Project Delivery Systems (PDS)

Project Delivery Method

➢ The owner needs to decide which designers to hire, when to
hire them, and under what type of contract ?
➢ The owner also needs to decide when to hire the construction
professional and under what type of contract ?
➢ Which organization gets hired first? Do both organizations
report to the owner, or does one report to the other?
 Project Delivery Systems
❖ Definition:
✓ The term delivery method means the approach used to organize the
project team so as to manage the entire designing and building
process.
✓ Contractual and organizational approaches by which a project is
executed.
✓ It is the first allocation of base responsibilities between the owner,
design professional and contractor. Thus, the project delivery system
is the foundation on which all subsequent negotiations will be based.
 Project Delivery Method
➢ project delivery systems"
describe how the participants
are organized to interact,
transforming the owner's
project goals and objectives Owner

into a finished facility. Also Supplier A/E

it is the method by which a

construction project is
executed. Subcontractor Project General
Contractor
 Execution of the Work
Will the Owner use:

General Construction
Contractor? Manager?

Design-Builder?
Multiple Trade
Contractors?

Independent A/E?
 Selection and Payment
Will the Owner use:
Competitive
Selection?
Negotiated
GMP? Selection?

Cost-Plus? Lump Sum?

 Program Construction
Manager? Manager?
General
Developer? Contractor?

Whose services will add

value and are compatible
with my project goals?
 Type of Project Delivery Systems
❖ Types of Project Delivery Methods
1. Traditional
2. Design-Build
3. Owner-Builder
4. Professional Construction Management (PCM)
5. Build-Operate-Transfer (BOT)
 Traditional Approach
➢Also known as Design-Bid-Build
➢Has three sequential phases: Design - Bid - Construction
➢The owner hires a design professional who prepares a complete set of
contract documents for the owner for a design fee.
➢Designer may provide limited services during construction:
✓ Intermittent inspection
✓ Review of payment requests
✓ Review of shop drawings
✓ Review of change orders
 Traditional Approach
➢The general contractor is totally responsible for delivering the
completed project as spelled out in the contract documents.
➢The general contractor may subcontract out parts of the project, with
each subcontractor reporting directly to the general contractor.
➢In this delivery method no direct, formal relationship exists between
the designer and the builder. They communicate only through the
owner
a) Design-Bid-Build with prime contractor

A/E
Owner
Design consultant

Prime
Contractor

subcontractor subcontractor Suppliers

 b) Design-Bid-Build with multiple
primes/GC (separate contracting)

A/E
Owner
Design consultant

E. Prime Prime M. Prime

Contractor Contractor Contractor

subcontractor subcontractor subcontractor

 b) Design-Bid-Build with multiple
primes/GC (separate contracting)

➢ The client has a direct contract with consultant.

➢ The client also has direct contracts with many contractors
to carry out construction

➢ The contractors also have contracts with the material

suppliers and other specialized subcontractors.
 Typical DBB Process

The four phases:

 Advantages of Traditional PDS
➢Familiarity: Most owners, designers, and builders have worked
under this framework on many projects and therefore are familiar
with the system (i.e. well established legally).

➢ Final price is known (assuming no changes)

➢Minimum involvement of owner in construction

➢Benefit from price competition (if competitive bidding is used)

 Disadvantages of Traditional PDS
➢ Project completion may be longer.

➢ Design does not benefit from construction experience

➢ Conflicts between owner & G.C. and between A/E & G.C.

➢ Changes in work may lead to disputes, litigation , claims and

may increase cost.
 Design-Build (Turnkey)
➢ In this approach, a single organization is responsible for performing both
design and construction .

➢ Within the design-build organization, parts of the design may be

subcontracted to specialist consultants.

➢ Being responsible for both design and construction, the design-build

contractor carries most of the project risks, and this can mean additional cost
to owner.

➢ The owner's role in this approach is minimal and is only to express his or
her objectives and specifications precisely before detailed design is started.

➢ Consultant maybe appointed to prepare tender and evaluation

 Design-Build DB (Turnkey)

Owner
Some times

Design consultant Design-Build

Contractor

subcontractor subcontractor supplier

 Typical Design-Build Process

The four phases

 Design-Build Advantages (for owner)

➢Construction expertise is utilized during design

➢Single point of responsibility for owner (i.e. one overall
contract with one entity).
➢ Project time is less (when fast track is used)
➢ Minimal owner coordination is needed.
➢ Implementing changes during construction is easy.
➢ Contractor’s claims caused by design is eliminated.
 Design-Build Disadvantages
➢ Project cost is not usually known at the start of the project

➢ If performed under lump sum, quality may be sacrificed to

insure profitability

➢ Heavy overhead due to large multi-disciplined staff

requirements
 Forms of Design Build Organization
➢ Identity of the design-builder:

➢ Integrated Design-Build Firm

➢ Contractor as lead

➢ A/E as lead

➢ Joint Venture
 Owner- Builder

Owner

Design Dpt Construction Dpt

Contractor Own force

 Owner-Builder

➢ Owner is responsible for both design and construction

➢ The client has no contracts with contractors to carry out
construction.

➢ Optional own force or contracted.

