Construction Project Delivery Methods

The Six Main Project Delivery Methods

Construction projects generally follow one of six delivery methods, each with distinct contractual relationships and risk allocations:

• Design-Bid-Build (DBB) - Traditional method with separate design and construction contracts
• Design-Build (DB) - Single contract covering both design and construction
• Construction Manager at Risk (CMAR) - Construction manager takes on project risk with a guaranteed maximum price
• Construction Management Multi-Prime (CMMP) - Owner contracts directly with trade contractors
• Public-Private Partnership (P3) - Collaboration between government and private entities
• Integrated Project Delivery (IPD) - All parties share risk under a single multi-party contract

Design-Bid-Build (DBB)

Design-bid-build is the traditional project delivery method. The owner contracts separately with a design team (architects, engineers) and a general contractor. The design is completed first, then put out for competitive bidding among contractors.

The competitive bidding process can result in lower construction costs, but the sequential nature means the contractor has no input during design. This can lead to change orders, delays, and disputes when design documents contain errors, ambiguities, or constructability issues.

Advantages: Competitive pricing, clear separation of roles, owner control over design.

Disadvantages: Longer timeline, potential for change orders, designer-contractor conflicts often fall on the owner to resolve.

Design-Build (DB)

In design-build, the owner contracts with a single entity responsible for both design and construction. This entity may be contractor-led (common for infrastructure and straightforward projects) or architect-led (common for complex designs).

Design-build streamlines communication and can accelerate project timelines since construction can begin before design is fully complete. However, the owner has less direct control over design decisions, and potential conflicts of interest exist when the same entity controls both design quality and construction cost.

Advantages: Single point of responsibility, faster delivery, improved collaboration between design and construction teams.

Disadvantages: Less owner control over design, potential cost-quality conflicts, may require additional E&O insurance.

Construction Manager at Risk (CMAR)

In CMAR delivery, a construction manager is engaged early - during the design phase - to provide cost control, constructability input, and scheduling expertise. The CM then takes on construction risk, typically through a guaranteed maximum price (GMP) contract.

If costs exceed the GMP, the construction manager absorbs the overrun. If costs come in under the GMP, savings may be shared with the owner depending on contract terms. This structure aligns the CM's financial incentives with the owner's cost and schedule goals.

Advantages: Early contractor input improves constructability, GMP provides cost certainty, CM has financial stake in project success.

Disadvantages: Success depends heavily on CM's capabilities, GMP can lead to conservative pricing, requires sophisticated owner to manage the relationship.

Construction Management Multi-Prime (CMMP)

In multi-prime projects, the owner acts as their own general contractor, contracting directly with the design team and each major trade contractor. A construction manager may be engaged for coordination, but the owner holds all the contracts and bears the coordination risk.

This method gives experienced owners maximum control and can reduce costs by eliminating general contractor markup. However, it requires significant owner expertise and resources to manage multiple contractors, resolve conflicts, and coordinate work sequences.

Advantages: Direct relationships with all contractors, potential cost savings, maximum owner control.

Disadvantages: Requires experienced owner, coordination burden falls entirely on owner, increased administrative complexity.

Public-Private Partnerships (P3)

Public-private partnerships combine government funding and oversight with private-sector construction and management expertise. Common for infrastructure, affordable housing, and large civic projects, P3 structures vary widely depending on funding sources, ownership arrangements, and operational responsibilities.

Payment protections differ significantly in P3 projects. Mechanics liens may not be available on publicly-owned property, and bond claim procedures differ from private projects. Understanding the specific P3 structure is essential for contractors evaluating payment risk.

Advantages: Access to public funding, private-sector efficiency, projects typically bonded.

Disadvantages: Complex regulatory requirements, potential for political delays, limited lien rights on public property.

Integrated Project Delivery (IPD)

Integrated project delivery brings owner, designer, and contractor together under a single multi-party contract from the project's earliest stages. All parties share in project risk and reward - if the project comes in under budget, savings are shared; if it exceeds budget, all parties absorb losses proportionally.

IPD requires high levels of trust and collaboration. It works best when parties have worked together before and are committed to transparent communication. The shared-risk model can drive innovation and efficiency, but requires careful contract drafting and sophisticated dispute resolution mechanisms.

Advantages: Aligned incentives, early collaboration, shared risk encourages innovation and problem-solving.

Disadvantages: Requires experienced and compatible parties, complex contract structure, difficult to make changes mid-project.

Choosing the Right Delivery Method

Selecting a project delivery method involves balancing several factors:

• Project complexity - Complex designs may benefit from design-bid-build's clear separation or IPD's collaborative approach; straightforward projects may suit design-build's efficiency
• Owner experience - Sophisticated owners can handle multi-prime coordination; less experienced owners benefit from single-point responsibility
• Risk tolerance - GMP contracts in CMAR shift cost risk to the CM; IPD spreads risk among all parties; DBB leaves coordination risk with the owner
• Timeline - Design-build and CMAR allow construction to begin before design is complete; DBB requires sequential phases
• Budget certainty - Competitive bidding in DBB provides market pricing; GMP in CMAR provides a ceiling; IPD's shared model can drive efficiency but has less predictability

Legal Implications of Project Delivery Choice

The delivery method you choose affects more than just project management - it shapes the legal landscape for the entire project:

• Dispute resolution - Different delivery methods create different potential conflicts. DBB often produces designer-contractor disputes that the owner must resolve. Design-build concentrates disputes between owner and DB entity. IPD requires sophisticated multi-party dispute resolution mechanisms.
• Payment rights - Mechanics lien rights and bond claim procedures vary based on who contracts with whom. Multi-prime delivery creates direct contractor-owner relationships that may simplify payment claims. Traditional delivery creates subcontractor payment chains that require careful lien notice compliance.
• Risk allocation - Each delivery method allocates design risk, construction risk, and coordination risk differently. Understanding these allocations is essential for proper insurance coverage and contract negotiation.

Getting the contract structure right at the beginning is far easier than resolving disputes that arise from poorly matched delivery methods. Our contract drafting and negotiation services can help ensure your project starts on solid legal footing.