choosing the right project-delivery method

7/27/2019 Choosing the Right Project-Delivery Method

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The author is a 2003 graduate of theMPA Program. She is currently pursuinga Ph.D. in architecture at the GeorgiaInstitute of Technology, specializing inconstruction-project delivery systems.Contact her at [email protected].

Any construction project thatmisses its deadline and is millionsof dollars over budget receives

unwanted attention. It receives even moreattention if it is funded by taxpayersmoney. Public owners (state agencies,counties and towns, universities andcommunity colleges, and hospitals)often seek new ways to make construc-

tion projects adhere to both deadlinesand budgets. Many experts believe thatthe key to the success of a constructionproject is the process by which it is or-ganized and managed, or the projectdelivery method. Recently the choicesamong methods have expanded. Pro-ponents of each method claim that theirsis the best choice to save money, reducetime, improve quality, and decreaseadministrative burden.

Historically, North Carolinas lawsrestricted public owners to using a projectdelivery method called design-bid-buildusing separate-prime bidding (explainedlater).1 In 2001 the North Carolina Gen-eral Assembly added two options forproject delivery: design-bid-build usingsingle-prime bidding and constructionmanager at risk.2 The North Carolinastatutes also include a special provisionthat allows the State Building Commis-sion to approve alternative contractingtechniques.3 The most commonly ap-proved method is design-build. Now,

with four methods available and variousopinions bombarding the industry, pub-lic owners are wondering which onebest suits their projects.

Public Construction Contracting:Choosing the Right Project-Delivery Method

Valerie Rose Riecke

F R O M T H E M P A P R O G R A MF R O M T H E M P A P R O G R A M


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f a l l 2 0 0 4 23

This article offers guidance to publicofficials in assessing the different projectdelivery methods. Construction industryprofessionals interested in public-sectorwork also will find the article of interest.The study reported in the article is not aquantitative study that determines which

method is the most cost-effective andleast expensive. Many quantitativestudies claim to have determined the

most effective approach, but a precise,comparative analysis is impossible.4 Myanalysis moves the industry one stepcloser to understanding the implicationsof each method.

Research Design and Methodology

Opinions on the relative merits and risksof each method vary. To account forthe differing opinions, I sought inputfrom experts representing all construc-

tion industry disciplines. I first studied

the published literature on the fourproject delivery methods, identifyingthe advantages and the disadvantagesof each using four construction-contracting industry goals as evaluationcriteria: (1) controlling project costs,(2) meeting or accelerating the schedule,

(3) ensuring a quality product, and(4) decreasing the administrativeburden.5

To apply the findings of the literaturereview, I distributed a questionnaire toconstruction industry experts. They in-cluded academicians, architects, engineers,construction managers, general contrac-tors, legislators, local and state officialsin North Carolina, and prime contrac-tors. I chose them using referral sam-pling: I surveyed experts who wereinitially interested and available to par-ticipate, and they referred me to addi-tional experts. In total, I incorporated

fifteen responses into the study.6

Definitions of Project

Delivery Methods

Many variations of project deliverymethods exist in the construction in-dustry. Because of this, there are nostandard definitions.7 Therefore it isimportant to understand how thesemethods are being applied in North

Carolina. The descriptions that followuse the North Carolina General Statuesas a basis and add information from theliterature review and experts comments.(For graphic representations of themethods, see Figures 14.) Words thatappear in boldface are defined in theglossary (see page 26).

Design-bid-build using separate- (or

multiple-) prime bidding. This projectdelivery method has four sequentialphases: selection, design, bid, and con-struction. The selection phase entails

hiring the designers, who are chosen onthe basis of qualifications.8

Once the designers are selected, de-sign begins. It has three phases: (a) sche-matic design, during which the basicappearance and the plan are developed;(b) design development, during whichthe functional and aesthetic aspects ofthe project and the building systems thatsatisfy them are defined; and (c) con-struction documents, during which thedetails of assembly and construction

technology are finalized.

