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Effectively Structuring and Managing Design-Build Projects. Timothy John Murphy and Jason J. Annibale Wednesday November 25, 2009. Overview. Overview. Overview. Introduction Factors Involved in Selecting the Form of Contract Running An Effective Design-Build Tender Process

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effectively structuring and managing design build projects
Effectively Structuring and Managing Design-Build Projects
  • Timothy John Murphy and Jason J. Annibale
  • Wednesday November 25, 2009

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overview
Overview

Overview

Overview

  • Introduction
  • Factors Involved in Selecting the Form of Contract
  • Running An Effective Design-Build Tender Process
  • Risk Management and the Allocation of Risk in Design-build Tenders
  • The Standard Form Design-Build Contract
  • Effective Management of Design-Build During Construction
  • Conclusion
  • Introduction
  • Factors Involved in Selecting the Form of Contract
  • Running An Effective Design-Build Tender Process
  • Risk Management and the Allocation of Risk in Design-build Tenders
  • The Standard Form Design-Build Contract
  • Effective Management of Design-Build During Construction
  • Conclusion
  • Introduction
  • Factors Involved in Selecting the Form of Contract
  • Running An Effective Design-Build Tender Process
  • Risk Management and the Allocation of Risk in Design-build Tenders
  • The Standard Form Design-Build Contract
  • Effective Management of Design-Build During Construction
  • Conclusion

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factors involved in selecting the form of contract
Factors Involved in Selecting the Form of Contract
  • (a) Design-Bid-Build / Stipulated Price
    • Procedure and overview of process
    • Advantages
      • Traditional and familiar structure
      • Fixed price at tender
      • Detailed control of design
      • Design team impartial
      • Competition to improve efficiency and quality

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factors involved in selecting the form of contract cont d
Factors Involved in Selecting the Form of Contract (cont’d)
  • (a) Design-Bid-Build / Stipulated Price
    • Disadvantages
      • Extended project schedule
      • Less conducive to teamwork
      • Owner takes risk of design coordination

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design bid build stipulated price structure

Owner

Consultant

General Contractor

Subconsultant

Subconsultant

Subcontractor

Subcontractor

Owner

Owner

Owner

Owner

Owner

Sub-subconsultant

Sub-subconsultant

Sub-subcontractor

Sub-subcontractor

Consultant

Consultant

Consultant

Consultant

Consultant

General Contractor

General Contractor

General Contractor

General Contractor

General Contractor

Subconsultant

Subconsultant

Subconsultant

Subconsultant

Subconsultant

Subconsultant

Subconsultant

Subconsultant

Subconsultant

Subconsultant

Subcontractor

Subcontractor

Subcontractor

Subcontractor

Subcontractor

Subcontractor

Subcontractor

Subcontractor

Subcontractor

Subcontractor

Sub-subconsultant

Sub-subconsultant

Sub-subconsultant

Sub-subconsultant

Sub-subconsultant

Sub-subconsultant

Sub-subconsultant

Sub-subconsultant

Sub-subconsultant

Sub-subconsultant

Sub-subcontractor

Sub-subcontractor

Sub-subcontractor

Sub-subcontractor

Sub-subcontractor

Sub-subcontractor

Sub-subcontractor

Sub-subcontractor

Sub-subcontractor

Sub-subcontractor

Design-Bid-Build/Stipulated Price Structure

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slide6
(b) Design-Build
    • Procedure and overview of process
    • Advantages
      • Project speed and expedited timeline
      • Communication and single source accountability
        • Reduction in the number and severity of conflicts between the design and construction entities
        • Possible to agree on fixed price contract for entire project
        • Possible advantages when negotiating project financing as project has lower risk of cost overruns once price established.

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slide7
(b) Design-Build

Disadvantages

      • Owner does not maintain direct control over design detail.
      • Difficult to accurately price a project before design has been fully completed.

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design build

Owner

Design-Builder

Consultant

Contractor

Contractor

Subconsultant

Subcontractor

Subconsultant

Subcontractor

Design-Build

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running an effective design build tender process
Running An Effective Design-Build Tender Process
  • Principles for The Proper Use of Design-Build
    • Selection Process
    • Remuneration
    • Intellectual Property at the Proposal Stage
    • Standard contracts
    • Request for Proposal (RFP) Documents

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slide10
What to Include in a Design-Build Tender Proposal
    • Scrutinizing project details, plan to prepare deliverables
    • Address each specification of owner as listed on the RFP
    • Less is more: checklist of all required submittals, criteria, and timelines. Do not add excessive volume
    • Attend pre-proposal conferences and ask questions
    • Exhibit listing what is not included in the package of deliverables: excellent check for completeness.
    • Include several items that help the team stand out
    • High quality, visually appealing package
    • Owners looking for “best value” solution for their project

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slide11
Role of The Consultant
    • Owner’s advocate consultant
    • Design-builder’s consultant

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risk management and the allocation of risk in design build tenders
Risk Management and the Allocation of Risk in Design-build Tenders
  • Significant Risk Factors
    • Owner
      • Financial Risk
      • Clarity of project definition
      • Problems with documents
      • Unknown site conditions
      • Lack of Control over Design Process
      • Lack of Control over Construction (e.g., use of materials)

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risk management and the allocation of risk in design build tenders cont d
Risk Management and the Allocation of Risk in Design-build Tenders (cont’d)
  • Significant Risk Factors
    • Design-builder
      • Liable for overall failure of the design or any construction defects
      • Usual construction project risks
      • Change orders

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slide14
Strategies and Best Practices for Risk Management
    • Pre-contract period
    • Understand Canadian competitive bidding law
      • Ron Engineering
    • Clarify owner’s expectations early
    • Disclose evaluation criteria in the RFP
    • Alternative Dispute Resolution
    • Select design-builder with care

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slide15
Strategies and Best Practices for Risk Management (cont’d)
    • Strong Documents
    • Strong Relationships (trust, reputation)
    • Competent construction solicitor
    • Assigning risks to third party: insurance and bonding

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the standard form design build contract
The Standard Form Design-Build Contract
  • Pros and Cons of Standard form contracts
    • Pros:
      • Lower transaction costs
      • Known risk allocation
      • Faster process
    • Cons:
      • Potentially inappropriate risk allocation
      • Not project specific
      • Key points may be missed

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the standard form design build contract cont d
The Standard Form Design-Build Contract(cont’d)
  • CCDC Design-Build Stipulated Price Contract, Document 14 (2000)
    • Risk allocation
    • Analysis

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effective management of design build during construction
Effective Management of Design-Build During Construction
  • Owner’s responsibilities
    • Inspection to ensure compliance with contract
  • Design-builder’s responsibilities
    • Project management models
    • Hiring and review of subcontractors
  • Construction Manager
  • Program Management

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slide19
McMillan LLPBrookfield Place181 Bay Street, Suite 4400Toronto, ON M5J 2T3T: 416.865.7000F: 416.865.7048
  • Timothy John Murphy
  • T: 416.865.7908tim.murphy@mcmillan.ca
  • Jason J. Annibale
  • T: 416.865.7912
  • jason.annibale@mcmillan.ca

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