“…bad things tend to happen when you divorce the people who take the risk from the people who understand the risk.”

 

-Hedge Fund Manager (HFM)


Discover the approach that aligns with your goals

 

Value
Approach

40 - 28

Qualifications
Approach

27 - 15

Cost Only
Approach

14 - 0


VALUE APPROACH

Why:

  • Highest potential for maximum value, team collaboration, value-engineering, efficiency, fast-track timeline, transparency, and positive owner experience.
  • Up to 30% reduction (2) in opportunity costs and project timeline due to partially-concurrent building and design schedules.
  • Reduces probability of +10% cost variance between up-front, bids in the “low bid process”, and the eventual cost (2).
  • No assumptions on design and pricing; all details are fully and clearly communicated prior to construction; limits unknowns.

HowSelection criteria: character, competence, expertise, relationship, referral, and ingenuity.

What: Builder and architect selected prior to design.

Case StudiesHTSJaguar Land RoverThe AdriennePDX Air

QUALIFICATIONS APPROach

Why:

  • Attempt to get best possible pricing.
  • Partial design definition causes GC’s to make assumptions on design details, scope, and owner vision.
  • Medium risk of project cost overruns (1.6% cost growth)(1) and opportunity costs with time consuming RFQ/RFP process.
  • Caps potential for collaboration, value-engineering input, and real-time budgeting.

How: Selection criteria: composite score between the RFP and bid (off of current design definition: between 10% - 50%).

What: Builder selected after design is partially completed.

Case StudiesColumbia Helicopters Turbine Engine Test CellHillsboro Aviation

 

COST ONLY APPROACH

Why:

  • Perceived as fastest way to achieve lowest-cost product.
  • “Low Bid” price rarely matches eventual project cost.  Highest risk of cost overruns (9% total cost growth) (1).
  • Highest opportunity costs due to sequential – not concurrent – schedule (14% schedule growth in high complexity projects) (1).
  • Strained or no relationship with construction team.
  • Little to no value-engineering input.
  • No GC budgeting input during design phase.

How: Selection criteria: lowest “responsible” bid; period.

What: Builder selected after design is completed.

Case StudiesAurora Air Traffic Control TowerReynolds High SchoolSunnyside Clinic


EARLY QUESTIONS TO CONSIDER

  • Is the builder selected before, during, or after building-design?
  • What is my realistic time-frame; is this a fast-track project?
  • Do I want real-time budgeting during the design phase?
  • Who will lead & manage my project: owner, architect or builder?
  • How do I know everything is included in a proposal or bid?
  • Will aggressive sub-contractor bidding occur?

(1) Wardani, Marwa A. El, John I. Messner, and Michael J. Horman. "Comparing Procurement Methods for Design-Build Projects." Design-Build Effectiveness Study. US DOT Federal Hwy Administration, Jan. 2006. Web. 22 June 2015.

(2) "Design-Build Effectiveness Study. Journal of Construction Engineering and Management J. Constr. Eng. Manage. 132.3 (2006): 230-38. Penn State Engineering. Penn State, 2004. Web. 22 June 2015.