Projects delivered under construction management at-risk (CMAR) and progressive design-build (PDB) contracts are becoming more common in the development of water infrastructure. Each method offers opportunities for owners to accelerate schedules, collaborate more effectively with their project teams, facilitate early consideration of construction issues and receive insight into project cost. There are many similarities between these two delivery methods, but PDB offers one major differentiator: an opportunity for owners to appropriately transfer risk.
Both CMAR and PDB make use of a collaborative, construction-focused perspective that is incorporated into planning and design. Overlapping activities shorten the schedule, and early decisions potentially lower costs and provide for better constructability. Construction cost is developed as an open-book process and creates opportunities to modify the project scope to meet the owner’s budget. Construction typically moves forward faster, with more cost certainty than traditional design-bid-build (DBB) delivery, and the number of change orders is reduced.
With increased collaboration, CMAR enables risk mitigation but still offers a risk profile comparable to a DBB project. On CMAR projects, owners contract for engineering and construction under two separate agreements. Under a PDB contract, however, the owner initiates a single contract with a design-builder to advance design and complete preconstruction activities. Unlike CMAR, PBD creates a single point of responsibility and transfers risk as further defined below.
Project risks are associated with design, project performance, building and administrative permits, coordination with existing facilities, fines and penalties, proprietary processes or equipment, schedule, cost, quality of existing infrastructure, construction warranty and professional liability. Because the CMAR process makes use of two contracts, the ability to transfer risk is more limited than PDB and liability, in most cases, remains with the owner. For example, under a CMAR construction contract, the contractor has no responsibility for developing the design documents. The owner remains liable for any issues and considerations outside a requirement for the contractor to conform with the “as-bid” documents.
Since PDB makes use of one contract, the design-builder becomes the single point of accountability, committed to delivering a project that performs within a set of parameters defined by the contract. These project performance requirements are much more encompassing and serve to transfer risk away from the owner.
The goal of PDB contracts is to have risk, contingency, and pricing discussed during Phase 1 – and to have an understanding between the owner and the design-builder on the consequences of breaking the agreement. Owners recognize value when using the PDB process to:
Allow the team to better identify, control, and possibly transfer project risk
Facilitate active discussion of risk and the development of solutions on how best to address it
Permit the project team to assign responsibility to the party best able to address the risk (owner or design-builder)
Provide open-book transparency on how risk is being accounted for in the project price
Owners should consider collaborative project delivery methods when evaluating options to design and construct water infrastructure projects. While both CMAR and PDB offer opportunities to improve project execution, PDB presents opportunities to better manage risk.