Delivery
Three ways to buy a building
They differ in who carries the design risk and when the price is fixed, and that single choice shapes everything that follows. This page includes the cases where our own method is the wrong answer, because a firm that only recommends its own is selling rather than advising.
00The choice
The delivery method is usually chosen early, often by people who will never be on site, and frequently by default rather than deliberately. It is the most consequential decision on the project and it gets the least attention.
What it actually decides is a single question: who pays when the drawings and the building disagree? Every other difference between the three methods follows from that one.
Under design-bid-build the answer is the owner, through change orders, because the architect drew what they drew and the contractor bid what was drawn. Under design-build the answer is the design-builder, because both are theirs. Under construction manager at risk the answer is somewhere in between and is negotiated.
Everything else — when the price is fixed, how much competition there is, how much the owner has to administer — is downstream of that. So the useful way to choose is to ask which risk you most want to be rid of, and what you are willing to give up for it.
Ask yourself these three
- How well-defined is the project? A building you can describe precisely can be competitively bid. One you cannot cannot.
- When do you need price certainty? If the answer is “before design starts”, no method can honestly give you that, and the one that comes closest is design-build with an early GMP.
- What do your procurement rules allow? For a public or institutional owner this frequently decides it before anybody has a preference.
Whichever of the three is binding on you is the one that should choose the method.
01Design-bid-build
Design-bid-build
An architect designs the building completely, the set goes out, contractors bid what is drawn, and the lowest responsive bid wins.
Its real strength is price tension. Three or four contractors competing on an identical, complete set will produce the lowest construction number available to you, and the process is transparent and easy to defend to a board. For a public owner it is frequently the default for exactly that reason.
It also gives you an architect who is contractually independent of the builder and whose job during construction is to advocate for your interests. That is a genuine benefit and we would not pretend otherwise.
Its weakness is the gap. The bid is for what is on the paper. Everything the set did not say, said ambiguously, or said in a way that cannot be built becomes a request for information and then a change order, and the owner pays for it because it belongs to neither party. On a simple, well-precedented building that gap is small. On a renovation of an existing facility it can be very large.
It is the right method when the project is well-defined, the drawings can be genuinely complete before bidding, you have time for a sequential process, and price tension matters more to you than schedule or than being insulated from drawing gaps.
We bid this work and are content to. If this is your method, send the documents.
02Design-build
Design-build
One contract covers both design and construction. The owner holds one party responsible for the whole thing.
Its real strength is that the gap disappears. There is no request for information to send, no scope argument to have, and no commercial incentive to let an ambiguous detail through in the hope it becomes a change order — because the ambiguous detail is the design-builder’s own and they would be paying for it.
It is also the fastest of the three, because construction on early packages can begin while later design is still developing, and because procurement of long-lead items happens during design rather than after permit. On a project where a service entry or a specialist door has a lead time longer than the building, that is worth months.
And it removes the position an owner otherwise stands in when a building does not perform: between an engineer saying it was built wrong and a contractor saying it was designed wrong. Under design-build there is nobody to stand between.
Its weakness is price tension. You do not get contractors competing on a finished set, and you have to be comfortable selecting on qualifications. The mitigation is an open-book arrangement where the major subcontract trades are still competitively bid and you see those bids — which moves the competition to where most of the money actually is.
It is the right method when the scope is not fully definable at the outset, the schedule matters, the budget is the hard constraint and you need it tested early, or the project involves an existing building with unknowns in it.
This is our own arrangement, and the architect inside sets out what it means in practice here — including four ways to check the claim rather than take it.
03CMAR
Construction manager at risk
The owner holds the architect directly, and separately selects a contractor early — on qualifications — who advises during design and then takes on the construction at a guaranteed maximum price.
Its real strength is that it gets you most of both. You keep an independent architect working for you, and you also get a builder in the room during design, pricing the thing as it develops and saying what will not build. The budget is tested continuously rather than discovered at bid.
For an institutional or public owner it is frequently the best available compromise: the selection is defensible, the architect relationship is conventional, and the price is committed at a point the owner chooses.
