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© Copyright 2017 by K&L Gates LLP. All rights reserved.

ISBA – April 7,2017

Project Delivery Methods Understanding the Construction Contract

PROJECT DELIVERY METHODS §  Design Bid Build §  Design Negotiate Build §  Construction Manager Advisor §  Construction Manager At Risk §  Design Build §  IPD

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PROJECT DELIVERY METHODS §  Design Bid Build

§  In some case a CM (Advisor) will be hired by the Owner either prior to or after retention of architect

§  Owner A/E agreement §  Design is generally at least 90% Complete before selection

of Contractor Begins

§  Owner Contractor Agreement §  Generally competitively bid on the basis a lump sum, unit

prices or combination of both lump sum and unit prices

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PROJECT DELIVERY METHODS §  Design Negotiate Build

§  A/E retained to complete design §  CM (At Risk) hired during design to assist brining

design within cost parameters, provide scheduling support, and to provide expertise such as value engineering and constructability assistance

§  Alternatively Contractor is hired when design is nearly complete and a VE/GMP proposal is prepared §  Contracts are usually negotiated with one Constructor usually

on a cost plus basis and a guaranteed price

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PROJECT DELIVERY METHODS §  D B/N B

§  Buildings – AIA, ConsensusDocs §  Engineered Projects – EJCDC

§  Water Waste Water §  Power Generation

and Transmission §  Industrial Use §  Transportation §  Communications

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PROJECT DELIVERY METHODS §  Construction Manager (Advisor) CMA

§  A CMA is hired during design to provide consulting services relative to estimating, scheduling and value engineering. Following completion of Design there are two alternatives: §  1) The CMA assists the Owner in selecting prime

subcontractors that contract directly with the Owner, but who are managed by the CMA;

§  2) The CMA assists the Owner in selecting a prime contractor on either a bid or negotiated basis

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PROJECT DELIVERY METHODS §  Construction Manager at Risk (CMAR)

§  CMAR is usually hired during design for estimating, value engineering, scheduling and trade procurement

§  Initially a cost plus fee contract is negotiated with in some cases a consulting fee prior to construction activities

§  Depending upon permit requirements certain construction activities such as demo and foundation can occur prior to completion of design

§  At certain point in the design the CMAR will provide a GMP, schedule and value engineering proposal

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PROJECT DELIVERY METHODS §  CM

§  AIA, CMAA, ConsensusDocs

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PROJECT DELIVERY METHODS §  Design Build

§  Single Contract Covering Design and Construction §  Contract will usually have two phases

§  Design – Fee Basis §  Construction - Cost Plus Fee

§  When the design reaches a certain level of completion in many cases a design builder will be required to submit a GMP proposal

§  If the Owner is not satisfied with the GMP, the Owner takes a license to the design and can terminate the agreement

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PROJECT DELIVERY METHODS §  DB Forms

§  Buildings – AIA, ConsensusDocs §  Engineered Projects – EJCDC §  Hybrid - DBIA

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PROJECT DELIVERY METHODS §  Integrated Project Delivery (IPD) §  Based upon an integrated Form of Agreement

(IFOA) §  A single agreement with the Owner, A/E and

Contractor §  Various Prime subcontractors can also be parties to

the agreement §  Additional architects, engineers, subcontractors and

suppliers can be members of the Profit Pool

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PROJECT DELIVERY METHODS §  IPD

§  The intent of the agreement is to promote collaboration with decisions made by committee

§  The team works towards a target value §  At some point an Estimated Maximum Price is set

based upon an estimated cost, plus a contingency, plus a Profit Pool

§  If the estimated cost is exceeded, the contingency is used. Once the contingency is exhausted, the Profit Pool pays for overruns until it is exhausted.

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PROJECT DELIVERY METHODS §  IPD Forms

§  ConsensusDocs §  AIA

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PROJECT DELIVERY METHODS §  Public Private Partnership (P3)

§  Design §  Build §  Finance §  Operate §  Maintain

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PROJECT DELIVERY METHODS §  P3 Forms

§  EJCDC

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ANY QUESTIONS §  Justin L Weisberg

Partner K&L Gates LLP 70 West Madison Suite 3100 Chicago, Illinois 60602-4207 Phone: 312 807-4253 Justin.weisberg@klgates.com

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