Construction Manager/General Contractor (CM/GC) is a construction project delivery method that includes a qualifications-based selection for a designer, a qualifications-based selection for a contractor, and as the project scope is better defined, a lump sum price from that same contractor. A qualifications-based selection is a selection process based solely upon qualifications without consideration of price. The opposite would be a low-bid selection where as long as the contractors are pre-qualified to do that type of work the selection is entirely based upon the lowest bid. The designer and contractor are both procured near the start of the project.
In previous years most construction projects were completed using a process called Design-Bid-Build (DBB). Using this process, the designer was selected using a qualifications-based selection, a construction plan set was created, and the owner procured a contractor using a low-bid selection process.
More recently Design-Build (D-B) delivery methodology has been used on more projects in the northeast. In this case the designer and contractor team together and provide the owner a lump sum price. There are different formulas being used to incorporate some qualifications into the decision, but the cost is the predominant selection criteria.
One of the strengths of DBB is that for State Transportation Agencies this is the incumbent system. Their staff has been trained on this methodology throughout their careers, their systems and protocols are designed for this methodology, and through a contractual relationship with the designer, they have a great deal of control over the contract plans. The disadvantages are that there is little/no contractor interaction during the design process that can result in constructability issues and that federal construction dollars can not be secured until the design is completed, the advertisement period is completed, and a contractor is under contract. With the fluctuation of federal funding and unforeseen delays on other projects, using this method requires States to have more projects "on-shelf". On-shelf projects are projects where the design is completed, but construction is not funded. These projects can be built if there is an influx of unanticipated money, but there is a risk of having these projects need to be updated if left on-shelf for too long.
D-B is a delivery method with a strong track record for expediting delivery on mega-projects, typically projects of more than $100 million dollars. Due to bonding requirements, these teams are almost always led by contractors with designers in a subcontractor/subconsultant role. Advantages include continuous contractor feedback throughout the design process, maximization of the contractor's staff and equipment in the design, and the ability to secure federal construction funds at about the 30 percent design stage.The disadvantages include a significant loss of control by the owner of the final product. Specifications will still need to be met, bu,t for instance, final aesthetics of a bridge could vary radically. Hidden disadvantages include taking the designer away from their traditional business model. A great example is insurance. Owners often require designers to increase their insurance requirements for D-B projects, but in many cases that is wasted expense. The reason is that Owner/Contractor contracts, which D-B contracts generally follow, are warranty-based. The contractor is warranting the product meets the contractual provisions. Their bonds follow suit. Designer's professional liability insurance is fault-based. As long as designers followed a reasonable standard of care, then their insurance doesn't kick in. The difference between a product warranty and an engineer's standard of care is very significant and could have significant ramifications for contractor, owner, and designer if the project goes poorly.
During the stimulus and period following the on-shelf projects dried up. To ensure federal construction dollars were spent D-B delivery was elected to spend the money, instead of only selecting the best delivery method for the projects.
Lastly, I cited the effectiveness of D-B methodology on mega-projects (exceeding $100M). The jury is still out about how D-B scales down to smaller projects. I suspect that the effective cutoff for construction costs is somewhere between $30-$50 million where the process routinely works well. At lower cost projects, designers are becoming almost an irrelevant commodity, but even contractors lose economies of scale to the process. There will always be projects that fit the process better or well-oiled teams that can make the difference on these smaller projects, but I think over time it will be proven that lower dollar D-B projects are not effective. Initially many companies are willing to take a loss to have D-B experience, but it is not reasonable to think that once these companies have this experience they will continue to chase projects that do not provide a reasonable return on investment.
I think the middle ground between DBB and D-B can be taken up by CM/GC. This process can be scalable down to smaller sized projects, maintain the owner control of the design process, provide constructability reviews by the actual contractors, and will allow federal construction dollars to be secured earlier in the process. The disadvantages include the need for legislative authority, the learning curve for owners and contractors, and getting contractors on board with qualifications-based selection.
Contractors had less of a learning curve with D-B, while the designer's business plan was turned on its head. CM/GC is the designer's revenge. The process will be very familiar for the designer, but the contractor will need to reform their marketing strategies, likely to include hiring new staff. The phrase often used is a "beauty contest". Some of the larger D-B firms I have worked with had marketing departments compatible with those of a design firm, but especially if CM/GC is scaled down to smaller projects many very competent contractors have non-existent marketing staffs and could require significant changes in their business philosophy.
Two recent projects I have been familiar with would have been great uses for the CM/GC methodology. One project was a D-B and one was a DBB. The D-B was a small project (under $10M) with significant risk from environmental, railroad, and Right-of-Way. Given the limited profit margins inherent on these low dollar D-B projects the risk was too great so we walked away. The CM/GC process would have allowed these risks to be better defined while still meeting deadlines for federal construction dollar allocation. Using D-B inappropriately will ultimately drive some good contractors from the market and lead to higher costs as competition diminishes. The second project was a DBB where the designer's approach and the contractor's approach were equally sound, but so different that the owner paid for design not used, effort to evaluate the contractor's methodologies, and a lot of time was lost from the schedule while ultimately ending up somewhere in the middle of the two approaches. Had this been CM/GC, the designer and contractor could have collaborated on the effort while securing the owner's blessing. With the knowledge of the means and methods of the contractor early items such as geotechnical borings, permitting, and right-of-way could be more strategically targeted to the contractor's approach. The result would have been a more efficient design targeting the contractor's strengths.
In summary each procurement methodology has its strengths and weaknesses, every project has its unique challenges, and owners, designers, and contractors have their own strengths, weaknesses, goals, and aspirations. By seeing each of these procurement options as only a tool as effective as the appropriateness of its use, a lot of very positive results can be obtained. D-B and DBB need to have CM/GC added to the tool box to provide State Agencies the right procurement methods to maximize limited transportation funding.
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