Procurement Management and Contract Administration Andualem Endris Yadeta

1. Project Delivery Methods
College of Engineering
Construction Technology and Management Department
Mada Walabu
University
Procurement Management and Contract Administration
CoTM 4242
Chapter Three
Instructor
Andualem Endris (M.Sc)
andu0117@yahoo.com
www.facebook.com/aendris1
www.linkedin.com/in/andualem-yadeta
www.twitter.com/andualemyadeta

2. Definition
Project Delivery Method: Is a system
used by an agency or owner for organizing
and financing design, construction,
operations, and maintenance services for a
project.
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3. Construction Project Characteristics
Construction projects are different than other types of
projects due to the following characteristics;
 Construction projects are complex undertaking.
 Every construction project is unique.
 Construction projects involve a lot of uncertainties,
lack of information and variables.
 Therefore, parties and their role shall be pre-determined.
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4. Traditional Vs Alternative Project
Delivery Methods
Traditional Approach (D-B-B):
The most common delivery system is called “the
traditional or standard approach” or “Design-Bid-
Build (D-B-B)”, in which the employer assigns the
design and construction phases to two different
firms (consultant/designer and contractor).
Constructing
Designing
Appointing
Consultant
Appointing Main
Contractor
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5. Traditional Approach (D-B-B):
 For many years, DBB has been the most common
method of project delivery for public projects,
and for many private projects as well.
 Design-Bid-Build is effective on projects
 where the owner needs both professional
design services and construction services
 where the designer does not require detailed
knowledge of the means and methods of
construction.
 DBB provides the owner with a high degree of
control.
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6. Traditional Approach (D-B-B) … Cont’d
 The owner defines project goals and objectives, secures the financing,
and specifies the standards and contract terms.
 The owner may perform planning, conceptual design and full design,
or may engage an outside design professional (designer) for some or
all of these tasks.
 During this planning and preliminary stage, owner and designer work
as a team to obtain required permits and conduct necessary site
investigations.
 The designer prepares the construction bid documents to reflect the
owner’s project goals and objectives.
 Prospective contractors prepare their bids from these complete and
specific bid documents.
 The bidders submit their proposals to the owner, who determines the
most responsive (typically the lowest) bid meeting project
requirements.
 In certain circumstances, owner may be justified in selecting a
contractor outright and negotiating contract terms directly.
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7. Advantages of D-B-B Approach
 Applicable to a wide range of projects.
 Well established and easily understood.
 Clearly defined roles for all parties.
 Provides the lowest initial price that competitive
bidders can offer.
 Extensive litigation has resulted in well
established legal precedents.
 Insurance and bonding are well defined.
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8. Disadvantages of D-B-B Approach
 Least-cost approach requires higher level of
inspection.
 Initial low bid might not result in ultimate lowest
cost or final best value.
 Designers may have limited knowledge of the
true cost and scheduling implication of design
decisions.
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9. Alternative Approach (D-B)
Design-build (D-B) approach is regarded as an alternative
project delivery system
It involves a single contract between the project employer
and a design-build contractor covering both the
design and construction of a project.
The design-builder performs design and construction
according to design parameters and other
requirements established by the employer.
Constructing
Designing
Appointing design & construction
contractor
Tendering
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10. Design-Build Approach
 The owner contracts with a single entity to provide the
design and to construct the project.
 The contract might be negotiated with a single design-
builder or result from competitive proposals.
 The selection can be based on low price or on a set of
value criteria (experience, staff, bonding capacity, etc).
 With the contractor playing a major role in design,
costs are typically defined and maintained to a greater
degree, and the coordination of fast-track management
to achieve early completion is greatly simplified.
 The design-builder makes many decisions that owner
would make under DBB, due to delegation of greatly
increased authority.
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11. Design-Build Approach
 For many owners, delegation of responsibilities
leads to satisfactory projects. However, if the
parties are inexperienced and do not cooperate,
the transfer of control and risk can be
disappointing.
 The owner may need to restructure his/her
internal procedures to accommodate design-build
approach.
 Compared to DBB, this involves a significantly
different set of requirements and expectations for
process, timelines and communications.
 A clear understanding and documentation of
design-build processes enhances the quality of
design-build projects
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12. Advantage of Design-Build Approach
Innovation and quality improvements through:
- Alternative designs and construction
methods
suited to the contractor’s capabilities
- Flexibility in the selection of design,
materials, and
construction methods.
• Earlier schedule and cost certainty
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13. Disadvantage of Design-Build Approach
 Reduced opportunities for smaller, local construction
firms.
 Fewer competitors and increased risk may result in
higher initial costs.
 Elimination of traditional checks and balances. Quality
may be subordinated by cost or schedule
considerations.
 Less Engineer control over final design.
 Higher procurement costs.
 Traditional funding may not support fast-tracking
construction or may require accelerated cash flow.
 Accelerated construction can potentially overextend
the workforce.
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14. Others
 Turnkey
 Turnkey Variations
 Direct Labor Approach
 Construction management.
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15. Turnkey
 Turnkey adds to the design-builder’s
responsibilities the operation and/or
maintenance of the completed project.
 Turnkey delivery has the potential for bringing
a new project on line more quickly.
 Three forms of turnkey project delivery:
 Design-build-operate-transfer
 Design-build-operate-maintain
 Design-build-own-operate-transfer
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16. Turnkey Variation
 Variations on turnkey add financing as a key
component. While financing arrangements are unique
for each project, developer financed projects
generally resemble one of the turnkey delivery
methods:
 FDBT (Finance, design, build, transfer)
 FDBOT (Finance, design, build, operate, transfer)
 FDBOOT (Finance, design, build ,own, operate,
transfer)
 In each case, the transfer of the project occurs only
after the developer’s interests and financial
obligations have been satisfied.
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17. Thank You