Church building projects: Construction delivery methods
By Robert C. Foreman

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The is the final part of a four-part series about church building projects: Part I | Part II | Part III | Part IV

Churches planning to build should thoroughly investigate the different construction delivery methods available and determine which one will work best for their situation. The delivery method establishes the contract relationship between the three members of the building team — the steering committee, the architect and the contractor.

The steering committee should decide on an acceptable level of risk they are comfortable with and which delivery method will provide the best balance of risk and reward for their church. Therefore, the committee must understand the advantages and disadvantages of each of the various delivery methods.

There are essentially four main delivery methods to consider. They are design-bid-build, partnering, design-build, and construction management. Each has advantages and disadvantages and different levels of risk depending on how they are configured.

Design-bid-build

At one time it was common for most churches to use the traditional design-bid-build (DBB) delivery. This method is still used by most government bodies and some churches, mainly because they believe it will result in the lowest price and have the lowest level of risk.

In DBB delivery, the church first selects an architect who develops the design and completes detailed construction drawings and specifications. Once the plans are 100 percent complete, they are provided to bidders for pricing. After taking bids, the church signs a fixed price construction contract with the low bidder.

In DBB delivery, the architect is responsible directly to the church for the design and contract documents. The architect administers the bidding and provides construction contract administration, serving as the church's representative during construction.

The contractor is responsible for the proper construction of the design for the bid price, construction quality, and for methods and procedures. DBB creates an independent relationship between the architect and the contractor, with each being directly responsible to the church. This system of checks and balances serves to help protect the church.

Since the architect acts on behalf of the church, he or she is able to protect the interests of the church in obtaining a quality finished facility that complies with the design. At the same time, the architect must also be fair and impartial toward the contractor.

DBB is low risk if the bidders are carefully screened and only the most qualified are invited to bid. However, risk is considerably higher when bidding is open to anyone.

One negative toward DBB is the separation of the design process from the construction function. The architect must know the construction cost of the project during the design. The contractor is usually better informed about current costs but only enters the picture after the documents are complete. The contractor must bid on the drawings, exactly as drawn.

During design, the contractor does not have an opportunity to provide input or propose cost-saving alternatives. Cost savings and alternate design ideas are only considered after the project is bid and then only if the bids are over budget. If bids come in higher than the budget, there can be a lengthy negotiation process wherein the low bidder is involved in repricing and value engineering. Sometimes, if extensive redesign is necessary, the bid process has to be repeated.

If contractors are busy, they may be reluctant to agree to bid on a project. The only contractors that may agree to bid will be the ones who need work the most. Often the ones with the least amount of work do not have a reputation for the best quality. Fewer church projects are bid today because other delivery methods seem to offer many of the advantages of the traditional design-bid-build method, with fewer disadvantages.

Partnering

Partnering combines the best aspects of traditional design-bid-build and design-build. With partnering, the architect is under direct contract with the church and still represents the interests of the church during design and construction. However, one contractor is selected after a thorough screening process during the early planning stages. This contractor enters a preconstruction agreement with the church, and this agreement eventually turns into either a fixed price or a "cost of the work plus a fixed fee" contract.

Often the cost-plus contract includes a guaranteed maximum price (GMP). Some cost-plus agreements with a GMP include provisions that allow for a savings incentive. If the contractor is able to reduce costs below the GMP, the savings is split between the church and the contractor by a predetermined percentage share, thus giving the contractor incentive to find ways to reduce costs and to finish the job for a final price less than the GMP. Some contractors will give the church 100 percent of the savings.

Partnering facilitates input from the contractor during design for cost, constructability and construction methods. Working as a team, the architect and contractor can look for ways to improve the design while keeping costs in line.

The contract price is negotiated between the church and the contractor with the assistance of the architect. The church has reliable cost information early on and therefore can better balance between design and budget. There is no chance of "sticker shock" on bid day because there is no bid day.

Risk to the church is low because the price is developed in parallel with the design; and if the price appears to be too high, the design can be adjusted before detailed construction documents are completed. Partnering can also speed up the schedule and even allows for fast-tracking. The fast track approach is riskier but allows construction to start before design and final pricing are complete.

Similar to partnering, integrated project delivery (IPD) is the newest method of delivery but has a more complex contract structure. IPD is most appropriate for large-scale projects. It is another way to allocate risk and reduce liability in return for potential cost and schedule benefits.

Design-build

Design-build (DB) combines the roles of designer and builder into a single entity. Some churches prefer DB because they like the single point of responsibility for both design and construction.

The single contract is directly between the church and the DB contractor. In most cases the architect is under contract with or employed by the contractor. In a few cases, the architect may be the lead, with the contractor working for the architect.

