Project Delivery Methods & Contract Types

Thinking about building a new house? You might first familiarize yourself with “project delivery methods” and contract “types” before you hire your architect or builder.

Project Delivery Methods. The most common contract type is “Design-Bid-Build”, but if you want a more customized home, you might consider a “Design-Build” contract type, as explained below.

Design-Bid-Build: This is the most traditional project delivery method for those looking for the lowest bidder. The client works first with the architect to arrive at a complete set of plans. The plans are then sent out to multiple contractors to look for the lowest or best bid. With this method, design and construction roles are independent and gives the client more control in choosing architects, contractors and engineers, independent of each other.

Design-Build: Instead of separate roles, a single entity would manage both the design and build together with the client. There are several “design build” firms in the valley, but otherwise you could choose your own team. This allows for early collaboration among the architect, the engineer, the builder and the homeowner to arrive a complete set of buildable plans. Advantages include much faster timeline (you don’t have to wait for the plans to be complete); reduced risk for the owner regarding code and safety issues; and streamlined communication. The main disadvantages is the lack of competitive pricing, as your home will not be sent out for competitive bidding.

After knowing these items, then ask yourself:

Do you already know which builder you want to use? Do you already know which architect you want to use? If the answer is yes to both, there is your customized design-build team. And if you need help finding the right builder and the right architect, feel free to call me to help find your people.

Contract Types: There are several contract types, but most people use either “Cost-Plus” contracts or “Fixed Price Contracts”.

Cost-Plus Contracts: Owner reimburses contractor for the costs incurred, plus an overhead/profit fee. The fees can be a fixed amount or a fixed percentage. Typically an estimate is provided with “allowances” for different aspects of the project. This gives the owner more flexibility to change the non-structural design or selected finishes during the course of construction.

Fixed Price Contracts: Owner pays a fixed fee for the project and obligates the contractor to perform the work at a fixed dollar amount. In this case, details must be defined during the estimate/bid phase and flexibility is allowed with a “change order,” which amends the total fixed price of the original contract.

For clarification or to help you find your team, please schedule a consultation.