➢ Best suited when volume of work is large and continuous.
 Professional Construction Management
➢ A four-party arrangement: Owner, C. Mgr., Designer,
Contractor(s).
➢ In this approach, the owner appoints construction management
organization to manage and coordinate the design and
construction phases of a project using a teamwork design
approach.

Owner

A/E Professional Construction

Design consultant C. Mgr. Contractor(s)
 Professional Construction Management
➢ With a high level of coordination between the participants,
innovative approaches of overlapping design and construction
(i.e., fast-tracking) can be adopted.
➢ Definition:
✓ CM is a process by which the owner engages an agent (C.
Mgr.) to coordinate and communicate the entire project
process (feasibility, design, planning, procurement, and
construction) with the objective of minimizing time and
cost while maintaining quality.
✓ Above definition is for “True” professional C. Mgr.
 Professional Construction Management
➢ These services may include:
✓ Management and programming of design;
✓Preparation of tender documents; tender analysis and selection of
contractors;
✓ Selection of methods of construction;
✓ Planning and scheduling construction works;
✓ Materials procurement and delivery expedition
 Professional Construction Management
➢ Sometimes, previous functions are performed by the designer
(A/E)

Owner

Designer/ C.Mgr.

Construction
Design Team Const. Team
Contractor(s)
 Professional Construction Management
➢Although this approach is likely to prove marginally more expensive
than the traditional approach, it offers greater guarantee of
performance and the potential to avoid time overruns and to reduce
the cost of claims.

➢The payment to the PCM organization is usually a fixed fee or

percentage of the total project cost.

➢Use of PCM approach, should be considered when there is a need for

time saving and flexibility for design changes, and the owner has
insufficient management resources
a) Management Contracting (CM at risk)

A/E
Owner
Design consultant

Management
Contractor

subcontractor subcontractor supplier

a) Management Contracting (CM at risk)

➢ The client contracts a contractor acts as a management

contractor.

➢ Provide purely management services.

➢ Management contractors contracts directly with other

contractors to carry out the work

➢ The client contracts consultant to provide design and cost.

b) Construction management (Agent)

Owner

A/E Construction
Design consultant Manager
Prime
Contractor

subcontractor subcontractor supplier

 b) Construction management (Agent)

➢ The clients directly contracts with a

 professional construction manager.

 Design and cost consultant
 Construction Contractor to carry out the work

➢ The construction manager is the agent of the client.

 PCM Advantages and Disadvantages
➢ Advantages:
❖ Construction skills can be utilized at all stages of the project
❖ Full time coordination between design and construction
❖ Opportunity to use value engineering and constructability review

➢ Disadvantages: CM
❖ Involve additional fee
❖ C. Mgr. is not legally responsible for the designer and contractor.
❖ Success of the entire program depends on the skills of C. Mgr.
 Built Operate Transfer (BOT)
➢ The term Build-Operate-Transfer (BOT) was first coined by
Minister of Turkey, in1984

➢ BOT is a system in which a private entity, usually a consortium

is responsible for financing, construction, operation and
maintenance of the facility for agreed duration known as
Concession period and at the end of the period transfers the
ownership of the facility to the government.

➢ The concession agreement is between the government and the

concessionaire. The concession agreement is the “heart” of a
BOT project
Examples on (BOT) Projects
 Built Operate Transfer (BOT)
➢ Variations of BOT:
✓ Build-Operate-Own (BOO)
❖ Similar to BOT except the ownership of the facility
remains with the concession company.
✓ Build-Transfer-Operate (BTO)
❖ The concession company finances, builds, and
immediately transfers the facility to the government. The
concession company operates the facility (and collect
revenues)
✓ Build-Lease-Transfer (BLT)
❖ The concession company finances, builds, and leases the
facility to the government. The facility is transferred to
the government at the end of the concession period.
(BOT) Contractual Structure
 Built Operate Transfer (BOT)
➢ Characteristics of BOT projects:

✓ Project financing is totally provided by the private sector.

✓ Projects are large scale infrastructure, such as power plants,

transportation, telecommunications.

✓ The delivery is a complex system involving many

independent agreements with various parties.

✓ Projects involve high risk.

 Advantages of Built Operate Transfer
➢ Facilitate building public projects which otherwise can not be
done due to tight government budget.

➢ The project and its associated services will be produced more

efficiently, since private organizations are more efficient and
innovative than public organizations.

➢ BOT projects attract direct foreign investment and create

business opportunities for the local private sectors.

➢ BOT projects help in transferring technology in the host

country.
 Disadvantages of Built Operate Transfer
➢ Complex and requires expertise

➢ Not suitable for small projects

➢ Transaction costs are very high

➢ Requires assurance that the revenues generated in the operation

phase are high enough to result in attractive Return On
Investment (ROI)
 Selecting Delivery Method

➢ Three main factors:

➢ Time
➢ Cost
➢ Quality
 Selecting Delivery Method

➢ All the systems mentioned provide adequate Performance.

➢ However, they all provide different emphasis and different
levels of risk.

✓ Economy & Speed Design & Build

✓ Individual building
with longer program Traditional
✓Fast Completion with
innovation Management