For business owners, proceeding with a construction project is a major decision, and to ensure a great construction experience, they must select the right team. Once an owner proves its project’s financial model makes sense for their business, they can either hire a design firm (architect) or a commercial general contractor with design capabilities. Who the owner contacts first largely depends on the owner’s preference or who they have a pre-established relationship with. However, it’s critical to have the voice of both the architect and contractor on the project.
The next important decision an owner needs to make is selecting the construction delivery method for their project. “Delivery method” is a fancy term for who holds the legal agreement or contract with whom. There are four typical paths or delivery methods an owner can take.
- Design-Bid-Build or Hard Bid – The owner holds the agreement with a designer. The designer designs the project to 100% completion and then engages the contractor. As a result, the owner holds an agreement with both the designer and contractor.
- Construction Manager as Constructor or Construction Manager at Risk (CMAR) – The owner holds the agreement with the designer and the contractor. This time, the owner brings on the contractor at the same time they hire a designer. Thus, the owner has the perspective of the contractor and designer as they are going through the design process.
- Construction Manager as Agent (CMa) – This delivery method is the exact same as CMAR with one major difference. The owner also holds agreements with each individual trade contractor such as a plumber, electrician, carpenter, etc. While the direct contractual flow is from the trade contractor to the owner, the CMa does all the work of administering those contracts.
- Design-Build – The owner holds a single agreement with either a designer or contractor and that entity is responsible for the entire design and construction risk. More often, this agreement is held between the owner and the contractor who either hires an outside architect or who has the design capabilities in-house.
In our Delivery Methods: Four Paths A Business Owner Can Take to Complete Their Next Project podcast, we dive into the pros and cons of each delivery method. Listen and learn why understanding each delivery method can be a time-consuming process and for some, take years to fully comprehend.
Because we could have spent hours on this topic, we decided to break each delivery method into its own podcast. Stay tuned for these upcoming episodes!
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