LESSON# 4

Construction Management

Construction Delivery Methods

CE 302 –

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 Lesson Objectives
• Describe the four sources of risk in a
construction project.
• Describe the three project delivery methods.

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 Key Definitions
• Contingency – Additional time in the
project schedule or additional money in the
project budget, provided to handle
unforeseen circumstances and events.
• Delivery method – The contractual
relationships between the owner, the design
professional, the constructor, and, in some
cases, the construction project manager; and
the times at which these contracts are put
into place.
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 Risk in a Construction Project
Risk is present in all construction projects; however, the degree
of risk can vary significantly from project to project. There
are four major sources of risk:
• Risk associated with the project site, including the soil
conditions, types and proximity of neighbors, and economic
conditions in the area.
• Risk associated with the project, including the level of
complexity, the types of technologies required, and the
desired level of quality.
• Risk associated with the process, including funding, the
project schedule, and unknown requirements or constraints.
• Risk associated with the owner’s organization, including its
organizational structure, experience, and decision-making
processes.
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 Delivery Methods
There are three principal types of delivery
methods
(1) Design-bid-build,
(2) Design-build, and
(3) Construction project management.

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 1. Design-Bid-Build
In the design-bid-build project delivery method, the
owner hires a design professional. The design
professional prepares a complete set of contract
documents, and then the owner selects a
constructor. The design-professional may be
involved in supervising the construction work,
though this is not always the case. Regardless,
there is no formal relationship between the design
professional and the constructor. They
communicate through the owner.

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 The advantages of the design-bid-build
system
• This system is widely used and well
understood.
• It gives the owner a firm, fixed price before
any construction work begins.
• It often results in a low construction cost for
the owner, because of competition between
bidders.
• It does not require active, day-to-day
involvement by the owner.
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 The disadvantages of the design-bid-
build system
• This system does not allow contractors and subcontractors to
provide input to the design.
• It tends to cause a longer project duration than other methods,
because construction cannot begin until the design is completed
and all of the contract documents have been prepared.
• It provides for little interaction between the design professional
and the constructor, resulting in poor coordination, differences
in interpretation of the contract documents, and disagreements.
• It less flexible in responding to unforeseen conditions.

The design-bid-build delivery method tends to be most effective

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 2. Design-Build
In the design-build project delivery method, the owner
hires a single company to provide both design and
construction services. In some cases, this single
company may actually be a joint venture—a legal
binding of a design company and a construction
company into a single entity for the duration of the
project.

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 The advantages of the design-build
system
• This system facilitates much better communication and
coordination between the designer and the constructor. In
particular, it allows for the constructor’s input to the design
process. It allows for fast-tracking—a project scheduling
technique in which construction begins before the design is
complete. Fast-tracking can significantly reduce the project
duration, thus saving money.
• It allows for more effective incorporation of design changes
due to unforeseen conditions, since both the designer and
constructor are in the same company.
• The owner does not need to be involved in facilitating
communication between the designer and constructor.

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The disadvantages of the design-build
system
• In this system, the owner can generally not obtain a firm,
fixed price before construction begins. Thus the risk of cost
overruns is higher.
• Because all of the designer-constructor communication is
internal to one company, it is easier for the owner to lose
control of the project.
• Similarly, in the design-build method, the tendency for the
designer and the constructor to provide checks on each
other’s performance is not present as it is in design-bid-build.

The design-build delivery method tends to be most effective for

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 3. Construction Project
Management
In the construction project management delivery
method, the owner hires a design professional
and a construction project manager early in the
preconstruction phase of the project. These
three key players then work together to manage
the entire project. Actual construction is
performed by subcontractors that are under
direct contract to the owner.

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 The advantages of the construction
project management method
• This system facilitates effective communication and
coordination between the designer, construction manager, and
owner throughout the project. Like the design-build method,
construction project management allows the constructor to
provide input to the design process, while the design
professional is able to review the constructor’s work in the
field.
• Like design-build, it also allows for fast-tracking.
• Because the subcontractors are under direct contract to the
owner, the owner receives the cost savings associated with
competitive bidding.
• This method also facilitates the implementation of changes
during construction.
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 The disadvantages of the construction
project management method
• Because the design professional and the constructor are not in
the same company, breakdowns in the relationship between
these two players can occur.
• This method requires a high level of owner involvement to work
effectively.

The construction project management method is commonly used by

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