Construction Delivery Methods: A Legal Perspective

In today’s construction and project management landscape, selecting the right project delivery method is as consequential as the project’s scope, budget, and schedule. This article introduces the principal approaches – Design-Bid-Build, Design-Build, Construction Manager Advisor, and Construction Manager at Risk – and explains how their differing allocations of risk, control, and collaboration shape project strategy and influence cost and schedule certainty from concept through completion. Understanding these models is essential for tailoring contracts, optimizing team structure, and achieving predictable outcomes across diverse project types.

Design-Bid-Build

In a Design-Bid-Build project, the project owner typically holds two contracts. The first is with an architect or engineer to develop and finalize a complete design with drawings and specifications. The other contract is with the general or prime contractor for the construction of the project based on the design. Both the architect/engineer and the contractor, in turn, subcontract their scope of work to specialized design firms and subcontractors, respectively. The architect/engineer reviews, approves, and/or denies the construction process, contractor payment applications, and change order requests. The owner then pays the contractor based on the architect/engineer’s recommendation(s).

Design-Bid-Build is traditionally the most common method of project delivery, especially on public projects, as it provides the most objective means to select the lowest, responsible, bidder. This method also follows three easily defined phases: design, bidding, and construction. Due to the separation of responsibilities, Design-Bid-Build is predictable and easy to assess from a risk management perspective. Conversely, the distinct separation of responsibilities can cause a lack of collaboration and force every participant to “stay in its lane” for risk mitigation’s sake. This can lead to negative impacts on the project budget and schedule, both at the beginning and during its execution.

Design-Build

In a Design-Build project, an owner issues a request for proposals based on overall project requirements, schedule, and budget. Design-build entities then submit responses that can include renderings, staffing plans and phased pricing. Once selected, the design-build entity assumes full contractual responsibility for the design and construction of the project. The design-build entity can perform the design and construction itself, enter into a joint venture between a designer and builder, contract with a subcontractor for design, and/or contract with a subcontractor for construction.

The Design-Build method is different from Design-Bid-Build because the Design-Build project usually does not expose the project owner to disputes or finger-pointing between the architect/engineer and the prime contractor as they are working for the same design-build entity. The Design-Build project can better address constructability and value engineering in the design phase. The Design-Build project delivery method can also lower overall contract costs and shorten the overall project duration through continuity, fast tracking (i.e. starting the project before receiving complete designs) and collaboration. However, because the agreement and subsequent amendments between the owner and the design-build entity are based on conceptual or preliminary designs, there can be an incentive for the design-builder to cut corners while staying within the general requirements of the contract, potentially leading to disappointment or change orders until the design is fully appreciated. Similarly, the design-builder risks committing to a lump sum or guaranteed maximum price for the project’s scope when it is little more than a concept.

Construction Manager Advisor (CMA) and Construction Management at Risk (CMAR)

Under the construction management project delivery methods, the project owner retains the construction manager during the preconstruction phase (i.e. before the design is complete) to provide value engineering, estimating and scheduling services during the design phase to help meet the project owner’s objectives.  This reduces the risk of surprises after bids are received that the design is over budget or will take longer than anticipated.

In the CMA method, the construction manager serves purely in an advisory role i.e. it does not directly contract with the subcontractors. Rather, through consultation with the construction manager, the project owner directly contracts with the subcontractors. In the CMAR method, the construction manager assumes the role similar to a general contractor and directly contracts with the subcontractors, thereby placing it at risk for construction costs, time, and workmanship.

Typically, under the CMAR method, the construction manager obtains bids from subcontractors under an open book basis shared with the project owner. Once most subcontractors are mutually selected, the construction manager typically provides the project owner a guaranteed maximum price (“GMP”). Whereby, the project owner agrees to pay for all legitimate project costs up to the GMP amount again on an open book basis. However, whether the parties agree to having a GMP is decided on a project specific basis, as some projects do not lend themselves to having a GMP.

Selecting a Delivery Method

Each of the delivery methods provided in this article has its own pros and cons. Furthermore, industry associations, such as the American Institute of Architects (AIA) and ConsensusDocs, have developed standard form contract documents to provide a good starting point to address all of these methods. Our recommended best practice is to discuss these methods, the corresponding contract forms, and any required customization to such forms with a construction attorney and then move forward with the appropriate delivery method.