As an owner, choosing a project delivery method (PDM) is one of the most important decisions you have to make. But which PDM is the right one?
Recently, the Construction Owners Association of America (COAA) brought together a panel of experts to discuss PDMs, including:
- Faye Bodyke, LEED AP, Director of Projects, at Ohio State University
- Jessica Baker, Director of Construction, Prometheus Real Estate Group
- Robert Ramsey, COO of the Nashville Airport
During the webinar, the three owners discussed the advantages and disadvantages of some of the most common project delivery methods — Design-Bid-Build, CM At-Risk, and Design-Build. Before the webinar, we caught up with the panelists and asked them to share their thoughts and insights into the PDMs they’ve used in their projects.
Here are some of their insights.
What is your typical project type, and what PDM do you use?
Robert: We’re an airport authority- a quasi-governmental entity. For the purposes of procurement, we are private. We’re subject to public review, and we have open records, but we don’t have any restrictions when it comes to the delivery methods we can pursue.
Seventeen years ago, we only did Design-Bid-Build then realized that wasn’t always the best solution. So, we then moved into pre-qualified low bidder, best value, CM At-Risk, and now Progressive Design-Build, which is merging CM At-Risk and Design-Build.
For major projects, we do a sit-down and really analyze which PDM makes the best sense and what those driving factors are.
Jessica: We go back and forth, depending on the pros and cons and the risk assessment of the project.
We’ve had a lot of success in Design-Build because we’ve had such a strong relationship with the general contractors and their subcontractor base.
We haven’t done a CM At-Risk delivery method. We’ve talked about potentially doing it, but we haven’t gone down that path just yet.
Faye: We’re governed under the State of Ohio policies for what we’re allowed to use.
Prior to 2012, the only options we had were a multi-prime system or Construction Manager At-Risk. Fortunately, in 2012, state legislation passed construction reform that brought in new delivery methods that state institutions and higher ed were allowed to use. When that passed, we brought in the CM At-Risk delivery method, the Design-Build delivery method, and the general contracting delivery method.
The university quickly embraced these PDMs, and we started using them right away. We had projects that we converted, and we’re still using all three of those delivery methods.
We’ve also developed a couple of alternate delivery methods that are allowable within the policies’ guidelines. We have what we call a Design-Build Competitive GMP, which opened up many opportunities for contractors. With this method, contractors could do more self-perform work as the design-builder.
Do you find any specific benefits or disadvantages from using a specific PDM?
Faye: I think it’s not so much about advantages and disadvantages. I would classify them as understanding the boundaries of each PDM.
For Design-Build, you have to make sure you’re making timely decisions that aren’t constantly changing. So that delivery method allows the design team and the construction team to move a little bit quicker. If the owner can make timely decisions and not change them, then Design-Build may be a good delivery method for your organization.
If you’re constantly making changes or need to wait on changes, I wouldn’t recommend Design-Build.
Jessica: I’ll start with Design-Build, too. When we employ this delivery method, we’re looking to mitigate the risk of exposure for the escalation of costs, as well as the ownership of the design. We feel comfortable with Design-Build because, as owners, we can make changes in some of the design. Most of those changes are primarily finishes-related and where we engage with the design-build contractors and subcontractor base.
So for us, it’s more of a cost escalation risk mitigation and true ownership of the design, barring any owner changes.
We are also currently pursuing projects with Design-Bid-Build. Because of the cost, the budget is tight on those. One of the reasons we would go with Design-Bid-Build instead of Design-Build would be to get that one last competitive bite of the apple. However, the market could soften a bit, and potentially the subcontractor base could be hungrier. We may end up seeing it as more of a risk mitigant to keep it as a Design-Bid and put it back out to market for the most competitive pricing right before we start.
Robert: I think it largely depends on the project to get the right fit.
We’ve tried CM At-Risk several times, and I’ve always ended up being frustrated at the end of the project. I’ve tried to bring in contractors early — sometimes I brought them in at the same time as the designers, but I haven’t had any good experiences with CM At-Risk. Part of it is because it seems to cost more. For example, every time they have an idea, my engineer or architect does more work that results in me incurring additional costs.
Establishing good processes upfront, regardless of the delivery method, is important because it will save time.
It’s painful on the front end as you set that up, but it will save you a lot of heartache at the end of a two or three-year job. Going back and trying to find and reconcile everything is maddening. You need to keep up with that as you go.
It’s also got to be about teamwork. I’ve had to make a few staffing changes to employ more people who were open and willing for a strong owner-contractor partnership and teamwork. I’ve also had one or two projects where I’ve had to ask for a change in their staffing. Maybe it’s the wrong super or wrong project manager from the Design-Build team. Ultimately, we do our best and hope that we get a good group fit in the project.
Have you found a certain type of PDM works best for a certain type of project?
Robert: Complexity and schedule are two of the main things that drive what we’re looking for.
At airports, if a project is back-of-house and very technical or performance-driven, that would be a great candidate for Design-Build.
When I get more public exposure, Design-Build still works, but I have to put in safeguards. So, I may do the bridging documents to get to 30%. Because the airport is the front door for the city and it’s often the first and last impression people get when they travel in and out, image is very important to us. So, we want to have a lot of control over things.
Over the years, we’ve used a little bit of everything, though we lean heavily towards Design-Build.
The one exception to that is when I have federal money. Design-Build is much harder for things like an airfield project, consisting of miles of runway and lots of earthwork. Projects like that generally employ Design-Bid-Build, more so as a restriction of the FAA. There’s also the contractor market. I’ve tried to do things that were not Design-Bid-Build, and it threw the contractor community for a loop. Medium to large general contractors are great with Design-Build, but civil folks are still newer to that space.
Faye: In the education sector, I would say any project over $50 million would almost always be CM At-Risk. You probably even hear people say any project over $20 million is going to go CM At-Risk.
CM At-Risk delivery gives you a second set of eyes for complex, multi-phase projects. So it’s almost a given that all of our larger projects are going to go to the CM At-Risk delivery method, just due to the vast nature of the subcontractors, logistics, and project controls involved.
How are you currently using data and analytics to inform decisions on PDM?
Jessica: Our industry is so ripe for engaging in data analytics on all fronts. In our company, we’re gathering our data and creating vaults of historical data, though, at this point, it’s too early to make those correlations quite yet. We’re definitely going to make more of those correlations in the future, though.
As of right now, we’re using data and analytics to ensure our projects are on track. We have a trend analysis for anything from contingency use to project management in general — i.e., number of RFIs, turnaround times, on-time submittals — and how that relates to the success and failure of a project.
We’re now at a point where we have an executive-level dashboard for our C-suite. We have another executive-level dashboard for our senior VPs, and depending on their role, they can drill down on the data to figure out what’s going on.