Project Management International Systems (PMIS) is a favorite choice for public and private clients due to our broad expertise, ability to deliver, bold leadership and solid commitment to excellence.
Separate Management Functions from Design and Construction
Developing good design solutions for the projects presently in-hand is somehow complicated work. So is getting them built. The tasks of leading and managing this process are complex. It’s unreasonable to expect the individuals, responsible for resolving the technical design and construction challenges to also take on the overall management task.
Here comes the role of our firm whose first priority is managing all phases of the project from start to finish. We will assume responsibility for the overall project team. This responsibility requires us to balance the support and/or monitor aspects of their relationship with other team members.
We identify the requirements of issues to be resolved, and then gathers data to define them clearly. Some typical issues are:
Scope Uses, space needs, flexibility, systems environmental issues, life expectancy.
Image Aesthetics, materials, durability, site use and neighbors.
Cost Initial (hard and soft), life cycle, cash flow, financing and allocation.
Time Start, internal milestones and completion date.
Process Approvals (internal and external), authority, organization and delivery strategy.
The final product of this planning phase is a report, produced by our firm, that helps to reduce the chance of misunderstanding by the decision makers who must give the approval and by the A/Es who will produce the design.
Choosing the Best Delivery Approach
The method chosen for design and construction will impact most aspects of the project. No delivery approach is universally superior, but there is a best approach for each individual project. The following key issues will help identify the best approach for your project:
- How much control does the Owner want?
- What type of contractual relationships and selection methods?
- When to transfer responsibility for design?
- Should design and construction be overlapped Fast-Tracked?
- What are the external influences?
Project Management International Systems (PMIS) represents the owner’s interest by providing continuous management services and in general, applying management controls including risk and claims reduction programs. These management services typically include supporting planning efforts, supplying construction and cost expertise during the design and procurement phases, and supervising the design, construction, and commissioning and occupancy efforts.
Unlike others involved in the project (owner, A/E and contractors), the project team assigned by us has a single focus “ managing the process. Hiring our firm for a specific project reduces the owner’s need for temporary internal staffing and may allow this management cost to be allocated as a project cost rather than a budgeted operating cost.
Delivery Method Characteristics
When considering innovative approaches, don’t ignore the global inertia and local traditions of the design and construction industry. ACM complies with all above characteristics.
The traditional approach isolates designers from builders. While this provides a clear division on responsibility and liability, it often hampers transfer of information and creates adversarial relationships. These weaknesses and the desire to finish projects faster have created a number of delivery processes with one common characteristic the builder is involved during the design phase. As building systems and materials become more complicated, it makes sense that those most knowledgeable are involved earlier.
In this widely used approach, the Owner retains the A/E and the contractor separately. The A/E is typically selected on the basis of qualifications and is responsible for representing the owner’s interest. The A/E prepares drawings and specifications that are both legal contract documents and also the detailed guide for construction. The contractor is selected, usually after competitive bidding, when the design is complete and the cost is fixed.
The traditional design-bid-build system remains the most popular delivery method for construction projects. The owner engages an architect or engineer (A/E), who prepares the design of the complete facility, including construction drawings, specifications and contract packages.
Among the main disadvantages of the traditional system are:
- The process is time-consuming since all design work must be completed prior to solicitation of the construction contract
- A/E may have limited ability to assess scheduling and cost ramifications as the design is developed which can lead to a more costly final product
- Owner generally faces exposure to contractor claims over design and constructability issues since the owner accepts liability for design in its contract with the contractor
- Traditional approach tends to promote more adversarial relationships rather than cooperation or coordination among the contractor, the A/E and the owner
- Contractor pursues a least-cost approach to completing the project, requiring increased oversight and quality review by the owner
- Absence of a contractor’s input into the project design may limit the effectiveness and constructability of the design. Important design decisions affecting both the types of materials specified and the means of construction may be made without full consideration of a construction perspective
While the most common approach to bidding a project in building construction is for general contractors to submit a sealed lump-sum bid, many variations in contractor procurement exist in the traditional system.
Other methods include unit-price contracting, which is generally limited to projects that can be easily divided into small work units and quantified prior to construction. This is commonly found in heavy construction projects.
At the other end of the spectrum is cost-plus contracting, generally used in circumstances where there is such high risk or variability in the work that preparing a responsible bid is impossible.
Most successful owners make some effort to pre-qualify contractors, either through invitation, or through an objective set of criteria considering construction experience and financial capability. Doing so helps assure the owner that the contractor is capable of providing a high-quality product. Once the field of bidders is established, an owner may choose to require sealed bids for a lump-sum project, wherein the lowest responsible bidder will earn the right to perform the work.
