Which construction model fits your growing business?

By Jay Connolly Connolly Brothers

One of the most important decisions when embarking on a construction project is also one of the most overlooked: which method of design and construction delivery will meet your organizations’ needs and objectives?

Business owners may be tempted to forego making this decision until design is underway. However, a comprehensive understanding of each option will enable your organization to make the most informed and cost-effective planning decisions.

Part of Connolly Brothers’ mission as a construction manager is to provide our clients with the guidance and expertise needed to select the model that will deliver the best possible results for your construction project. Because Connolly Brothers has successfully completed projects with all three of the most frequently used commercial construction approaches – general contractor (GC), construction manager at risk (CMAR), and designbuild – we are well-positioned to provide a comparative overview.

The general contractor model is the most widely used, or “traditional,” construction project delivery method. In this model, the owner first hires an architect to start defining the scope of work and produce schematic designs. Bid requests, the project scope, and architectural drawings are sent to selected general contractors for pricing. The owner pays the architect for the plans and chooses a general contractor based on cost, schedule, qualifications, etc.

The GC model offers baked-in price competition. Therefore, if the project is cost-driven, general contracting can work best for the owner. The trade-off is less flexibility when it comes to scope or design changes and how those affect the overall project budget.

Errors or inefficiencies can occur when the project scope is not clearly defined from the outset, resulting in a lack of direction for the design team. This in turn can lead to insufficient information in the bid package sent to general contractors for pricing and may result in a less-accurate and ineffective pricing effort. However, this approach may be most appealing to owners who wish to be closely involved with the coordination of the project scope and design, as it provides the owner with a comprehensive understanding of the project budget.

In a construction manager at risk (CMAR) model, the construction manager (CM) is hired at any point during the planning and design stages. The CM’s role is to collaborate on finding the best design and construction solutions for the project, to review the architect’s plans for constructability, and to provide cost estimating at various intervals for budgeting purposes. Once the design development process is completed, the CM will proceed with cost estimating, resulting in a guaranteed maximum price (GMP) for construction of the project. The CM proceeds to hire the subcontractors and, moving forward, is responsible for guaranteeing their work.

In a CMAR approach, risk transfer occurs; the construction manager is considered “at risk” in this model because if the project exceeds the GMP, it is the construction manager, not the owner, who suffers the financial consequences of the overage. Holding separate contracts for both architecture and construction, the owner has significant agency in these relationships. This structure is very advantageous when it comes to controlling both cost and schedule. Coordination and a high degree of trust on the part of the owner is essential for meeting the construction completion date. This can either be an advantage or a disadvantage, depending on the owner’s time commitment plans.

An advantage of this approach for the owner is access to detailed budgetary options during the design phase. This enables the owner to use cost information provided by the CM early on to make critical decisions about program elements, construction type, building systems, subcontractor selection, and finishes within the context of the overall project goals and design intent. Some CMAR contracts may build in incentives for the construction manager in the form of a shared savings agreement if the CM’s cost of completion is less than the GMP.

Design-build is the fastest-growing construction project delivery method in the United States. In this model, the owner hires a design-builder who serves as the design and construction manager. The design-builder oversees every aspect of the project, including hiring subcontractors, engineers, consultants, and an architect. Unlike the two models above, with design-build, the owner has one contract, contact, and point of responsibility. The designbuilder develops a preliminary scope with the owner, which the architect then uses as the basis for schematic design. The design-builder starts developing a GMP for construction of the project. The design phase continues as the construction phase begins.

Design-build is considered the most efficient or fast-track-friendly construction approach because budgeting, pricing, design, and early construction work may all happen simultaneously. Because the design and construction teams are unified from the start, the design-builder can order materials with long-lead times and develop a phased approach to executing construction early on, paving the way for an accelerated timeline.

While there is no “one-size-fits-all” option, understanding the strengths and weaknesses of each model will help align your organization’s priorities with the approach that will maximize the results and success of the construction project. Whichever model is selected, one thing that has not changed since our founding in 1880 is this: any construction approach will only be as good as the standards and care of those who practice it. I