Cons Tem: Truc Sys

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT
Construction Delivery
System
By: Dr. Azhar Ghazali

School of Housing, Building and Planning
Construction Delivery System
2 Main Organizations
Formal Informal
Follow standards, Deviate from standards,
procedures, laws and procedures, laws and
regulation. regulation from the
authorities.
Prepared by
agencies/institution Built outside the building
recognized by the industry’s environment.
government, local [Eg. Squatters and slum
authorities, private areas].
organization, and financial
institution. Illegal construction.
Using contemporary
construction delivery
systems

Project Delivery System Procurement Methods Contract Formats

process procedure to acquire the disbursement is going to be made
Best Value (BVS) Cost Plus Fee

A comprehensive process
including planning, design Guaranteed Maximum Price
Low Bid
and construction required to (GMP)
execute and complete a Negotiated Lump Sum (or Fixed Price)
building facility or other type
of project. Qualifications-Based (QBS) Target Price
Sole Source (or Direct Select) Unit Price

Cost Plus Fee is a cost reimbursement contract, is a contract where a contractor is paid for all of its allowed
expenses, plus additional payment to allow for a profit.
A guaranteed maximum price (also known as GMP, not-to-exceed price, NTE, or NTX) contract is a cost-type
contract (also known as an open-book contract) where the contractor is compensated for actual costs incurred
plus a fixed fee subject to a ceiling price.
A lump sum contract (or stipulated sum contract) is the traditional means of procuring construction, and still the
most common form of construction contract. Under a lump sum contract, a single 'lump sum' price for all the
works is agreed before the works begin
Target Price Contracts are based on a cost reimbursable mechanism in which the contractor is reimbursed his
costs (on an actual cost basis) subject to the application at the end of the project of a formula which allows the
contractor to share any savings made and to contribute towards overspend.
Unit Price Contract. Construction contract in which the client or owner pays a fixed sum for each
completed unit of work.

Project Delivery System

Choosing a project delivery method is one of the fundamental
decisions owners make while developing their acquisition
strategy.
Delivery method establishes when parties become engaged;

• it influences the choices of contractual relationships
• it influences ownership
• impact of changes and modification of project costs.
There is always a minimum of three parties

involved:
• Owner,
• Designer
• Contractor.

3 main construction delivery

system:
Traditional System Design and Build’ Construction Management
Design-Bid-Build [D&B] System [CM]
[DBB]
4 phases of 3 phases of 4 phases of

implementation implementation implementation
• Project initiation • Project initiation • Project initiation
• Design • Selection of contractor • Design
• Tender • Design and construction • Selection of contractor
• Construction • Construction

Traditional System
(Design-Bid-Build) [DBB]
Architect Engineer 1
Owner/ Engineer 2
Main Contractor
Developer
QS
Sub Sub Sub
1 2 3
Relationship among main actors

Characteristic of Traditional System (Design-Bid-Build) [DBB]

Owner/ Engineer 2
Developer Main Contractor
QS
Sub Sub Sub
1 2 3
Most popular method for construction projects.

Segmented process/system
• architect is engaged to design • contractor is engaged to built the project.
• Contract between client and architect • Contract between client and contractor.
• The design team is selected by the owner and • General contractors bid for the project, with the
works on owner’s behalf to produce construction lowest qualified bidder receiving the job.
documents that define the location, appearance, • Similarly, the general contractor selects sub-
materials, and methods to be used in the creation contractors based on competitive tender or
of the building and its infrastructure [construction bidding, and awards the specific work, e.g. steel
drawings, specifications and contract packages]. erection or masonry works to the lowest qualified
bidder.
Characteristic of Traditional System (Design-Bid-Build) [DBB]

Owner/ Engineer 2
Developer Main Contractor
QS
Sub Sub Sub
1 2 3
• Primary objective of traditional system is low-bid procurement

methods
• Priority of system: client and architect/consultants control over
quality.
• No involvement of the contractors at the initiation and design
stage.
• Contractor is given full responsibility in carrying out the
construction works.

