Planning & Delivery Systems
Construction Engineering 380
Engineering Law
Planning and Delivery
• Quality, speed, and cost form the
management triangle of construction (and
other design and delivery systems)
time
time
quality
cost
Balanced job
quality
cost
Time constrained job
Planning and Delivery
• Project constraints affect choice of
planning and delivery system
• Business judgment, engineering judgment,
and legal judgment are all involved in the
management triangle, and decisions must
be made with an understanding of risk,
project goals, and constraints
Planning and Delivery
• Direct legal controls- registration,
licensing, award process, standards,
claims process
• Indirect legal controls- loss of efficiency,
contract and control ambiguity, cost of
collection, risk management
Planning and Delivery
• Contract award
– Public contracts- usually competitive bid
process of some kind
– Private contracts- market governed
• Contract pricing
– Fixed price (lump sum)
• Risk is with the contractor
• Contractual method for increasing price of contract
• Allows owner to better plan financing IF the plans
and specs are sufficiently complete & coordinated
Planning and Delivery
– Cost (Cost plus) contracts
• Beneficial when design conditions are uncertain or
incomplete
• Can be a problem for financiers of the project
• No incentive for designer or contractors to manage
cost
• Can put in a guaranteed maximum amount (G-Max
or GMP) and a cost-savings split option
• Jobs are usually open book
• Value engineering- is a gray area because of
intellectual property issues and bid-shopping
Planning and Delivery
– Unit price contracts
• Used when material estimates are impossible or
unreliable (soil excavation, remediation, asbestos)
• Good for repetitive work easily categorized
• How to handle “general conditions” needs to be
addressed
• Can be combined with other forms of contracting
(for instance, LHI on development projects)
Planning and Delivery
– Allowances
• Set a fixed amount for certain categories of work to
be included in the contract but final choices have
not been made (used frequently for equipment and
finishes)
• Variances are handled through change orders
• Must spell out net vs., gross, and how shipping,
OH, and other related costs are handled
Planning and Delivery
– Contingencies
• Unallocated money set aside in a contract for
uncertainties and other unforeseen (latent)
conditions.
Planning and Delivery
• Traditional delivery
– Design and construction are separated
– Design-bid-build sequence
– Wider range of design possibilities
– (theoretically) better quality control
– Contractor left out of the design process
– Adversarial relationships develop
– Cost “designed-in” early, hard to fix
Planning and Delivery
Cost of
changes
$
Cost of
design
time
Planning and Delivery
• Early design decision fix cost parameters
and constrain subsequent decisions
• Construction Management- three party
contracting
• Design-Build- single party contracting
• Fast-tracking (design-assist)
• Multiple Primes
• Turnkey contracting (land, financing, eq)
Planning and Delivery
• Partnering and teaming
– Becoming more formalized
– Set goals and expectations
– Develop trust and commitment to the project
– Build, operate, transfer
– Build, operate, own
• Privately financed infrastructure
• More common in lesser developed countries with
insufficient capital for water systems, sanitation