DB has none of the checks and balances found in more conventional contract arrangements. The disadvantages are related to the lack of an architect or advisor who is directly responsible for the interests of the church. In some situations, the committee may never even meet the architect. Additionally, many design-builders prefer to build from familiar prototype designs or build using pre-engineered structures. This greatly limits design options for the church.

DB is sometimes sold on the basis that it will result in lower overall project cost, provide a guaranteed price, allow for speedier construction and reduce risk. Cost may be easier to estimate if the builder has previously built the design, but that is no guarantee of lower cost.

A previously built or prototype design may require less design time, allowing the project to start sooner. Some pre-engineered structures can be built faster and for less cost than conventional structures. The church must determine if the best way to meet its facility needs will be with a prototype plan or a pre-engineered structure.

There is no one to advise the church during construction concerning payments, work quality or changes. In some cases, the church may have to accept a lower standard of quality.

Sometimes churches are led to believe that these sacrifices are required to reduce construction cost below other delivery methods. The sales pitch for DB is cost reduction and time savings. But does the church really benefit from these so-called cost and schedule benefits?

DB contractors will insist that risk is less because of the promised guarantees. The problem comes in enforcing the guarantees. DB has the potential for high risk. In my opinion, the only delivery method with potentially higher risk is construction management.

Construction management

Construction management (CM) comes in several varieties. With CM delivery, a construction manager performs most of the duties of the contractor for a set fee. The construction manager is a person with a great deal of construction experience and who acts in the capacity of a paid advisor or manager working directly for the church.

In some respects, the church is essentially acting as its own contractor. On larger projects, the construction manager may be part of a full-service construction company. The advantages include the church having expert pricing and construction advice early in the design process, resulting in potential cost savings. During construction, CM can reduce the cost of conventional contractor overhead and profit. The architect is under contract to the church and carries out the same duties and responsibilities as with DBB and partnering.

The biggest disadvantages are increased liability and financial risk to the church and the lack of a guaranteed maximum construction price. With the church being its own contractor, there is no separate party to accept overall responsibility for construction defects.

If a problem arises after payment is made, the church, the architect and the CM advisor may not have the clout to induce the offending subcontractor to fix the problem and make the necessary corrections. If defective work has to be removed and redone, the church may end up absorbing the cost. Under CM delivery, the church incurs relatively high risk in exchange for the possibility of lower cost.

Which delivery method is right for your church? It depends on how much risk the church is willing to accept in return for "promises" of lower cost, faster schedule or better quality. The level of risk associated with each delivery method is a matter of much disagreement in the construction industry. It depends on one's point of view. Consider the following risk chart:
  • Lowest risk — Design-bid-build (DBB) with invited bidders
  • Lower than average risk — Partnering cost plus guaranteed maximum price
  • Medium risk — Design-build (DB) with access to architect
  • Above average risk — Design-build (DB) with no access to architect
  • High risk — Construction management (CM)
  • Highest risk — Design-bid-build (DBB) with open bidding
This risk chart is my own opinion, based on my 42 years in the construction industry. However, it is not that simple. In theory, with enough built-in enforceable guarantees, the amount of risk can be mitigated for even the riskier methods of delivery.

The lowest level of risk for design-bid-build is achieved by carefully prescreening and selecting the bidders. But the level of risk is considerably increased if the bidding is open to anyone. Open bidding, with no discrimination on the experience and qualifications of the bidders, should be considered higher risk even than CM.

Partnering provides an overall good risk-reward balance, allowing a carefully selected contractor to provide a good level of construction quality for a reasonable price. The only thing given up over bidding is the guarantee of the lowest possible price. Is it not better to get a well designed and properly built facility for a fair price than trying to be certain of the lowest possible price?

The risk inherent in DB can be reduced to some extent if the design-builder will allow the church to have full access to the architect, as well as allow the architect to provide construction phase services and site visits. Another seldom-used option is for the church to hire an independent architect or construction expert as an advisor.

Even the risk of CM can be reduced by using "CM-at-risk," a system in which the construction manager takes on financial responsibility for the construction cost. However, you must be certain that the construction manager has the financial backing to make good on the guarantee.

There are highly reputable and financially sound CM contractors with excellent track records, with whom the risk level may indeed be lower. I have observed many small first-unit "mission churches" built partly by volunteers and managed by an experienced construction manager with excellent results.

The steering committee should learn as much as possible about the expected risks and rewards of each delivery method by talking to churches experienced with each method. They should obtain legal advice concerning the construction contracts used with the delivery methods they are considering. They should discuss these delivery options with construction industry professionals, lenders and their denominational leaders.

Once fully informed of the advantages and disadvantages of each, the steering committee should be able to determine which delivery method is the most appropriate for their church.

Bob Foreman is senior principal at Foreman Seeley Fountain Architecture, an Atlanta firm specializing in the design of church and school facilities. Bob is a member of the American Institute of Architects and is a LEED Accredited Professional.