Chapter 1

Owner's Role

• The owner is responsible for a construction project and can be a private person, group, or company
• The owner initiates and funds the project
• The owner develops facilities to meet functional and business requirements

Public Sector Owners

• Develop facilities to meet federal, state, or municipal project needs
• Funded through taxes or public revenue such as bonds
• Examples of public sector owners: utilities, regional airport authorities, and educational and research institutions
• Spend about 80% of all funds on projects

Private Sector Owners

• Are not bound by public acquisition regulations
• Have more flexibility in the procurement process
• Subject to federal, state, and local regulations
• Use relationships based on prior experience or other business motives to procure project teams
• Limit risk with contractual relationships that share project risks and rewards

Public-Private Partnerships (P3)

• A funding and delivery method that emerged in response to a lack of funds to promote public projects
• Involve a public sector entity seeking a private sector partner to fund, develop, and operate an infrastructure or facility project
• Private sector partners typically provide design, build, and operational services
• Compensated for their efforts via tolls or fees collected from project users
• Combine elements of both public and private sector procedures

Project Delivery Methods

• The process of planning, designing, building, and completing a construction project
• Refers to the chosen system for achieving the satisfactory completion of a construction project

Traditional Construction Manager Approach (Design-Bid-Build)

• A linear, five-phase process: pre-design, design, procurement, construction, and post-construction
• The owner hires a design consultant, who prepares a complete design package
• The design package is presented to GCs, who submit bids for the work and execute contracts with subcontractors
• The lowest responsive and responsible bid is typically chosen
• The contractor constructs the facility according to the design
• The designer maintains limited oversight of the work and responds to questions about the design

Advantages of Design-Bid-Build

• Well understood and widely applicable
• Clear roles for all parties
• Provides the owner with control over the final product

Disadvantages of Design-Bid-Build

• Time-consuming
• Limited input by contractor in design
• Owner exposed to potential contractor claims over design errors
• Adversarial relationships among owner, designer, and contractor
• Contractor pursues a least-cost approach, requiring increased oversight by the owner

Multiple Prime Contracting

• Owner holds separate contracts with contractors of multiple disciplines
• Owner manages the overall schedule and budget

Advantages of Multiple Prime Contracting

• Widely applicable and well-understood
• Clearly defined roles for all parties
• Provides owner with control over the project
• Open price competition

Disadvantages of Multiple Prime Contracting

• Owner assumes greater risk
• Owner is responsible for project changes and schedule gaps
• Increased oversight by the CM

Construction Manager At-Risk (CM at Risk or CMAR)

• Owner uses the CM as a consultant to provide advisory professional management assistance in the pre-construction phase
• CM transitions to the role of the GC and assumes risk by guaranteeing the project’s completion for a negotiated price (GMP)

Advantages of Construction Manager At-Risk (CM at Risk or CMAR)

• Early development of working relationships
• Cost security for owner
• Transparency in subcontracting process
• Potential cost savings/sharing incentives

Disadvantages of Construction Manager At-Risk (CM at Risk or CMAR)

• Owner has little control over cost contingencies
• Lack of explicit duties of loyalty and care to the owner
• Potential for adversarial relationships

Design-Build (D-B)

• Owner contracts with a D-B team to plan, implement, and control the entire project through completion
• D-B team negotiates a fixed price to complete the design and construction of the facility

Advantages of Design-Build (D-B)

• Simplicity of having one party responsible for the entire project
• Decreased potential for disputes
• Owner has a single point of responsibility
• Fast-tracking and/or phasing options

Disadvantages of Design-Build (D-B)

• Owner has fewer checks and balances and less control over design, price, schedule, and technical matters
• Difficult for the owner to verify the best value
• Complex logistical planning, scheduling, and coordination

Considerations for Selecting a Delivery Method

• Type of project
• Size of project
• Owner capabilities
• Time considerations
• Likelihood of changes

Construction Management

• A discipline uniquely tailored to the planning, design, and construction process
• Used successfully in all contracting methods and delivery systems

Advantages of Construction Management

• Provides the owner with control over the project
• Maximizes the owner’s control over scope, quality, time, cost, and safety
• Adds predictability to the project
• Increases the owner’s confidence in the success of the project

Advantages of Using CM Services

• Most effective use of available funds
• Enhanced control of the scope of work
• Optimal project or program scheduling
• Best use of individual project team members’ expertise
• Maximum avoidance of delays, changes, and claims
• Enhanced design and construction quality
• Optimal flexibility in contracting or procurement options
• Recommendations for emerging technology tools

Key Tasks of Construction Management Services

• Development of a written scope of work
• Development of thorough design criteria
• Communication and management of risk
• Design quality assurance
• Consideration of material, systems, and process alternatives
• Constructability reviews
• Code compliance review
• Matching construction spending to funds availability
• Milestone cost estimating
• Construction contract administration and compliance
• Continuous schedule analysis
• Program management
• Project controls
• Project management
• Project monitoring
• Quality management
• Risk management
• Energy and sustainability solutions
• Inspection services
• Operations and maintenance
• Safety and environmental health management
• Schedule management
• Virtual design and construction services

Other Project Delivery Methods

• Integrated Project Delivery (IPD)
• Lean Construction
• Engineering-Procurement-Construction (EPC)
• Engineering-Procurement-Construction-Management (EPCM)