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 cost to lowest common element.
- Change orders are disruptive, not readily accommodated – Pricing to recoup initial low costs bid.
- Contractor uninvolved/uninformed during planning stage.
- Quality of budget dependent on accumulation of bids.
- Only focus is on lowest price.
- Assumes quality construction will be the result of strict documents, regardless of contractor ability.
- Schedule is often adversely affected for price.
Negotiated (Design/Construction) Risks and Rewards
- Proper risk allocation is reflected in allocation of appropriate cost to various parties.
- Relationships between owner, architect, and contractor are based on respect and trust, creating a team environment.
- Owner, architect, and contractor are on even level, working for mutual benefit.
- Owner can choose cost/quality trade-offs; more emphasis on value.
- Changes are readily accommodated and priced accordingly.
- Contractor involved in planning and implementation of project goals.
- Early budget input from contractor’s conceptual estimates.
- Contractor/subcontractor selection based on successful performance and reputation.
- Considers experience, quality, reliability, schedule performance, and creativity, along with price to calculate value.
Design/Build Risks and Rewards
- Architect/contractor design/build team established; focused on integrating owner into process.
- Contractor involved in planning and budgeting. Conceptual pricing assigned to design ideas allows owner informed decision making.
- Early definition of scope allows design/builder to establish Guaranteed Maximum Price (GMP) for owner’s budget.
- Time savings due to 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.