delivery methods

  

hello dear ,here some reading pages that you most do , than after read it you will write about 4 pages. * if you can try to use simple words and sentences , please do that . * i will upload an outline that i did on the same chapter . it may help you if you have any questions please head me back . thank you
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CHAPTER 4: PROJECT DELIVERY METHODS
Book Outline (use for paper):
Simplified Outline (use for presenting):
Intro
Intro
Managing Project Risks
Principal Challenges Overcome by
• Lessons from History
Successful Projects
Assessing Project Risks
4 Major Categories of Risk
• General Risks
3 Primary Delivery Methods and Their
• Project-Specific Risks
Advantages, Disadvantages
• Other Risks
3 Major Types of Contracts
Minimizing Risk
Real World Example
• Choosing the Right Delivery Method
• Choosing a Contract Type
• Monitoring the Entire Process
• Partnering
Delivery Methods
• Design/Bid/Build
• Design/Build
• Construction Project Management
Contract Types
• Single Fixed Price
• Unit Price Contract
• Cost Plus a Fee
Contract Changes
Real World Example
Conclusion
***Make sure discussion questions are answered somewhere in there
_____________________________________________________________________________________
Intro:
Owner’s goals in choosing delivery method:
• Meet project objectives
• Fit w/in org’s culture
• Deliver on time & w/in budget
Owner must monitor process due to unpredictability of building process – complexities and
complications due to large number of components and different suppliers.
Is issue for experienced owners as well bc depends on:
• Time
• Site
• Conditions
• User needs
• Economic health
Late delivery can have cascading effect on project completion
Building team of experienced people who have proven their ability to avoid these issues = key
•
Before assembling team, owner determines how members will interact with the owner org
and one another. This is called project delivery method – “particular combination of
professionals and contract arrangements that assign responsibilities and risk in a certain
way.”
3 most common PDMs:
1. Design/bid/build
2. Design/build
3. Construction mgmt.
Each of these has risks and benefits unique to individual situations. Is the owner’s responsibility
to determine which PDM is best fit for project.
Managing Project Risks
An owner’s thorough knowledge of common problems can help prevent them. Those problems
include:
Separated Functions
• 2 Primary professionals on project:
o Designer
o Constructor
▪ Their communication is crucial
• Ex: design changes that are expressed earlier allow for
constructor to plan on how to integrate them in the design
schedule, which prevents loss of efficiency due to adverse
effects on sequencing and loss of money. Also if the reverse
occurs and construction changes are not communicated,
the building may not function as originally planned by
designer
Scope Creep
o Scope = “product of quantity of the work and character of the work.”
▪ This is the primary driver of cost increases on a project
o Maintaining scope is difficult due to the fact that it is beyond control of single
individuals
o Large projects often take too long to achieve full consensus on timeline, so when
project moves forward without this, it often creates issues that can sometimes only
be solved by increasing the scope
o
o
o
Can also increase when critical member of analysis stage is not included and must
be subsequently accommodated (reasons for not being included can be influx of
money, new requirements, etc)
Can be result of miscommunications between the designer and/or constructor and
the user. In large projects, large amounts of information between different parties
makes controlling flow of information and communication a key factor in CPM
delivery methods.
Project team identifies scope of work budgeted in project and document any
changes
Project Acceleration
o Early completion benefits
▪ Lowers costs
▪ Puts building in service sooner
▪ Cuts interest costs from loans
▪ Psychological impact -> makes all parties happy
• Changes easier to settle
• Inspectors can be less rigid
• Adds general smoothness to flow
o Risks of early completion
▪ Less time to consider all elements of design means building could provide
less of owner’s originally intended function
▪ Documents might not be completed
• Ex: drawings might not be detailed enough to determine costs
accurately, which could stop construction and waste money/time
Poor Working Relationships
• Contributing factors:
o Different companies might only work together for single project. This period can
be too short to develop strong working relationships between them.
o Different work styles, “personal chemistry” can be hit or miss
o Contracts:
o “A construction contract has been called an exercise in risk allocation.”
 If one party attempts to place unfair amount of risk onto
another, teams will likely have poor working relationship and
communication breakdown as a result
• Preventative solution: establish informal rapport between project participants
Assessing Project Risks
General Risks
4 Areas:
1. Financial – project exceeds budget allocation “or will cost more than product itself is worth”
2. Time – project won’t be completed in projected time
3. Design – project won’t serve intended purpose
4. Quality – project uses low quality materials, craftsmanship, or isn’t complete
These should be addressed during project development by the project team. Each risk is approached
differently depending on the phase of the project during which it is being addressed.
Preconstruction – project team balances design/cost equation (i.e. “increased function and
quality = increased costs”).
• Designer takes lead here, identifying changes in:
o Scope
o Engineered Systems
o Level of Quality
o Other design elements that could result in increase of costs
• Owner’s earlier knowledge of these allows preventative decision making to help
save $, time
Field Construction – focus moves towards executing project w/in defined terms of contracts,
schedule, budged.
