Over the past 20 years, design-build has grown in popularity as a delivery method for non-residential construction projects among private-sector owners. They recognize the potential advantages of streamlined project management and single-source accountability, with associated improvements in project cost, schedule and quality. Yet, many education institutions still use the traditional design-bid-build methodology, awarding separate contracts to an architect, construction manager, and one or more separate prime contractors. In some states, legislation has prohibited public agencies from entering into a single contract with an integrated design-build team.
When structured properly, a sole-source design and construction management (CM) relationship is a viable alternative. Some school project leaders who have completed projects using both traditional and sole-source design/CM methods have concluded that the latter project delivery method offers the advantages of design-build for public education projects.
Defining the terms
Most school administrators are familiar with the traditional design-bid-build approach to project delivery. Here is a look at the design-build, CM at risk, CM agency, and sole-source design/CM project delivery methods:
In a design-build project, the owner has a single contract with a design-builder. The design-builder also holds the contracts with all subcontractors, and provides a turnkey project for the owner.
However, in some states, including New York, it is illegal for an integrated design-build entity to perform public work. Moreover, projects for public agencies must be bid competitively under at least four separate prime contracts, and the owner must manage these contractors' activities. The typical way around this barrier is for the owner to contract either with an independent architect or an independent builder to deliver a design-build project. The architect holds a separate contract with the builder for construction services; or the builder holds a separate contract with the architect for design services. The owner holds separate contracts with the prime contractors and manages their activities. However, most owners do not have the resources to perform this complex, specialized management task, so many owners prefer to hire a CM.
- CM at risk
The owner hires a CM and holds a contract with it to deliver a project at a guaranteed maximum price, or at cost plus a fixed percentage. The owner also holds a contract with an architect for design services. The CM holds the contract with all prime contractors; for that reason, CM at risk is not acceptable for public work in some states, including New York.
- CM agency, a.k.a., CM as owner's adviser
There are two methods of CM as owner's adviser. In one method, the owner holds separate contracts with the architect, CM and prime building contractors. The architect is responsible for coordinating its efforts with the CM, but the two have no contractual relationship. The CM is responsible for managing the prime contractors on behalf of the owner. The CM's contract with the owner typically includes preconstruction services during the design phase of the project.
In the second method of CM as owner's adviser, the owner contracts with the architect to provide both design and CM services. The owner holds the contracts with all prime building contractors, and the architect/CM is responsible for managing the prime contractors during construction.
- Sole-source design/CM
This method takes agency CM a step further. In this project-delivery method, the owner contracts with an integrated architect/CM firm. Ideally, the firm is organized into two separate divisions — architecture and CM — staffed by professionals trained, licensed and experienced in the appropriate discipline. Each project is led by two project managers — the design PM and the construction PM — and the design and CM staffs work hand in hand to design and build the project.
Sole-source design/CM has a number of advantages:
- No learning curve
Because these architects and construction managers have worked together on many projects, there is no learning curve. When two independent firms are involved in a project, either they are new to one another, or, if the firms have worked together, they may have little project experience with one another. It takes time and experience to mesh as a team.
- Integration of preconstruction services
A sole-source solution integrates preconstruction services into the process from day one. Early in the design process, the two PMs and their staffs begin planning project phasing and developing the schedule. This saves time compared with a typical CM project, in which the owner may select the CM firm late in the design phase or after the design is complete.
- Independent construction cost estimator
Often, the firm will engage an independent construction cost estimator on its CM team, who will take a fresh, objective look at its drawings, phasing plan and schedule, and prepare a detailed conceptual estimate early in the design process.
An independent CM firm could provide the same service; however, these often are general contractors that also do construction management. These firms may be proficient with the CM-at-risk project delivery method, which is similar to general contracting, but they may fall short when they perform an agency CM role. Typically, these CMs have an in-house estimator who normally develops bid estimates from a detailed set of plans and detailed quantity take-offs. When presented with conceptual drawings, they may distribute these to their mechanical, electrical and plumbing subcontractors and ask for estimates "as a favor." Like the CM's estimator, the subs' priority is bid-work. Often, each will return a single-page estimate comprising a few figures, and the estimator will incorporate these into an overall estimate. Because of the hand-offs, it may take four to six weeks to finish the estimate, and this leads to design delays.
