Project Delivery Strategies

When to contract for construction | Contract documents
Key decisions | Typical project delivery methods | CM fast-track with a GMP | Footnotes

Early in a project, a client must select a process for design and construction. The process will affect the financing, the selection of the project team, the schedule and the cost.

We have experience with all the processes. We have worked as architects, engineers, project managers, construction managers and Design/Build contractors. We have worked with fast-track, bridging and traditional processes. We have worked with GMP, cost-plus, target-price and fixed-price contracts.

All these processes are flawed, but they can all be made to work. The best choice is governed by the exigencies of the project.

Phases of Design and Construction

Three Phases

Design and construction can be divided into three distinct phases: project definition, design and construction. These phases (and their subphases) can be overlapped, subdivided or regrouped, but none can be eliminated. If one phase is done poorly, the following phases are impaired.

Project definition: At Barretta & Associates we subdivide this phase into two activities.

  • Discovery: the identification and analysis of project requirements and constraints
  • Integration: the description of the project and the plan (including an estimate of cost and time for delivering it)

Design: Typically, design is divided into three phases.

  • Schematic design: the basic appearance and plan
  • Design development: an evolution of design that defines the functional and esthetic aspects of the project and the building systems that satisfy them
  • Construction drawings and specifications: the details of assembly and construction technology

Construction: Construction can also be divided into several basic activities.

  • Procurement: the purchasing, negotiation or bid and award of contracts to construct the project1
  • Shop drawings: the final fabrication drawings for building systems2
  • Fabrication, delivery and assembly: the manufacture and installation of the building components
  • Site construction: the labor-intensive field construction and the installation of systems and equipment

When to contract for construction

When to Contract for Construction

Traditional process is the term used for projects that are bid or negotiated after an AE completes construction drawings. However, shop drawings are done by contractors, so it's correct to argue that in all processes some design is done by the contractor.

Bridging is a hybrid of Design/Build and the traditional process. The contract documents are prepared by the client's AE. They specify the project's functional and esthetic requirements, but the details of construction technology are described with performance specifications. The construction contract is awarded halfway through design. Construction drawings are done by a Design/Build contractor or a general contractor with an AE as a subcontractor (who is also the Architect of Record).

Design/Build contracts are typically negotiated before project definition, or just after. The design/-build contractor does all design (including construction drawings).

Fast-track is jargon for overlapping design and construction to accelerate completion. It may be done with the traditional process, bridging, Design/Build or any other process.

There is no technical reason not to overlap design and construction. The problem is cost control: construction begins before the design is complete, so the final scope and therefore the final price may be disputed.

There are two ways to fast-track a project. A single contract can be awarded to a general contractor who may build the project under a cost-plus contract, perhaps with a guaranteed maximum price. Or the owner may retain a construction manager who may bid the project in stages with complete contract documents for each stage. The contracts for each stage are typically bid to trade contractors. The general contractor is eliminated.

Contract documents

A construction contract that includes a fixed-price, a target price or a GMP requires a description of the result that the contractor must produce. Different countries and different industries have different traditions (and convictions) about the detail required to describe that result. Typical documents are:

Construction drawings and specifications Construction documents show how the building is made and what it's made of. The drawings show details like the size and location of reinforcing rods, wiring runs and duct sizes. The specifications typically define the construction by product or by prescription. Most U.S. AEs believe that these detailed construction drawings and specifications are the proper way to define the required result and to enforce a contract.

Bill of Quantities In countries influenced by the British, licensed quantity surveyors measure drawings, calculate the amount of each required material and prepare a Bill of Quantities. Construction contractors bid on the unit cost of each building material. These unit-price contracts are common for highway construction and tenant fit-out in office buildings in the U.S.

Design development and performance specifications In many countries, projects are bid with what we would call design development drawings (35-50 percent of the level of detail that is contained in a full set of construction drawings and specifications). Performance specifications describe what systems must do rather than describe how they will do it. Construction drawings are completed by Design/Build contractors who maintain a staff of architects and engineers. In the U.S., the petrochemical industry, GSA and the Air Force are using this technique.

