Construction Delivery Methods – What’s Best for your School District?
When it comes to construction projects, many school districts in Texas often face the ongoing question of how to deliver new construction and renovation projects. A District’s staff and board of trustees are held accountable for tax payers’ dollars, which places them in stressful situations to ensure those monies are used effectively and as efficiently as possible. One question that surfaces with every construction project is “what construction method should we use?” The all-to-common question boils down to several factors and the best way to make a decision is to educate a school district’s staff and board members about the various methods along with the advantages and disadvantages between the methods.
The following describes the three most common construction delivery methods with their pros and cons, and is meant to serve a guide for future construction projects.
Common Construction Delivery Methods
Competitive Bid (Design / Bid / Build)
With this method, referred to as Design/Bid/Build, many school district staff members are most familiar with. The process is linear in nature where one task is followed by another with no overlap. The architect completes the plans and specifications of a project, and then bid documents (plans and specifications) are issued. The contractors bid the project exactly as designed and are chosen based on the lowest bid submitted. This method is best suited for projects that are not complex in nature, not budget sensitive, not schedule sensitive and not subject to change.
- Familiar delivery method
- Simpler process to manage
- Fully defined scope for both design and construction
- Accountability to Owner
- Lowest price proposed and accepted
- Creates most bidding opportunities for general contractor and subcontractors
- Linear process results in longer completion time
- Price established later in process, may require redesign and rebid
- Quality of contractor and subcontractor not assured
- Overall cost estimates can change during design process
- Increase probability of disputes and change orders
- Contractor unable to provide insight during design phase on project planning, budget or estimates
- Not suited for time or change sensitive projects
- Change orders common and may increase final project cost
Construction Manager at Risk (CMAR)
The CMAR method gives more control to the Owner in hiring a fee-based firm based upon qualifications and experience. This is typically completed before bidding documents are 100 percent complete. The design team is selected separately by the Owner and reports directly to them. The CMAR and design team work together to develop and estimate the design of the project. A guaranteed maximum price (GMP) is provided by the CMAR who then receives proposals and awards subcontractors. Generally, any unused contingency at the end is returned to the Owner at the completion of the project. This method is best suited for large renovation or new construction projects that have a strict schedule to adhere to, and difficult to define or susceptible to changes. CMAR is best when the project requires a high level of construction management due to multiple phases, complexity or a large amount of coordination between disciplines (HVAC, structural, electrical, technology, etc.).
- Contractor selected based upon qualification, experience and overall team
- Contractor involved during design phase including budget and planning
- Ongoing budget control
- Ability to screen subconsultants
- Faster schedule than traditional bid through ability to fast track construction
- GMP is established earlier in process, earlier than traditional bid, later than D/B
- In theory, creates more teamwork between design firm and contractor
- Allows greater flexibility in handling change in design and scope
- In theory, once in construction, reduced amount of changes
- Contractor, not the Owner, is responsible for costs in excess of the GMP
- Overall cost can be higher than traditional bid due to reduced competition in pricing of contractor
- Difficult for Owner to ensure the GMP is the best price possible for the project
- Cost can increase due to “details” not in the GMP without skilled Owner’s project management
Design / Build (D/B)
In the Design/Build method the contractor and architect are one team hired by the owner to deliver a complete project. The GMP is provided early by the D/B team and is based upon design criteria established by the Owner. The D/B team then develops drawings that meet the design criteria and complete the design, all while staying under the established GMP. The contractor will then receive bids from subcontractors and award subcontractors contracts. This method was not used as a delivery method, until recently, due to Texas law not allowing its use for schools for many years. Since the change districts are beginning to use this method to tackle projects quickly.
One thing to note, the Texas Education Agency (TEA) suggests that school districts consider contracting with a separate construction manager to supervise design-build activities due to the complexity of monitoring D/B project(s) (TEA Financial Accountability System Resource Guid, January 2010, Update 14).
- D/B team is a single entity to be held accountable
- Contractor and architect selected based upon qualifications, experience and overall team
- Contractor involved in design phase
- Project completion faster than traditional bid, slightly faster than CMAR and allows ability to fast track schedule
- GMP is established early in the process
- Price tends to match quality of work
- Reduction of change orders due to fluidity of schedule
- Provides no checks and balances between contractor and architect
- Owner gives up some power to architect
- Increases risk of reduced quality and potential conflict between Owner and D/B team
- Generally, Owner has difficult time determining if the best price has been achieved
- Initial costs higher than traditional bid due to reduced competition
- Due to phased construction, changes difficult and expensive to make once construction begins
- Stringent budget requirements
- Method considered for “sophisticated” Owners who have a clear understanding of scope and concept
- Steadfast focus on cost by the D/B team may impede quality
- Fast-tracked schedule opens door for potential mistakes
- Owner’s staff required to make quick decisions
The bottom line, its best to consult with your district’s staff to determine what method is best for a particular project.
Jasmine Engineering has used all three methods at school districts in Texas. Specifically, Jasmine Engineering has used Construction Manager at Risk and Design / Build at Harlandale ISD for a variety of projects. All have been successful due to the fact that a project manager/program manager has been involved to help act as an Owner’s Representative and look out for the best interest of the district. Without that extra set of eyes and ears, a school district’s project can quickly go awry and end up costing more than the project should.
The graphic below, quickly compares the three methods and can be used to determine which is best for your school district.