About the Presenters
 John Robinson
 General Manger/Illinois; Performance Services, Inc.
 David Binkley
 Director/Business Development; George Sollitt Construction Co.
 Tim Thoman
 Owner/President; Performance Services, Inc.
Program Outline
 Introductory Remarks - Bob Lanzerotti
 Construction Delivery Alternatives – David Binkley
 Guaranteed Energy Savings – John Robinson
 Questions?
Construction Delivery Alternatives
Traditional Architectural Design Phases
Percentage of Architect’s Professional Fee
Programming (5%) – Information gathering and definition of building issues
Schematic Design (10%) – Transform building issues into a graphic solution.
Ideally, the Construction Manager becomes involved during this phase
Design Development (20%) – Refine the design solution
Construction Documents (40%) – Convert the design into technical drawings
Bidding (5%) – By General Contractor or subcontractors (under CM) per Illinois
Procurement Code
Construction Administration (20%) – Confirm building in accordance with
Construction Documents
Construction Delivery Alternatives
General Contractor
Also referred to as; Design-Bid-Build or Lump Sum
Construction Manager (2 basic forms)
CM as Advisor (CM/a) – also referred to as “Agency”
CM as Constructor CM/c) – also referred to as “At-Risk”
with or without a Guaranteed Maximum Price
Construction Delivery Alternatives
Relationships – General Contractor
OWNER
No Contract
CONTRACTOR
HVAC
Plumbing
Fire-Protection
Electrical
Mason
Roofing
Glazing
Paving
Excavator
Landscape
Flooring
Painting
Drywall
Ceiling
Rough Carpentry
Millwork
Elevator
Specialties
Equipment
ARCHITECT
MEP/FP Engineer
Structural Engineer
Civil Engineer
Interior Designer
Cost/Scheduling Consultant
Acoustical Consultant
Theatrical Consultant
Roofing Consultant
Food-Service Consultant
Lighting Consultant
Security Consultant
Technology Consultant
A/V Consultant
Construction Delivery Alternatives
Pros/Cons - General Contractor
 PROS





Roles clearly defined - traditional and straightforward
Best suited for well defined, uncomplicated projects
Competitive – perhaps lowest cost depending on Change Orders
One contract to administer
Single-source responsibility
 CONS





No Contractor input during design
Contractor and subcontractor selection based solely on cost
Slowest delivery method
Contractor may attempt to enhance profit with Change Orders
Potentially antagonistic relationship with the Owner and Architect
Construction Delivery Alternatives
Relationships – Construction Manager as Advisor (CM/a)
OWNER
No Contract
CM
HVAC
Plumbing
Fire-Protection
Electrical
Mason
Roofing
Glazing
Paving
Excavator
Landscape
Flooring
Painting
Drywall
Ceiling
Rough Carpentry
Millwork
Elevator
Specialties
Equipment
ARCHITECT
MEP/FP Engineer
Structural Engineer
Civil Engineer
Interior Designer
Cost/Scheduling Consultant
Acoustical Consultant
Theatrical Consultant
Roofing Consultant
Food-Service Consultant
Lighting Consultant
Security Consultant
Technology Consultant
A/V Consultant
Construction Delivery Alternatives
Description – Construction Manager as Advisor (CM/a)
 CM’s Professional Fee and General Conditions are negotiated;
subcontractors are bid (per Illinois Procurement Code)
 CM is an “agent” and “advisor” to the Owner
 CM provides administrative and management services during preconstruction and construction phases
 Owner holds and manages contracts with subcontractors
 CM does not provide a Payment & Performance Bond; individual
subcontractors provide this bond
 Advisable for complex, fast or phased construction
 Flexible for projects of ill-defined scope or that are subject to change
Construction Delivery Alternatives
Pros/Cons – Construction Manager as Advisor (CM/a)
 PROS
 CM selection based on QBS process - Owner can choose their CM
 CM is District’s advocate throughout the process
 CM input is available during the design phase
 Cost / Schedule / Construction Logistics / Constructability
 Flexibility with regard to scope changes
 Allows for “Fast Track” construction
 CONS