Public Owner

Designer:Architects, Engineers,

and Consultants

Heating, Ventilating,and Air Conditioning

Prime Contractor

PlumbingPrime Contractor

ElectricalPrime Contractor

General ConstructionPrime Contractor

Selection Design Bid Construction

Figure 1. Design-Bid-Build Using

Separate-Prime Bidding

As UNC was about to embark upon a massive capital program in excess of$4.2 billion,it was clear that a greater number of construction delivery

options were necessary for success.The North Carolina General Assemblys

approval late in 2001 to add construction manager at risk and single-prime

bidding to the long-used multiple-prime bidding was a watershed event.

Kevin MacNaughton, special assistant for capital projects, UNC at Chapel Hill


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Public Owner


and Consultants


Subcontractor

PlumbingSubcontractor

ElectricalSubcontractor

General ConstructionSubcontractor(s)

Selection Design Bid Construction

General Contractor

Figure 2. Design-Bid-Build Using

Single-Prime Bidding

Public Owner


and Consultants


Prime Contractor

PlumbingPrime Contractor

ElectricalPrime Contractor

General ConstructionPrime Contractor

Selection Design

Construction

Construction Manager

Bid-Selection

Figure 3. Construction Manager at Risk

During design the public ownercreates the project requirements, alsoknown as the project program. Also, thedesigners develop the design documentson the basis of those requirements.

Next, the designers createbid pack-ages for the following trades: heating,ventilating, and air conditioning; plumb-ing; electrical work; and general con-

struction (any work not includedin the other three categories). Thenbidding begins on the constructionproject. Bids are received from pro-spective prime contractors and awardedto the lowest, most responsible bidders.At the end of the bid phase, contractsare executed with each of the primecontractors.

In the final phase, construction takesplace. Under this method, it occurs afterthe design documents are complete, andthe pubic owner contracts separately withthe designers and the prime contractors.

Design-bid-build using single-prime

bidding. This project delivery methodalso has four sequential phases: selection,design, bid, and construction. Activities


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f a l l 2 0 0 4 25

prospective construction managers.11

The construction manager is selected onthe basis of qualifications.

Once the construction manager isselected, the contract has two phases ofexecution. In the preconstruction phase,the construction manager works with

the public owner and the designers untilthe design documents are about 80percent complete. Then the contract isrenegotiated to include a guaranteedmaximum price for the construction.12

After the guaranteed maximum pricehas been set, the construction manager

may begin construction, even though thedesign documents are not complete. Ifconstruction begins early, the constructionmanager creates multiple bid packagesfrom the incomplete design documentsand opens bidding.13 Contracts areawarded to the lowest, most responsiblebidders, and construction takes place.

Under this method, constructionbegins before the design documents arecomplete. Also, the public owner con-

tracts with the designers and the con-struction manager, and the constructionmanager contracts with the primecontractors and the subcontractors.

Design-build. Unlike the design-bid-build and construction-manager-at-riskmethods, this method has only three

phases: bid-selection, design, and con-struction. The public owner first pre-pares a detailed project program andthen requests proposals to attract adesign-builder. The design-builder iseither a single company or a partnershipof two or more companies. Several

companies are selected on the basis oftheir qualifications.

The design-builders then developdetailed proposals, which include designdocuments and a cost for construction.A proposal is selected on the basis of thelowest, most responsible bid.14 As withthe construction-manager-at-riskmethod, the design-builder may beginconstruction after being hired. Underthis method, construction begins before

Public Owner


Subcontractor

PlumbingSubcontractor

ElectricalSubcontractor

General ConstructionSubcontractor(s)

Bid-Selection

Design

Construction

Design-Builder

Figure 4. Design-Build

in the selection and design phases arelargely the same as in separate-primebidding. The exception is that the de-signers create one bid package from thedesign documents, as opposed to mul-tiple packages.

After one bid package is developed,construction bidding begins. Bids arereceived from general contractors and

awarded to the lowest, most responsiblebidder. At the end of the bid phase, onecontract is executed.

Construction is the projects finalstage. It takes place after the design doc-uments are complete. The public ownercontracts separately with the designersand the general contractor, and thegeneral contractor holds contracts withsubcontractors.

Construction manager at risk (con-

struction management).9 As with thedesign-bid-build methods, there are four

phases of project delivery: selection (of adesigner), design, bid-selection (of a con-struction manager), and construction.First, the public owner develops the pro-ject program and then requests proposalsfrom prospective designers.10 As withother methods, the public owner awardsthe contract on the basis of qualifications.