Key decisions

There are four basic decisions in setting project delivery strategy. They are:

  • Number of contracts
  • Selection criteria
  • Relationship of owner to contractor
  • Terms of payment

These decisions aren't either/or. There are shades of gray.

Number of contracts

A project may be awarded with one contractor, as in design/build. In the traditional process there are two contracts: one with an AE and one with a construction contractor. (There are three with a project manager.) With a construction manager you may have contracts with 40 prime subcontractors, or you may purchase building materials and equipment and arrange multiple labor contracts. There may be thousands of contracts.

With multiple contracts a client can fast-track a project (overlap design and construction). Direct purchase of labor and materials eliminates overhead markups. Unbundling design allows selection of specialists, and unbundling construction allows careful selection of specific manufacturers and trade contractors. So as the number of contracts increases, the opportunities to save time, money and improve quality also increase.

So does risk. Clients who choose to manage multiple contracts must manage the contracts well or take the responsibility for management failures. Consequently, most clients package contracts under a general contractor or choose a construction manager to3 help if they use multiple contracts.

Selection criteria

A contractor may be selected on the basis of price or qualifications. Owners often consider both and require a proposal (which could be a management plan or a design) and a price.

Typically, AEs are selected with an emphasis on qualifications, and construction contractors are selected on the basis of price. But there are owners who select AEs on price and those who select GCs on qualifications.

The selection criteria are influenced by what is to be bought. If it's a common product, easily defined and easily evaluated, there is little reason not to choose on the basis of price. But if the product is unusual or proprietary, or if service is required, or if intellectual qualities (talent, creativity, wisdom, judgment or experience) are required, selection is usually based on qualifications.

Contractual relationship

A contractor may be viewed in one of two ways: as an agent or as a vendor. An agent represents the client's interest and has a fiduciary responsibility. A vendor delivers a specified product for a price.

AEs are usually viewed at the agency end of the spectrum and contractors at the vendor end. But there are exceptions. Some owners ask contractors to act as their agents in procuring and managing construction and treat AEs as vendors of plans and specifications.

When owners need guidance or advice, they typically choose an agent (a fiduciary) relationship. Owners who know exactly what is required typically form vendor relationships.

There can be a conflict of interest if a contractor is both agent and vendor or if a contractor changes from agent to vendor in the course of a project. For instance, an AE that designs a building for a fee is usually precluded from bidding on construction. Some owners don't worry about the conflict of interest and look for good reputations and continuity instead.

Terms of payment

A contractor may be paid based on the contractor's costs. At the other end of the spectrum is a fixed-price. Contracts tend to be cost-plus when the scope is unknown and fixed-price when the requirements are well defined. There are variations between cost-plus and fixed-price. The common arrangements are:

Cost-plus Contractor is paid actual costs plus a fixed or a percentage fee.

Cost-plus with target price Contractor is paid actual costs plus a fee. However, a target price is set, and the contractor shares in the savings or the overrun. The target price is modified by change orders as the project progresses.

Cost-plus with a guaranteed maximum price Contractor is paid actual costs plus a fee. However, a maximum price is set, and the contractor will share in the savings but will pay all of the overrun. The GMP is4 modified by change orders.

Unit-price Contractor is paid a predetermined amount for each unit of material put in place (or removed).

Fixed-price Contractor is paid a fixed sum for the work.

These payment terms may be combined in one contract. For instance, many contracts are fixed-price with unit-price provisions for rock removal during excavation or tenant work during lease-up. Change orders may be based on a cost-plus arrangement.

Typical project delivery methods

Variations are infinite. Examples of the most common follow.

Traditional process

Most U.S. projects are design, bid, build. An AE defines the client's needs, designs the building, prepares construction drawings and specifications and administers construction. Drawings and specifications serve two purposes. They are guidelines for construction, and they are the contractual definition of what the contractor is to build. Contractors may be prequalified and short-listed. They usually provide a bond. Typically, the low bidder is awarded the work. The AE is at the agent end of the spectrum, the contractor is at the vendor end.

