CT 103 Quiz Chapter 4 Project Delivery Methods ____ 1. Project Risk when the amount of work increases ____ 2. Project Risk when you attempt to finish a project early. a. Project Acceleration ____ 3. Project Risk associate with regulations or geological characteristics. b. Contract Change ____ 4. Delivery Method whereby the owner hires a designer to design, and a contractor to build according to a contract. Design and construction are separate functions. c. Design/Build ___ 5. Delivery Method with a single point of contact and responsibility. The owner hires a firm to both design and construct the project. ____ 6. Delivery Method where the owner hires both a design firm and a construction project management firm early in the preconstruction phase of the project. ____ 7. Contract Type where a contractor agrees to provide a specific amount of work for a specific sum ____ 8. Contract Type where a contractor agrees on a price per unit (price per square foot, etc.) ____ 9. Contract Type where a contractor agrees to build for reimbursement of labor and materials plus a percentage of costs. ____ 10. Results from changes in owner requirements, design features that can’t be built as specified, or unforeseen circumstances. d. Construction Project Mgt e. Cost Plus a Fee f. Design/Bid/Build g. Scope Creep h. Single Fixed Price i. Unit Price Contract j. Site Risk Ch 4 Project Delivery Methods Construction Management CT 103 “Structure” drives Markets • What would happen to concrete prices if there was only one company in a city? “Structure” drives Markets • Suppose someone was hired to cut 16 ft 2x4s into 4 ft lengths. If he/she was by the number of 16 ft 2x4s that you cut up, what might happen? “Structure” drives Markets • Suppose someone was hired to cut 16 ft 2x4s into 4 ft lengths. If he/she was paid by the hour, what might happen? “Structure” drives Markets • Suppose someone was hired to cut 16 ft 2x4s into 4 ft lengths. If he/she was paid by the hour, but docked for every 4 ft 2x4 that was longer or shorter by 1/16th of an inch, what might happen? “Structure” drives Markets • Why would we have different outcomes to performing the same work? • Is any “structure” better than another? • What should we consider when we get organized to take on a project? What are Primary Objectives of Each? • Designer (Architect/ engineers) – – – – Profit Reputation Meet Schedule Avoid change orders, plan it right the first time – Longevity of building – Beauty/functionality of project • Constructor – – – – Profit Reputation Meet Schedule Profit from change orders, build it right – Pass inspection – Simplicity of construction How Can There Be Conflict? Partnership? Design Profits • • • • • Experienced team Thorough project design Few design mistakes Use of innovation Delays not attributed to design team • Quality construction Constructor Profits • Both Profit • • Good Communications • • Solve problems quickly/ • • inexpensively • Meet Schedule • Seamless transition from planning to bldg • to turnover. Experienced team Accurate Estimating Meet schedule Little OT used Good understanding of project scope/constr. methods Compensated for delays or changes Ch 4 Managing Project Risks • What is a “Field Change”? – A change done at the job site by the constructor • What is a “Design Change”? – Change in the design, initiated by the Architect Ch 4 Managing Project Risks • Scope Creep – Quantity changes – Caused by: • Planning shortfalls • Critical user not taken into account • Miscommunication Ch 4 Managing Project Risks • Project Acceleration – Can save money (interest on loans, for example) – Makes money (puts building in service sooner) – Beating the goal!! • Risks – Rushed planning may lead to poor design – Plans may have errors or lack details • Northridge Quake --- $16.8 million on $14 .9 million contract!! 10 Freeway Re-Built Ch 4 Managing Project Risks • Poor Working Relationships – “Chemistry” – Risk-sharing – Information sharing Project Risks • Financial • Time • Design • Quality How Would YOU Mitigate Project Risks • Financial • Time • Design • Quality Project Specific Risk • Site Risks – Regulatory environment – Political environment – Economic environment • Seabrook Station. . . What happened? • Project Itself Minimizing Risk • Why is the “Right Delivery Method” important? Design/Bid/Build • • • • • Owner hires Designer first Designer designs Project is put out to Competitive Bid Construction firm is hired to build Designer may/may not be hired to administer the contract Design/Bid/Build Owner Completed Project $Design Fee Contract $ Bid Prices Documents Designer Design Consultants Contractor Informal Relationship Sub Contractors Design/Bid/Build • Advantages – – – – Known quantities Owner is protected Open market competition (cheaper) Owner doesn’t have to be involved in the construction phase • Disadvantages – – – – – Design in not reviewed for “constructability” Design features may be expensive/inefficient Time Separate “kingdoms” --- communication drops Conflicts may arise Design/Bid/Build Participant Goals Design Profits • • • • • Experienced team Thorough project design Few design mistakes Use of innovation Delays not attributed to design team • Quality construction Constructor Profits • Experienced team Both Profit • Accurate Estimating • Good Communications • Compensated for delays • Solve problems quickly/ or changes • Good understanding of inexpensively project scope/constr. • Meet Schedule methods • Seamless transition from planning to bldg • Meet schedule • Little OT used to turnover. Design/Build • Owner hires firm to design and build • Single point of contact • Used for industrial construction and complex projects Design/Build Owner $ Project Completion Fee Designer Completed Project Contract $ Direct Employee Documents Design Consultants Contractor Collaboration SubContractors Design/Build • Advantages – Single point of contact for life of project – Good communications between design and construction sides – Collaboration → Value Engineering and Constructability early in design of project – Owner less involved and changes/problem-solving within a single contractual entity – Fast-tracking may save significant time • Disadvantages – Fixed firm price is rarely given to the owner • Early firm price may sacrifice quality --- or incent high price! • Fast-tracking may lead to higher costs than anticipated – Design/Build team may drive project in a direction the owner doesn’t want – Lack of checks and balances --- Constructor is part of team, quality may not be upheld Design/Build Participant Goals Design Profits • • • • • Experienced team Thorough project design Few design mistakes Use of innovation Delays not attributed to design team • Quality construction Constructor Profits • Both Profit • • Good Communications • • Solve problems quickly/ • • inexpensively • Meet Schedule • Seamless transition from planning to bldg • to turnover. Experienced team Accurate Estimating Meet schedule Little OT used Good understanding of project scope/constr. methods Compensated for delays or changes Design/Build • Advantages – – – – – Good communication Construction input during design Construction costs captured early Easier incorporation of changes Time, efficiency gains • Disadvantages – – – – Firm price may not be given to owner Competitive bidding may not happen Owner may be marginalized. . . Satisfied? Lack of checks and balances Construction Project Management • Owner hires designer and construction project management early in preconstruction phase. • Everyone works for the Owner! • Lots of variation – Often hires “Prime Contractors” and have CP Manager coordinate – Owner carries lots of risk, must TRUST both the Designer and CPM • Combines benefits of early collaboration between Designer and Constructor • Good Communication • Value Engineering • Coordination, scheduling, and cost benefits • Team works together with changes • Relies on Team Work! • Relies on competence of Project Manager Contract Types • Single Fixed Price – Advantages • Locked in price • Precision in scope of work – Disadvantages • Changes create conflict – Errors – Change in need/decision • Precision takes time – Associated with Design/Bid/Build Contract Types • Unit Price Contract – Advantages • Useful when scope is vague • Allows for changes • Comparative pricing – Disadvantages • If scope changes significantly, so does final price • Potential disagreement on quantity billed Contract Types • Cost Plus a Fee – Advantages • Useful when scope of work is difficult to define or is innovative • Collaboration is encouraged – Disadvantages • Price is unknown • If a Guaranteed Maximum Price is used, quality/scope may suffer • Trust is a must Contract Changes • Change in owner requirements • Unforeseen conditions • Omissions in the documents or design features • Can be VERY expensive! Summary • • • • • Design/Bid/Build Design/Build Project Management Contract types Choose the best project delivery method for the unique project. Homework • Review Questions 1-10 • Exercise Question #2
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