The designer then develops designdocuments. During this process thepublic owner requests proposals from

Employing single-prime bidding on less complex projects has ensured a

single source of responsibility. Many institutions have found that the pre-

qualification of these hard-bid contractors is worth the effort on most jobs.Kevin MacNaughton


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the design documents are complete.The public owner contracts only witha design-builder.

Findings

The study found that opinions varygreatly on the relative merits and risksof each method. The findings are pre-sented in the following sections accord-

ing to the evaluation criteria identifiedearlier.

Controlling Project Costs

Although many studies claim to have de-termined the most cost-effective or theleast-expensive project delivery method,as noted earlier, the task is impossible.So, for each method the questionnaireasked ifproject costs were always metand usually reduced, typically met and

rarely reduced, or rarely met and neverreduced. I deemed the most effectivemethod to be the one cited by the highestpercentage as always meeting andusually reducing project costs.

Overwhelmingly, experts indicatedthat the construction-manager-at-riskmethod is the most effective. (For agraphic presentation of the results, seeFigure 5.)

Seventy-three percent of the expertsresponded that costs are always met andusually reduced because the construc-tion manager assumes the financial riskassociated with any profit or loss.15 Ifthe budget is exceeded, the constructionmanager must work without charge toarrive at the guaranteed maximum price.

Experts also ranked this methodhigh because the construction manageris involved in all project phases. There

are more opportunities for valueengineering and cost estimating.

Even though this method rankedhighest, experts said that public ownersmay have difficulty enforcing the con-tract. The guaranteed maximum price isbased on incomplete design documentsand is a defined price for an undefinedproduct.

The design-build method also is

effective in controlling project costs,although not as effective as theconstruction-manager-at-risk method.Forty-seven percent of experts respondedthat costs are always met and usually re-duced. Additionally, 53 percent respondedthat costs typically are met. Expertsranked this method high because thereare not as many change orders or asmany claims stemming from errors andomissions in the design documents. The

GlossaryBid package: A group of documents

issued to contractors who are

bidding on a construction project.

The documents include information

on the bidding process and the

design documents (see below); also

called bidding documentsorinvitation to bid (ITB) package.

Change order: A revision in the con-

tract documents after the execu-

tion of the contract. A change

order is an order to change the

work to be performed under a

contract. It is usually given by the

public owner to a general or prime

contractor (see column 3) or by a

general or prime contractor to a

subcontractor.

Cost estimating: Calculation of the

approximate direct and indirect

costs of the project.

Design documents: The construction

documents and the project specifi-

cations. The construction documents

are drawings that describe the

construction requirements. The

project specifications are detailed

written instructions, which explain

each phase of work to be done.

For example, the drawings will

show the size and the location of

a duct, and the specifications willdefine the manufacturer of the

duct and the construction tech-

nique to install it.

Designer: Architects; landscape archi-

tects; civil, structural, mechanical,

plumbing, and electrical engineers;

technical consultants; and specifica-

tions writers.

Guaranteed maximum price: An

amount stipulated in a construction

contract as the maximum sum pay-

able by the public owner to the

construction manager for the work

specified.

Long lead time: The extended period

required to manufacture certain

materials. Long lead times may

create scheduling delays if the

items involved are needed before

they are manufactured.

Phased construction: Overlapping

of design and construction, also

called fast tracking. The con-

struction schedule is compressed by

overlapping some activities that

otherwise would be performed

sequentially. Phased construction

increases project delivery speed

because construction can start

before the design documents are

complete. An example is to start

site work and construction of the

foundation before the interior iscompletely designed.

Prime contractor: A company respon-

sible for all facets of construction

or renovation of a building, in its

particular trade: (a) heating,

ventilating, and air conditioning;

(b) plumbing; (c) electrical work;

or (d) general construction (anywork not included in the other

three categories). The prime con-

tractor employs a subcontractor

or subcontractors to perform some

or all of the work associated with

its specialization.

Project costs: The direct and indirect

costs associated with the execution

of a project.

Project program, project require-

ments: A general project descrip-

tion, including project objectives,functional uses, occupancy require-

ments, and budget and time

considerations and limitations.