Pros The process is easy to manage. Roles are clear, the process is universally understood. Since the owner has a defined requirement and a fixed price, it appears prudent.

Cons Construction can't start until design is complete. There is not a fixed price for construction until much work has been done. If bids are over the budget, more time and money are lost for redesign. Design suffers from a lack of input from contractors and subcontractors. Procurement of subcontractors by the general contractor during the bid period is typically unbusinesslike.

Traditional process with a project manager

Owners often add project or construction management companies to the traditional process to mitigate the traditional flaws. The idea is to select an organization with experience in construction to improve cost, schedule and quality control; improve the constructibility of the design; develop risk management and claims protection programs; improve other management controls to smooth the process; and improve field management.5

Often project managers unbundle design and construction contracts. Instead of a single AE, projects may have a planner, a design architect, a production architect and separate architects for different aspects of the interiors. These firms may be selected by the owner and PM and assigned to the lead architect. The PM may also negotiate major items of manufactured equipment and subcontracts and assign them to the selected general contractor. That maintains a single, bonded price for construction but allows direct negotiation (and useful collaboration) with speciality subcontractors and manufacturers. Procurement of subcontracts also provides cost feedback. That reduces the possibility of a bust on bid day.


Many owners look for ways to accelerate schedules. Fast-track -- starting construction before finishing design -- is a common technique. Fast-track can be used with the traditional process, with bridging or with Design/Build. However, it is most common with CM.

Pros The process saves time.

Cons The problem with fast-track is inherent in its advantage. Since construction is started before design is complete, the owner lacks the security of a fixed price based on complete construction documents. There is no contractual assurance that the project will be completed within the budget. There are two common approaches that mitigate this problem: construction management with a guaranteed maximum price and construction management with multiple prime contracts.

CM fast-track with a GMP

Many general contractors provide CM services under a cost-plus general construction contract with a guaranteed maximum price. The argument is simple: since the project isn't fully designed when construction begins, the contract should be cost-plus. But to give the owner security that the project will be built within the budget, the contractor provides a GMP.

Pros The process works for developers or experienced private sector clients who can select contractors on the basis of qualifications and integrity, reward them with repeat work and manage them vigorously. The process also works for simple office buildings that are well understood by all (the client, the AE and the contractor).

Cons The contract is hard to enforce. The guaranteed maximum price is for work that isn't completely defined. As design progresses there is opportunity for a contentious or inept contractor to make claims for changes that are "out of the guaranteed scope." The GMP is a defined price for an undefined product.

Furthermore, owners with complex buildings, the public sector or large corporate or institutional clients should be circumspect about a cost-plus contract with a GMP. First, it's difficult for these kinds of owners to award and administer cost-plus contracts. Second, these owners are particularly vulnerable to claims and change orders. Awarding a contract with incomplete documents increases vulnerability to claims, particularly for owners with deep pockets.

CM fast-track with multiple prime contracts


The general contractor is eliminated and replaced with a construction manager who manages the project in an agency (fiduciary) capacity.

The CM bids construction to trade contractors just as a GC would, beginning with items critical to the schedule. One common strategy to avoid downstream overruns is to award only the shop drawing phase of the first trade contracts. The CM delays final notice to proceed with construction until most of the work is bid and the project cost is certain. On government work, the subcontracts are directly with the owner. In the private sector, the CM may hold the subcontracts as agent of the owner.

Pros Clients have a professional construction manager on their side. The multiple trade construction contracts are fixed-price based on complete documents with little room for change orders.

Cons Multiple contracts can make for administrative difficulty. If one prime trade contractor damages another by delay, the owner can get caught up in the fight.

The secret of a successful fast-track project isn't the legal security of a contract. Nor does anyone believe it's risk-free. Success only comes from good management. The professional approach works better for the public sector because governments can select professionals on the basis of qualifications to replace the function of a general contractor. Governments also have difficulty exercising the management sanctions that are the necessary stick to make a cost-plus GMP contract work.



