Delivery Systems Vary Widely in Benefits for Owners, Architects & Contractors

NEW YORK, N.Y. — New research from McGraw Hill Construction published in its Project Delivery Systems SmartMarket Report reveals that while owners, architects and contractors in the buildings sector all agree that the choice of a delivery system on a project impacts project cost, schedule and the potential for overall client satisfaction, perspectives on which of the three established delivery systems can best deliver these and other benefits often vary widely by player.

Established delivery systems include design-bid-build systems, in which owners hold a separate contract with the design firm and contractor on a project; design-build systems, in which one entity delivers both design and construction to the owner and construction management at risk systems, in which the owner contracts with a construction manager during design who works collaboratively with the design team in the final design stages and offers the owner a guaranteed price for the final completion of the project.

Research in the Project Delivery Systems SmartMarket Report indicates that choice of a delivery system can have potentially powerful implications for the ability of the project to be delivered satisfactorily, on schedule and on budget:

• Client Satisfaction: The highest percentage of owners who are highly satisfied with their projects are also those using the CM-at-risk delivery system (60 percent). However, architects are nearly evenly split in their opinion of the best delivery system to improve client satisfaction between design-bid-build, design-build and CM-at-risk. On the other hand, the highest percentage of contractors by a wide margin (43 percent) regard design-build as the best system for improving owner satisfaction.
• Cost: The highest percentage of owners reporting projects coming in under budget (33 percent) are those using a CM-at-risk delivery system. However, the highest percentage of architects (38 percent) believe design-bid-build is the best delivery system for reducing construction costs, and the highest percentage of contractors (38 percent) find that design-build reduces costs most effectively.
• Schedule: There is a consensus among owners, architects and contractors that design-build has the best impact on schedule of the three established delivery systems included in the study, a rare moment of agreement in otherwise highly diverse results.

“In order for the buildings sector to capitalize fully on the benefits available by using specific delivery systems for projects, there needs to be a wider understanding of how the other members of the project team view the use of that system,” says Harvey Bernstein, vice president of industry insights and alliances at McGraw Hill Construction. “Architects and contractors definitely need to consider how their clients regard the performance of these delivery systems, but owners also need to factor in how the project team members regard the impact of delivery systems because their approach to a delivery system can impact the performance of projects in terms of cost, schedule, quality and other benefits.”

According to the Project Delivery Systems SmartMarket Report, given the widely disparate views on the best delivery systems in the buildings sector, it is not surprising that no one on the three established delivery systems included in the study dominates the buildings sector in terms of use. While the majority of architects (60 percent) do report that they have engaged most frequently in a design-bid-build project, contractors are more evenly split, with 37 percent reporting most frequent involvement in design-bid-build projects, 25 percent in design-build projects and 24 percent in CM-at-risk projects.

However, most study respondents expect the building sector to reduce its use of design-bid-build and increase the use of other delivery systems:

•       23 percent of owners, 42 percent of architects and 30 percent of contractors expect to see decreases in the use of design-bid-build
•       50 percent of owners and contractors expect CM-at-risk to increase
•       63 percent of owners and 68 percent of contractors expect increases in design-build

The disconnect about the benefits associated with delivery systems also extends to the drivers that will encourage wider use of these systems. Since owners select delivery systems, their perceptions of drivers are critical and need to be better understood by architects and contractors.

• Owners’ top drivers of specific delivery systems: Maximizing the budget drives all three delivery systems, and it is more important than reducing project cost as a driver for the design-bid-build and design-build delivery systems. Improved quality on projects is another top driver for future use of CM-at-risk.
• Architects’ and contractors’ top drivers: Reducing project cost nearly always ranks above maximizing the value of work put in place for the budget as top drivers for design-bid-build and design-build, representing a large disconnect from the owners’ opinion. More architects also report reducing construction schedule as a key driver, and more contractors report that concerns about risk/liability are a key driver for CM-at-risk.

The study also examined the drivers and benefits of emerging delivery systems. In particular, the findings demonstrated strong benefits from the use of Integrated Project Delivery in the buildings sector. Eighty-percent or more of owners that have used IPD report that it increased process efficiency, reduced the risk of litigation, improved construction quality, improved sustainable building performance and reduced construction costs. The greatest obstacles they saw to wider IPD adoption included concerns about team members not performing and contract concerns, factors that may be addressed by wider familiarity with this approach in the industry.

The Project Delivery Systems: How They Impact Efficiency and Profitability in the Buildings Sector SmartMarket Report was produced by McGraw Hill Construction in partnership with MMC Contractors, the American Institute of Architects, the Design-Build Institute of America and the Society for Marketing Professional Services, with the support of Bentley Systems.

To download the full report, visit http://www.analyticsstore.construction.com/ProjectDeliverySMR?sourcekey=PRESREL.