Comparing 5 Delivery Methods for Construction Projects

Gordian was founded by one of the creators of Job Order Contracting (JOC), and we’ve been perfecting the JOC process for over 30 years. But Job Order Contracting is only one of many methods for procuring construction services. Each one was designed for specific purposes and is best utilized for certain types of projects. Knowing the differences between them and when to use each delivery method can determine a projects’ success.

Let’s take a look at a few of the most widely used project delivery methods in the construction industry: Design-Bid-Build, Design-Build, Construction Manager at Risk, Job Order Contracting and Time and Materials.

1. Design-Bid-Build (Traditional Building)

Design-Bid-Build is the most commonly used construction procurement method and it’s probably the process most people think of when they think about construction contracting. As its name suggests, this delivery method consists of three distinct phases: the design phase, the bid phase and the build phase. Design-Bid-Build is a good option for new commercial construction. Although it’s a lengthy process, it allows owners to work in tandem with architects and engineers to get the best price for their project.

The design phase begins with an owner hiring a designer, either an architect or an engineer, to design a new facility. While designing the new building, the architect or engineer will prepare any necessary drawings and specifications that the contractor’s team will need to complete the construction work. Once the design work is finished, the project is opened for bids.

During the bid phase, general contractors will review construction documents, confer with any needed subcontractors and ask the architect or engineer clarifying questions in order to prepare their bid. Each bid represents a general contractor’s best price for a project, and multiple bids for the same project can vary greatly. After all of the general contractors have submitted their respective bids, the designer will review each bid, ask the contractors for any additional information and, ultimately, choose the bid they think best fits the owner’s needs.

Once the winning bid has been selected, the build phase begins, and the general contractor’s team can get to work constructing the new facility. A unique feature of the Design-Bid-Build method is that the designer will oversee the work of the general contractor and subcontractors. This helps ensure that the owner receives a quality end product.

2. Design-Build (D-B)

The Design-Build method was created to reduce the lengthy timeline that often accompanies Design-Bid-Build. It does so by replacing the designer and the contractor with a single party who fills both of these roles, called a design-builder. The design-builder, who is usually an architect, engineer or contractor, serves as the owner’s single contact for the entirety of the project. And while this allows for efficient communication, it also means that the design-builder is singularly accountable for the outcome of the project.

The D-B process begins with an owner drafting an initial project design and asking for project proposals from various design-builders. These proposals, like bids in the Design-Bid-Build method, generally represent a design-builder’s best price for the project. The key difference between a bid and a proposal is that proposals include notes on the project design, whereas bids don’t alter the project design. Owners typically select the proposal that provides the best value for the project without sacrificing design elements.

After the owner has chosen a specific proposal, the design-builder’s team can get to work securing permits and beginning construction immediately. The project can also be completed in phases, where the first phase is designed and construction begins while the second phase is designed, again allowing for a faster start to construction. This makes Design-Build ideal for large projects that require an accelerated timeline.

But the benefits of D-B also add some risk to the owner. Owners who choose the D-B delivery method for their projects lose the advantage of having a separate party oversee the quality of construction. Instead, the design-builder has complete autonomy in the construction phase. So choosing a trustworthy design-builder is integral to success in Design-Build.

3. Construction Manager at Risk (CMAR)

Construction Manager at Risk, also called CM at Risk or simply CMAR, is also a derivative of the Design-Bid-Build process. But instead of the designer overseeing the design process and construction quality, a construction manager (CM) is hired by the owner to oversee the entire project. In fact, once hired, the CM stands in as the owner’s representative and advocate in every step of the construction process from preconstruction, to design and bidding, through construction. This makes CMAR ideal for project owners who want an expert’s help managing their project or communicating between parties, and sometimes CMAR allows owners to remove themselves from the majority of the construction process altogether.

When an owner decides to use the CMAR delivery method for their project, they’ll bring an initial design to a CM, who will then begin consulting with designers to draw up plans. During the design phase, the CM will work on the owner’s behalf to value engineer and find cost-saving opportunities where possible. About halfway through the design phase, the CM will present the owner with their Guaranteed Maximum Price (GMP). With their GMP, the CM sets a price threshold that they promise the owner’s project will not exceed. If the project comes in under this threshold, the CM will likely be rewarded by the owner through a cost-sharing agreement. But if the project exceeds the GMP, then the CM takes on the risk of making up the difference.

Once the design phase is finished, the CM will take bids from contractors for the project and select the bid they believe best meets the owner’s needs without crossing the GMP threshold. Once construction begins, the CM will work with the contractor to schedule construction phases, oversee the quality of the contractor’s work and coordinate any needed change orders.

