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“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
Project Delivery Methods: Pros and Cons
Michael Kenig Holder Construction Company
[email protected] October 26, 2012
1
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012 Typical Delivery Methods
2
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012 Typical Approaches in GA
Design-Bid-Build
CM at-Risk
Design-Build
DELIVERY METHOD Low Bid
Best Value:
Total Cost Best Value:
Fees
Qualifications Based
Selection (QBS)
Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB)
CM/GC; GC/CM; CMc; ECI
Engineer-Procure-Construct (EPC)
n/a n/a
IPD Not Typical
Not Typical
n/a
Multi-party; Alliancing
Common Nicknames
X
n/a
X
X
X
n/a
n/a n/a n/a
n/a n/a
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012 OPEN BOOK VS. CLOSED BOOK
Design-Bid-Build
CM at-Risk
Design-Build
DELIVERY METHOD Low Bid
Best Value:
Total Cost Best Value:
Fees
Qualifications Based
Selection (QBS)
Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB)
CM/GC; GC/CM; CMc; ECI
Engineer-Procure-Construct (EPC)
n/a n/a
IPD Not Typical
Not Typical
n/a
Multi-party; Alliancing
Common Nicknames
X
n/a
X
X
X
n/a
n/a n/a n/a
n/a n/a
Closed Book
Open Book
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012 Typical Approaches in GA
Design-Bid-Build
CM at-Risk
Design-Build
DELIVERY METHOD Low Bid
Best Value:
Total Cost Best Value:
Fees
Qualifications Based
Selection (QBS)
Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB)
CM/GC; GC/CM; CMc; ECI
Engineer-Procure-Construct (EPC)
n/a n/a
IPD Not Typical
Not Typical
n/a
Multi-party; Alliancing
Common Nicknames
X
n/a
X
X
X
n/a
n/a n/a n/a
n/a n/a
1 2 3
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
GA: Three “Questions”
1. Closed Book vs. Open Book?
2. If Closed: ITB or Best Value?
3. If Open: CM at-Risk or Design-Build?
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
GA: Three “Questions” Discussion
1. Closed Book vs. Open Book?
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
To be able to recommend the most appropriate option, experience with going through the thought process of applying the factors outlined in this chapter is essential. It is even better and widely considered to be good practice to use the counsel of a group of trusted advisers who can help to be sure that all the factors and their interrelationships can be as fully evaluated as possible. Your trusted advisors should be experienced not only with going through the thought process of applying the major factors, but ideally are also experienced with implementing all of the different delivery options.
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
“Major” Factors
Regulatory/Legal or Funding Constraints
Owner’s Internal Resources
Necessity to Overlap Phases
Ability to Define Scope
Desire for Single Contract
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
“Major” Factors
Regulatory/Legal or Funding Constraints
Owner’s Internal Resources
Necessity to Overlap Phases
Ability to Define Scope
Desire for Single Contract
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
“Major” Factors
Regulatory/Legal or Funding Constraints
Owner’s Internal Resources
Necessity to Overlap Phases
Ability to Define Scope
Desire for Single Contract
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
Design Planning Bid Construction Occupancy
NEED
Traditional Linear Process
Schedule
Design
Planning
Occupancy
Construction
Fast-Tracking Process
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
2. If Closed: ITB or Best Value?
GA: Three “Questions” Discussion
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012 Typical Approaches in GA
Design-Bid-Build
CM at-Risk
Design-Build
DELIVERY METHOD Low Bid
Best Value:
Total Cost Best Value:
Fees
Qualifications Based
Selection (QBS)
Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB)
CM/GC; GC/CM; CMc; ECI
Engineer-Procure-Construct (EPC)
