Building Success Stories:
A Survey of Construction
Delivery Methods
PRESENTED BY:
BLAKE G. POWELL
Texas Government Code § 2269.001 et seq.
Construction Delivery Methods
Competitive Bidding
Competitive Sealed Proposals
Construction Manager-Agent
Construction Manager –At-Risk
Design-Build
Job Order Contracts
Competitive Bidding (“Hard Bid”)
TEX. GOV’T CODE § 2269.101 ET SEQ.
Construction, alteration, rehab/repair of a facility
Gov’t shall select A/E to prepare construction documents (“CDs”)
Request for bids must include: (CDs, estimated budget, scope and estimated project
completion date)
Advertise for bids
Publicly open and read aloud “names of the offerors and their bids”
Select (award to) lowest responsible bidder
Not later than 7th day following award, document basis and make evaluations public
Competitive Sealed Proposal (“CSP”)
TEX. GOV’T CODE § 2269.151 ET SEQ.
Gov’t requests proposals, ranks offers, negotiates then contracts for construction,
alteration,
rehab/repair of a facility
Gov’t shall select A/E to prepare CDs
Request for CSP must include: (CDs, selection criteria/weighted values, estimated
budget,
scope and estimated project
completion date)
Publicly open and read aloud names of the offerors and their monetary proposals
Not later than 45th day following award, document basis and make evaluations
public
Select (award to) proposer that submits “best value” based upon criteria values and
ranking
Construction Manager-Agent(“CMA”)
TEX. GOV’T CODE § 2269.201 ET SEQ.
Description: Standard method of construction contracting with award to the lowest
responsible proposers for each scope of work. Multiple prime contracts are awarded.
The CMa acts on behalf of the District in a fiduciary capacity for a fixed fee.
Prime Players: District, Architect/Engineer, Construction Manager Agent and
General Contractor or Multiple Prime Contractors.
Construction Manager-Agent(“CMA”)
TEX. GOV’T CODE § 2269.201 ET SEQ.
• Best Suited: Complex projects, schedule sensitive projects, or projects subject to change
• Least Suited: Utility projects
Advantages:
• Faster Delivery Schedule
• Helps Build Integrated Team
• Design Phase Builder Assistance
• Fixed Fee by the CMa so the District’s
best interest is always first
• Most Transparent Bid Process (Bids are
opened and read aloud at a deeper level
than normal)
• Check and Balance between A/E and
Contractor
Disadvantages:
• Multiple Prime Contracts
• Prime Contractors (Typically Subcontractors) are
required to have bonding and insurance as required by
law alleviating some firms from participating
Construction Manager-at-Risk(“CMAR”)
TEX. GOV’T CODE § 2269.251 ET SEQ.
Description: Construction Manager is brought on earlier in the design process to allow
for interface with design consultants. Selection can take into account factors in
addition to price, including vendor reputation, quality of goods or services and
vendor’s past relationship with the District.
Prime Players: District, Architect/Engineer, Construction Manager At Risk.
Enables fast-track delivery (beginning construction before design is complete)
Design-Contract-Build
Construction Manager-at-Risk(“CMAR”)
Best Suited: Larger projects that are complex , schedule sensitive, difficult to
define, and/or change subject to change
Least Suited: Smaller projects
Advantages:
• Faster delivery schedule
• Helps build integrated project team
• Design phase builder assistance/
expertise
• Early construction cost commitment
• Change flexibility
• Single point of responsibility for
construction
• Check and balance between A/E and
contractor
Disadvantages:
• Scope is not clearly defined if
selection occurs during design
process
• Percentage based fees promotes
higher budgets
• Hidden costs in GMP for cost of work
items
• Subcontractor bids are not always
“best value”
• Contractor controls Contingencies
Design-Build(“D-B”)
TEX. GOV’T CODE § 2269.301 ET SEQ.
Gov’t contracts with a single entity to provide design and construction services for
construction, alteration, rehab/repair of a facility
D-B firm must include and A/E
Gov’t must also select an A/E independent of D-B firm for project
D-B firm selected from RFQ criteria / best value / ranking process
Job Order Contracts(“JOCs”)
TEX. GOV’T CODE § 2269.401 ET SEQ.
Allowed for: “maintenance, repair, alteration, renovation, remediation, or minor
construction of a facility when the work is of a recurring nature but the delivery
times, types, and quantity of work required are indefinite”
Whether to use A/E depends on nature of the work
Gov’t may procure through CSP or Interlocal Contract
Gov’t may award to multiple contractors
Term may not exceed 2 years
Fixed or unit pricing allowed
Decision Making Factors
Time
◦ Start with the “end” in mind (maze mentality)
◦ When will you move in?
◦ “Back Into” your time schedule
Money
◦ What is the cost difference?
External Stakeholders
◦ What do they expect?
Control
◦ What level of control do I want to exercise?
Delivery Schedule
Figure 1 – Traditional Bid
Process
Total Delivery Time – In Months
Design
Bid
Build
Figure 2 – Design
Build/CM-at-Risk
Total Delivery Time – In Months
Design
Bid
Build
Decision Matrix
Contract Forms
Delivery Method
Contractor Form
Architect Form
AIA – A101 &
AIA – A201
AIA – B141
CM Agency
AIA – B801CMa (CM)
AIA – B141CMa
CM-at-Risk
AIA – A121 – CMc/AGC
Form 565
AIA – A201
AIA – B141
Design Build
AIA – A191 (part 1 & 2)
N/A
Traditional Bid/Sealed
Proposal
Purchasing Requirements for Subcontractors
• Competitive Sealed Proposals
• Public opening by owner
• Must define selection criteria
and weights
• CM – Agency
• Hard bid
• Public opening
• Competitive sealed proposals
• Multiple contracts
• CM-at-Risk
• Bids or proposals
• Opened privately
• Public only after ward
• Difficult for owner to evaluate
without good scopes of work
• Design/Build
• No requirements for subcontractor bids
Construction Cost Pyramid
Estimated
Cost
Start of
Project
CM/Contractor
Owner
GMP or
Hard Bid $
Summary of Subcontractor
Pricing, General
Conditions, Soft Costs, CM
Fees, and Contingency
Actual Cost
End of
Project
Cost of Materials, Labor, Insurance, Bonding,
Job Site Costs, and Change Orders
Timing the GMP
Consider the Split of Contingency
Narrow down the “Guesswork”
Inverse relationship between plan completion and contingency
Defining Contingency
Clearly define the components of “Cost of the Work”
◦ Closely related to timing of GMP
◦ Mostly used for items included in the plans, but not picked up by
◦ bidding process
Review all contract amendments carefully
Set rational expectations
Insist on monthly usage reports
Managing Disagreements
Delete Arbitration
Consider adding Non-Binding Mediation
Keep all transactions at “arm’s length” and within the contract
documents
Consider monthly meetings with all Parties
Consider Partnering
Avoiding Pitfalls
• Choose delivery method and
do it in a board meeting
• Follow the purchasing
statutes
• Use the right contract for
the method you have chosen
• Understand the components of
construction cost
• Time your GMP properly
• Clearly define contingency
• Manage disagreements effectively
Blake G. Powell
Powell & Leon, LLP
115 Wild Basin Road, Suite 106
Austin, Texas 78746
Phone: (512)494-1177
Facsimile: (512)494-1188
Email: bpowell@Powell-leon.com
www.Powell-leon.com