The construction of large-scale infrastructure hinges on the coordination of multiple construction services, most notably design, planning, and construction. Though every project includes these elements, the way they are coordinated contractually throughout the execution of a project can vary greatly. The most commonly used construction project delivery methods can offer drastically different pros and cons - yielding various levels of risk and reward, depending on the project focus and type.
What is construction project delivery?
Construction project delivery is defined by the specific method or organization of the contractual agreements between project stakeholders - usually the project owner, designer, and builder. Adaptation of these relationships under varying project delivery methods in the construction industry helps stakeholders meet distinct project objectives. Those objectives may include a focus on restrictions in budget, adherence to project scope, mitigation of risk, timeline or scheduling constraints, and consideration of stakeholder experience and qualifications.
Project delivery methods in construction of large-scale infrastructure
While there are many different project delivery systems in the construction industry, construction delivery methods used for large-scale infrastructure usually adhere to a few common models. These include Design-Bid-Build, Progressive Design-Build, Construction Manager At-Risk, and Integrated Project Delivery. While there are many alternative delivery methods (such as Public-Private Partnerships, Design-Build, and Unsolicited Bid processes), they are less commonly used in construction of large-scale infrastructure projects within the US - often, due to complications of transparency and legality.
Some historical context may be helpful in understanding the development and usefulness of certain construction project delivery methods. Many large-scale infrastructure projects are publicly funded, and the need for processes such as Design-Bid-Build arose from the desire to impede cronyism, favoritism, or other unethical practices in the assignment of government work or public contracts. Concern over corruption inspired the US government, in particular, to focus on the use of project delivery systems for construction which offered deeper transparency into contract assignment.
Today, myriad construction delivery methods exist - each with their own distinct advantages and disadvantages. Here, we’ll go over the most commonly used project delivery methods for construction of large-scale infrastructure - including the benefits and drawbacks of each, and how leveraging AI-driven tools can support your chosen construction delivery methods.
Common construction delivery methods - an overview
Design-Bid-Build
The most commonly-utilized project delivery method in construction of large-scale infrastructure projects is Design-Bid-Build. Required by law in most areas of the United States, it is typically used on publicly-funded projects such as the construction of transportation infrastructure, government facilities, and other public institutions (such as schools or universities).
The process for construction project delivery within the Design-Bid-Build delivery method flows from the owner, who contracts an architect for completion of the project design. After completion of the design phase, contractors are invited to submit their bids for completion of the construction phase. Bids are collected and reviewed by the owner and architect. The most appropriate bid is selected from those submitted, and the contractor responsible for the chosen bid is then awarded the construction contract.
In this process, there is no opportunity for collaboration between design and construction teams when developing the scope of work, as all drawings and specifications are completed prior to request for bid. The owner is also responsible for coordination/communication between stakeholders, who are separately contracted.
Pros:
- Fair and transparent process. Bidding is either open to public submittal, or offered to a range of pre-qualified contractors - eliminating the risk of favoritism, or other corruption within the selection process.
- Increased competition. Developers and construction contractors interested in consideration must tailor their approach and estimates to blind comparison with other candidates. This incentivizes contractors to lower their cost of construction - and to develop qualified, experienced project teams - in order to maintain competitiveness.
- Reduces cost of construction. Especially in the realm of public works, the Design-Bid-Build delivery method is preferred for its emphasis on selection of the lowest reasonable bid, conserving the use of public funds.
Cons:
- Diminished quality of work. Awards are often assigned to the lowest bid - which often incentivizes contractors to sacrifice quality in favor of lowered construction costs. The use of budget subcontractors or cheap materials may result in lower overall quality of construction.
- Increased disputes over competing interests. The disconnect between design and construction teams leads to competing interests, particularly in the balance of quality versus economy. Disputes between the architect and general contractor may trigger delays in construction which impact the project timeline.
- High risk for general contractors. Scope of work accuracy pivots on the receipt of detailed, high-quality drawings and specifications. Faulty or incomplete designs may lead to scope-of-work changes that delay construction, inflate costs, and increase contractor exposure to risk.
ALICE can help by:
- Reducing cost (without diminishing quality of work). There are many resource inefficiencies lurking in large and complex projects. ALICE helps GCs assess their true project cost, and analyze valuable alternatives - without sacrificing quality of build. When budget overruns loom, ALICE’s resequencing capabilities can help a general contractor regain their ground without skimping on labor or materials, proposing alternative build scenarios that offset cost through optimized use of available resources.
- Prioritizing constraints. When competing interests collide, ALICE offers speedy resolution. Customized prioritization of project constraints allows GCs to model what-if scenarios, and present a side-by-side comparison of pathways forward.
For example - in the below diagram, projections for completion according to the baseline schedule are represented in green. When compared to potential scenarios optimized to utilize the maximum number of onsite crews (represented in red), we see that a slight increase in labor cost is offset by schedule acceleration, reducing time-to-completion by approximately 200 days.
