About to embark on a new building construction project? Many church building committees deliberate for hours over design and construction delivery methodologies. Should we hire an architect for design and then competitively “hard bid” the construction? Do we select a single point Design-Build firm for both architectural design and actual construction? The pros and cons of either method mentioned above or some hybrid of one or the other seems confusing, at the least, to the average church building committee member. If there could only be a way to have our cake and eat it, too! Perhaps there is.
First, let’s consider the old-fashioned design and construction delivery method, the “Hard Bid”. The traditional hard bid approach involves the owner contracting design services from an architect who develops the designs per the owner’s needs and direction. The architect prepares the contract documents (plans and specifications) for bidding and construction. The architect also assists the owner in meeting the city requirements for permitting, competitively bidding the project, and in administration of the construction contract (shop drawing review, review of application for payments, job site observations and final project close-out services).
The following are some of the major advantages and disadvantages to this delivery method:
• The owner directly hires the architect who allows for an unbiased/ unencumbered service to assist the owner and represent the owner’s best interest from design through occupancy.
• The architect provides custom building and systems designs tailored to client’s specific needs, site, city requirements, and budget.
• Wide open general contractors competitive bidding of the entire construction contract provides the lowest cost for the design requirements specified.
• The architect, serving as the owner’s primary advocate, acts as a third party arbitrator on any disputes and/or discussions between the owner and general contractor.
• The architect may provide moderately accurate pre-bid cost estimates (±15%) based on square foot area of similar recently constructed buildings in the area.
• Due to lack of early contractor participation, the design professionals may over-design systems, which may inflate construction cost.
• “Closed Book” approach where the owner does not have access to the general contractor’s accounting. Any savings realized through the construction process will go to the general contractor.
• Typically, bid shopping occurs which results in less quality/stable subcontractors being considered. This results in a potentially lower level of craftsmanship or inflationary change order/substitution requests during construction.
• Multi-point responsibility of performance (design issue vs. construction issue).
Owners and contractors say the only advantage of the old-fashioned “Hard Bid” approach is that the lowest bid cost may be obtained due to a more wide-open, every subcontractor invited, bidding approach. This is certainly a possibility because of lower quality subs bidding. Subcontractors that are shaky financially, and possibly bidding at cost to maintain cash fl ow to stay in business are typical problems under this hard bid method. This sometimes leads to subcontractors going out of business during the construction phase, which causes delays and extra cost to the general contractor in replacing a defaulted subcontractor. Also, many general contractors and subcontractors bidding “hard bid” work often do not include contingency costs in their bid, thus precipitating more change orders and an adversarial relationship between Owner, Architect, and Contractor.
Now let’s discuss the delivery method that continues to increase in popularity every year, “Design-Build.” This delivery method involves the owner securing a single contract with a general contractor who in turn contracts for architectural, engineering and construction services. The selected general contractor may have in-house architectural and engineering services, or the contractor may have to subcontract these services with individual architectural and engineering firms. Either way, the general contractor is responsible for those contracts under their contract and provides the single point contract to the owner. The following are some of the major advantages and disadvantages to this delivery method:
• Single point responsibility on initial performance of design and construction.
• Potential for the lowest construction cost.
• The general contractor and major subcontractors are involved early in the design team to provide input in design and engineering services.
• Lower architectural design and engineering costs due to abbreviated design services provided. • Good pre-bid cost estimates (±3% to 5%). In fact, sometimes a guaranteed maximum price (GMP) is provided at the early design phase. Construction Delivery Methods By David E. Evans, AIA Mantel Teter, Inc.
• The architect is hired by the general contractor and controlled by the general contractor whose decisions are based on the general contractor’s requirements vs. the owner’s requirements.
• Abbreviated architectural design and engineering services often inadequately define how and what is to be provided at the end of construction.
• No checks and balances for general contractor performance or other owner protection (lacks third party quality reviews during design and construction, i.e. architect).
• No third party arbitrator within the team, leaving legal recourse as the only means to resolve design and construction conflicts.
