Simplified Procurement and Construction Delivery Methods Overview

Selecting a procurement and construction delivery model is a major decision. Below is a brief description of popular models.

1. Design-Bid-Build (DBB)

Description: The traditional method where the Owner hires a designer to complete full construction documents, then bids the project to contractors. The lowest qualified bidder is typically awarded the construction contract.

Pros for Owner:

• Familiar and straightforward process

• Clearly defined roles and responsibilities

• Competitive bidding may result in lower initial costs

Cons for Owner:

• Longer timeline due to sequential process

• Limited contractor input during design

• Higher risk of change orders or disputes over scope

2. Construction Manager (CM) (Umbrella term – split below into two types)

Description: The Owner hires a construction management firm to oversee the project. This can take two forms:

2A. Construction Manager as Constructor (CMc or CM at Risk)

Description: The CM is involved early during design and later acts as the general contractor. The CM provides a Guaranteed Maximum Price (GMP) and takes on construction risk.

Pros for Owner:

• Early cost and constructability input

• Faster project delivery (design and construction can overlap)

• GMP provides budget predictability

Cons for Owner:

• Less competitive bidding on subcontractors (depending on CM’s process)

• CM is both advisor and builder, which can create conflicts of interest

2B. Construction Manager as Advisor (CMa)

Description: The CM acts solely as an advisor to the municipality and does not hold subcontracts. The municipality contracts directly with trade contractors.

Pros for Owner:

• Independent advice from CM with no conflict of interest

• Greater control over contractors and decisions

• Flexibility in managing trade contractors

Cons for Owner:

• Owner holds all subcontractor risk

• Greater administrative burden and coordination responsibility

• Potentially more complexity in contract management

A procurement model in Indiana that is gaining popularity, is Build Operate Transfer (BOT).

BUILD OPERATE TRANSFER (BOT)

A public-private partnership for the development, design and construction of public facilities, Build Operate Transfer (BOT) has gained popularity as a procurement and delivery method.  Subject to satisfaction of the procedural requirements set forth in Indiana Code 5-23, the BOT model allows a municipality to negotiate directly with developers (developer, design, construction team. This process has statutes and ordinances to follow prior to beginning the process that we won’t get into here, but can provide upon request.

Under this model, the municipality issues one RFQ and hires the full development team. The municipality holds a single contract with the developer, who holds contracts with all other design and construction partners. A GMP is developed to control costs.

In Closing

Each delivery model has trade-offs in terms of cost control, risk allocation, speed, and municipal oversight. The right choice depends on project complexity, internal staff capacity, and desired level of involvement.