4. Job Order Contracting (JOC)

Job Order Contracting is an indefinite-delivery, indefinite-quantity (IDIQ) project delivery method. This means that multiple projects can be completed over the life of one long-term contract, as opposed to the single-project contracts used in the previous delivery methods. The long-term contract makes JOC an ideal choice for owners who complete a high volume of construction projects over the course of each year. Rather than needing to take each project to bid, owners take bids from contractors one time at the beginning of the contract, then can access their services without having to re-bid throughout the entire life of the contract. This is all done in accordance with applicable laws and regulations.

The JOC project delivery method is predicated on a Unit Price Book of construction tasks with preset prices that lives for the entirety of the contract. At Gordian, we call our Unit Price Book the Construction Task Catalog (CTC), and it is full of verified local construction costs for the work owners expect to complete in the places they expect to complete it. The CTC allows owners to access contractor services at any point during the agreed timespan without having to renegotiate prices for each project. Rather than bidding on individual projects, contractors place bids by adding an adjustment factor to the CTC to account for their overhead, profit and other operating costs. Owners will typically award the contract to the lowest responsive, responsible bidder

Interested in becoming a Gordian JOC contractor? Check out this page to see how you can participate in a program.

After a contract is awarded, the winning contractor can perform work for the owner at any point needed. Each project will be preceded by a Joint Scope Meeting to make sure all parties agree on what work needs to be completed and to set a Detailed Scope of Work for the project. Once the scope is set, the contractor will submit a Price Proposal for the total project cost, the owner will review the Price Proposal and work will get started. NIGP and Gordian found in a recent study of public procurement professionals that project delivery with traditional methods requires twelve weeks or more before work begins. But with JOC, that timeline shrinks to fewer than nine weeks according to 70% of survey respondents. This saves significant time, which in turn lowers transaction costs, defined as the material and capital investments and/or human effort required to procure construction work. Further, JOC’s preset pricing makes sure that cost overruns are minimized.

Because the JOC method is designed to complete a succession of pre-defined construction tasks, it’s perfect for routine, operational work including repairs, renovations and maintenance, especially when short timelines or fixed budgets are involved. JOC, however, isn’t typically an ideal choice for new construction. Building a catalog of Pre-Priced Tasks for constructing an entire building would be burdensome, and the length of the project would negate the timesaving benefits of completing smaller projects in quick succession.

There’s a lot more we could say about JOC and why we think it’s an incredible innovation. If you’d like to hear more about JOC from us, you can find information here. But for now, we’ll move onto other project delivery methods.

Find out more about how JOC benefits the procurement office, contractors and the broader community in our “Job Order Contracting 101” video series.

5. Time and Materials (T&M)

The Time and Materials construction project delivery method has a singular feature that separates it from every other delivery method on the market: It allows work to begin without a full timeline or a total budget.

With T&M contracts, owners estimate project costs for the work they expect contractors to complete, and work begins before all project details are finalized. This unique approach enables projects to begin quickly on the front end. However; this method of construction procurement requires more involvement and diligence from owners during the course of the project. That’s because it is incumbent upon them to review contractor’s billable hours and the materials they use to ensure contractors are delivering what they want and being paid accordingly. For this reason, the Time and Materials method is best suited for owners who are comfortable with trading time during the project in exchange for construction starting quickly.

Bonus Project Delivery Method: Vendor of Record (VOR)

Every project delivery method we’ve covered so far, including Gordian’s Job Order Contracting, is available in Canada. This one is exclusive to Canada. Ontario, to be specific.

Vendor of Record (VOR) contracts provide a list of vendors from which buyers can choose. This list of pre-qualified service providers is established through a process following the guidelines of the government procurement directive.

VOR construction contracts are typically established on a project-by-project basis. Cost estimates are competitively priced, as vendors must compete during the pre-qualification period before being added to the list of approved providers.

Project owners enjoy three key benefits when they opt for a VOR contract. First is the ease of finding vetted contractors without expending internal resources. Further, competitive pricing ensure owners pay a fair price for services, enabling them to maximize their available budget. Finally, since owners are free to work with multiple providers, each vendor is incentivized to deliver top-notch service, fostering innovation and continuous improvement.

Each of these project delivery methods has its own merits and potential shortcomings. So being aware of their differences and respective advantages will help you better plan your next project. Even if you’ve only utilized one of the above methods before, it can be worth looking into others. Who knows, you could discover newfound savings in time, energy and costs.