• Risks here include time and external unknowns
• Preconstruction estimates are not guarantees that prices will remain the same at
time of materials purchase or hiring of labor
• Factors that can increase project prices and time:
o General change in market prices
o Availability of product
o Community opinion (pressures officials)
o Labor actions
o Weather conditions
o Site accidents
Project-Specific Risks
Site Risks
• Unhappy population near site
• Regulations
• Geological conditions
• Economic factors (change fastest of all of these)
Risks in project itself (unique project = unique risks)
• Complexity (higher complexity req new technologies, materials which carry more risk
than usual)
• Smart systems (risks being made obsolete, incompatibility of future parts, installation
glitches)
Other risks
• Organization: owner’s knowledge of building process varies – proj members should
match delivery type to this level
• Financial (can run out of capital during process, pushing teams that aren’t capable of
accelerated schedule can lead to inefficiency and $ loss)
Minimizing Risk
Choose the Right Delivery Method
• Ideal situation: owner chooses delivery method before choosing project team members
• Sometimes designer is onboard prior to choosing method
o Here, they will help owner select which method will fit best under project conditions
• Owner’s dilemma in choosing = price vs performance
o More complex = selecting method that allows for close cooperation btwn proj members
o Less complex = choose method with lower price or earlier completion date
Choosing Contract Type
• Owner selects w/ goal of purchasing construction service at lowest price w/o creating undue risk
for owner
• 3 major types of contracts:
o Lump sum
o Unit price
o Reimbursable (aka cost plus a fee)
Monitoring Entire process – owner must utilize mechanism to monitor:
• Budget
• Schedule
• Quality
Partnering
• Goal: encourage people to look beyond traditional adversarial roles to increase cooperation,
communication, push ethical standards
• Begins w/ owner when hiring proj participants
o Owner introduces idea
o Top mgmt. of all stakeholders must commit
o Designated managing partner “nurtures project participants through project”
o Project-length commitment, should be part of original charter
o
o
o
o
Usu involves workshop run by a facilitator where participants discuss and agree on
mutual goals
Charter is developed with these mutual goals
Est formal org to lay out lines of communication, conflict-resolution, decision-making,
and problem solving steps
Advantages
▪ Decrease in court costs
▪ Collaborative problem solving
▪ Equity in goals
▪ Job satisfaction
Delivery Methods
Delivery Methods
o Owner’s approach to organizing project team that will manage entire design, construction
process
o Motivation
o Minimize risk
o Save $
o Finish on schedule
3 types (can sometimes be combined)
1. Design/Bid/Build
2. Design/Build
3. Construction Project Mgmt
Design/Bid/Build
o Owner 1st hires design professional
o Design professional preps design, including contact docs
o Design prof is paid by one of the following methods
o % of construction costs
o Lump sum
o Reimbursement for costs at agreed-upon billing rate
o Owner now has complete set of docs and either negotiates w/ specific contractor or
conducts a competitive bid opening
o Contractor is solely responsible for delivering completed project according to the contact
docs
o Contractor can subcontract or use in house work force
o During construction process owner might hire architect to administer contract or can use in
house employees to do this
o Architect can act in owner’s name, contractor cannot
o There is no contract btwn an architect and contractor
o
o
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Administering contract – observing work to monitor:
o Quality
o Change order process
o Certifying payment to contractor
o Ensuring owner is getting product outlined in contract docs
Advantages
o Approach procedures and contract rules of contact are well established because it
has been in use for so long. This reduces level of uncertainty and, therefore, risk
o Usually means project will run smoothly
o Owner has greater contractual protections
o Owner can be less heavily involved in construction process
Disadvantages
o Lack of potential for fast tracking as process is sequential and linear, so no overlap
o Minimal design construction collaboration
o Unforeseen issues that result in renegotiation of the contract remove all advantages
Design/Build
o
o
o
o
o
o
o
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Owner has single point of contact and responsibility for entire project
Owner hires firm
Firm performs design and construction
Firm can hire subcontractors
Used exclusively in industrial construction due to complexities of projects such as oil
refineries, power plants
Was popular method before Design/Bid/Build, but lost popularity as professions became
more specialized
Advantages
o Inherent efficient communication between design and construction teams
o Phases flow smoothly
o Projects easily fast tracked
o Good communication allows construction input during design phase including
▪ Constructability analysis
▪ Value engineering
▪ Subcontractor pricing
o These become part of overall project planning:
▪ Cost est
▪ Scheduling
▪ Long lead item identification
▪ Ordering
o Easier incorporation of changes due to unforeseen condition, scope changes bc
acting within same contractual entity
o Owner is not involved in day to day communications
o Owner staffing is at minimum
Disadvantages
o Generally, owner not given fixed price before project begins
o
o
Owner is not involved in day to day communications (can be disadvantage too)
bc may not have full understanding of a situation when pressed to make a
decision, or project can take an unintended direction
Lack of checks and balances
…
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