Project Delivery Methods and the Impact on Project Success
Among the many factors that greatly affect the successful delivery of a project is the project delivery method. Choosing the right one can make or break it for a project.
The project delivery method is sometimes not considered necessary until the project goes through a few development phases. As it approaches the construction engagement stage, the subject becomes urgent and significant. After all, it is a risk item.
An owner needs to choose the right project delivery method and contracting strategy that has the highest chance of delivering a project successfully and efficiently.
Some of the key factors that play a role in choosing the most appropriate delivery method are:
- Project Budget. Not all project delivery methods are created equal. Some come at a higher cost but with increased reliability, whereas others come with lower costs but higher project outcome risks. With the advisors’ help, the owner needs to contemplate and compare a few delivery methods and choose the one that aligns with the project budget.
- Design. The owner should clearly communicate the design and performance requirements of the desired facility to the design team. The design team should be chosen based on experience in similar facilities. How much control the owner wants to retain in the design process influences the project delivery method most suitable for fulfilling owner expectations.
- Schedule. The schedule plays a significant role, as the cost does. A fast-track project delivery calls for a different delivery method than a project with more cost considerations.
- Risk Assessment. The risk associated with the project delivery can be reduced by choosing the most appropriate project delivery method. At the same time, it is also important to mention that the risk can be transferred or shared, depending on a particular project delivery method.
- Owner’s Level of Expertise. Some owners have more experience in project/program delivery than others. The owner’s familiarity with the construction process and in-house expertise for project management impact the level of how much outside expertise is required. This influences what project delivery method should be chosen.
Project Delivery Methods
A project delivery method is a system that is designed to achieve the successful completion of a project, from concept to operations.
Sometimes, a mix of contracting strategies can be employed to increase the chances of a successful project. There are variations of each delivery method, but the main ones can be defined as follows:
Design-Bid-Build.
This method is by far the most frequent for projects with no unique elements, is straightforward regarding design and has a relatively short time sequence from design to bid and build. The sequences involved in this delivery method are design, bid, and build. There are typically two contracts, owner with the consultant/design firm and owner with the contractor(s). The contract is usually a lump sum contract.
Construction Management.
The owner chooses a construction management firm to coordinate the design and, later, the construction. The construction management contract can be at risk when the construction management firm has a contract with the owner and employs the trade contractors directly. Or the pure construction management type of contract, where the construction management firm has a contract with the owner to coordinate the design and construction, but the owner has contracts with the trade contractors. In the first scenario, the construction management firm assumes the risks associated with the cost and schedule. In the second scenario, the risk is assumed by the owner.
Design-Build.
This type of project delivery method combines engineering services and construction performance under one contract. The design requirements are based on the desired performance of the completed facility. The team can design the facility as it finds appropriate to meet the budget, schedule and performance requirements. The owner has minimal involvement in the design process. This project delivery method has the following variations:
The owner hires a design team to deliver a schematic design of the proposed facility. In the second phase, the owner hires a design-build contractor to finish the design and construct the project.
P3 – Private-Public-Partnership. In this variation, a private group provides the financing, or part of it, to design and build the facility in exchange for a portion of the revenue from future operations. This method is very common for large government infrastructure projects.
Integrated Project Delivery.
This method is intended to spread the project risk among the primary parties involved in the project: the owner, the designer, and the builder. Each group is a stakeholder in the project, joins the project team early in the design process, and the team works together towards a common goal: the project’s success.
Each method mentioned carries a level of risk for the owner. In short, the highest the control the owner has over design and construction, the higher the risk. There is also a correlation between the project’s final cost and the level of risk assumed by the owner. The less risk an owner assumes, the higher the project’s total cost. The risk is not eliminated but transferred from the owner to the other parties. There is no perfect project delivery method, but there is one that is always the best fit for a particular project.
The most prevalent project delivery method in the vertical construction market is design-bid-build, followed by construction management at risk and design-build. The integrated project delivery method is used on a very limited number of projects.
In the horizontal infrastructure market, the design-bid-build is still the most common project delivery method, followed by design-build predominantly on large infrastructure projects. The construction management delivery method is almost non-existent in this market.
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3 Responses
Good stuff to know before moving onto actually doing anything.
Thanks for sharing.
Thank you, Doina. Well written and informative article. I enjoyed reading it.
Very informative and helpful topic. Thank you.