The first step in a successful construction project
Before hiring a contractor, a construction project owner must first determine the appropriate delivery method for the project. The delivery method affects a project's efficiency, cost and quality. But no method is perfect for every project, so owners must evaluate their construction goals and choose the method that best serves them.Design-bid-buildIn a design-bid-build project, the owner first engages a designer to develop detailed specifications and drawings, and then enters into a separate contract with the lowest bidding general contractor before starting construction, thus creating a linear process of three distinct phases: design, bid, and build. This method requires significant initial investment in the design phase.The design-bid-build method is well established, and minimizes confusion about the role of each party: The contractor wants to accomplish the project as quickly and efficiently as possible, and the engineer wants to ensure the design accomplishes the owner's intended purpose.One drawback, however, is that the owner retains significant risk of delay and/or design and construction defects. Additionally, having two separate contracts may create a potentially litigious relationship between the contractor and the designer. The design-bid-build delivery method is typically utilized for public works projects to ensure the bids are as accurate as possible.Design-buildIn a design-build project, the owner enters into one contract with a designer-contractor, which serves as the single point of responsibility for all aspects of construction.The design-build method gives the owner only one contract to administer, eliminates disputes between the builder and designer, and facilitates fast track construction. The increased risk taken on by the design-build team may, however, result in higher overall cost.Additionally, the owner loses the benefit of an independent engineer overseeing construction. The design-build method is suited for large, innovative projects where the owner wants to avoid disputes and reduce its administrative burden.Construction management at riskIn a construction management at risk project, the owner enters into a contract with a construction manager that guarantees the project price, and then engages other contractors.This method provides design phase planning and the ability to fast-track construction. The interests of the owner and construction manager are aligned because the construction manager accepts all or part of the risk of cost overruns.Although the project cost is fixed, the reduced competition in contractor selection may result in a higher overall cost. Furthermore, fast-track construction requires significant planning and coordination by the owner and the construction manager, and quality issues may arise. This method is frequently used for large, time-sensitive projects. In particular, the supervision provided by the construction manager is ideal for projects with multiple phases or technical complexity.Multiple prime construction managementIn a multiple prime project, the owner first hires a construction manager who accepts no delay or cost risk, and a separate designer, and then enters into separate trade contracts with other contractors.Multiple prime contracts permit the owner to retain control over the construction schedule and allow for fast project delivery. The heightened participation of trade contractors in the process can also increase accuracy in execution.The main drawback of multiple prime is the retention of liability by the owner. The existence of multiple contracts may also result in administrative difficulty and lack of coordination.Multiple prime construction management is effective for time-sensitive projects such as public works. Fast-track construction is possible with multiple prime projects, meaning that a public project with a tight deadline may be better suited to the multiple prime method.Integrated project deliveryIntegrated project delivery (IPD) is a new and largely untested method. In an IPD project, the owner, contractor and designer work as a collaborative team, making decisions on a "best-for-the-project" basis.The theory behind IPD is that it utilizes the experience and skill of all team members, thus increasing efficiency, reducing the project's cost and eliminating the risk of litigation.The biggest drawback to the IPD method is that it has not been thoroughly vetted, meaning that the roles of each player are not well-defined. Furthermore, in an IPD construction project, the risk is shared among the team members, which may result in high costs to the owner.The IPD method is intended to facilitate large, complex and innovative construction subject to a high risk of design change. Due to the extent of the owner's involvement in the IPD team, an owner must have strong project management resources to be successful under the IPD method.The structure of a construction project is the most important decision made by a project owner. Regardless of the method ultimately chosen, owners must carefully evaluate their goals in determining the appropriate project delivery method to ensure their project's success.Christopher D. Hawkins, an attorney with the Manchester-based firm of Nelson Kinder and Mousseau, focuses his practice on construction litigation and professional negligence defense. Attorney Cori Phillips Palmer is a member of the firm's employment litigation and construction industry practice groups.