Choosing the Best Construction Method: Design-Build vs. Construction Manager At-Risk

Understanding Construction Manager At-Risk

Definition and Key Characteristics

Construction management at risk, or CMAR, is a construction delivery method known for its two-contract approach between the owner, contractor, and architect/engineer. The public owner holds separate contracts for the design and construction of the project.

 

Advantages

Owners gravitate to the CMAR method for several reasons. One key advantage is that the construction manager is onsite throughout the project, ensuring quality construction and providing valuable input during the design phase. Selected during preconstruction, they can assist the team during the design phase to provide input on estimating, constructability, scheduling, and required value engineering.

Disadvantages of Construction Manager At-Risk 

Given the inherent design of CMAR procurement, there are a few downsides that are often overlooked and can lead to headaches for the owner, including:

1. Owner Risk: Separate contracts for design and construction introduce distinct risks for the owner. Firstly, the design contract involves the architect’s standard of care, which refers to the level of skill, competence, and diligence that a reasonably prudent architect would exercise under similar circumstances. While architects are responsible for providing designs that meet industry standards, they are not liable for unforeseen construction issues, material availability, or contractor errors. On the other hand, the construction contract is governed by the Spearin Doctrine, which asserts that constructors are not accountable for design flaws in the owner-accepted designs provided. This doctrine means that any gaps between design and construction phases can lead to change orders, escalating project costs, or reduced project scopes – all of which pose significant risks to the owner.
2. Managing Complex Relationships: The owner may think they are on one team with their architect/engineer and construction manager. However, they are not. Contractually, the AE and CM are separate entities employed by the owner with no incentive to collaborate. Often, the result is finger-pointing, with the Owner left holding the liability or legal challenges.
3. Budget Overruns: Owners can be hit with costly change orders for plans/specifications gaps, unforeseen site conditions, or design adjustments.
4. Schedule Delays: Change orders naturally create delays due to the need for review and approval. Every question or issue can cause delays. Issues can take days or weeks to resolve, impacting the schedule.
5. No Incentive to Innovate: Because the architect and construction manager are on separate teams with no contractual obligation to one another, they don’t have an incentive to collaborate. So, when budgets are tight, design scopes are value-engineered reactively, leading to design cuts that may disappoint the owner.

Design-Build Construction: A Better Choice

Definition and Key Characteristics

Instead of holding multiple contracts, the Owner contracts directly with one design-builder who is solely responsible for the planning, design and construction of the project. The design-build contract outlines the agreement between the Owner and the design-builder to provide design and construction, with a focus on cost, speed of delivery and the ultimate outcome that meets the owner’s objectives.

Advantages of Design-Build Construction

Owners increasingly chose design-build because it provides a single point of responsibility, streamlining communication and decision-making. This approach results in faster project delivery and cost savings by eliminating separate bidding phases and parallel schedules. The collaborative nature of design-build encourages innovative solutions and efficient designs while improving risk management. Quality is enhanced as a single team oversees both design and construction. Additionally, design-build allows for flexibility during construction and simplifies project management for owners.

Related Reading: 10 Reasons Why the Design-Build Delivery Method Works

“The most significant consideration in our selection decision was a single point of contact with one contract. The board and I did not want any buck-passing or finger-pointing. With design-build, the buck started and ended with the design-builder. For our situation, time was critical, so this delivery method with sole accountability for both design and construction was right for our project.” – Jordan Sinz, Former District Administrator | Wisconsin Heights School District

Related Reading: A Case Study in Design-Build of The Wisconsin Heights School District Story

Misconceptions about Design-Build Construction

1. Final Construction Documents: The final construction documents are provided after the selection process. However, this often results in an innovative design solution considering design and construction requirements.
2. The “Fox Watching the Henhouse”: This misconception stems from CMAR, as the method’s structure provides checks between the architect and construction manager. However, there are also checks and balances with design-build. Because everyone is on the same team, there is more collaboration, stronger relationships, and easier communication flow, which allows the team to check in with each other more frequently about solutions, challenges, and solving problems. Because they are on the same team, they are incentivized to work to meet project goals quickly and efficiently.
3. Higher Upfront Costs: Contrary to this belief, design-build’s cost-effectiveness is rooted in a design-to-target budget approach, minimizing cost overruns through the design process. Compared to construction management at risk, design-build exhibits 2.4% less cost growth and 3.8% less compared to design-bid-build. A flexible and transparent bidding process and early collaboration between designers and constructors ensures known project costs, limiting change orders to Owner-requested scope changes.
4. Less Owner Involvement: Design-build empowers owners to actively participate throughout their project. The architect doesn’t assume they have the best solution. Instead, intent listening helps bring innovative solutions forward, which is only possible with the owner in control. This ensures project goals are met and shaped by contributions.

Related Reading: Debunking Common Design-Build Myths: Separating Fact from Fiction

What Factors Influence the Decision-Making Process?

Choosing the right construction approach is one of the most important decisions an owner must make when beginning a construction or renovation project. Owners must understand not only their delivery method options but also the decision’s impact. Each method varies on when parties become engaged, how contracted parties interact, and how changes and modifications are handled and impact the overall project. The decision is crucial to a project’s success as it can significantly impact various aspects, including cost, schedule, quality, and risk management. Moreover, delivery methods allocate project risks differently among stakeholders, with some methods helping to mitigate risks related to schedule delays and cost overruns.

Before beginning a project, weigh the pros and cons and look critically at each model to ensure your project outcome has the greatest likelihood of success. Most importantly, consider the following factors and how they could impact the success of your project:

• Owner involvement: How involved do you want to be throughout the design and construction of the project? Do you want to participate actively and contribute to the final design?
• Owner relationships: Do you want to have direct relationships with contractors? Do you want to avoid the potential for adversarial relationships?
• Project complexity: How complicated is your project? Are you looking for an innovative, cost-effective solution to large design challenges?
• Past project experience: How successful were they? Did they stay on budget/schedule and meet expectations?
• Budget Constraints: How tight is your project budget? Would change orders and cost overruns negatively impact your organization’s financial future?
• Project Timeline Requirements: How quickly do you need the project completed? For example, with schools, is there a need to have the project completed without interrupting the school calendar?
• Owner risk: How much risk are you willing to take on with your project (change orders, liability for successes or failure, etc.)?

Related Reading: What is the difference between design-bid-build and design-build projects?

Understanding the inherent differences between these two construction delivery models is crucial. Before starting any project, whether large or small, carefully consider your goals, priorities, and expectations to determine which method best aligns with your goals. This thoughtful approach will help ensure a successful project that you and your community can be proud of.

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