In contrast, a professional estimator is dedicated to — and paid for — construction estimating based on conceptual drawings, and usually is able to turn around an accurate, detailed estimate in a week or two.
- Constructability analyses
An integrated approach also ensures that constructability analyses will be performed early in the process, when they can make a real difference.
- Optimal number of bid packages
Ideally, the design/CM team will prepare the drawings and specs for bidding so that each of the multiple prime contractors can bid separately for their scope of work. Not only does this satisfy the requirement for a minimum of four separate competitive bids (if there is such a requirement), it also provides a savings for the institution, which avoids paying a general contractor for its overhead and profit mark-up on each prime contractor's price. Working together, the design/CM staffs may split up the project into eight to 12 separate contracts to gain cost benefits and construction efficiencies. Similarly, the design PM and construction PM work together in the pre-bid conferences to make sure bidders understand the scope of the project.
- No finger-pointing
One of the most important reasons to use a sole-source design/CM firm is that it establishes a single point of accountability to the owner for design and construction management. At the end of the project, there is no finger-pointing between two separate entities.
Some common objections to the sole-source project delivery method:
"It's like the fox watching the hen house." Actually, because the architect is professionally liable for the project, it is in the sole-source design/CM firm's own best interests to make sure it is done right. If an owner trusts an architect to design the project, the owner should trust the firm to provide the CM services.
"We like the checks and balances of a separate CM company." Good point. That's why it is ideal if the firm has separate design and CM divisions to provide checks and balances at each phase of the project — for example, the construction PM and the site representative performing quality-control reviews of the drawings at each design milestone.
"Architects don't understand construction." Well, like any CM firm, a sole-source design/CM firm must be able to demonstrate its qualifications, experience and results. And this is another reason to hire a firm with separate divisions staffed by the appropriately trained and credentialed professionals.
- Read the "A phased renovation" sidebar to learn about one sole-source design/CM program.
A phased renovation
Using sole-source design/CM, Gloversville Enlarged School District, Gloversville, N.Y., has completed the first three phases of a $60-million, four-phase program:
- Phase 1: New transportation facility.
- Phase 2: Renovations and addition to 183,000-square-foot high school.
- Phase 3: Renovations of two elementary schools.
- Phase 4 entails renovations of three remaining elementary schools. Another project, a $25 million athletic facility for the high school, also is planned.
The conditions of Gloversville High School were typical of schools constructed between 1959 and 1970; it had received few capital improvements in 20 years. Changes in program requirements created the need to enhance and expand instructional areas, and the aging building needed major renovations. Upgrades included new skylights and larger windows to increase daylight penetration into the building; replacement of mechanical, electrical, communications and security systems; and code-compliance work.
The addition accommodates larger science laboratories and more general classrooms. Three cafeterias situated around the building were converted to other uses, and a larger cafeteria was created. The art department was moved into two of the original cafeterias. This created larger instructional spaces, interconnecting storage areas and a large display area for student artwork. A new band room, instrument practice rooms and music classrooms were added to provide space for the expanding music curriculum.
The year-long planning process addressed a number of project challenges. To house the ninth and 10th grades for one curriculum year, the design team established temporary accommodations in the middle school, which occupies the same campus as the high school. This enabled the school to have greater flexibility during renovation and reconfiguration of the high school. As a result, the construction schedule was compressed by more than 14 months.
By addressing the new transportation facility in the first phase of the project, the district was able to reduce its operating costs sooner, saving $60,000 annually in direct costs. The district realized additional savings by reducing its bus fleet's total annual mileage by 25,000 miles and improving maintenance.
Moreover, the design/CM team's understanding and consideration of the district's properties and utility infrastructure enabled it to overcome significant construction challenges associated with the transportation facility's site, which was adjacent to federal and state wetlands, beyond the reach of public water and sewer services, and crossed by two high-voltage transmission-line easements. The solution involved provisions for alternative installation and delivery of utility services, including bringing services to the new site from the district's neighboring campus. As a result, the school district realized significant savings in costs and time.