Phases of Implementation in
Traditional System [DBB]
Selection of
architect
use
Project Initiation Design Tender and Construction

selection of
contractor

Selection of
architect
Phase 1 [DBB]
►Project Initiation.
use

selection of
contractor
• Critically important to the eventual success of the project.

• Planning + development of project requirement:
Client’s initial ideas transform into specific objectives of space
requirements called the brief, quality, budget, schedule: duration and
completion. It requires:
• Cost analysis to determine budget.
• Behavioural analysis to determine activities to be accommodated in
building –programming studies.
• Selection of architect and consultant

Selection of
architect
use Phase 2 [DBB]
►Design.
selection of
contractor
• Prepare schematic design; design development + detailed design,

specification and construction documentation for tender or
bidding.
• Make initial decision on the materials, system of construction,
and suppliers.
• Report + acquire client’s approval for every phases.
• Apply for necessary approvals and building permit from the local
authorities and departments.
• These documents are also reviewed by the lending institution
financing the construction of the building.

Selection of
Phase 3 [DBB]
architect
►Tender &
use
selection of
Project Initiation Design Tender and
selection of
Construction contractor.
contractor
• Prepare tender document consisting of:

• Working and detail drawings.
• Construction specifications.
• Instruction to bidders.
• Construction contracts.
• Offer bidders to submit completed tenders/quotation [4-8 weeks preparation
for bidding].
• Evaluation and selection of contractor:
• Selection based on the construction experience reputation and the
costing submitted.
• Signing of contract document between client and selected contractor.

Selection of
Phase 4 [DBB]
architect
►Construction
use

selection of
contractor
• Contractor carry out the construction works.

• Contractor control, monitor and manage the construction works.
• Architect maintains limited oversight of the work and responds to question about the
design on behalf of the Owner.
• Interpret, inform and discuss with architect and consultants in situation where the
drawings and specifications are incongruent, misleading, missing and under
unanticipated condition.
• Architect and consultants make changes to drawings and issue variation orders.
• Work complete, undergo inspection by architect, consultants and client. Produce defect
list for contractor to conform within a period of time [6 months, 1 year etc]. Issue
certificate of practical completion. Obtain certificate of fitness, CFO (Certificate of
Fitness for Occupation) now CCC (Certificate of Completion and Compliance).
Advantages of DBB
• Widely applicable, well understood, well established
and clearly defined roles of the actors involved.
• Owner and Architect have significant control over
quality of the end product.
• Commitment on a price for the building prior to the
start of the construction.
• Competitive tender gets the best price for the
construction cost.

Disadvantages of DBB
Although the project is theoretically delivered at the lowest cost to the
OWNER:
• Process is time consuming since all design works must be completed
prior signing of the construction contract.
• Owner faces exposure to contractor’s claim over design and
constructionability issues since Owner accepts liability for design in its
contract with the contractor.
• Contractor adopts a least-cost approach to completing the project,
requiring increased oversight and quality review by the Owner.
• Absence of contractor’s input at the initiation stage may limit the
effectiveness and constructionability of the design.
• Promotes more adversarial relationships rather than
cooperation/coordination among Owner, Architect and Contractor.

Disadvantages of DBB
Conflicts among the parties to the contract [owner, design team,
general contractor, subcontractors, material suppliers] are frequent,
resulting in
• Emotional tension through the lack of overall management.
• Communication problems [miscommunication] between contract parties.
• Uncertainty over responsibility for problems that arise due to the
segmented/separated contract.
• Duplication of design works – costly and time consuming.
• Leads to specific problems reflected in unnecessarily high project cost
and long completion period due to change orders, repairs, and lawsuits.

DBB: Best Selection when…

• when owner places high priority on control
over quality.
• when owner wants to put full responsibility
for construction in the hands of the
main/general contractor.

