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What's your process for selecting delivery methods and contracting strategies for construction projects?

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Choosing the right delivery method and contracting strategy for your construction project is a crucial decision that can affect its cost, quality, schedule, and risk. There are many factors to consider, such as the project scope, complexity, budget, schedule, owner's preferences, market conditions, and legal requirements. In this article, you will learn about some common delivery methods and contracting strategies, and how to select the best one for your project.

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1 Delivery methods

A delivery method is the way the project is organized and executed, and defines the roles, responsibilities, and relationships of the owner, contractor, and designer. Common delivery methods include Design-bid-build (DBB), Design-build (DB), and Construction management at-risk (CMAR). DBB is suitable for well-defined projects with low uncertainty and risk, and when the owner values price over speed and flexibility. DB is beneficial for complex projects with high uncertainty and risk, as it offers faster delivery, lower cost, and more innovation. CMAR is ideal for projects with moderate uncertainty and risk, as it provides the owner with the CM's expertise, collaboration, and risk-sharing.

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Jim Rogers

Teaching construction professionals to integrate safety, quality, and productivity with over 2 million on-line learners
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I disagree with the categorizations here. Useing Design-Build for a complex project is often a mistake unless the owner is sophisticated enough to properly articulate their needs and expectations. I think CMAR amd IPD are better suited for complex projects. DBB is the traditional delivery method in construction. CMAR, DB, and IPD (Integrated Project Delivery) are all characterized by early contractor engagement and require contractors who are well versed in the choosen method.

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John Russell

Retired Construction Management & Operations Leader
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Timing, complexity and market conditions are the key factors we look at to determine if we are going with CMAR, CSP or Design-Build.

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Kay Yoon

Project Management Expert | Business Strategist & Coach | Legal & Financial Business Specialist | MBA, MSc, BA Law
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In my 20+ years of industry experience, mega projects often find success in delivery models like Design-Build (DB) or Public-Private Partnerships (P3) for these key reasons: - Efficient Communication: DB streamlines design and construction collaboration, reducing delays. Speedy Delivery: DB fast-tracks projects by overlapping phases. - Cost Savings: DB and P3 models offer innovation and cost-efficiency. - Risk Sharing: P3s distribute financial and operational risks. - Innovative Financing: P3s leverage private funds, easing public budgets. - Long-Term Sustainability: P3s ensure projects maintained during the concession period. - Resource Efficiency: Private sector efficiency benefits mega projects.

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Rajarajan S

Empowering Efficiency: Orchestrating Administration Advancements at TCS iON as Regional Administration Manager
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Developing construction methods and contracting strategies involves these steps: 1. Project Assessment: Understand scope, budget, and client needs. 2. Delivery Method: Choose Design-Bid-Build, Design-Build, or other approaches. 3. Project Team:Assemble architects, engineers, contractors. 4. Contract Documents:Specify details, quality standards, timelines. 5. Cost Estimation: Prepare accurate cost estimates, consider contingencies. 6. Bidding and Procurement: Invite bids, evaluate based on cost and experience. 7. Contract Negotiation: Negotiate terms, payment, and dispute resolution. 8. Risk Management: Identify and mitigate risks, create a risk management plan. This adaptable process ensures successful construction projects.

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Dinesh kumar

Executive -HR/Admin
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Here's a breakdown of the steps involved in this decision-making process: 1. **Project Evaluation:** 2. **Identify Project Objectives:** 3. **Understand Delivery Methods:** - **Design-Bid-Build (DBB):** - **Design-Build (DB):** - **Construction Management (CM):** . - **Integrated Project Delivery (IPD):** - **Public-Private Partnerships (PPP):** 4. **Assess Risk Tolerance:** 5. **Budget and Cost Considerations:** 6. **Project Schedule:** 7. **Quality and Innovation:** 8. **Stakeholder Collaboration:** 9. **Legal and Regulatory Compliance:** 10. **Contracting Strategy:** 11. **Document the Decision:** 12. **Continuous Review and Adaptation:**

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2 Contracting strategies

A contracting strategy defines the allocation of risk and reward between the owner and the contractor, and determines how the project is priced and paid for. Common strategies include lump sum, cost plus, and guaranteed maximum price. With a lump sum strategy, the contractor agrees to a fixed price based on the design documents and takes on most of the risk for cost overruns, delays, and changes. It is suitable for projects with low uncertainty and risk when certainty and simplicity are valued over flexibility and collaboration. A cost plus strategy has the contractor agreeing to actual costs plus a fee for profit and overhead. The owner assumes most of the risk for cost overruns, delays, and changes, making it suitable for high uncertainty/risk projects where flexibility and collaboration are prioritized. Lastly, a guaranteed maximum price strategy has the contractor agreeing to actual costs plus a fee not exceeding a maximum price agreed in advance. The contractor assumes risk up to the maximum price but shares savings if actual cost is lower. This is suitable for moderate uncertainty/risk projects where certainty and flexibility are valued more than simplicity and speed.