However, many private owners prefer to negotiate bids with pre-selected GCs. This can be an especially powerful technique if the owner considers qualifications, history of claims and experience in related work along with price in its evaluation. What owners should really be seeking is the best value for their money, not necessarily the lowest initial cost. Through a careful negotiation or contractor evaluation, the owner can maintain the maximum amount of control over the resulting construction portion of the project.
The owner selects the contractor (construction manager) during the design phase on the basis of qualifications and fee. The fee covers, estimating and constructability advice to the owner’s A/E and giving a guaranteed maximum price (GMP) before the design is complete. The GMP is usually set midway through the construction document phase, but it may be set at any point after the schematic design. However, if the GMP is set early, it will contain a substantial contingency to protect the contractor from undefined issues. Construction often begins as soon as the GMP is established.
The contractor is reimbursed for actual cost against the GMP amount. Often the owner and contractor agree to share the saving if the final cost is less than the GMP.
The above system adopted and promoted by many large general contracting firms, is similar in many ways to the traditional system, in that the CM acts as a general contractor during construction. That is, the CM holds the risk of subletting the construction work to trade subcontractors and guaranteeing completion of the project for a fixed, negotiated price following completion of the design. However, in this scenario, the CM also provides advisory professional management assistance to the owner prior to construction, offering schedule, budget and constructability advice during the project-planning phase. Thus, instead of a traditional general contractor, the owner deals with a hybrid construction manager/general contractor (CM).
The primary disadvantages cited in the CM-at-risk system involve the contractual relationship among A/E, CM and owner once construction begins. Once construction is underway, the CM converts from a professional advisory role of the construction manager to the contractual role of the general contractor. At that time, tensions over construction quality, the completeness of the design, and impacts to schedule and budget can arise.
The design-build (D-B) project delivery system has grown in popularity, and it is seen by some in the industry as the perfect solution in addressing the limitations of the other methods. For an owner, the primary benefit is the simplicity of having one party responsible for the development of the project. While the other systems often give rise to disputes among various project participants with the owner acting as referee (or party ultimately to blame) in D-B many of these disputes become internal D-B team issues, which do not affect the owner.Under this system, the owner contracts with a D-B team, which is often a joint venture of a general contractor and an A/E. Since GCs are comfortable in the role of risking corporate capital in performing projects, they usually are the lead members of this type of teams. One variation of the typical D-B team structure, known as fee-paid developer, involves the owner engaging a developer, which then selects its own A/E and contractor partners. However formulated, the D-B team performs the complete design of the facility, usually based on a preliminary scope or design presented by the owner.
At some point early in the process, the D-B team will usually negotiate a fixed price to complete the design and construction of the facility. Once underway, the D-B team is then responsible for construction of the project, and for all coordination between design and construction.
The contract may be lump sum or cost reimbursable. Lump sum contracts are used for simple projects or for projects where a design element is repeated, as in residential projects. Reimbursable contracts are more common for high tech projects with owners who understand the design and construction process.
Since the construction team is working together from the outset, D-B offers the opportunity to save time and money. However, the advantages of the system are offset by a significant loss of control and involvement by the owner. Accordingly, it is difficult for the owner to verify that it is receiving the best value for its money, without a great deal of confidence in the D-B team.
The primary caution for an owner considering D-B is that it considers the level of involvement it requires for a successful project. First, the owner needs to recognize the effort and completeness that must be behind its initial scope/preliminary design, which forms the basis of its contract with the design-builder. Often, the owner will require additional consultants to help him in the development of the project scope or preliminary design (the role of a traditional A/E firm).
Agency construction management (ACM), or construction management-for-fee, encompasses a range of services provided by a CM on behalf of an owner. It is a common misconception that CM-for-fee represents a distinct project delivery system. In fact, agency construction management consists of a distinct set of services that are applicable to any project delivery system. These services can be used by the owner as necessary to extend or supplement the owner’s own expertise and staff, to manage the construction process and to help address some of the shortfalls of the project delivery system chosen.
ACM working as an agent to the owner primarily provides the benefit of independent, professional services provided on the owner’s behalf throughout the project. In contrast to some other project participants, the ACM has no vested interest in the project in either its design or construction and maintains a fiduciary duty to act on the owner’s behalf and provide to provide impartial advice concerning the construction project. As such, ACM firms should be selected based on qualifications, and not on a cost or low-bid basis. Attached is a table of delivery method characteristics that helps the owner in deciding which approach to follow depending on his Project Requirements.