Proposal: The document submitted by

a bidder to a public owner for

design and/or construction of a

project; also called bid.

Underbid: To submit a bid that is less

than the cost to perform the work.

Value engineering: The process of

analyzing the direct cost versus the

value of alternative materials,equipment, and systems.


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owner can make changes in the projectprogram at a moderate cost during thedesign phase because construction hasnot begun.

Overall, however, the design-bid-build methods together ranked low andthe separate-prime bidding methodranked last, with 60 percent of experts

responding that costs are rarely met. Oneexpert attributed the low rankings to thecontract-selection process. Because thecontract is awarded to the lowest, mostresponsible bidder, contractors tend tounderbid when they know that the projecthas problems. The problems will createchange orders later. Also, because thechance for change orders increases in pro-portion to the number of contracts madeon a project, public owners potentially

could have four change orders from adesign error when they are using separate-prime bidding, as opposed to one whenthey are using single-prime bidding.

Meeting the Project Schedule

The questionnaire asked, for eachmethod, whether the project scheduleis always met and usually accelerated,

typically met but rarely accelerated,or rarely met and never accelerated.According to the experts, the design-build method is the most effective inmeeting or accelerating the projectschedule. Sixty-four percent of expertsresponded that schedules are alwaysmet and usually accelerated, and 36percent reported that schedules aretypically met. (For a graphic presenta-tion of the results, see Figure 6.)

designers and the constructors (thegeneral contractors or the prime con-tractors) are under one contract. Further,as with the construction-manager-at-riskmethod, a project using this approachbenefits from increased value engineer-ing and cost estimating during design.

Nevertheless, public owners shouldbe aware of the increased financial risks

of using this method. Because the fixedprice is based on the design documentsdeveloped during the bid phase, changesin the project program are likely to oc-cur. Any such changes can be costly onceconstruction is under way.

Although not as effective as the others,the two design-bid-build methods alsowere effective in controlling projectcosts. Thirteen percent of experts re-

ported that costs are always met andusually reduced using either design-bid-build method. Also, 67 percent respondedthat costs typically are met when using

the single-prime bidding method, and27 percent responded that they typicallyare met when using the separate-primebidding method.

With these methods the public ownerbenefits from the designers expertise andadvice. It also benefits from separatingthe designers from the contractor(s).The separation creates a system ofchecks and balances. Unlike the casewith the other two methods, the public

We have used construction manager at risk with great success.We built our

new Justice Center under this method,and we just awarded bids for several

large water department projects under a construction-manager-at-risk

contract.In both instances the bids came in under projection.The Justice

Center project came in on time and on budgetunheard of in government

construction projectsand we saved over half a million dollars on the water

department bids.So the finance officer,David Clawson,and I are big fans of

this contracting method.

Norma Mills, attorney, Dare County, North Carolina

HARRYLYNCH/NEWS&OBSERVER


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Experts responded favorably to thismethod because phased construction canoccur. Using this approach, the design-builder can avoid scheduling delays byidentifying long lead times early.

Even though this method rankedhighest in the study, one expert remarkedthat public owners with committeesmay encounter problems. In some cases,

committees with multiple stakeholdersmay prolong the decision making.Phased construction relies on speedydecisions from the public owner.

The construction-manager-at-riskmethod also is effective in meeting oraccelerating the schedule. Fifty-threepercent of experts responded that theschedule is always met and usuallyaccelerated, and 47 percent respondedthat the schedule is typically met.

As with the design-build method,phased construction explains the high

ranking. However, design-build reapsthe benefits of phased constructionearlier in the process than constructionmanager at risk. Also as with design-build, public owners must gain inputfrom the stakeholders more quickly andearlier in the design process to reap thetime savings of the phased construction.

The two design-bid-build methodsalso were effective in meeting and ac-celerating the schedule, although less sothan the other methods. Sixty percent of

experts responded that the scheduletypically is met using the single-primebidding method, and 33 percent of ex-perts responded the same for the separate-prime bidding method.

The main benefit to the public owneris the systematic checks and balancescreated by separating the designer andthe contractor(s). The designers scru-tinize construction operations, while thecontractors carefully review construc-tion administration by the designers.