n/a n/a
IPD Not Typical
Not Typical
n/a
Multi-party; Alliancing
Common Nicknames
X
n/a
X
X
X
n/a
n/a n/a n/a
n/a n/a
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
3. If Open: CM at-Risk or Design-Build?
GA: Three “Questions” Discussion
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012 Typical Approaches in GA
Design-Bid-Build
CM at-Risk
Design-Build
DELIVERY METHOD Low Bid
Best Value:
Total Cost Best Value:
Fees
Qualifications Based
Selection (QBS)
Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB)
CM/GC; GC/CM; CMc; ECI
Engineer-Procure-Construct (EPC)
n/a n/a
IPD Not Typical
Not Typical
n/a
Multi-party; Alliancing
Common Nicknames
X
n/a
X
X
X
n/a
n/a n/a n/a
n/a n/a
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
“Major” Factors
Regulatory/Legal or Funding Constraints
Owner’s Internal Resources
Necessity to Overlap Phases
Ability to Define Scope
Desire for Single Contract
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
NEED
“Fast Tracking” vs. “Warp Speed”
Design
Planning
Occupancy
Construction
Fast Tracking
Warp Speed or Flash Tracking
Design
Planning
Occupancy
Construction
“Design” Risk!!
Schedule! Performance!
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012 “Other” Approaches in GA?
Design-Bid-Build
CM at-Risk
Design-Build
DELIVERY METHOD Low Bid
Best Value:
Total Cost Best Value:
Fees
Qualifications Based
Selection (QBS)
Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB)
CM/GC; GC/CM; CMc; ECI
Engineer-Procure-Construct (EPC)
n/a n/a
IPD Not Typical
Not Typical
n/a
Multi-party; Alliancing
Common Nicknames
X
n/a
X
X
X
?
? ? ?
n/a n/a
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
“Other” Factors Why aren’t these Major?
Size of Project ($)…small $ vs. large $
Type of Project… warehouse, research, office
Type of Construction…wood frame, steel, concrete
Economy…booming period?, recessionary downturn?
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012 Collaborative
Design-Bid-Build
CM at-Risk
Design-Build
DELIVERY METHOD Low Bid
Best Value:
Total Cost Best Value:
Fees
Qualifications Based
Selection (QBS)
Competitive Sealed Bid; Low Bid; Inv. to Bid (IFB)
CM/GC; GC/CM; CMc; ECI
Engineer-Procure-Construct (EPC)
n/a n/a
IPD Not Typical
Not Typical
n/a
Multi-party; Alliancing
Common Nicknames
X
n/a
X
X
X
n/a
n/a n/a n/a
n/a n/a
Collaborative
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
Mike Kenig:
1. Schedule?
2. Place a Value on Collaboration?
a) Ability to define the scope
b) Likelihood for changes (during construction)
NOT, the size of the project!
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
Industry Perspectives
24
Global Total Revenue by Project Delivery
(Includes Domestic and International)
0
20
40
60
80
100
120
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Rev
enue
(Bill
ion
$'s)
Design-Build
CM at-Risk
Source: ENR Top 100 Firms Ranking
US Domestic Total Revenue by Project Delivery
0102030405060708090
2004 2005 2006 2007 2008 2009 2010 2011
Rev
enue
(Bill
ion
$'s)
Design-Build- Domestic
CM at-Risk -Domestic
Source: ENR Top 100 Firms Ranking
International Total Revenue by Project Delivery
0
5
10
15
20
25
30
35
40
2004 2005 2006 2007 2008 2009 2010 2011
Rev
enue
(Bill
ion
$'s)
Design-Build -International
CM at-Risk -International
Source: ENR Top 100 Firms Ranking
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
Project Delivery Methods: Pros and Cons
Michael Kenig Holder Construction Company
[email protected] October 26, 2012
31
Source: Construction Users Roundtable (CURT) User Practice #1001
Selecting the most Appropriate Project Delivery Method… Construction Strategy: Selecting Contracting Strategies
• Published by CURT
• User Practice #1001
“Promoting the Value of Georgia‘s Higher Education Environments” Office of Real Estate & Facilities
FOC 2012
2. Analyze project, identify critical factors
Schedule requirements
Scope clarity
Likelihood of change
Level of Risk
Degree of owner control
Relative cost
Local Market conditions
Level of innovation
Concurrent projects
Corporate preferred strategy
Availability of owner personnel
Confidentiality
Specialized Work
Proprietary technology
Source: Construction Users Roundtable (CURT) User Practice #1001
Critical Factors to Consider