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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