PROJECT DELIVERY METHODS

ARE 413
CONSTRUCTION MANAGEMENT
CLASS- 5

By
Zulfikar Aliyu Adamu
Presentation Outline

Project Delivery Methods

Definition
Types of Project Delivery Methods
Traditional

Design- Build
Professional Construction Management (PCM)
BOT ( Build Operate Transfer)
Advantages & Disadvantages of various PDM
Summary
Objectives of Class :

To introduce various types of project delivery methods.

To distinguish between the common project delivery methods.
To introduce different types of contract and to differentiate
between the different contracting methods.
 Project Delivery Methods : What is it ?
The term delivery method means the approach
used to organize the project team so as to
manage the entire designing and building
(design-build) process.
The owner needs to decide which
designers to hire, when to hire them,
and under what type of contract ?
The owner also needs to decide when
to hire the construction professional
and under what type of contract ?
Which organization gets hired first?
Do both organizations report to the
owner, or does one report to the other?

Project Delivery method is an organizational concept which assigns specific

responsibilities and authorities to people and organizations and which defines
relationship of the various elements in construction of a project.
Definitions: Project Delivery systems

A project delivery system is the method by which a construction project is

executed.

It is the first allocation of base responsibilities between the owner, design

professional and contractor. Thus, the project delivery system is the foundation

on which all subsequent negotiations will be based.

Types of PDM
Types of Project Delivery Methods:

Traditional
Design- Build (Turnkey)

Professional Construction Management

(PCM)
BOT ( Build Operate Transfer)
 The Four Phases
(every project goes through)

NEED

Traditional Planning Design Bid Construction Occupancy

Linear Process

Fast-Tracking Planning
Process
Design

Construction

Occupancy
Traditional

The owner hires a design professional who prepares a complete set of

contract documents for the owner for a design fee.

The owner either negotiates a price with a general contractor or bids out the
work.

The general contractor is totally responsible for delivering the completed

project as spelled out in the contract documents.

The general contractor may subcontract out parts of the project, with each
subcontractor reporting directly to the general contractor.

The designer may be involved in overseeing the construction work in the

field.

In this delivery method no direct, formal relationship exists between the

designer and the builder. They communicate only through the owner
Traditional
 Typical Design-Bid-Build
Process
(The Four Phases)
NEED

Planning Design Bid Construction Occupancy

Typical
Design-Bid-Build
Process

Design Team Contractor

Advantages- Traditional PDM

Familiarity: Most owners, designers, and builders have worked

under this framework on many projects and therefore are familiar
with the system.

Overall Job coordination: Their control systems, documentation,

and organizations are all set up to manage this process. The
workers, subcontractors, and vendors also understand the system,
improving overall job coordination.

Owner can get a firm fixed price for the project before any work
begins. The owner knows before construction begins what the cost
of the project will be.

Opportunity to get good price competition from the open market.

Pros and Cons of the Traditional Approach

Advantages Disadvantages

Price competition The approach takes a long time .

Total cost is known before Design does not benefit from

construction starts construction experience

Well-documented approach used Conflicts between owner & G.C.

in most government projects done and between AlE & G.C.
for public works Changes may lead to disputes and
claims
Design-Build

In this approach, a single organization is responsible for performing

both design and construction .

Within the design-build organization, parts of the design may be

subcontracted to specialist consultants.

Being responsible for both design and construction, the design-build

contractor carries most of the project risks, and this can mean
additional cost to owner.

The owner's role in this approach is minimal and is only to express his
or her objectives and specifications precisely before detailed design is
started.

Historically, the design-build approach has been used on large,

privately funded, industrial-sector projects. Recently, however, this
approach has begun to be used on commercial building projects, some
publicly funded.
Design-Build

Owner

Design-Build
Firm

Designers and Consultants Subcontractors and Suppliers

Design-Build

OWNER

DESIGN-BUILD
FIRM

design
subcontractors
construction
subcontractors
design
subconsultants
suppliers
 Typical Design/Build Process
(The Four Phases)

NEED

Typical Planning
Design/Build
Process Design

Construction
Design/Build
Team Occupancy
Design-Build Advantages
Good communication occurs between the design team and the
construction team. Allows for constructability analyses and value
engineering.
This collaboration allows the project to be easily fast-tracked,
cutting down on the design-build time for the project.
Good cost estimating and scheduling should occur throughout the
entire project.
Long-lead item identification and ordering should also be able to
proceed smoothly.
In general, this arrangement allows easier incorporation of changes
due to changed scope or unforeseen conditions than in the other
arrangements, since the coordination is to occur within the same
company.
 Pros and Cons of the Design-Build Approach
Advantages Disadvantages
Single point of responsibility for New learning curve for owners
owner
Reduced conflict. Less adversary A/E doesnt work directly for
relationships Owner