Owner holds many contracts – Architect, CM and all subcontractors
More paperwork due to multiple contracts held by District
CM may lack leverage over subcontractors
CM makes no promises relative to cost
Architect’s authority during construction may not be clearly defined
Construction Delivery Alternatives
Time Saved using a Construction Manager
Traditional Schedule
Design
Bid
Build
Fast Track Schedule
Design
Bid
Bid
Bid
Build
Time Savings
Construction Delivery Alternatives
Relationships – Construction Manager as Constructor (CM/c)
OWNER
No Contract
ARCHITECT
CM
HVAC
Plumbing
Fire-Protection
Electrical
Mason
Roofing
Glazing
Paving
Excavator
Landscape
Flooring
Painting
Drywall
Ceiling
Rough Carpentry
Millwork
Elevator
Specialties
Equipment
MEP/FP Engineer
Structural Engineer
Civil Engineer
Interior Designer
Cost/Scheduling Consultant
Acoustical Consultant
Theatrical Consultant
Roofing Consultant
Food-Service Consultant
Lighting Consultant
Security Consultant
Technology Consultant
A/V Consultant
Construction Delivery Alternatives
Description – Construction Manager as Constructor (CM/c)
 CM’s Professional Fee and General Conditions are negotiated;
subcontractors are bid (per Illinois Procurement Code)
 You can essentially chose your GC utilizing this method
 CM serves as an “open book” GC
 Guaranteed Maximum Price (GMP) Option
 Cost-Plus Option (no promises relative to final cost)
 CM assumes risk for construction
 CM holds contracts with subcontractors
Construction Delivery Alternatives
Pros/Cons – Construction Manager as Constructor (CM/c)
 PROS
 CM selection based on qualifications - Owner can choose their CM
 Single-source of responsibility
 CM input is available during the design phase
 Cost / Schedule / Construction Logistics / Constructability
 CM has “leverage” over subcontractors
 Allows for “Fast Track” construction
 CONS
 CM’s allegiance may be divided between the Owner and profit, if under a GMP
 Possible adversarial relationship with the Owner and Architect
 Architect’s authority during construction may not be clearly defined
Construction Delivery Alternatives
Construction Manager as Constructor (CM/c)
Guaranteed Maximum Price
 Definition and Characteristics
 GMP = Cost of Work + Contingency/Allowances + CM Fee/General
Conditions
 GMP based on a specific set of design documents at a given time
 GMP is subject to additions and deletions due to changes in scope of work.
All costs above the GMP that are not approved by change order are
absorbed by the CM.
 Sharing or Return of Savings
 Unused contingency and/or allowances
 Anything that causes the Cost of Work to be less than the figure used to
establish the GMP
CONSTRUCTION DELIVERY
METHODS
IASBO Annual Conference
May 16, 2012
Advantages to Guaranteed Energy Savings
Contracts
• Sole accountability – no finger pointing
• Integrated team
• Guaranteed performance
– Energy savings
– Optimal learning environment
– No “change orders”
• Lower costs
– Lower soft costs
– Lower overall construction costs
Plan-Spec Project Accountability
Lots of cooks in the kitchen – who is accountable?
Guaranteed Contract Project
Accountability
One chef = full accountability
Contractual Accountability
Plan & Spec
Guaranteed Contract
Owner
Owner
Architect
Architect
Construction
Manager
Suppliers
Contractors
Subcontractors
No direct accountability
Qualified Provider
Suppliers
Subcontractors
Full accountability
Integrated Team
Provider’s integrated team consists of architects, engineers, project managers and
contractors working collaboratively together, shoulder-to-shoulder, to deliver the Best Value
proposal. If this team doesn’t out-listen, out-think and out-work the other two teams, they
lose the job. This collaboration and increase effort delivers better designs and more value.
Value of Team:
 Several brains are better than one –
collaborative synergy
 Contractors often know more about
what works best
Advantages to Guaranteed
Contracts
• Sole accountability – no finger pointing
• Integrated team
• Guaranteed performance
– Energy savings
– Optimal learning environment
– No “change orders”
• Lower costs
– Lower soft costs
– Lower overall construction costs
Energy Savings Guarantee
• Monthly measurement
– Utility bills
– Equipment operating data
•
•
•
•
Monthly collaboration with operators
Annual utility bill reconciliation
Goal: Energy Star certification
Hard guarantee
Learning Environment Guarantee
•
•
•
•
•
•
Temperatures: +/- 2 degree F
Carbon Dioxide: < 1,000 PPM
Humidity: < 65% RH
Background noise: < 45 dB
Drafts: none
Illumination: 50 – 80 foot candles
No “Change Order” Guarantee
•
•
•
•
Owner can still add scope to project
Not a transfer of contingency accounts
Owner’s cost for errors and omissions are eliminated
Since PSI team pays for mistakes
– Measure twice, cut once
– Spend far more time investigating existing conditions
– Persistent focus on processes that eliminate mistakes
No “Change Order” Guarantee
• No “value added” change orders
• Very limited “unforeseen condition”
contingency costs
– Only exceptions
• Unknown below the ground issues
• Unknown hazardous materials (i.e. asbestos)
• Examples
Advantages to Guaranteed
Contracts
• Sole accountability – no finger pointing
• Integrated team
• Guaranteed performance
– Energy savings
– Optimal learning environment
– No “change orders”
• Lower costs
– Lower soft costs
– Lower overall construction costs
Lower Soft Costs
• Architectural – engineering fees
– Plan & Spec: 7 – 10%
– Guaranteed Contract: 3 – 6%
• Contingency
– Plan & Spec: 5 - 7%
– Guaranteed Contract: 2%
• 2% is for scope additions
Lower Soft Costs
Penn State Study
Design-Build vs. Plan-Spec
Design Build delivered:
• Quality: 10% Higher
• Cost:
6% Lower
• Speed: 33% Faster
Source: Project Delivery Institute, 1999
Integrated team approach is better!
Lower Soft Costs
U.S. Dept of Commerce Study
Summary Results
“The use of the design-build delivery system tended
to yield better performance outcomes for ownersubmitted projects. These projects tended to have
better performance in cost, schedule, changes,
rework and practice use. “
Source: U.S. Dept of Commerce Report. “Measuring the Impacts of the Delivery System on Project Performance – Design-Build
and Design-Bid-Build,” Pg 49. November 2002
Cost Structure Comparison
Plan-Spec
Design-Build
Owner’s Cost
Owner’s Cost
Multiple Layers of Compounded Markup
Flat Markup
Architect
GESC Contractor
A&E/CM/GC/MC/CC
Construction
Manager
Masonry
Other
Contractor
General
Contractor
Mechanical
Contractor
Suppliers
Masonry
Control
Contractor
Suppliers
Subcontractor
Sheet
Metal
Electrical
Suppliers
Insulator
Advantages to Guaranteed
Contracts
• Sole accountability – no finger pointing
• Integrated team
• Guaranteed performance
– Energy savings
– Optimal learning environment
– No “change orders”
• Lower costs
– Lower soft costs
– Lower overall construction costs