In the above scenario, the baseline schedule of a distressed project is adjusted to maximize application of labor, allowing the general contractor to weigh the cost and benefit of a 200-day acceleration to the project timeline.
Often, ALICE presents GCs with innovative solutions that improve both cost and time-to-completion, simultaneously - but on a distressed project which requires speedy recovery to avoid liquidated damages, the ideal scenario proposed above ($56M / 870 days to completion) may be the perfect pathway forward.
- Revealing exposure to risk. ALICE can help GCs model and assess millions of potential construction scenarios in minutes - revealing hidden issues prior to bid submission. These issues may then be addressed in their scope of work, mitigating future exposure to risk.
Progressive Design-Build
In traditional Design-Build projects, an owner hires a construction contractor, who then supervises both the project design phase and construction via collaboration with an architect. Typically, the architect and contractor have formed a prior partnership, and respond to a request for proposal from the owner. The owner supplies project parameters, which are then used to develop a project design and estimate.
Historically, owners could expect a Design-Build proposal to outline performance guarantees - including either a fixed price, or a Guaranteed Maximum Price (GMP); proposal packages from multiple Design-Build teams would then be reviewed side-by-side for selection, with price weighing heavily in the selection.
The Progressive Design-Build method has slowly overtaken traditional Design-Build, becoming a preferred construction delivery method for large-scale infrastructure projects. Progressive Design-Build solves the pain points of the Design-Build method by shifting from proposal-based selection to qualifications-based selection of a Design-Build construction team, who is contracted to complete the first phase of the project - which includes design development, preconstruction, and price negotiation.
Decisions regarding cost, schedule, and so forth are made collaboratively, and a step-by-step design process incentivizes both parties to focus on project outcome. When preconstruction planning is finalized, a fixed price or GMP is set; the owner can then agree to continue the project under these terms with the current Design-Build team, or “off-ramp” and use the completed designs to pursue Design-Bid-Build construction project delivery.
Pros:
- Centralizes Accountability. Both the Design-Build and Progressive Design-Build construction project delivery methods consolidate accountability, by creating a single contract overseeing both design and construction. This makes it easy to determine who is at fault, should issues arise.
- Streamlines preconstruction. Eliminating the lengthy bidding process of the Design-Bid-Build method speeds up the process of preconstruction - and Progressive Design-Build further fast-tracks selection, by cutting out proposal submittals which may miss the mark.
- Favors qualified contractors. Progressive Design-Build emphasizes the skills, experience, and qualifications of the Design-Build team - ensuring they have what it takes to execute in accordance with project specifications and intended use.
- Improves collaboration & innovation. Contractors and architects work as a team, sharing responsibility, and supporting the most efficient solutions - and owners are also directly involved in relevant decision-making and planning. Innovation and creativity are supported by the collaborative process.
Cons:
- Limited use. Some government entities prohibit certain project delivery methods for construction which is subsidized by public funds. Progressive Design-Build is limited in use for large-scale infrastructure projects, as these projects are often financed by taxpayers, and have stringent transparency requirements.
- Extensive design phase. By involving the owner in collaborative design, Progressive Design-Build often extends the design phase significantly. While more robust planning is the usual outcome, getting there can require many iterations of the project design, schedule, and construction timeline - and that takes time.
- Drastic consequences for default. Should the worst-case scenario unfold, the consequences may be dire. Under the Progressive Design-Build project delivery method, the contracted project team may be held directly liable for postponements, delays, or hidden expenses that push project delivery outside of allotments for time and budget.
ALICE can help by:
- Improving transparency. ALICE provides stakeholders with deep insight - improving both preconstruction and construction. Options and decisions can be carefully modeled to reveal potential outcomes, prior to commitment - increasing transparency and confidence throughout the project lifecycle.
- Supporting speedy iteration. Collaborative design takes time - but ALICE speeds the process by leveraging the power of generative design for construction. ALICE’s powerful AI identifies all possible solutions for any issue - from design challenges to scheduling snafus - and generates alternative scenarios in record time. Stakeholders can easily explore what works - and what doesn’t. (Read this exclusive ebook to learn more about Generative Construction.)
- Triaging troubled projects. Slipped milestones can easily snowball into defaulted delivery. ALICE is great at realigning troubled projects, and getting them back on track - helping Design-Build teams maintain progression toward on-time delivery.
Construction Manager-at-Risk
Construction Manager-at-Risk (or CMAR) is an efficient project delivery method for construction of large-scale complex projects. In this project delivery method, the construction manager and the architect are separately contracted - however, the general contractor acts as a project manager, on behalf of the owner. As the Construction Manager, they are responsible for cost control, ensuring the project is completed within the GMP.
The construction manager is involved throughout the entire lifecycle of the project, and is responsible for ensuring that cost of construction remains within the allotted budget. If the project exceeds the GMP, the contractor is financially liable for any additional costs - thus “at risk” for any amounts which exceed the predetermined limit.
