"Alternative" Project Delivery Isn't So Alternative Anymore

AGC Smartbrief recently wrote a story addressing project delivery methods that featured the ConsensusDocs’ design-build and construction management at-risk standard contracts with the following:

On the contractor side, ConsensusDocs’ package of traditional design-build standard contracts documents in its 400 series is compatible with progressive design-build and includes an option to use a two-phased approach, says Brian Perlberg, senior counsel for construction law and contracts at AGC and executive director and senior counsel for ConsensusDocs. The initial phase of the project, governed by ConsensusDocs 400, an Owner/Design-Build Preliminary Agreement, quickly brings a design-builder on board without locking in a price. Moving to the second phase, options include the ConsensusDocs 410 Design-Build Agreement (Cost of Work with a GMP) or ConsensusDocs 415 Design-Build Agreement (Lump Sum) agreements. The 410 document delays setting a guaranteed maximum price, while the 415 requires detailed design for a fixed price. Using only the 410 without the 400 is a single-phased approach, incompatible with progressive design-build. 

For CMAR, the 500 series can be helpful. A ConsensusDocs 500 agreement between the owner and the construction manager stipulates the construction manager offers preconstruction services related to scheduling, budget and design. It can also issue subcontracts for fully designed portions of the project before the entire design is done. The series also includes the industry-first ConsensusDocs 541 Design Assist Addendum, which covers some modern considerations in projects, including constructability, value engineering and life cycle analysis. It also pairs nicely with lean construction tools.

In both design-build and CMAR, Perlberg notes that a shared savings clause can provide an incentive for the contractor to complete the project under the guaranteed maximum price. If actual costs come in under the GMP, the savings are shared between the owner and construction manager based on an agreed-upon formula. This clause incentivizes collaboration and cost control efforts since the construction manager shares in any savings achieved. It helps align the owner and construction manager’s interests in keeping costs low. ConsensusDocs guidelines include an optional shared savings clause that parties can incorporate into these agreements.

That said, while ConsensusDocs can accommodate collaborative delivery, AGC itself is “project delivery neutral,” and Perlberg says “progressive design build is not the panacea that is going to fix everything.” There are still some real risks involved, and WCDA acknowledges on its website that “no single delivery method is suitable for every project.” In the grand scheme of construction, progressive design-build is still relatively new, so there is some uncertainty around how often the “off-ramps,” or exit clauses in contracts, are utilized, says Perlberg. He says the threat of an owner taking a project to the off-ramp could potentially be used to terminate a design-builder prematurely in order to low bid out the remaining work and acquire their intellectual property, even though that may not actually save the owner money in the long run. However, experience with off-ramps are used will inform how these risks should be contractually addressed up front as well as addressed through project management.

The rest of the story can be found here:

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