Even though several experts favored

these methods, they ranked low overall.Twenty-seven percent of experts respondedthat the schedule is rarely met using single-prime bidding, and 60 percent respondedthesame for separate-prime bidding.

Experts suggested that public ownersbe aware that stakeholders take theinitial decision deadlines less seriouslybecause changes can be made later.Another challenge with these methodsis that checks and balances can create a

Figure 5. Controlling Project Costs

Note: The method in bold type is the most effective in meeting the project schedule.

Figure 6. Meeting the Project Schedule

Note: The method in bold type is the most effective in controlling project costs.

Separate-PrimeBidding

Single-PrimeBidding

Construction

Manager at Risk

Design-Build

13%

27%

60%

13%

67%

20%

73%

47%

20%

7%

53%

0%

Project costs are always met and usually reduced.

Project costs are typically met and rarely reduced.

Project costs are rarely met and never reduced.

7%

13%

33%

60% 60%

27%

53%

47%

0%

64%

36%

0%

The project schedule is always met and usually accelerated.

The project schedule is typically met and rarely accelerated.

The project schedule is rarely met and never accelerated.


Single-PrimeBidding

ConstructionManager at Risk

Design-Build


8/10

strained relationship and hinder co-ordination. This is especially importantin separate-prime bidding becausethe designer may work with four primecontractors.

Ensuring a Quality Project

The definition of what makes a qualityproject varies in the construction indus-try. Because of this, the questionnaireasked whether the functional and

aesthetic goals of a project are met,rather than asking if the methods ensurea quality project.

There was little distinction amongthe methods. Forty percent of expertsresponded that functional and aestheticgoals are always met using single-primebidding, construction manager at risk,or design-build. Twenty-seven percentthought that using separate-prime biddingis best. (For a graphic presentation of theresults, see Figure 7.) Overall, experts

indicated that public owners have thegreatest chance for a quality projectusing construction manager at risk.

Under construction manager at risk,public owners benefit from having inputfrom construction personnel duringdesign. This also is a characteristic ofdesign-build. However, a conflict ofinterest can occur under design-build.Unlike the case with constructionmanager at risk, with design-build, thedesigner is no longer an independentadviser. When using this method, public

owners should be aware that the design-builder is likely to cut corners because itboth interprets design needs and mayseek the lowest cost alternative.

Like the case with construction man-ager at risk, under the design-bid-buildmethods, the designer is an independentadviser. (That is, under these methods theowner holds separate contracts with thedesigner and the construction manager,so they are not contractually responsible

to the prime or general contractors.)Because of this and the expanded designphase, several experts indicated that aquality product is more common whenusing these methods. The designers are

not under a deadline to produce high-quality design documents. All expertsagree that having good design documentsensures a quality product.

When asked about the risks of

these methods, experts again cited thecontract-selection process. One ex-plained that even well-qualified firmsmay be forced to shortchange the publicowner on quality of supervisory staff inorder to submit a bid low enough towin. Public owners should be aware ofthis risk and the probability that short-

changing will multiply as more con-tractors become involved.

Reducing the Administrative Burden

Experts were asked whether the publicowner is less involved, moderately in-

volved, or highly involved in the design,bidding, and construction phases.Responses indicated that design-buildcalled for the least involvement, thusproviding the greatest reduction ofadministrative burden. It was followedby construction manager at risk.Design-bid-build using single-primebidding ranked a close third, and

separate-prime bidding ranked last.In general, the results indicate that

the administrative burden increases withthe number of contracts. The design-build method benefits the public ownerby involving only one contract. There isonly one line of communication for theowner. With construction manager atrisk and single-prime bidding, the publicowner holds two contracts, and withseparate-prime bidding, five. Each con-tract involves developing a biddingpackage, issuing it, receiving proposals,

evaluating them, negotiating the contract,and overseeing its implementation.

