Facilities: Construction or Confusion?
School Advisor, 2007 Issue No. 2

Five thousand years ago, the Babylonians encountered mass confusion with the construction of the Tower of Babel. Today, confusion still exists unless owners understand project delivery methods and the associated contracts. The primary objective is for the client to balance time, quality, and cost to complete a project and pick the method that best meets the project objectives. Facility owners have a variety of construction delivery methods at their disposal. While these choices exist to make an owner’s job easier during the construction process, most owners simply don’t have the time or expertise to make an informed decision.

There Are Many Project Delivery Methods Used Today

The three most popular project delivery methods are traditional (design/bid/build), construction management, and design/build. Each of these methods has distinct advantages and disadvantages. The primary difference involves the level of risk and control the owner assumes. The traditional method will provide the owner the most control over the design; however, the schedule can be compromised. The construction management method will typically be faster, but an owner won’t identify the actual cost until much later into the process. The design/build will typically be the fastest of the three, but the owner’s control of deign is sacrificed.

There Are Risks in Selecting a Contract

Once a project delivery method is selected, an owner is still faced with the development and administration of a project contract. Oftentimes, contractors will recommend a contract which may be not completely owner-friendly. There are a multitude of contracts that need to be evaluated and typically modified to suit the project. Three organizations, the American Institute of Architects (AIA), Association of General Contractors (AGC), and the National Society of Professional Engineers, have standard contracts for construction projects. Each of these organizations has tried to consider the owner’s needs, but the standard contract still contains language that doesn’t benefit the owner. Most owners aren’t aware of the risks they accept when they execute the contract, only to find out after construction has started that it’s too late to rectify anything.

An example of an issue that frequently surprises owners during construction is change orders. Many change orders are often necessary, but the methodology for pricing these change orders must be well defined, and outlined for the owner’s benefit within the project contract. Even when properly defined, the owner still needs to understand how change orders will impact project pricing, through additional costs and/or project credits. When not properly defined or negotiated a project can often cost 10 to 20 percent more than originally planned.

An Owner Representative Can Help

As construction projects become more complex, local districts often don’t have the in-house expertise to select the most advantageous delivery method, negotiate the appropriate business terms in a contract, or to respond to issues that arise during construction. Through the assistance of a professional independent owner representative, school districts can appropriately plan a project, negotiate contract business terms, and address construction issues, while knowing that only the owner’s interest is being represented. If you need assistance, contact David Asker at 248.223.3413 or Mark Eckles at 248.223.3670.