Owners often pick a delivery model the way they did last time. The agency always bids hard, the developer always uses design-build, the hospital system always hires a CM. Habit is not a strategy. Every delivery model is really a decision about who carries which risk, and when. Get that match right and the contract works for the project. Get it wrong and the contract becomes the project's biggest problem.
Start with the risks, not the contract
Before choosing a model, list what could actually hurt the project. The usual suspects are a schedule that cannot move, a budget that cannot grow, a design that is not finished, unknown site or existing conditions, a volatile market for key materials and an owner team with limited time to make decisions. Then ask two questions about each one. Who is best placed to control it? And who is best placed to price it?
Those questions point to a delivery model far more reliably than precedent does. Here is how the three most common models answer them.
Design-bid-build: clear lines, late certainty
In traditional general contracting, the owner hires a designer, finishes the drawings and bids the work to builders. The lowest responsible bidder signs a lump sum or unit-price contract.
- Who holds design risk. The owner. Errors and gaps in the documents become change orders.
- Who holds price risk. The builder, for the scope as drawn. Anything not drawn is the owner's.
- When cost is known. At bid, which is after design is complete.
Design-bid-build works well when the design is complete and stable, the scope is familiar and the owner wants a straightforward, competitive price. It is weaker when time is short, because design and construction cannot overlap, and when the documents are likely to have gaps, because the builder has every incentive to price the drawings exactly and pursue changes on everything else.
CM at-risk: early input, a guaranteed maximum price
Under construction management at-risk, the owner hires the designer and the builder separately, but brings the builder in during design. The CM provides estimates, constructability reviews and scheduling through design, then commits to a guaranteed maximum price and builds the work, usually by buying it out to trade partners.
- Who holds design risk. Still the owner, through its designer, though early builder review reduces it.
- Who holds price risk. The CM, up to the GMP, for the scope defined in the GMP documents. Owner contingency covers owner changes, and a CM contingency inside the GMP covers buyout gaps and coordination issues.
- When cost is known. Progressively, with the GMP set once the design is far enough along to price with confidence.
The GMP mechanics matter. A good GMP rests on a clear set of documents, a short list of assumptions and qualifications, well-defined allowances and contingencies sized to real risks. Savings below the GMP typically return to the owner or are shared, which keeps incentives aligned. CM at-risk suits complex buildings, phased work in occupied facilities and owners who want to keep a direct relationship with their designer while still getting builder input early.
A GMP is only as good as the documents behind it. If the qualifications run longer than the scope narrative, the price is not finished yet.
Preconstruction director, MarkWester
Design-build: one contract, one point of responsibility
In design-build, the owner contracts with a single entity to both design and build the project. The design-builder carries the risk that the design works and that it can be built for the agreed price.
- Who holds design risk. The design-builder, for meeting the owner's performance requirements.
- Who holds price risk. The design-builder, often from an early stage, sometimes with a lump sum set on bridging documents.
- When cost is known. Early in lump-sum design-build, later in progressive design-build where the price is set once the design has matured.
Design-build is strongest when speed matters, when the owner can describe what it needs in performance terms and when the builder's means and methods shape the design. Highways, industrial buildings, data centers and student housing are common fits. The tradeoff is control. An owner who wants to decide every finish and detail will find a lump-sum design-build contract frustrating, and the design-builder will price that frustration. Progressive design-build eases this by letting the owner work through design with the team before the price is fixed.
The right answer is rarely pure. A hospital may use CM at-risk with design-assist trade partners for MEP. A transit agency may use progressive design-build with an off-ramp if the price does not meet the budget. What matters is that the choice is made on purpose, after an honest look at the risks, by an owner who understands what each model asks of it. We deliver under every major model, and we are glad to help an owner think through the choice before a builder is even selected.
