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While there are a variety of project delivery methods available, choosing the appropriate strategic approach to project delivery varies by project. The decision needs to be based on a number of factors, including budget, schedule, cash flow, project complexity, risk mitigation, project team composition, and project goals. Essentially, a project delivery method is a configuration of roles, relationships, responsibilities, and sequences on a project. Here’s a brief overview of some of the typical project delivery methods.
DESIGN-BID-BUILD (DBB)
DBB is the most common project delivery method in the manufacturing industry. Owners with sufficient in-house staff contract with different entities for each phase of design and construction, and take on the responsibility of orchestrating the various team members. Each step in the execution process follows the other sequentially with minimal overlap. Under the DBB approach, the owner functions as the overall project manager and hires external engineers, consultants, and contractors.
The DBB approach is typically used when the project is not well-defined and there is adequate time for the design and construction phases. DBB projects are typically competitively bid and priced as lump sum. The competitive nature of the bidding process usually results in a competitive cost for the owner, but the quality of the subcontractors is left to the GC. Under this method, all construction and performance risks are assumed by the contractor. Scope variations resulting in change orders and schedule delays can occur if the owner’s intent for the scope of work is not well-defined by the architect to the contractor.
DESIGN-BUILD (DB)
The DB project delivery model is suited for projects that require fast-track delivery and want a single point of contact. The contractor and designers are hired by the owner to deliver a complete project. The owner selects a DB firm and the DB firms retain their own architects, engineers, and other consultants. The DB firm is typically responsible for preparing the estimate and scope, as well as producing all construction drawings, details, and specifications. DB contracts are typically lump sum and based on the design that accurately meets the owner’s requirements. The owner may be given a guaranteed maximum price based on the defined requirements.
DB is utilized to reduce the project delivery schedule. DB is typically used for architecturally-driven projects. The DB concept typically results in enhanced communication and a higher degree of accountability. While this is a complex delivery method, the compressed schedule and value engineering approach often result in cost savings for the owner. The DB approach is well-suited for larger, less complicated, time-sensitive projects where the owner has a clear project definition and concept prior to soliciting bids and desires a firm price to be confirmed early in the process.
CONSTRUCTION MANAGEMENT (CM)
Under the CM method, the owner will retain a firm to act as its construction management representative. There are a number of variations on the CM model. An architect is retained to develop a design package. Either the architect, design engineer, or CM rep will develop a cost estimate. The CM is retained for a fee and is responsible for managing detail design and construction while meeting goals in terms of quality, scope, cost, and schedule are met.
The CM rep is also responsible for estimate development, construction, engineering, subcontracts, scheduling, reporting, quality control, and cost controls. Then architects, engineers, and consultants are retained to develop a program. Multiple construction packages are developed, and bids are solicited from various trades that then become contractors reporting to the CM. Under the CM method, design and construction activities overlap. The CM rep is essentially an extension of the owner and is typically referred to as “Agency CM” or “CM for Fee.”
The CM model is well-suited for owners that lack in-house design and construction expertise or capacity. The method ensures consistent oversight and careful monitoring of costs and schedule. However, this method can result in additional upfront costs and create communication challenges among the team.
ENGINEER-PROCURE-CONSTRUCT (EPC)
EPC has emerged as a preferred choice of project delivery for many industries. With an EPC contract, the owner has a single point of contact for the project. Under this model, the EPC firm handles the design, procurement of all equipment and construction materials, and construction services for complete delivery of the project, usually at a lump-sum price. The EPC process starts with a preconstruction effort that involves some preliminary planning and engineering to define the scope, schedule, and costs of the project. The EPC firm has complete responsibility for the project from start to finish.
Project scope and estimates are developed by the EPC firm. The project schedule and project budget are known at the start. All scope and budget risks are passed to the contractor. EPC project delivery offers the tightest integration of activities during the construction process through a structured and disciplined approach. In addition, communication among the design, procurement, and construction teams begins immediately.
The EPC model helps align team members for optimal project performance. This often results in a collaborative, value-based construction process. EPC delivery is typically used for process or equipment driven projects. The EPC model reduces project risks for the owner, delivers predictable results, and maximizes the effectiveness of capital planning.
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