Construction management delivery method gaining ground

When it comes to construction delivery methods, a new school of thought is making its way into the commercial industry. While results currently are a mixed bag, one thing is clear: It’s not going away.

The delivery method – or the way in which a project is executed – has remained steady for some time, comfortable in what’s known as the standard design-bid-build model. As named, it includes three sequential project phases: design, procurement and construction.

Roughly 60 percent of all commercial projects fall into this category, according to the Construction Management Association of America.

However, a model known as construction management at risk – often shortened to simply CM – is starting to take hold, spurred on by owners and developers who feel it gives them a better seat at the table. Broken down, the CM method employs a construction manager who basically acts as a consultant to the owner in the development and design phases and assumes the risk for construction performance. The CMAA notes the method is gaining ground in recent years with roughly 25 percent of all projects now utilizing the practice.

“They perceive better service because they feel represented in the process,” said Sean Thouvenot, vice president of field operations for Branco Enterprises Inc.

A third delivery method known as design-build combines design services with construction performance under one contract. In recent years, Branco has experience in all three methods, serving as a construction manager on projects, working on private design-build projects and even serving as a general contractor under a construction manager.

“You have to be able to change with the industry,” Thouvenot said, noting he’s seen an uptick in CM jobs over the past five years. “You have to work with the delivery method de jour.”

The U.S. Bureau of Labor Statistics forecasts 17,800 new construction manager jobs by 2024, an increase of 5 percent, with a median pay of $87,400 per year.

Big risk, big reward
When Matt O’Reilly and silent partners with Green Circle Projects LLC concepted south-side mixed-use development Farmers Park, he knew a construction manager was the ideal choice.

“Having that oversight on board early means they can lend their knowledge to the design process as well,” he said. “Because they work with the subcontractors, they know which subcontractors are able to do the best work. You’re not designing in the dark.”

As O’Reilly and crew embark on the fifth and final Farmers Park building, he again plans to use the CM model.

“I feel it’s a more holistic approach to this. It forms a triangle of parties where all the incentives align with good checks and balances,” he said. “I think that’s even more important with a green building project. There are added specifications to keep track of.”

At 2144 E. Republic Road, the fifth building will occupy the gravel lot directly east of Aviary Cafe and Creperie.

Much like the park’s second building, the 55,000-square-foot plans call for a mix of first-floor retail and three stories of office space meeting Leadership in Energy and Environmental Design standards, including rooftop solar and an upgraded HVAC system. O’Reilly said he’s had a lot of interest in the retail space with one major tenant confirmed, but he declined to name prospective occupants.

“The whole project is out for proposals right now and we will award it in the coming week,” he said. “Then we can finish the design documents with the construction manager at that point and start bidding out the project for subs.”

Results may vary
O’Reilly may be an anomaly when it comes to CM delivery, as local leaders say the model usually is favored by public projects. Nixa Public Schools has used CM for the past few years on projects such as its junior high expansion, where Branco served as general contractor.

“They are paid to take care of your interests,” said Superintendent Stephen Kleinsmith, noting the district must closely monitor its spending of taxpayer money. “In the end, (a construction manager) saves us more than we pay. I’d say that makes (the construction manager) worth his weight in gold.”

Local architects agree having a construction manager can be a timeline boon.

“One significant advantage is that the construction manager is usually selected early in the process as part of the development team and can assist with decisions about major building systems, market influences, construction sequencing and can provide cost estimating and budget control services,” said Jim Stufflebeam, Sapp Design Associates Architects vice president and senior project manager, via email. “A construction manager usually works better on larger, more complex projects, but that can also depend on the expertise and sophistication of the firm performing the services.”  

However, area general contractors aren’t as sold on the emerging model.

“To be honest, I don’t understand why an owner would choose it,” said Branco’s Thouvenot. “They are not in the design process as much as people think and owners pay a premium for their service.”

According to the CMAA, the design-bid-build delivery method has been the standard for years, offering the owner reliable pricing information for the project before construction starts. With proper design oversight and budgeting of the total project, costs are somewhat predictable for the owner once the bids are received. The primary disadvantage of the CM system is a variable final cost as bids of different portions of the project are taken along the way. CM eliminates the low-bid contract, replacing it with a guaranteed maximum price contract.

“The CMs are putting out the work packages – it might be concrete work here or steel there – collecting all the bids and putting those results together for the owner,” Thouvenot said. “That’s just an added layer.”