Design and Build System

[D&B]
Design and Built Contractor
Owner/
Developer
Architect Engineer Engineer

QS
1 1 2

Characteristic of Design and Build System [D&B]

Owner/
Developer

QS
1 1 2
• Grown in popularity.
• Integrate the two components of design [architect/engineer] and
built [contractor]
• The system provides the owner with a single contractual relationship
with an entity that combines both design and construction services.
• This entity may be a firm that possesses in-house design and
construction capabilities, or a partnership between a design firm and
a construction firm.

Characteristic of Design and Build System [D&B]

Owner/
Developer

QS
1 1 2
• The owner gets a firm price for construction without the

risk in time and money of developing a detailed
architectural design. Guaranteed Maximum Price (GMP)
• Suitable for utilitarian buildings such as factories and
workshops where function takes priority over form; with
minimal use of special detail and finishes; and using simple
construction method.

Design & Built System [D&B]
use
Project Contractor Design and Construction

Initiation Selection

use
Phases 1 [D&B]
►Project Initiation
Project Contractor Design and Construction
Initiation Selection
• Owner prepare statement of objectives for the

building as a basis for development of the proposal
by the contractor in Phase 2.
• [project initiation is common to all 3 approaches]

Phases 2 [D&B]
use
►Contractor
Project
Initiation
Contractor
Selection
Design and Construction
Selection
• 2 ways – through negotiation or through tender

offer/competitive tender.
• Contractor prepare schematic design, brief specification,
and a bid for the construction price.
• Sub-contractor develop preliminary designs and estimates
for their areas of work –engineering works.

Phases 3 [D&B]
use
►Design and
Project
Initiation
Contractor
Selection
Design and construction
Construction
• Contractor’s architect develops the detailed design and

construction specification.
• Engineers working with the sub-contractors develop
detailed designs for structural, mechanical and electrical
works.
• Rigorous preparation of contract documents
• Owner retain an independent architect and engineer to
review the work for compliance with the D&B contract and to
authorize monthly progress payment.

Advantages of D&B
• Better and more buildable design of specific buildings.
• Problems arise can be addresses to the main contractor as
the responsible party.
• Reduce typical design-construction conflicts.
• Efficient design and constructability.
• Cost determination at an early stage.
• Fast project completion.
• Eliminates the division of responsibility for design and
construction.
• Eliminates the communication problems.
• Facilitate improved communications among the project team
members.

Disadvantages of D&B
• Lack of owner control.
• Lack of detailed description of the work to be done –
not a disadvantage for simple buildings.
• Lack of communication between architect and end
user. Architect is answerable to the contractor.

D&B: Best Selection when…

• When client demands contractor to fully
control the process of building.
• When building design is simple and utilitarian,
or design requires specialized expertise
undertaken by contractor.

Construction Management System

Construction Manager (CM)
Owner/
Developer Contractor 1 Engineer 2
Contractor 2 QS
Contractor 3
Contractual relationship Supervisory relationship

Characteristic of Construction Management System

Construction Manager (CM)
Owner/
Developer Contractor 1 Engineer 2
Contractor 2 QS
Contractor 3
• construction manager will work on the owner’s behalf

• Owner appoint a construction management individual or organization
on a fee basis [negotiated] similar to that of the appointment of other
professionals and consultants.
• CM will prepare all necessary information on behalf of the owner for
the architects and consultants.
• Allows projects to be carried out in phases.
• There is no main contractor.

Construction Management System
Project
Initiation Design
Selection of
architect
stage 1
stage 2
stage 3
stage 4
use

Project Construction Delivery System
Initiation Design
Selection of
architect
Phases 1
stage 1
► Project Initiation
stage 2
stage 3
stage 4
use
• Owner hires construction management CM [project manager].

• CM provides preconstruction services such as cost analysis,
constructability analysis, value engineering, project scheduling
and prepare initial project budgets and involve in the selection of
the design team.
• The construction manager is required to guarantee that total
construction cost will not exceed a maximum price referred to as
the guaranteed maximum price [GMP].
• CM advises owner on all phases of project.

