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4/6/17 1
© Copyright 2017 by K&L Gates LLP. All rights reserved.
ISBA – April 7,2017
Project Delivery Methods Understanding the Construction Contract
PROJECT DELIVERY METHODS § Design Bid Build § Design Negotiate Build § Construction Manager Advisor § Construction Manager At Risk § Design Build § IPD
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PROJECT DELIVERY METHODS § Design Bid Build
§ In some case a CM (Advisor) will be hired by the Owner either prior to or after retention of architect
§ Owner A/E agreement § Design is generally at least 90% Complete before selection
of Contractor Begins
§ Owner Contractor Agreement § Generally competitively bid on the basis a lump sum, unit
prices or combination of both lump sum and unit prices
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PROJECT DELIVERY METHODS § Design Negotiate Build
§ A/E retained to complete design § CM (At Risk) hired during design to assist brining
design within cost parameters, provide scheduling support, and to provide expertise such as value engineering and constructability assistance
§ Alternatively Contractor is hired when design is nearly complete and a VE/GMP proposal is prepared § Contracts are usually negotiated with one Constructor usually
on a cost plus basis and a guaranteed price
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PROJECT DELIVERY METHODS § D B/N B
§ Buildings – AIA, ConsensusDocs § Engineered Projects – EJCDC
§ Water Waste Water § Power Generation
and Transmission § Industrial Use § Transportation § Communications
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PROJECT DELIVERY METHODS § Construction Manager (Advisor) CMA
§ A CMA is hired during design to provide consulting services relative to estimating, scheduling and value engineering. Following completion of Design there are two alternatives: § 1) The CMA assists the Owner in selecting prime
subcontractors that contract directly with the Owner, but who are managed by the CMA;
§ 2) The CMA assists the Owner in selecting a prime contractor on either a bid or negotiated basis
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PROJECT DELIVERY METHODS § Construction Manager at Risk (CMAR)
§ CMAR is usually hired during design for estimating, value engineering, scheduling and trade procurement
§ Initially a cost plus fee contract is negotiated with in some cases a consulting fee prior to construction activities
§ Depending upon permit requirements certain construction activities such as demo and foundation can occur prior to completion of design
§ At certain point in the design the CMAR will provide a GMP, schedule and value engineering proposal
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PROJECT DELIVERY METHODS § CM
§ AIA, CMAA, ConsensusDocs
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PROJECT DELIVERY METHODS § Design Build
§ Single Contract Covering Design and Construction § Contract will usually have two phases
§ Design – Fee Basis § Construction - Cost Plus Fee
§ When the design reaches a certain level of completion in many cases a design builder will be required to submit a GMP proposal
§ If the Owner is not satisfied with the GMP, the Owner takes a license to the design and can terminate the agreement
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PROJECT DELIVERY METHODS § DB Forms
§ Buildings – AIA, ConsensusDocs § Engineered Projects – EJCDC § Hybrid - DBIA
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PROJECT DELIVERY METHODS § Integrated Project Delivery (IPD) § Based upon an integrated Form of Agreement
(IFOA) § A single agreement with the Owner, A/E and
Contractor § Various Prime subcontractors can also be parties to
the agreement § Additional architects, engineers, subcontractors and
suppliers can be members of the Profit Pool
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PROJECT DELIVERY METHODS § IPD
§ The intent of the agreement is to promote collaboration with decisions made by committee
§ The team works towards a target value § At some point an Estimated Maximum Price is set
based upon an estimated cost, plus a contingency, plus a Profit Pool
§ If the estimated cost is exceeded, the contingency is used. Once the contingency is exhausted, the Profit Pool pays for overruns until it is exhausted.
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PROJECT DELIVERY METHODS § IPD Forms
§ ConsensusDocs § AIA
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PROJECT DELIVERY METHODS § Public Private Partnership (P3)
§ Design § Build § Finance § Operate § Maintain
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PROJECT DELIVERY METHODS § P3 Forms
§ EJCDC
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ANY QUESTIONS § Justin L Weisberg
Partner K&L Gates LLP 70 West Madison Suite 3100 Chicago, Illinois 60602-4207 Phone: 312 807-4253 [email protected]
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