Even though the design-bid-buildmethods ranked low, experts stated thatthey are easy to understand and publicowners have worked with them forsome time. Many experts said that thereis confusion in the industry because the

construction-manager-at-risk and design-build methods are relatively new andare used differently. For example, withconstruction manager at risk, opinionsdiffer about when proposals should berequested for the construction manager.

f a l l 2 0 0 4 29

By all accounts the multiple-prime delivery system for this campus was a

total disaster,and we have absolutely no intention of using this system for

future construction projects.The majority of our future projects costing more

than $15,000,000 will be candidates for construction manager at risk. The

balance will in all likelihood be bid and awarded on the single-prime basis.Clyde D. Robbins, director of design and construction, Appalachian State University

Dare County found through experience that the single-prime process

provided only a guaranteed minimum price for our new Justice Center and

that the only incentive for maintaining a schedule was a punitive one in the

form of liquidated damages.After much research and discussion and since it

was before the passage of Senate Bill 914,the county obtained local legisla-

tion to allow alternative methods for the project.The county ultimately

decided upon a design plus construction-manager-at-risk approach. [The

county had the design done before it solicited for a construction manager.]

We were able to obtain a guaranteed maximum price for the project,to in-

clude incentives for schedule improvements and for savings of the budgeted

contingency,and to obtain a quality product knowing that both the architect

and the contractor were on the same team and had the same boss.David Clawson, CPA, finance director, Dare County


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Some public owners request proposalsfor the designers and the constructionmanager at the same time, while othersrequest proposals for the constructionmanager after schematic design. Becausethese methods are relatively new, expertssuggested that public owners considerusing the design-bid-build methods untilmore experience is shared in the public

contracting industry.Regardless of method used, owners

involvement depends on how much timethey dedicate to a project. Experts thinkthat public owners should carefullyjudge their involvement and capacitylevel so that they do not lose control ofthe project.

Further Considerations

Overall, the study reveals that expertsthink the construction-manager-at-risk

and design-build methods controlproject costs, reduce time, improvequality, and decrease administrativeburden more than the design-bid-buildmethods. However, public ownersshould recognize that additional factorswill influence their decision in choosingthe best method: whether or not theyare developing a project program;whether or not they are working withmultiple stakeholders; and whether ornot they are using in-house design and

construction staff.First, experts agree that the key to asuccessful project is a comprehensiveproject program. Some project deliverymethods offer greater assistance thanothers during this process. Public ownersshould consider the design-bid-buildmethods if they do not develop a projectprogram because the design periodallows for more time. Because theconstruction-manager-at-risk anddesign-build methods have shorterdesign phases, public owners must

ensure that a program is developedearly using construction manager at riskand is well developed for design-build.For example, with design-build, develop-ment includes classifying detailedbuilding components early on.16

Next, stakeholder involvement mayforce public owners to choose one ofthe two design-bid-build methods. Thelonger design period of these approachesallows interest groups representing


Figure 8. Reducing the Administrative Burden

Note: The method in bold type is the most effective in reducing the administrative burden.

Figure 7. Ensuring a Quality Project

Note: The method in bold type is the most effective in meeting the functional and aesthetic goals

of a project.

27%

20%

53%

40%

47%

13%

40%

7%

53%

40% 40%

20%

Functional and aesthetic goals are always met.

Functional and aesthetic goals are usually met.

Functional and aesthetic goals are rarely met.


Single-PrimeBidding

Construction

Manager at Risk

Design-Build

16% 16%

31%

53%

62%

22% 22%

51%

27%

56%

22% 22%

The public owner is less involved in the design, procurement, and construction phases.A design and construction representative allocates minimal weekly hours to contract oversight.

The public owner is moderately involved in the design, procurement, and construction phases.A part-time design and construction representative manages the contract(s).

The public owner is highly involved in the design, bid, and procurement phases.A full-time design and construction representative manages the contract(s).


Single-PrimeBidding

ConstructionManager at Risk

Design-Build


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several public agencies and the generalpublic more time to discuss options.The phased construction approach usedin the design-build and construction-manager-at-risk methods relies onspeedy decisions by the public owner.

Finally, public owners that have noin-house design and construction staffand whose staffs have heavy workloads

or no training with the construction-manager-at-risk or design-build methodsshould consider the design-bid-buildmethods until the public constructionindustry has more experience with theseapproaches.

Conclusion

Changes always are taking place in theconstruction industry. New tools areavailable to manage projects, and newbuilding techniques are being used.Each new approach spawns claims thatit will save money, reduce time, improvequality, and decrease administrative bur-den. To protect themselves from mis-leading claims, public owners should stayabreast of new laws and information.

