Choosing the right project delivery method is an essential and often undervalued step in meeting a project’s goals, and it happens shortly after deciding to move a capital project forward.

For building owners and facility management teams, knowing who is responsible for key aspects of a build is essential for every milestone, from determining the design schedule and setting the budget, to choosing when to onboard subcontractors.

In the last decade, alternative project delivery methods have become popular as building owners realized a one-size-fits-all approach was not always effective. Outside of a traditional design-bid-build (DBB) model, with the construction manager (CM) either working under a guaranteed maximum price (GMP) or a stipulated sum, there was not much choice when it came to deciding how to assign roles and responsibilities.

One of the models that has increasingly become a popular choice for owners is design-build, which historically has promised a more streamlined approach to project management. Despite its potential, design-build is not right for every job, but owners sometimes choose this delivery method to accelerate the design timeline even when it is not the best fit for their scope of work.

When managing risk and meeting deadlines, the simplest approach for project delivery is often the best. Choosing the wrong delivery model can introduce complexity that could have been avoided.

Design-build: When it works, when it doesn’t

At its core, design-build is a delivery method whereby the owner hires the CM, who in turn contracts with and manages the design team and its engineering consultants. The client no longer manages both groups; the responsibility for design and construction is passed on to the contractor for an agreed-upon fee.

Design-build makes sense for clients who do not have a lot of project management capacity or construction expertise (e.g., nonprofits) and who are embarking on highly complex projects, in which logistics and phasing are intertwined with design and engineering considerations. By utilizing design-build, the CM absorbs those responsibilities, so the owner’s team does not have to.

Another instance where design-build is appropriate is a technically simple project wherein documentation is needed only to comply with local permitting requirements, such as renovation for an existing space being modernized to match a previously updated area. Because no real design is required, choosing design-build would allow the facility management team to delegate the project management of an architect tasked with matching existing finishes to the CM. Without the need for extensive documentation or coordination of building systems, design-build would simplify the process, and the architect could focus on documenting the bare minimum for permitting.

There are other scenarios where design-build makes sense, but the client is not allowed to use alternative delivery methods. For example, some defense companies must have separate agreements with both parties and are not allowed to combine them.

A second scenario where design-build is not the right fit is when a client simply wants the CM to handle the relationship with the architect, usually around budget overruns and design creep. In these situations, an owner’s project manager and/or a robust preconstruction phase makes far more sense, both from addressing the client’s key priorities and allowing the client to still have the opportunity and flexibility to change their CM before actual construction begins if preconstruction does not go well.

The impact of preconstruction

Preconstruction is a phase of work that is offered by most commercial contractors but not always utilized by clients. This phase offers an opportunity for the owner, owner’s project managers, architect, CM and key subcontractors to map out the project logistics, schedule and budget during design to eliminate surprises and potential roadblocks before any actual construction begins.

These projects are complex; but compared to the design-build model, the client has the project management staff or owner’s representative to help them deal with the complexity of the job and all the consultant relationships.

For example, health care and defense clients typically want to know where every system resides in an existing space and will require extensive documentation to ensure the next facilities director is able to see in extreme detail what was done in a previous renovation or new construction project. The priority here is the continuity of the design team and providing a road map for future capital projects in adjacent areas in the client's building or campus.

By not using design-build, where the CM would manage the design team, the client gains the flexibility to choose a different CM on future projects while maintaining the integrity of design across the portfolio. Preconstruction, however, is still essential to allow close work between architects, engineers and the CM to eliminate surprises, maintain schedules and manage budgets.

It is important to remember that design-build delivery is simply a means of contract management; it does not help eliminate surprises or get CMs on the same page as the architect. Preconstruction services are designed to spur greater coordination across the team; so, if this is the priority, hiring a CM to lead a preconstruction phase may be a better use of resources and generate both time and cost savings over the course of the project.

Saving time & money in preconstruction

The most important advantage of preconstruction is the ability to save money – potentially significant money – over the life of a project. While there is a fee associated with preconstruction services, the cost savings typically make this investment worth the price.

Preconstruction costs are usually minor in comparison to the overall project budget. Preconstruction service fees can range widely depending on the size, complexity and extent of services; but in general, building owners can expect preconstruction service fees to range from 0.5 percent to 5 percent of the project’s total cost. The larger the project, the lower the percentage and vice versa. In most cases, the cost savings associated with sidestepping potential unforeseen conditions or creating higher-quality design documents with contractor input will more than offset the investment. In addition, teams that engage in preconstruction services can often implement cost control measures that help realize savings before the project team mobilizes on site.

There is often an assumption that a design-build project is the only way to adjudicate responsibilities of team management to the CM. Preconstruction is yet another avenue that building owners and facility managers have at their disposal to get the most qualified lineup without the headache of handling contracts or selecting the right tradespeople. Preconstruction is the best time for contractors to prequalify subcontractors and specific trade services and iron out final selections while conversations are taking place with the owner and architect.

Finally, the preconstruction phase represents the ideal time to perform value engineering services along with site and constructability assessments. These important tasks foster stronger collaboration among the key team disciplines and help ensure the viability of the project against the projected budget. By bringing each team member to the table in a preconstruction phase and ironing out important details that could have significant budgetary and schedule implications, if not addressed early in the project, building owners and facilities teams will reap significant benefits regardless of the delivery model they ultimately choose.

When preconstruction or design-build are not the answer

There are scenarios whereby the traditional DBB model does make the most sense. In this approach, the building owner solicits CM bids after the design is completed.

An appropriate use for DBB is for an owner who does have the project management or owner’s representative staff to manage the design team and the project type is relatively straightforward – meaning, the construction logistics, schedule and phasing are not affecting the design process and the costs are relatively well known (e.g., an interior office fit-out on the first floor).

Additionally, DBB allows the client to have fully developed construction documents before the CM or their subcontractors are brought on board. This is in comparison to a project with preconstruction, which requires the owner to choose the CM and sometimes subcontractors early in the project before the design is complete. While locking in the CM early can be helpful for controlling logistics and schedule, the owner can potentially be contractually obligated to pay a higher price due to choosing a subcontractor too soon and losing all buying power.

Conclusion

Design-build makes sense for many kinds of projects, just as design-bid-build (DBB) and preconstruction do for others. What is important to remember is that there are specific reasons for choosing one delivery method over another, just as some projects would benefit far more from a robust preconstruction phase than others. Understanding not just the goals but the priorities for a project will help teams make the right decisions and invest their time wisely in strategies that will create benefits both in terms of project quality and budget management.