What Construction Delivery Method is Right for your Project – CM@R vs CSP

Selecting the right construction project delivery method is a very crucial decision. A lot of building owners focus solely on choosing the best contractor for their design/build. You want a team that has a reputation for quality and a record of completing projects on schedule, right? However, choosing the right people is not the only key decision to make as an Owner. You also need to select the right delivery method. We see two types of delivery methods most often: Competitive Sealed Proposal and Construction Manager at Risk. While there are other options out there, our clients typically utilize one of these methods. Read on to find out how they differ and which might work best for your project.

Competitive Sealed Proposal

The most traditionally used construction project delivery method is Competitive Sealed Proposal (CSP).  In this method, the Architect/Engineer (A/E) and Contractor are contracted with the Owner. The design is bid after final plans and specifications are completed by the A/E firm. The upfront benefit to the owner is that the competitive nature of  CSP bidding usually results in a lower initial cost for the Owner.

However, because the Contractor is not involved during the design phase, there can be a risk of bid overrun. Without a strong connection between A/E and Contractor, this method can result in a lower quality project as well.

Construction Manager at Risk

An alternate delivery method is Construction Manager at Risk (CM@R). In this case, the Owner has separate agreements with the A/E firm and the Contractor, but the Contractor manages all agreements with subcontractors. Because the Contractor provides management services in this scenario, this means they also charge an additional fee, so it may have a higher cost to the Owner.

There are many advantages to the CM@R method that ultimately could provide the Owner with a better project quality – and provide better budget controls. If you use this delivery method, the Contractor is brought in at the onset of design. They can review the proposed budget and can provide options for construction materials that are the best value.  Construction can also begin much earlier due to phased construction “trade” packages. Additionally, the Contractor assumes a level of risk by agreeing to a Guaranteed-Maximum-Price (GMP). This means they cannot exceed the construction cost agreed upon during the design phase.  A contingency amount is typically included in the Contractor’s GMP but will be returned to the Owner if it does not have to be used to finance bid award and change orders.

Each construction project delivery method has certain advantages and drawbacks. Owners should consider what they value in the long run to make a choice. Generally speaking, CSP is best for Owners who do not have a very strict schedule and might be able to sacrifice a little quality/time for a lower bid price. CM@R allows for the Contractor to be involved in the design phase and thus provides better scheduling and cost protection to the Owner.

Contact Rice & Gardner today to find out how one of our qualified Program or Project Managers can make your next project a success! 

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