With Design/Build, one company provides both design and construction. Some owners like the Design/Build idea, but they want to cherry-pick specialized designers. In these cases, the AE is a subcontractor to a GC or a Design/Build contractor.

Pros There is a single point of responsibility for both design and construction. Design/Build contractors add construction practicality to design imagination. Owners get an enforceable price for construction sooner and can fast-track the project. The contractor can negotiate subcontracts methodically so the owner can benefit from good prices, reliable subcontractors, better technology and tighter contracts.

Cons More projects would be Design/Build if they could be bid. But it's difficult to formulate an enforceable price before design begins. The paradox: It's hard to define the work to be done for an agreed-upon price without design. If design is done, then it's not Design/Build.

Some Design/Build companies work under an AE fee with a target price until the design is set. They then negotiate a final price for construction. They agree that the client may obtain prices from other contractors as well. The Design/Build contractor begins in an agent role and changes to a vendor role. Many do so with integrity. But many clients feel that it's unwise to hire a contractor to define a product as an agent that the contractor will then sell as a vendor.



Bridging is the U.S. name for a Design/Build process common in Europe and Japan and in the petrochemical industry.

In the bridging process there are two AEs. The first AE is under contract with the client. Bid documents define the functional and esthetic characteristics of the project. They include drawings similar to design development in the traditional process. There is a combination of performance and traditional specifications. These documents define the parts of the building that the client wants to control, typically the functional and esthetic aspects. But the documents leave considerable latitude for contractors to look for economies in construction technology.

The project is bid (or negotiated) by Design/Build contractors or by a GC with an AE as a subcontractor. The contractor's AE (the second AE) does the final construction drawings and specifications and is the Architect of Record. Typically, construction doesn't begin until the final construction drawings are complete and it's clear that there are no misunderstandings about what was intended by the bid documents. If there is disagreement the client owns the plans and may use them to take competitive bids.

Pros Bridging has the beneficial attributes of the traditional process: a bonded, enforceable lump-sum contract and complete contractual documentation before construction starts. It also has the beneficial attributes of Design/Build: centralization of responsibility, integration of practical construction knowledge into final design and reduction of the time and cost required to obtain an enforceable lump-sum price for construction.

By centralizing responsibilities during construction, bridging minimizes the opportunity for contractor claims based on errors or omissions in the drawings or specifications. It also centralizes the responsibility for correction of post-construction faults in the design or construction.

Cons The biggest problem with bridging is that it's new in the U.S. The construction industry is large and replete with contractors, AEs, consultants, subcontractors, manufacturers and suppliers. Tradition is the great facilitator. These organizations don't all understand bridging and may not perform well without careful management.

All these processes are flawed, but they can all be made to work. The best choice is governed by the exigencies of the project. The biggest issue is the quality of the people. The best way to get a good project is to get good people to do it, set the environment for collaboration and make sure responsibilities are clear.


1 This activity occurs at many levels. The way the client buys construction affects the methods that may be used by construction managers, general contractors, subcontractors and suppliers.
2 One could easily argue that shop drawings are really the last phase of design. They are included in the construction phase only because they are done by contractors after they have been selected.
3 The term "construction manager" is frequently used synonymously with "project manager." Often the term "project manager" is used with the traditional process, and "construction manager" is used with multiple-contract fast-track. A GC may take the title of construction manager with a GMP contract. The same company may provide all three kinds of services for different clients.
4 Many people use the term GMP synonomously with fixed-price. That is incorrect. A GMP is a lid on a cost-plus contract with a defined scope. It is one of the most difficult of all contracts to manage. It has the problems of both fixed-price and cost-plus contracts. It is more susceptible to change orders than a fixed-price because it is typically given before construction drawings are complete. There will also be many issues over the definition of "cost," e.g., rental rules on contractor-owned equipment or ownership of workman's compensation refunds or penalties.
5 Although it is not yet common in the industry, 3D/I has also emphasized the project definition phase as an important project management service.