Time can be reduced if the design- Cost may not be known until the end
build company overlaps design and of design
construction
Coordination between design and New learning curve for owners
construction
Easier implementation of changes Design-build company may reduce
quality to save cost Constraints with public
laws
 How Are Design-Builders
Organized?
Integrated Design-Build Firm
Contractor as lead
A/E as lead
Joint Venture
Developer as lead
BOT (Build Operate Transfer)
The term Build-Operate-Transfer (BOT) was first coined by Ex-
Prime Minister of Turkey, Turgut Ozal in 1984

Essentially in a BOT project delivery method, a private entity,

usually a consortium is responsible for financing, construction,
operation and maintenance of the facility for agreed duration
known as Concession period and at the end of the period, transfers
the ownership of the facility to the government.

A BOT mechanism is a complex structure comprising multiple,

inter-dependent agreements among various participants.

The concession agreement is between the government and the

concessionaire. The concession agreement is regarded as the
heart of a BOT project
Examples of BOT Projects
BOT Contractual Structure
BOT (Build Operate Transfer)
BOT Advantages
The private sector invests directly in the development of infrastructure,
thereby reducing public debt, balancing the budget deficit, and
reduced role of public sector. Financing mechanism for infrastructure

The private firms are more efficient, hence project or service can be
delivered at lower cost

BOT projects create business opportunities for the local private

sector, create employment avenues as well as attract substantial
foreign direct investment

BOT projects help in facilitating transfer of technology by introducing

international contractors in the host countries
BOT Disadvantages
BOT is not a easy method and requires high capability of
promoters.

Not suitable for smaller projects. Victorian Government of

Australia has suggested that projects with a value of less than
Australian dollar $15m are unlikely to gain benefits from BOT
delivery method.

The success of BOT project depends upon successful raising of

necessary finance.
Transaction costs are high, they amount to 5-10% of total project
cost
BOT projects are successful only when substantial revenues are
generated during the operation phase.
Professional Construction Management
In this approach, the owner appoints a PCM organization (also known as
construction management organization) to manage and coordinate the
design and construction phases of a project using a teamwork approach.

The design may be provided by specialist design firms and in some cases
by the PCM organization.

With a high level of coordination between the participants, innovative

approaches of overlapping design and construction (i.e., fast- tracking)
can be adopted.

The PCM organization aims at holding a friendly position similar to that

of the consultants in the traditional approach.

The services offered by the PCM organization overlap those traditionally

performed by the architect, the engineer, and the contractor.

Professional Construction Management

This may include:
management and programming of design;

cost forecasting and financial arrangements;

preparation of tender documents; tender analysis

and selection of contractors;

selection of methods of construction;

planning and scheduling construction works;

materials procurement and delivery expeition

Although this approach is likely to prove marginally more expensive than

the traditional approach, it offers greater guarantee of performance and
the potential to avoid time overruns and to reduce the cost of claims.
The payment to the PCM organization is usually a fixed fee or a
percentage of the total project cost.
Use of PCM approach, should be considered when there is a need for time
saving and flexibility for design changes, and the owner has insufficient
management resources
Professional Construction Management
PCM Agency with GC

Owner

Agency
CM

A/E
GC

Designers and Consultants

Subcontractors and Suppliers

 OWNER

ARCHITECT
LIMITED
CONSTRUCTION
ADMINISTRATION

DESIGN
DATA DETAILED
CONSTRUCTION
COORDINATION

FEASIBILITY
+COST DATA

Architects
design GENERAL
consultants CMa CONTRACTOR

subcontractors

Construction Management: materials suppliers

Agency Form Source: Modified AL( 1998)
 41
PCM Advantages & Disadvantages
Advantages over traditional A/E construction administration:
CM with a construction background may be BETTER

QUALIFIED
CM provides greater QUANTITY of construction phase

services
CM often assumes greater DEGREE of control over

contractors

limitations: the professional or agent CM:

DOES NOT guarantee construction cost or time

DOES NOT perform any work or contract with the trade
contractors
IS NOT RESPONSIBLE for their performance
usually DOES NOT assume responsibility for safety
 Pros and Cons of the PCM Approach
Advantages Disadvantages

Utilization of construction skills at all Higher owner involvement and

stages with no conflict among participants responsibilities

Independent evaluation of cost and Need skilled construction managers

schedule to the best owner interest

Time could be much less PCM fees (up to 4%)

Principals such as "value engineering

could be applied in all phases
CONCLUSION

Types of Project Delivery Methods

Traditional
Design- Build
Professional Construction Management (PCM)
BOT ( Build Operate Transfer)
Advantages & Disadvantages of various PDM