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Matt Graves PMP, CCM

Dragging Construction into the 21st Century || Construction Project Manager || ConTech Evangelist || Meme Enthusiast
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Before you can decide on which delivery method to choose, you need to understand what is most important to the Owner. Is it cost? Schedule? Quality? There is no one delivery method to rule them all. Each delivery method has different pros and cons than the next. Understanding what the Owner wants and needs out of the project will go miles in selecting the appropriate method.

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3 Selection criteria

When selecting the best delivery method and contracting strategy for your project, you need to consider a range of criteria. These include the size, scope, complexity, location, duration, and quality of the project, as well as the goals, preferences, expectations, and capabilities of the owner. Additionally, you should take into account the availability, capacity, competition, and reputation of the designers, contractors, and subcontractors in your market. Lastly, you need to consider the regulations, laws, codes, and standards that apply to your project in terms of liability, insurance, bonding, and warranties. All of these elements will determine the level of uncertainty and risk involved in the project as well as the degree of integration and coordination required among participants.

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4 Selection process

To select the best delivery method and contracting strategy for your project, you need to follow a systematic process. First, define your project by identifying and documenting the scope, budget, schedule, quality, and performance requirements, as well as the key stakeholders and their roles and responsibilities. Then, evaluate your options by comparing the advantages and disadvantages of different delivery methods and contracting strategies. Additionally, assess the risks by identifying and analyzing potential risks that could affect the project. After that, make a decision based on the evaluation criteria and risk assessment. Finally, implement the contract by preparing and executing documents that reflect the delivery method and contracting strategy selected, as well as defining the scope, price, terms, and conditions of the project.

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UBAIESE VALIYARA

Construction Engineer @ CPECC
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Set once again get benfit. monitoring and tecnical supervision Risk Set again and again quality review oftenly. skill set hand to hand.

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5 Best practices

To ensure the success of your project, it is important to involve key stakeholders early and often, communicate clearly and frequently, monitor and control the project, and manage changes and disputes. This complex and dynamic process requires careful planning, analysis, and judgment in order to select the best option for your project. Through effective engagement, communication, tracking, and dispute resolution, you can achieve your desired outcomes.

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Abbigail Meah-Ali

Project Manager and Consultant/Training Facilitator/Auditor
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Collaborate closely with project stakeholders, including the owner, architect, engineers, and potential contractors, to gather insights and align expectations. Evaluate the level of risk involved in the project. Some methods distribute risk more evenly between the owner and the contractor, while others place it primarily on one party. Consult with legal counsel or experts in construction law to ensure that contracts are well-drafted, protecting your interests and addressing potential disputes. Be prepared to adapt and learn from your experiences. Continuous improvement is key in selecting the most suitable delivery method for future projects.

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Maura Feaheny, MBA, RA (Registered Architect)

Business Owner - HOMEstretch: SW Nashville - Green Hills, Belle Meade, Brentwood, Franklin, Cool Springs, Spring Hill, Columbia = I65 South Corridor
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Aligning expectations and honestly approaching investors in the beginning of any project will lead to a better success model. Too often the investors want to hear their own voice (ego) ahead of taking experienced counsel from designers, owner’s representatives and/or contractors. To make the best ROI, trust your team and their expertise … without sugar coating.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Jim Rogers

Teaching construction professionals to integrate safety, quality, and productivity with over 2 million on-line learners
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Selecting a project delivery method is one of the most important decisions a project owner will make and it requires a clear understanding of the characteristics of each type. In general, design-bid-build is meant to deliver "best cost", while the other methods of delivery that are characterized by early contractor engagement are suited for delivering "best value". Executed improperly, they won't achieve the desired outcome. You can learn more about project delivery methods on LinkedIn Learning at https://www.dhirubhai.net/learning/construction-management-project-delivery-methods

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What's your process for selecting delivery methods and contracting strategies for construction projects?

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1 Delivery methods

2 Contracting strategies

3 Selection criteria

4 Selection process

5 Best practices

6 Here’s what else to consider

Construction Management

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