Initiation Design
Selection of
architect
Phases 2
stage 1
► Design
stage 2
stage 3
stage 4
use
• CM assists the design team in reviewing project costs estimates and making
decisions with important cost and scheduling for phase construction also
known as fast-track scheduling.
[fast-track scheduling = work on early stages of construction such as earthworks, cut and fill, excavation and foundations
will proceed while design of the later stages of construction is still underway].
• Working together, the parties produce construction documents that meet the
owner’s requirements, schedule, and budget: and
• Prevent physical conflicts among systems, missing information, and other
product of miscommunication often found in the construction documents
produced for hard bid projects.

Initiation Design
Selection of
architect
Phases 3
stage 1
► Selection of
stage 2
stage 3
contractor
stage 4
use
• Contractors are selected by the methods outlined in the

traditional process – using the bidding process.
• The selection is based on the contractor’s capabilities and
quality of work, NOT merely the lowest bid.
• CM is responsible for the coordination of these independent
selection processes.

Initiation Design
Selection of
architect
Phases 4
stage 1
► Construction
stage 2
stage 3
stage 4
use
CM plays a role very similar to that of the

main/general contractor in the traditional process

Advantages of CM System
• Owner gains greater control over the construction process

through the CM and may save both time and money over the
traditional approach.
• Accordingly, the level of conflict is much lower [although still
exist] because of the closer relationship among the parties to
the contract
• Projects can be carried out in phases.
• Suitable for mega and complex building design such as
corporate buildings, airports and hospitals.

Disadvantages of CM System
• Owner taking the risk of committing funds at the early
stages of construction without knowing what the total
construction cost will be.
• Owner taking the risk of managing the building process.

CM: Best Selection when…

• When projects are huge.
• Where clients satisfaction becomes a
primary objective.

CONSIDERATION
Following considerations guide in the selection of a proper delivery
system:
o Type of project: the level of complexity and uniqueness of the
project and maintain an appropriate level of control.
o Size of project: the amount of outside assistance and number of actors
should match the significance of project. The more complex and
costly the project, the greater the need for professional
management and advice.
o Owner capabilities: the owner should realistically assess its own in-
house capabilities in evaluating the delivery methods.
o Time considerations: fast-track construction for projects requiring
severely compressed time limit. However should weigh the need for
compressed time limit against the increased cost and risk of fast
tracking.
o Likelihood of changes: if numerous changes are foreseen during the
construction period, then D&B may present the best choice for
incorporating changes during construction, but it will incur higher cost.

CONCLUSION
No one right construction delivery
system for a given project.
All methods discussed have been

used successfully.

END

Cons Tem: Truc Sys

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RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

By: Dr. Azhar Ghazali

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Project Delivery System Procurement Methods Contract Formats

Best Value (BVS) Cost Plus Fee

Sole Source (or Direct Select) Unit Price

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Project Delivery System

Delivery method establishes when parties become engaged;

There is always a minimum of three parties

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

3 main construction delivery

4 phases of 3 phases of 4 phases of

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Relationship among main actors

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Characteristic of Traditional System (Design-Bid-Build) [DBB]

Most popular method for construction projects.

• architect is engaged to design • contractor is engaged to built the project.

Characteristic of Traditional System (Design-Bid-Build) [DBB]

• Primary objective of traditional system is low-bid procurement

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Project Initiation Design Tender and Construction

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Project Initiation Design Tender and Construction

• Critically important to the eventual success of the project.

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

• Prepare schematic design; design development + detailed design,

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

• Prepare tender document consisting of:

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Project Initiation Design Tender and Construction

• Contractor carry out the construction works.

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

DBB: Best Selection when…

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Design and Build System

Design and Built Contractor

Architect Engineer Engineer

Relationship among main actors

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Characteristic of Design and Build System [D&B]

Architect Engineer Engineer

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Characteristic of Design and Build System [D&B]

Architect Engineer Engineer

• The owner gets a firm price for construction without the

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

Project Contractor Design and Construction

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

• Owner prepare statement of objectives for the

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

• 2 ways – through negotiation or through tender

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

• Contractor’s architect develops the detailed design and

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT

D&B: Best Selection when…

RAG 132 BUILT ENVIRONMENT & HUMAN SETTLEMENT