• Often employs the utilization of pre-engineered metal building construction, which dictates design that may not be sensitive to the owner’s needs, site conditions, or city requirements. This system fits the needs into the predesigned structure rather than design the structure around the needs.
• Potential to under design systems to satisfy low price which may affect performance and longevity.
• Potential for higher long term maintenance and operation costs due to low price satisfaction.
Still confused? Still desire the best low price possible while maintaining high quality construction and owner watchdog checks and balances? Again, if there could only be a way to have our cake and eat it, too. The design and construction delivery method about to be discussed is the way to enjoy both! This delivery method is often referred to as the “Negotiated General Contractor” approach.
Under this method, the owner selects and contracts with an architect, preferably one with extensive church design experience, for design and engineering services. Immediately following the architectural selection, the owner begins to interview high quality general contractors with years of experience building religious facilities. Utilizing this method, most times, the owner and general contractor will not have any contractual agreement for the design phase. However, some general contractors may have a contract with a small stipulated sum amount for pre-bid services. This amount is usually credited towards the final construction contract once final bidding is complete.
With these steps complete, the construction team is in place: the owner, the architect, and the contractor. The strength of this relationship is already founded on trust, experience, and quality. A design team with the owner’s best interests in mind is assembled, and a high quality general contractor is now available to provide early preliminary cost estimates during schematic design and design development phases of drawings. The general contractor will use the AIA Owner-Contractor Agreement (A111). Under this agreement the basis of payment is the Cost of the Work Plus a (Negotiated) Fee with a guaranteed maximum cost. The owner will realize some of the advantages listed below:
• The general contractor becomes a building team member. The contractor attends building committee meetings, assist s in value engineering, and provides cost estimates while the design drawings and final drawings are being prepared. Usually project time is reduced due to a shorter final bid and negotiation period.
• The general contractor provides preliminary and final bid cost with at least three subcontractors competitively bid in each scope of work category. Sometimes a 50% contract documents phase estimate is provided as one final price check before final bidding. Additionally, specific cost checks can be provided for component or system evaluations as the final drawings are prepared.
• This is an open book approach where all sub bids and fees are open to the owner and architect for review (it is closed book on hard bid or stipulated sum contracts). Competitive bids from a mini mum of three sub contractors in all work categories are provided, and since subcontractors typically perform eighty percent of the work, the owner still receives the benefits of competitive bidding.
• The contract should include a guaranteed maximum cost with 100 percent savings at the end of the project retained by the Owner. On most projects under this contract arrangement, the Owner at the completion of the project has retained significant savings (under the hard bid stipulated sum contract, any savings on the project are retained by the contractor).
• Higher quality subcontractors are involved through general contractor preselection, versus wide-open sub contractor bidding in hard bid stipulated sum contracts. Generally, owners experience far less problems during the construction phase under the negotiated contract arrangement, mainly due to the use of higher quality subcontractors.
• Usually few change orders occur due to the greater involvement and improved communication of the Architect, General Contractor, and Subcontractors, especially during the bid period.
Providing value engineering cost control, a good general contractor who becomes a design team member, outweighs any initial savings from the “Hard Bid” or “Design-Build” method. This delivery method reduces construction problems and poor workmanship significantly. To protect the owner, this method also provides quality services with checks and balances that are not found in the “Design-Build” method. Remember, the negotiated general contractor’s main incentive is to get the project within the church’s defined budget during the design and final drawings phase. Otherwise the General Contractor will not have a contract to build the project where the majority of fee is based.
From this evaluation of delivery methods, there is a way to have your cake and eat it too! The negotiated general contractor delivery method is appropriate for all religious facilities building types. It is a method that continues to increase in popularity, too, since it provides the owner with separate contracts for watchdog protection and high quality construction at an affordable price. The old saying holds true today, “the reminder of poor quality remains long after the sweetness of low price is forgotten”. Now, have your cake and eat up!
Published in RELIGIOUS PRODUCT, NEWS April 2004