor is brought to the team after design is
complete, there is little (or late) opportunity for input on design or
construction options as decisions are being made.

Traditional Bidding Scenario

Traditional Design-Bid-Build
What’s wrong with this picture?
• Owner and Architect work together to develop a
design for the facility – often work for months
• Architect develops detailed plans and
specifications

Traditional Design-Bid-Build
What’s wrong with this picture?
• Contractors bid the job (usually in a 2- to 3-week period)
• Bids are often put together in the last 2 hours, even
down to minutes
• Contractors tempted to take last minute subcontractor
bids

Traditional Design-Bid-Build
What’s wrong with this picture?
• Low bidder gets the job!
• Often low bidder is “the one who made the biggest
mistake” or used a low-ball subcontractor bid.
• Contractor in a position to make up money.
Options:
- Lower quality work
- Lower quality materials
- Get subcontractors to lower their prices more
- Find error and omissions on plans
- Change orders

What’s wrong with this picture?
What do you mean you left out the foundation in our bid?

Traditional Design-Bid-Build
What’s wrong with this picture?
• Architect hired to “police” the contractor to endeavor to
ensure that construction is done per plans and specs

COMPETITIVE SEALED PROPOSAL
ADVANTAGES / DISADVANTAGES
• Similar advantages and disadvantages as Design-Bid-Build
• One main advantage over Design-Bid-Build:
Qualifications together with best price form the basis for
contractor selection.

CONSTRUCTION MANAGER -
AGENT
ADVANTAGES
• CM-Agent is usually hired early in the project, thus
providing cost and scheduling input as design decisions
are made.
• Owner receives all subcontractor bids and has control of
selection of the construction team.
• Possibly Saves money – omits mark-up on
subcontractors.
• The CM-Agent offers impartial advice throughout the
project since he is neither the designer nor the general
contractor.

CONSTRUCTION MANAGER-
AGENT
DISADVANTAGES
• All subcontractors technically work directly for the
Owner. (The C.M. just coordinates their work on behalf of
the Owner.) This increases risk (and paperwork) for the
Owner.
• There is no single bond on the project. Therefore, for a
public entity, all major subcontractors have to provide a
bond for their own work.
• Upon project completion there is no single responsible
contractor for warranty items. Owner has to go to each
subcontractor for any warranty work.

CONSTRUCTION MANAGER -
AT RISK
ADVANTAGES
• CM-At-Risk is usually hired early in the project providing
cost and scheduling input during the design phase.
• Owner sees all subcontractor bids and has input on
selection of the construction team. Yet all subs are
contracted by the CM-At-Risk.
• A single bond is provided by the CM-At-Risk.
• A GMP (guaranteed maximum price) can be established
prior to completion of the final plans and specifications.
• Typically eliminates a “low bid” construction project.

CONSTRUCTION MANAGER -
AT RISK
DISADVANTAGES
• Selection process requires specific steps for a public
entity to hire.
• Often, being General Contractors by nature, a CM-At-Risk
may feel closer to the subcontractors than the Owner by
habit.
• If sub-bids come in higher than the GMP (Guaranteed
Maximum Price) allowance, there is pressure to reduce
the scope of work to fit the guaranteed price.
• Larger contingencies are plugged in to safeguard the
GMP.

DESIGN-BUILD
ADVANTAGES
• Single point of responsibility
• Accelerates project delivery
• Establishes firm “budget” price earlier
• Team approach - avoids adversarial
relationships
• Prevents “budget-busting” on bid day

DESIGN-BUILD
DISADVANTAGES
• There is a more involved initial selection process
to hire the Design-Build Team. Takes more time
upfront to get things going (but saves time later).
• The checks and balances that exist between the
architect and general contractor are missing.
• Difficult for the Owner to determine whether the
best price has been achieved.
• Design-Build requires “Trust”.

CURRENT / FUTURE
TRENDS
• I.P.D. – Integrated Project Delivery – put forth as
an alternative to Design-Build by the AIA.
Features a Tri-Partite (3-Party) Agreement where
all parties share liability and responsibilities.
Little case law exists for the settlement of
disputes.
• Hybrid Design-Build / CMaR – owner basically
converts the agreement from DB to CMaR
arrangement.

Questions????
Frank Callahan
Callahan & Freemen Architects
[e-mail]
Randy Landers
Speed Fab-Crete Corporation
[e-mail]