CMAR is generally considered very efficient for large, privately-funded projects, including large-scale infrastructure builds - however, legal restrictions commonly prohibit its use on publicly-funded projects.
Pros:
- Efficiency. CMAR establishes the Construction Manager as the single-point-of-contact, streamlining supervision and decision-making processes.
- Emphasizes experience. Inexperienced owners and developers may favor the CMAR method, as only the most reliable and experienced GCs are likely to accept the additional liability posed. This limits the owner’s maximum exposure to risk, allowing them to commit to larger projects otherwise beyond the reach of their expertise.
- Ease of management. The construction manager directly manages all relationships with suppliers and subcontractors, easing the burden of management, and streamlining the process of subcontractor communication and payment.
Cons:
- Estimate issues. Faulty design or an inaccurate estimate can lead to serious issues with a CMAR project, as budget overruns or unexpected costs can trigger downward pressure on subcontractors or suppliers.
- Quality control. Responsible to the bottom line, construction managers may be incentivised to cut costs on workmanship or materials, in order to maintain control over project budgets, and meet stringent GMP requirements.
- Single point of failure. The CMAR method for construction project delivery places responsibility solely on the construction manager - which makes them the single source of failure. Should a general contractor become overwhelmed, or fail to maintain proper oversight on a project, budgets and deadlines can quickly slip, leading to quickly compounding damages.
ALICE can help by:
- Ensuring accurate estimates. ALICE considers all aspects and parameters of a project during preconstruction, helping GCs and construction managers ensure that their estimates are accurate and complete, from the start.
- Budget prioritization. When budget constraints are of utmost importance, GCs can use ALICE to reveal cost-saving approaches, at any point in the project lifecycle. Optimized scheduling and clever utilization of resources onsite can help GCs maximize cost-efficiency, without skimping on labor or materials.
- Increased transparency. Comprehensive oversight is critical to a CMAR project - and ALICE delivers. GCs and construction managers can leverage ALICE to maintain accurate insight and control over project progression, increasing communication and transparency throughout the project lifecycle.
Integrated Project Delivery Method
Integrated Project Delivery (IPD) harnesses the talents and insights of all project stakeholders to optimize productivity, increase owner value, and maximize efficiency throughout the entire project lifecycle. The Integrated Project Delivery (IPD) method for construction is a collaborative approach, which utilizes one contractual arrangement to collaboratively align the business interests of all parties. Project profits and risks are pooled, and divided amongst stakeholders as incentive. Mutual trust and teamwork is emphasized, to increase efficiency and optimize project results.
The Integrated Project Delivery method is best aligned to the complex construction of large-scale infrastructure projects, or those with long duration and multi-million dollar budgets (such as higher education, healthcare, and manufacturing facilities). Integrated Project Delivery’s focus on collaborative delivery methods offers value through innovative construction process improvement and increased communication, with shared risks and rewards driving successful project delivery.
Pros:
- Highly collaborative. The project owner, architect, and construction manager, work collaboratively as one project team, sharing risks and rewards for project success.
- Scope and budget alignment. Integrated Project Delivery’s targeted cost approach is maintained through consistent project oversight, and sharing of real-time data on project progression, throughout the entire lifecycle.
- Economical and innovative. When changes occur throughout the Integrated Project Delivery construction process, a proactive communication with an integrated team results in more effective problem-solving and adjustment, eliminating expensive redesign costs, and maintaining forward momentum.
Cons:
- Few qualified candidates. A highly integrated and qualified team is required to execute using the Integrated Project Delivery method, and few firms have the experience to support this method.
- Shared risk, shared reward. Trust is required to pursue this method, as pooled incentives also leave each stakeholder vulnerable to their weakest member - if one fails, all fail, and the damages can be significant.
- Communication is burdensome. A fully integrated approach to Integrated Project Delivery requires complete collaboration and ongoing communication between all parties. On large, complex projects, this can mean increasing the burden of constant communication.
ALICE can help by:
- Providing comprehensive oversight. ALICE tracks each detail of your project from start to finish, decreasing reliance on human resources - and enabling constant, consistent view into all aspects of the entire project, and its progression.
- Mitigating exposure. All parties involved can leverage ALICE’s powerful AI to proactively identify possible barriers to progression, and mitigate exposure to risk before it affects shared profits.
- Reduces collaborative burden. By democratizing access to project data, ALICE enables stakeholders to focus on what they do best - eliminating redundant data processing, and burdensome information requests. Team members can easily examine project project progression, adjust scheduling to create beneficial scenarios, and optimize project constraints and controls - maintaining focus on what matters.
When it comes to construction of large-scale infrastructure, your chosen project delivery method matters. So does your choice of software for construction scheduling and management. ALICE was designed to leverage the utmost in Artificial Intelligence to optimize the construction delivery process - helping you win bids, model contingencies, and lower variance to final cost.
Schedule your demo today, to learn how ALICE helps publicly-funded projects maximize use of taxpayer dollars - improving both cost of construction and time to completion.