Wednesday, April 28, 2010

You can't build without the benjamins--bidding and negotiation, Part 2

Design-Bid-Build is the traditional (20th-century) way of building a project, but two forms of construction have come along in the past twenty years: CM/GC and design-build.

CM/GC (Construction Manager/General Contractor)
This method is somewhat similar to design-bid-build, but it brings the contractor into the picture much sooner. Usually after schematic design or early on into design development, the call for a CM/GC goes out to construction firms. Firms review the drawings and provide bids, as they do under design-bid-build. The difference here is that the contractor is now a project team member early on, and s/he can review the drawings and look for ways to save time and money during construction. In this way, the contractor is the construction manager, the CM of CM/GC. The CM may figure out that bringing the mechanical subcontractor onto the project before CDs are finished could save money by locking in that fee, or perhaps by having the architect produce a structural and foundation package before the rest of the CDs could shave time (and therefore money) off the project. For example, on one project I worked on a few years ago, the CM/GC figured out that if we went to a precast concrete structure and exterior instead of a steel structure with brick exterior, we could save $200,000 plus two months off of the construction schedule.

The CM/GC can put the DD set out to bid to various subcontractors (playing the part of the general contractor, or GC), which can help the owner and architect figure out if the project is under budget and where VE might need to take place. This process can be helpful ultimately; because the costs and budgets have been reconciled before the end of CDs arrives, then construction can start on time (granted, of course, that the project makes it through the building department in a timely fashion). CM/GC gets used on a lot of big institutional projects, such as schools/colleges, hospitals/healthcare, and large multi-use buildings (with retail, hospitality, and residences in them). Sometimes, though, when the budget is really tight, CM/GC can feel like design-build.

In both design-bid-build and CM/GC, both the architect and the contractor are separate entities that work for the owner--they each sign a separate contract with the owner, and they get paid by the owner. However, in design-build, the architect works for the contractor and is paid by the contractor, who has one contract with the owner for design and construction services. This arrangement takes the CM/GC arrangement to another level, in which the contractor and architect are working together from the start to make sure the project is buildable and on/under budget from the start. Some owners like the idea of just having the one contract; in a way, it's like one-stop shopping for a building project. Some design-build firms are the product of working with a developer. In this way, if a developer wants to build a neighborhood or a mall or an office/retail complex, s/he can do so very easily with his/her design-build firm quickly brought on board. Sometimes, architecture firms and contractor firms will go after large institutional projects with each other as a one-time design-build group, again in order to show the owner that they can get the job done quickly and on/under budget. The downside of the design-build arrangement that I've personally seen happen is that a dissenting voice during construction is missing. When the architect is beholden to the contractor (because that's who's cutting the architect's checks!), it's a lot harder for him/her to speak up about a badly-built detail or a short-sighted VE decision. In a good design-build relationship, the contractor isn't afraid of hearing "yow, that's a bad idea" from the architect. Sadly, I've yet to see firsthand (or even secondhand) a good design-build arrangement, but I'm sure they exist.

In both CM/GC and design-build arrangements, the bidding and negotiation happens in two phases: first, the contractor bids on the overall project; and second, the contractor gets bids from and signs contracts with the various subcontractors. I highly recommend getting a copy of the project estimates from a contractor on whatever project you're working on, as they're quite educational. Contractors generally break down the costs of a project by CSI spec division (concrete, masonry, steel, doors and windows, drywall and interior framing, painting, etc.) It's pretty informative to see what it costs to build a building, and you can ask your manager or the contractor directly if these costs are line with what they're seeing on other projects.

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