Delivery Methods

There are many different types of delivery systems used in the construction industry. Layton offers project delivery under a variety of contract options.

With every delivery system we offer for the construction process, there are three key parties involved: the owner, the designer/architect and the constructor. Though the roles played by and relationships between these parties differs with each contract delivery system, there are some basic, unchanging responsibilities that each party has.

Basic Responsibilities

Owners decide the scope of work, establish the program (what is to be built), determine the budget and desired schedule and provide sufficient funding.

Designers/Architects guide the program process through drawings and specifications, work with engineers and local officials to provide approved construction documents and advise and assist the owner in selecting products or services.

Constructors provide input for construction means and methods, cost information, schedule durations and quality issues and oversee the construction process.

Listed below are some of the basic elements of each contract delivery system, as well as the advantages each one offers and considerations that should be made.

Lump Sum General Contracting (Design - Bid - Select - Build)

Lump sum general contracting is the "traditional" way of procuring construction, when the contract documents are prepared before the project is released for the bidding process.

Advantages
• Owners easily understand lump sum contracts.
• Because of transparency and predictability, these contracts are widely used in the public sector.
• Owners are aware of the cost of the project, as defined by the documents, before beginning construction.
• Owners can get a good feel of the marketplace reviewing bids and scope of work included.
• The bid process helps avoid favoritism by the owners and architects, allowing all qualified contractors to compete equally.
• Project scope and cost are well established before construction begins.

Considerations
• Lump sum general contracting is the most time consuming system. All documents must be complete before the bid and subsequent contractor selection can occur.
• The increasing complexity of building construction, intensified regulations and budget constraints make it difficult to provide a final set of construction documents before starting a project.
• Because each party has different financial goals, adversarial relationships can develop, which frequently produce problems and claims that must be resolved.
• Owners are responsible for plan completion. Any discrepancies and scope gaps become the responsibility of the owner.
• Actual final costs are not known until completion of the project.

Cost Plus Fee (guaranteed maximum price)

A cost plus fee agreement allows the contractor to be reimbursed for the actual costs of construction plus a negotiated fixed percentage fee. In this case, the contractor guarantees that an agreed-upon maximum price will not be exceeded. Any costs above the guaranteed maximum price will be borne by the contractor. If costs are less than the guaranteed maximum price, the resulting savings are often shared between the owner and contractor at a predetermined percentage.

Advantages
• Cost plus fee delivery systems are generally faster than the design-bid-select-build process.
• Owners can take advantage of the contractor’s experience during preconstruction.
• Value engineering and constructability reviews can take place as the design is created, prior to the completion of final documents.
• There is often a smoother transition from design to construction.
• Project schedule acceleration can be thoroughly and accurately evaluated, with cost implications and possible savings more accurately predicted.
• Cost plus fee contracts typically result in fewer changes, disputes, claims and delays than a traditional lump sum contract.

Considerations
• Final costs are not known until project is complete.
• Owners may have to expend more resources to monitor construction costs.
• Only the maximum cost for a defined scope is guaranteed by the contractor.

Design - Build
A design-build contract enables an owner to bring both design and construction under one contract. The contract is between the owner and contractor, who then subcontracts with a design firm. One of the most appealing aspects of this system is the single point of responsibility. Additionally, design-build has been proven to be much quicker than design-bid-select-build.

Advantages
• The contractual merger of design and construction activities saves time.
• Long lead items can be identified and, in some cases, ordered prior to the start of construction.
• Owners have a single point contact for both the design and construction phases.
• Project cost can be determined early on in the process.
• Value engineering and constructability reviews are enhanced with the integration of the design and construction process.
• Design-build contracts offer the most flexibility and highest efficiency in the construction process.
• Specialty contractors can easily be consulted on design and value engineering options.
• Changes, disputes, claims and other delays occur less frequently in the design-build delivery system.
• The contractor is responsible for the completion of construction documents. Any additional cost because of inconsistencies or scope gaps are the responsibility of the contractor.

Considerations
• The selection of an experienced design-build team is essential.
• An early understanding of the owner’s scope requirements must be reached.

read more about Design-Build

Construction Manager
Construction manager contracts can be written with different levels of risk, depending on the owner's desired scope of service. In agency construction management agreements, the construction manager assumes the role of agent to the owner and administers the work for the owner. Under this agreement, the owner contracts directly with the trade contractors. In at-risk construction management agreements, the construction manager begins as an agency construction manager for the preconstruction phase of the project. Prior to construction, the construction manager assumes the risk for delivering the project. With an at-risk agreement, the construction manager contracts directly with all trade contractors.

Advantages
• Construction management contracts allow projects to be completed in phases, which can shorten overall project duration.
• There is often increased coordination between the three principal parties because of early involvement.
• The overall project schedule can be reduced by compression of the design/construction process.
• Cost savings can result from a compressed project duration.
• The construction management agreement allows for all three parties to have similar financial goals, resulting in fewer disputes, claims and delays.

Considerations
• Project costs may not be established until late in the preconstruction process.
• As an agent, the construction manager will have a reduced influence on the trade contractors.
• Often times, projects are inadequately staffed when the construction manager is selected on fee alone. The selection process must examine the performance and qualifications of each submitting construction manager carefully.
• Overlap of administrative tasks may occur between the construction manager and design team.
• The owner can be included in the subcontract selection process.

The primary difference between a CM/GC and a CMAR obligation is founded upon principle of responsibility. The CMAR contract links the Construction Manager in a contract bond with the design team members. As the Construction Manager in the CMAR role, we represent the Owner in the early design phases to see that the design and the budget are and remain in alignment. The CM hires the design team and takes responsibility for the timeliness and accuracy of the design. In a CMAR contract, Layton may act as the general contractor or hire a different general contractor to build the project.

The role of the CM/GC on the other hand is to work in cooperation with the owner’s design professionals to coordinate design and the construction. The design team and the CM/GC both work for the owner in separate roles. The CM/GC bids out the work shown in the documents and establishes a total project construction budget with and appropriate contingency (often shared with the owner). The CM/GC also acts as the general contractor. The CM/GC risk is limited to the construction and not the design.