Construction Delivery Systems

    What are the different construction delivery systems? 

    There are 4 primary construction delivery systems. Only 3 of which are legally allowed in public construction.

    • Design-Bid-Build
    • Construction Management at Risk
    • Construction Management Agency
    • Design-Build (Not allowed in Public Construction)

    Design-Bid-Build (Triad)

    The Design-Bid-Build (Triad) system is a delivery system that involves the owner, the architect and the general contractor working together to complete a building project. It is the strongest system in relationship to bidding transparency and fairness with no subjectivity.

    Advantages

    • It is best for the taxpayers because it provides a fixed cost without hidden fees.
    • It is in full compliance with Iowa law. Iowa law requires the owner to award the contract to the lowest responsible, responsive bidder for public works projects.
    • Transparency
    • It does not duplicate services.
    • Eliminates fraud and favoritism.
    • Allows for lower cost due to built-in checks and balances between architect and contractor.
    • The Triad System guarantees the owner will receive the lowest qualified possible price for a project without unknown costs or hidden fees.
    • Owner has no risk.
    • The General Contractor takes full responsibility and risk for the construction process.
    • Design-Bid-Build utilizes many more sub-contractor bids than any other system.
    • Provides multiple competitive bids with a guaranteed maximum price with a guaranteed 5-10% bid bond.
    • The bid bond protects the owner. The bid bond assures that a qualified general contractor will enter into a contract with the owner and will provide a single performance bond that covers the entire project​
    • The contractor will secure the proper permits necessary for construction, incorporate their own work forces, contract with reputable firms for subcontract work, maintain the construction site at all times in accordance with OSHA standards and will keep all records up to date.

    Construction Management At Risk

    The most common form of Construction Management is CM At-Risk, where an independent professional reduces the risk to the Owner because a Construction Manager At-Risk (CMAR) holds the subcontract agreements.

    Disadvantages

    • This method requires a high level of communication between the Owner and the CMAR
    • Requires cooperation of the Architect to work out details of design before or during construction
    • Construction costs may run over if design mistakes are not detected early
    • Involves negotiation of two separate contracts and requires careful contract language establishing responsibilities of each party
    • Duplication of services is highly likely.
    • The Owner does not receive the benefit of the system of “checks and balances” that exist when it contracts separately with an Architect and a Contractor
    • It is difficult for the Owner to verify that the best price has been achieved for the work
    • Long process of subjective interviews and scoring proposals to select your contractor
    • There will only be one final bid. There will not be any other competitive bids to compare it to.
    • Construction Manager bills for reimbursables after the project is over. The owner does not know the final bill until the end.
    • Contingencies are hidden in CMR's bid.
    • Guaranteed Maximum Price (GMP) doesn't necessarily eliminate change orders.

    Construction Management Agency

    In Construction Management Agency, the Agency Construction Manager acts as an advisor to the client. Construction Management – Agency or CM (Agency) is a fee-based service in which the CM (Agency) acts as the Owner’s representative during each stage of the project.

    Disadvantages

    • The Construction Management advisor has limited risk
    • Owner is provided only advice on budget, schedule, and constructability during design phase
    • The owner is ultimately in charge of the budget and schedule.
    • The owner has all of the risk
    • The owner is responsible for all of the contracts
    • Run the risk of not having competitive pricing for all bid packages on bid day