Chapter 3- Contract Management
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This document discusses different project delivery methods for construction projects. It begins by defining project delivery methods as systems used by owners to organize design, construction, operations, and maintenance of a project. It then describes traditional design-bid-build and alternative design-build methods. For design-bid-build, owners contract separately with designers and contractors, while design-build involves a single contract between the owner and a contractor covering both design and construction. The document outlines advantages and disadvantages of each approach and briefly discusses other methods like turnkey and construction management.
Chapter 3- Contract Management
- 1. Project Delivery Methods College of Engineering Construction Technology and Management Department Mada Walabu University Procurement Management and Contract Administration CoTM 4242 Chapter Three Instructor Andualem Endris (M.Sc) andu0117@yahoo.com www.facebook.com/aendris1 www.linkedin.com/in/andualem-yadeta www.twitter.com/andualemyadeta
- 2. Definition Project Delivery Method: Is a system used by an agency or owner for organizing and financing design, construction, operations, and maintenance services for a project. 31 July 2021 COTM 4242 2
- 3. Construction Project Characteristics Construction projects are different than other types of projects due to the following characteristics; Construction projects are complex undertaking. Every construction project is unique. Construction projects involve a lot of uncertainties, lack of information and variables. Therefore, parties and their role shall be pre-determined. 31 July 2021 3 COTM 4242
- 4. Traditional Vs Alternative Project Delivery Methods Traditional Approach (D-B-B): The most common delivery system is called “the traditional or standard approach” or “Design-Bid- Build (D-B-B)”, in which the employer assigns the design and construction phases to two different firms (consultant/designer and contractor). Constructing Designing Appointing Consultant Appointing Main Contractor 31 July 2021 4 COTM 4242
- 5. Traditional Approach (D-B-B): For many years, DBB has been the most common method of project delivery for public projects, and for many private projects as well. Design-Bid-Build is effective on projects where the owner needs both professional design services and construction services where the designer does not require detailed knowledge of the means and methods of construction. DBB provides the owner with a high degree of control. 31 July 2021 5 COTM 4242
- 6. Traditional Approach (D-B-B) … Cont’d The owner defines project goals and objectives, secures the financing, and specifies the standards and contract terms. The owner may perform planning, conceptual design and full design, or may engage an outside design professional (designer) for some or all of these tasks. During this planning and preliminary stage, owner and designer work as a team to obtain required permits and conduct necessary site investigations. The designer prepares the construction bid documents to reflect the owner’s project goals and objectives. Prospective contractors prepare their bids from these complete and specific bid documents. The bidders submit their proposals to the owner, who determines the most responsive (typically the lowest) bid meeting project requirements. In certain circumstances, owner may be justified in selecting a contractor outright and negotiating contract terms directly. 31 July 2021 6 COTM 4242
- 7. Advantages of D-B-B Approach Applicable to a wide range of projects. Well established and easily understood. Clearly defined roles for all parties. Provides the lowest initial price that competitive bidders can offer. Extensive litigation has resulted in well established legal precedents. Insurance and bonding are well defined. 31 July 2021 7 COTM 4242
- 8. Disadvantages of D-B-B Approach Least-cost approach requires higher level of inspection. Initial low bid might not result in ultimate lowest cost or final best value. Designers may have limited knowledge of the true cost and scheduling implication of design decisions. 31 July 2021 8 COTM 4242
- 9. Alternative Approach (D-B) Design-build (D-B) approach is regarded as an alternative project delivery system It involves a single contract between the project employer and a design-build contractor covering both the design and construction of a project. The design-builder performs design and construction according to design parameters and other requirements established by the employer. Constructing Designing Appointing design & construction contractor Tendering 31 July 2021 9 COTM 4242
- 10. Design-Build Approach The owner contracts with a single entity to provide the design and to construct the project. The contract might be negotiated with a single design- builder or result from competitive proposals. The selection can be based on low price or on a set of value criteria (experience, staff, bonding capacity, etc). With the contractor playing a major role in design, costs are typically defined and maintained to a greater degree, and the coordination of fast-track management to achieve early completion is greatly simplified. The design-builder makes many decisions that owner would make under DBB, due to delegation of greatly increased authority. 31 July 2021 10 COTM 4242
- 11. Design-Build Approach For many owners, delegation of responsibilities leads to satisfactory projects. However, if the parties are inexperienced and do not cooperate, the transfer of control and risk can be disappointing. The owner may need to restructure his/her internal procedures to accommodate design-build approach. Compared to DBB, this involves a significantly different set of requirements and expectations for process, timelines and communications. A clear understanding and documentation of design-build processes enhances the quality of design-build projects 31 July 2021 11 COTM 4242
- 12. Advantage of Design-Build Approach Innovation and quality improvements through: - Alternative designs and construction methods suited to the contractor’s capabilities - Flexibility in the selection of design, materials, and construction methods. • Earlier schedule and cost certainty 31 July 2021 12 COTM 4242
- 13. Disadvantage of Design-Build Approach Reduced opportunities for smaller, local construction firms. Fewer competitors and increased risk may result in higher initial costs. Elimination of traditional checks and balances. Quality may be subordinated by cost or schedule considerations. Less Engineer control over final design. Higher procurement costs. Traditional funding may not support fast-tracking construction or may require accelerated cash flow. Accelerated construction can potentially overextend the workforce. 31 July 2021 13 COTM 4242
- 14. Others Turnkey Turnkey Variations Direct Labor Approach Construction management. 31 July 2021 14 COTM 4242
- 15. Turnkey Turnkey adds to the design-builder’s responsibilities the operation and/or maintenance of the completed project. Turnkey delivery has the potential for bringing a new project on line more quickly. Three forms of turnkey project delivery: Design-build-operate-transfer Design-build-operate-maintain Design-build-own-operate-transfer 31 July 2021 15 COTM 4242
- 16. Turnkey Variation Variations on turnkey add financing as a key component. While financing arrangements are unique for each project, developer financed projects generally resemble one of the turnkey delivery methods: FDBT (Finance, design, build, transfer) FDBOT (Finance, design, build, operate, transfer) FDBOOT (Finance, design, build ,own, operate, transfer) In each case, the transfer of the project occurs only after the developer’s interests and financial obligations have been satisfied. 31 July 2021 16 COTM 4242
- 17. Thank You