When comparing the risk and rewards of traditional, negotiated and Design/Build projects, it is easy to see the benefits of the Design/Build process.
Traditional Design/Bid/Build Risks and Rewards
- More risk for owner/architect/contractor.
- Relationship between owner/architect/contractor often adversarial.
- Parties must protect self-interests.
- Competitive bidding reduces the cost to the lowest common element.
- Change orders are disruptive, not readily accommodated – Pricing to recoup initial low costs bid.
- Contractor uninvolved/uninformed during the planning stage.
- The quality of the budget depends on the accumulation of bids.
- The only focus is on the lowest price.
- Assumes quality construction will be the result of strict documents, regardless of contractor ability.
- The schedule is often adversely affected by price.
Negotiated Design/Construction Risks and Rewards
- Proper risk allocation is reflected in the allocation of appropriate costs to various parties.
- Relationships between the owner, architect, and contractor are based on respect and trust, creating a team environment.
- Owner, architect, and contractor are on an even level, working for mutual benefit.
- The owner can choose cost/quality trade-offs; more emphasis on value.
- Changes are readily accommodated and priced accordingly.
- Contractor involved in the planning and implementation of project goals.
- Early budget input from the contractor’s conceptual estimates.
- Contractor/subcontractor selection based on successful performance and reputation.
- Considers experience, quality, reliability, schedule performance, and creativity, along with the price to calculate the value.
Design/Build Risks and Rewards
- Architect/contractor design/build team established; focused on integrating the owner into the process.
- Contractor involved in planning and budgeting. Conceptual pricing assigned to design ideas allows owner informed decision making.
- An early definition of the scope allows the design/builder to establish Guaranteed Maximum Price (GMP) for the owner’s budget.
- Time savings due to the overlap of design and construction activities.
- Implementation of a “fast track” process.
- Changes are routine and readily accommodated.
- Fees minimized due to centralization; no duplication; clear assignment of responsibilities.
- Project costs minimized through the use of innovative and cost-effective solutions.
- Better communication by involving all parties in all aspects of the project.
- Cooperative spirit brings out the best ideas of all parties.
- Realistic completion dates can be established and maintained.
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