This study has shown that expertsconsider the construction-manager-at-risk and design-build methods to bethe best for controlling costs, reducingconstruction time, improving quality,and decreasing the administrativeburden. However, public owners maynot realize the benefits of thesemethods if their project program is notwell developed, many stakeholders areinvolved in decision making, and their

f a l l 2 0 0 4 31

staff is less experienced. Because ofthis, public owners may find that thedesign-bid-build methods, especially thesingle-prime bidding method, will con-tinue to be useful in many situations.

Notes

1. The federal government has separateprocedures for project delivery. The laws ofNorth Carolina do not apply to Army Corpsof Engineers projects, federal buildings, orfederal military bases in North Carolina.

2. N.C. GEN. STAT. art. 8, PublicContracts, 143-128 [hereinafter G.S.].

3. G.S. 143-135.26(9).

4. To make a comparison, one would haveto replicate a project exactly under eachproject delivery method. This would meanusing the same design, staff, site, and timeframe simultaneously.

5. The goals were developed during theliterature review.

6. Confidentiality was assured to theexperts during this research.

7. Representatives from the AmericanInstitute of Architects, the Associated Gen-eral Contractors of America, Design BuildInstitute of America, and Construction Man-agers Association of America are currentlycollaborating on developing industry-widedefinitions documenting the variations foreach method.

8. The public owner develops the selectioncriteria. They may include the public ownersprevious experience with the firms, and thefirms financial capability, staff qualifications,history of litigations and disputes, andreferences from past clients. Bids are solicitedusing a request for proposals (RFP) or arequest for qualifications (RFQ).

9. The term at risk refers to theconstruction managers assuming high risk,for example, for the performance and thefinancial stability of subcontractors andvendors, fluctuations in prices of materials,adherence to schedule, and weather changes.The high risk also is linked to a guaranteedmaximum price, which is explained later inthe article.

10. In some cases the public owner at-tempts to attract a company that has theability to perform both design and construc-tion management. If that happens, theninstead of requesting proposals for a secondtime, it renegotiates a guaranteed maximumprice with the company later in the designprocess.

11. Several experts noted that the selectionprocess takes place when the schematic-designphase of design is complete.

12. The public owner determines thepoint in the design phase when the guaranteedmaximum price is to be negotiated. Severalexperts indicated that the guaranteed maxi-mum price is negotiated toward or at the end

of the construction-documents phase.13. As with design-bid-build with separate-

prime bidding, bid packages may be preparedfor heating, ventilating, and air conditioning;plumbing; electrical work; and generalconstruction.

14. After the design-builders develop theproposals, the public owner critiques eachone. Then each design-builder respondswith design changes that make all theproposals technically equivalent, adjustingthe price accordingly. The public ownerevaluates the revised proposals and makesthe award on the basis of the lowest price.

A lowest-price award is made because thepublic owners critique created equivalentdesigns.

15. Experts revealed that savings producedduring the execution of the contract revertto the public owner. In some cases the publicowner and the construction manager sharethe savings. This is known as a sharedsavings program. When the direct projectcosts, including profit and overhead, areless than the guaranteed maximum price,the construction manager and the publicowner share the difference on the basis ofsome stipulated percentage. Experts saidthat the shared savings program providesan additional incentive to the constructionmanager to control project costs.

16. An example of such a component is abuildings air handling units. The term airhandling unit refers to equipment that isdesigned to move conditioned air. It containsfans, filters, and heating or cooling coils.Units can be classified as either a centralsystem or a unitary system. Unitary equip-ment can be classified as a rooftop unit, aunitary package unit, a unitary split system,or a compound room unit.

Appalachian State University has to date initiated three projects using the

construction-manager-at-risk delivery system:the Library and Information

Commons ($47,586,800),the Rankin Science Addition and Renovation

($11,157,000),and the Athletic Facilities Addition and Renovation($16,000,000).The library project is proceeding in excellent fashion

on budget and ahead of schedule.The construction-manager-at-risk

method for the Rankin project did not meet our expectations and was not

continued beyond the preconstruction phase.The project was subsequently

bid and awarded using the single-prime delivery system, which to date is

proceeding satisfactorily.Clyde D. Robbins

choosing the right project-delivery method

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