Its weakness is administration. It is more work for the owner than either of the others. You are managing two relationships rather than one, the open-book process requires somebody on your side who can read it, and the point at which the GMP is set is a negotiation with real consequences.
It is the right method when you want an independent architect, you want early cost certainty, and you have the internal capacity — or an owner’s representative — to administer it properly.
04Compared
The three, side by side
The row that decides most projects is the third one. Everything expensive that happens on a construction project traces back to who pays when the drawings and the building disagree.
| Design-bid-build | Design-build | CMAR | |
|---|---|---|---|
| Contracts the owner holds | Two | One | Two |
| Contractor selected on | Price | Qualifications | Qualifications |
| Who pays for a drawing gap | The owner | The design-builder | Negotiated |
| Price fixed at | Bid | GMP, during design | GMP, during design |
| Competitive price tension | Strongest | On subcontracts only | On subcontracts only |
| Architect independent of builder | Yes | No | Yes |
| Builder in the room during design | No | Yes | Yes |
| Typical speed | Slowest | Fastest | Middle |
| Owner administration effort | Lowest | Low | Highest |
| Best suited to | Well-defined scope, few unknowns, price-driven | Schedule-driven, budget-driven, existing buildings | Institutional owners wanting both |
Read the sixth row honestly. Under design-build you give up an architect who is contractually independent of the builder, and for some owners — particularly where a board wants a separate professional checking the contractor’s work — that is the deciding factor and it should be. We would rather say so here than have the conversation after you have signed.
05Questions
Questions about delivery
The commercial terms — schedule of values, pay applications, retainage, change orders, lien waivers — are in the payment and cancellation policy.
Which method should we use?
It depends on three things: how well-defined the project is, how much price certainty you need and when, and what your procurement rules allow. A simple building on a clean site with a good architect and no schedule pressure is a fine candidate for competitive bidding. A complicated renovation, a tight schedule, or a project where the budget is the hard constraint usually favours design-build or CMAR. If you tell us which of those three is binding, we can usually tell you the answer in one conversation.
Does design-build mean we lose competitive pricing?
On the total, yes, and that is the honest cost of the method. You do not get three contractors competing on a finished set. What you can still get is competition where it matters most: on a design-build or CMAR project the major subcontract trades are still competitively bid, and under an open-book arrangement you see those bids. So the competition moves from the general contractor’s margin to the subcontract packages, which is where most of the money is anyway.
What is a guaranteed maximum price, exactly?
A commitment that the project will not cost more than a stated figure, agreed at a defined point in design, with the contingency and the fee stated separately and visibly. If the work comes in under it, the saving is dealt with as the contract says — frequently shared or returned. If it comes in over, that is the contractor’s problem, which is the entire point. What a GMP does not cover is a change you make to the scope afterwards.
Can a public entity use design-build?
In many cases yes, and the rules vary by entity and by project type. What a public owner should establish first is what their own procurement code and their funding sources permit, because that frequently decides the method before anybody has an opinion about which is best. We work under all three and are content to bid a hard-bid project like anybody else.
If we hire our own architect, will you still work with us?
Routinely, and it is a perfectly good arrangement. We build to other architects’ sets as a general contractor and we are happy to. The one thing we would ask is to be brought in during design rather than at bid, because nearly all the value we can add to somebody else’s set is constructability review while changes are still free. That is available as a preconstruction service whether or not we end up building it.
What is preconstruction and is it worth paying for?
Budgeting, constructability review, scheduling and procurement planning during design, usually for a fee. It is worth paying for when the project has real unknowns, when the budget is tight enough that finding out late would be fatal, or when long-lead equipment drives the schedule. It is probably not worth it on a small, simple, well-precedented building. We will say which yours is.
Choosing a method rather than a contractor?
That is the conversation with the most leverage on everything after it, and it costs nothing. Describe the project and the constraint that is actually binding — scope, price certainty or procurement rules — and we will tell you which of the three fits, even where that is not the one we would build under.
T-Bone Construction, Inc. · 1310 Ford St, Colorado Springs, CO 80915