The document discusses six alternative construction project delivery methods now available to public sector owners: 1) Design-Build-Finance, where a single builder acts as designer, builder, and financial lender. 2) Public-Private Partnership (P3), where a private party assumes risk and may finance through user fees. 3) Job Order Contracting (JOC), which allows outsourcing of recurring maintenance projects. 4) Integrated Project Delivery (IPD), calling for collaboration between owner, designer, and builder. 5) Design-Assist, with designers and builders collaborating on-site. 6) Construction Management-at-Risk (CM-at-Risk), where the builder works with the designer to provide cost

1. Six Alternative
Construction Project
Delivery Methods
NOW AVAILABLE TO PUBLIC SECTOR OWNERS
By Bo Calbert
McCarthy Southwest Region President
mccarthy.com
bcalbert@mccarthy.com

2. THE WAY PUBLIC WORKS PROJECTS CAN
BE BUILT AND FINANCED IS CHANGING.

3. Traditionally, the three stages — planning, design, and
construction — have been independent and sequential.
Builders bid on jobs based on designs already set in stone, and owners
selected the lowest-bidder to bring the project to life.

4. But revised procurement laws adopted over
the last few years have opened up new
delivery methods for public projects like:
SCHOOLS
WATER/WASTEWATER
TREATMENT PLANTS
ROADS
HIGHWAYS
CORRECTIONS
FACILITIES

5. … the new, alternative delivery methods
include new benefits, such as:
• Solutions for project
financing
• Cost guarantees earlier
in the project
• Efficiencies through
collaboration between
planners, designers and
builders
• Reduced financial risk
• Building without
needing to secure
traditional financing
• Building without using
tax dollars at all

6. As a general contractor,
one of the most critical
roles McCarthy assumes
is working together with
our project owners to
review all options when
planning for the design
and construction of
new projects.

7. Here are alternative options
FOR DELIVERY OF PUBLIC WORKS AND OTHER
CONSTRUCTION PROJECTS

8. ONE Design-Build-Finance
The hiring of a single builder that
acts as a stand-alone designer,
builder and financial lender.

9. ONE Design-Build-Finance
Design-Build-Finance gives municipal
institutions a viable financing alternative
without the huge capital investment typically
associated with plant construction.

10. ONE Design-Build-Finance
Design-Build-Finance is the most preferred
project delivery option for an owner who
doesn’t qualify for traditional bond financing.

11. ONE Design-Build-Finance
A common adopter: A municipal institution that
operates a water/wastewater treatment plant.
Design-Build: owner hires
a builder that acts as the
designer and the builder,
with financing coming from
a third party. Includes
performance guarantees
that help secure traditional
funding.
Design-Build-Operate:
owner hires a builder that
acts as the designer, builder
and the ongoing operator
of the plant/project, with
financing coming from a
third party. Includes pricing
and performance guarantees
that help attract traditional
financing.
TWO VARIATIONS:

12. ONE Design-Build-Finance
Potential downsides to Design-
Build-Finance, Design-Build, and
Design-Build-Operate: Can result
in difficulties for the owner to align
the bridging documents and the
design-builder proposal documents
to best meet end-user needs.

13. TWO Public-Private Partnership (the toll-road model)
Also known as P3, this is the method where a
public-sector authority, say a state’s department
of transportation, partners with a private party
that assumes substantial financial, technical and
operational risk of the project.

14. TWO Public-Private Partnership (the toll-road model)
In some cases, like in a toll road, tax money is
not used to build it, but rather the users of the
facility pay to use it, leaving the public-sector
party without the need to incur any borrowing.

15. TWO Public-Private Partnership (the toll-road model)
Therefore, P3 is an “off-balance sheet” method
of financing the delivery of new or refurbished
public-sector assets.

16. Of all the delivery methods
available today, P3 has the
most potential to solve more
problems and deal with the
challenges associated with
complex public projects. The
challenge with P3s is that
users often don’t like paying
tolls and elected officials
tend to avoid what can be
seen as contrived financing.

17. THREE Job Order Contracting (JOC)
Downsized public entities sometimes no longer
have the manpower or resources to complete
the kind of public infrastructure maintenance
and repair work they once tackled in-house.

18. THREE Job Order Contracting (JOC)
Job Order Contracting
offers public owners
an efficient way to
outsource these types
of projects that include
work of a recurring
nature, with indefinite
delivery times, types
and quantities of work.

19. FOUR Integrated Project Delivery (IPD)
ONE OF THE NEWEST DELIVERY METHODS AVAILABLE TODAY…
Integrated Project Delivery calls for significant
collaboration early on in the project between
the three major stakeholders — owner, designer
and builder — where most value is created
through the planning of efficiencies.

20. FOUR Integrated Project Delivery (IPD)
IPD eliminates volumes of waste and promotes
productivity by allowing for data sharing directly
between the design and construction team.

21. Potential downside: there
can be murky legal
conundrums involved with
intellectual property,
ownership of collaboration
software files, and issues
surrounding team conflict
on projects utilizing this
delivery method.

22. FIVE Design-Assist
Where design professionals work along-side
construction contractors on the job
site, to collaborate on the best solutions
to meet all the owner’s needs.

23. FIVE Design-Assist
The cooperation in the field between designers
and builders streamlines the construction process
and provides cost certainty earlier in the project.

24. SIX Construction Management-at-Risk (CM-at-Risk)
With the CM-at-Risk model, the
builder (the CM-at-Risk firm) is
hired before the design phase is
completed, and works with the
separately hired design firm to
provide constructive solutions
that may be more cost effective,
provide a better delivery schedule,
and provide for the best long-term
maintenance and
operability of the facility.

25. SIX Construction Management-at-Risk (CM-at-Risk)
The builder provides cost-estimating that matches
the design and construction to the project budget.

26. CONCLUSION:
Traditionally, builders bid on jobs based
on designs already set in stone, and public
owners selected the lowest responsive
bidder, not the most qualified builder.

27. CONCLUSION
BUT TODAY
The construction industry is providing public
owners with flexible alternative delivery methods.

28. CONCLUSION
There is no “one size fits all” prescription
when it comes to construction delivery. Each
project is unique and often has a complex set
of circumstances to consider before selecting a
delivery method.

29. It takes a lot of
training, insight
and experience
to get it right.

30. Owners should not be averse to opening up a
dialogue with contractors and learning from their
varied experiences — good and bad — with the
wide array of delivery options.

31. We work with owners to explore available
delivery methods and identify the best options
for each unique project. We also work together
with all parties in mastering the complexities
involved in each delivery method.

32. Would you like to talk about alternative delivery
methods that might be right for your project?
CONTACT McCARTHY TODAY.
A presentation by Robert “Bo” Calbert, President of McCarthy’s Southwest Region,
based in Phoenix. Bo can be reached at bcalbert@mccarthy.com