Project%20Delivery%20Options%20in%20the%20California%20Construction%20Market

1
Project Delivery Options in theCalifornia
Construction Market

• Presentation for
• Construction Specifications Institute, Fresno
  Chapter
• By
• Rick Barton, LEED AP

2
Overview

• During this Presentation well
• Review goals towards project success
• Review why various delivery methods exist
• Explore various delivery methods

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Goals for Project Success
4
Delivery Methods Overview
Lease-Leaseback
5
Traditional Design-Bid-Build

• Characteristics
• Detailed plans and specifications prepared in
  advance of bidding
• Contractor bids on completed construction
  documents
• Price-based contractor selection
• Publicly funded projects governed by Public
  Contract Code
• Most successfully used with Agency CM for
  large/complex projects
• Application
• Traditional public sector delivery
• Prescriptive scope requirements
• Widely understood methodology

6
Traditional Design-Bid-Build

• Benefits
• Clear-cut division of responsibility and
  accountability
• Public sector comfortable with process/methodology
  
• Well defined and detailed design
• Lower cost at bid day
• Owner controls change order contingency
• Drawbacks
• Minimal to no control over contractor or
  subcontractor selection
• Difficult to gain time through fast-tracking or
  phasing
• Contractor has no incentive to contain change
  order costs
• Potential for adversarial relationships due to
  conflicting goals

7
CM-Multiple Prime

• Characteristics
• CM fulfills GC role Agency relationship
• Scope is segregated into prime packages
• Owner holds contracts with prime contractors
• Application
• Common in K-12 education projects
• Clear trade segregation
• High concentration of one (or few) trade(s)
• Sparse or hostile GC market

8
CM-Multiple Prime

• Benefits
• CM is an advocate for the Owner
• Reduced contractor fees
• Affords fast tracking of design and construction
• Continuous on-site supervision for Owner
• Drawbacks
• Owner assumes more risk
• Typically low bid contractor selection
• More administration for multiple packages

9
CM At-Risk

• Characteristics
• CM/GC early involvement
• CM/GC typically holds subcontracts
• Guaranteed Maximum Price (GMP) established at
  bidding
• GMP typically includes change order contingency
• Often open book
• Application
• Popular private sector delivery
• Public sector application dependent on
  legislation
• K-12
• UC
• CSU
• AOC

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CM At-Risk

• Benefits
• CM at Risk selection typically qualifications-base
  d
• Provides cost containment
• Reduces Owners risk exposure
• Owner-CM/GC-Designer collaboration potential
• Shared savings potential
• Drawbacks
• Could result in overall increased construction
  cost
• Owner could experience loss of advocacy once GMP
  is established
• Requires a GC with strong in-house conceptual
  estimating and management skills and experience
  in CM at Risk approach

11
Lease-Leaseback

• Characteristics
• Similar to a builder-developer delivery
• Owner leases property for 1/year
  Builder-developer delivers project leases back
  the improvements
• Quasi-private work
• Application
• K-12 - Ed Code Section 17406
• CCD Ed Code Section 81335
• Fee generating facilities Gov Code 5956

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Lease-Leaseback

• Benefits
• Increased control over subcontractor selection
• Flexible project financing options
• Flexible delivery options
• Cost containment through establishing a GMP
• Reduces Owners financial risk exposure
• Shared savings potential
• Drawbacks
• New delivery not widely understood by the
  industry
• Highly flexible LLB statutes could lead to faulty
  contractual practices
• More time required to develop and negotiate the
  LLB contracts

13
Design-Build

• Characteristics
• Owner contracts with a single entity for design
  and construction
• Project requirements defined through design
  criteria outline specifications
• Owner may develop bridging documents through
  schematic design phase
• Application
• Private sector no restrictions
• Public sector
• Redevelopment Agencies
• Counties
• Through LLB
• Straight forward scope
• Parking structures
• Storage facilities

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Design-Build

• Benefits
• Single point of responsibility and accountability
• Owner shielded from most disputes between
  architect and contractor
• Accommodates accelerated project delivery
• Early establishment of fixed cost and limited
  potential for change orders
• Promotes non-adversarial team environment
• Heavy contractor involvement and freedom to
  recommend construction efficiencies and
  innovations
• Drawbacks
• Success is contingent upon Owners ability to
  clearly define design criteria
• Owner may have less control over the end result

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Program Management

• Characteristics
• Program manager acts as extension of Owners
  staff
• Typically used in carrying out multi-project
  capital programs
• PM establishes program-wide budgets, schedules,
  standards, etc.
• PM assists Owner in hiring consultants
  typically in a prequalified resource pool
• Individual projects are delivered in a variety of
  ways
• Application
• Multi-project capital programs

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Program Management

• Benefits
• Provides needed assistance to Owners with limited
  staff, expertise or time
• Provides specialized management tools, systems
  and skills to enable sound decisions early
• Can set design standards to achieve consistency
• Can coordinate and accelerate project delivery
• Owner can realize economies of scale through
  combining smaller projects
• Lessons learned from one project more easily
  transfer to subsequent projects
• Drawbacks
• Perception of additional cost of PM fees
  although, must be compared to maintaining owner
  staff positions

17
Integrated Project Delivery (Lean)

• Characteristics
• Joint Owner-Architect-Contractor agreement
• Shared risk-reward
• Modeled after Toyota mfg processes
• Early subcontractor involvement
• Decentralized decision making
• Heavy use of technology BIM
• Maximize prefabrication
• Application
• Emerging private sector delivery
• Current bidding laws limit public sector
  application

18
Integrated Project Delivery (Lean)

• Benefits
• Highly collaborative
• Shared risk-reward creates performance incentives
• Innovation encouraged
• Drawbacks
• New delivery Not well understood
• Interdependent lines of responsibility
• Limited public sector application

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Q A