Author: Tim Mearig
Date: 2004-06-14

District Logo

[Project Name]

Project Delivery Options Analysis

Date: [Month, Day, Year]

XYZ School District

PROJECT [Name]
MANAGER [Title]
XYZ School District
[City], Alaska
CONTRIBUTORS [Name]
[Title]
XYZ School District
[Name]
[Company]
[City], Alaska
Table of Contents
SECTION Page
EXECUTIVE SUMMARY 2
PROJECT DELIVERY OPTIONS 6
THE PROJECT ENVIRONMENT 7
DETERMINING FACTORS ANALYSIS 8
Establishing Determining Factors
Evaluating Determining Factors
DELIVERY METHOD SELECTION 16
APPENDICES
APPENDIX A 1-3
Gantt Chart Schedules
APPENDIX B 1
Delivery Methods Flow Chart
Executive Summary
Background
In [Month, Year], the XYZ School District submitted a capital project to the Alaska Department of Education & Early Development for FYXX funding consideration. The project, entitled [Project Title], received funding through DEED and the district entered into a Project Agreement with the following final scope:
[Copy from Project Agreement]
Purpose
The purpose of this document is to evaluate project delivery method options available under Department of Education & Early Development provision and select the delivery method that had the greatest influence on the success of the [Project Name] project. This evaluation identified six alternative delivery methods as described in the DEED publication Project Delivery Methods Handbook but focuses primarily on [number] alternatives. These are summarized as follows [select from among those below as extracted from the DEED handbook]:
Design-Bid-Build
Design-Bid-Build is the most common project delivery option. It is often referred to as the “traditional” method. For school projects in Alaska with a state contribution, Design-Bid-Build is the default delivery method. All other project delivery options require a specified approval.
There are three prime players: Owner, Designer and Constructor (general contractor). The relationship of these parties is depicted in the graphic at the right.
A standard three-question test can be applied to determine, from these relationships, whether a delivery option falls into the Design-Bid-Build category. Those three questions and their results are as follows:
Are the Designer and Constructor contracts combined? NO
Is the Construction Cost of Work a selection criteria? YES
Is the Total Construction Cost the sole selection criteria? YES
Under this delivery method, selection of the Constructor is based on a Total Construction Cost with the award going to the lowest responsible and responsive bidder.
Construction Manager/General Contractor—Best Value
CM/GC—BV is the next most common project delivery option. It allows the Owner to maintain control throughout the design process but provides for the early involvement of a “best qualified” Constructor. For school projects in Alaska with a state contribution, CM/GC is an alternate delivery method and requires a specified approval by both school boards and DEED.
There are three prime players: Owner, Designer and Constructor (general contractor). The relationship of these parties is depicted in the associated graphic.
The standard three-question test can be applied to determine, from these relationships, whether a delivery option falls into the CM/GC category. Those three questions and their results are as follows:
Are the Designer and Constructor contracts combined? NO
Is the Construction Cost of Work a selection criteria? YES
Is the Total Construction Cost the sole selection criteria? NO
Under this delivery method, selection of the Constructor is based on a best value weighting of Total Construction Cost with other factors; the award goes to the CM/GC that best meets the predefined qualifications and cost selection criteria.
Construction Manager/General Contractor – QBS
CM/GC—QBS is a lesser used project delivery option. It allows the Owner to maintain control throughout the design process while providing for the early involvement of a “best qualified” Constructor without regard to the construction cost of work. For school projects in Alaska with a state contribution, CM/GC–QBS requires that cost elements other than the Cost of Work provide 50% of the evaluation. CM/GC-QBS is an alternate delivery method and requires a specified approval by both the recipient entity and DEED.
There are three prime players: Owner, Designer and Constructor (manager-general contractor). The relationship of these parties is depicted in the graphic at the right.
The standard three-question test can be applied to determine, from these relationships, whether a delivery option falls into the CM/GC category. Those three questions and their results are as follows:
Are the Designer and Constructor contracts combined? NO
Is the Construction Cost of Work a selection criteria? NO
Is the Total Construction Cost the sole selection criteria? NO
CM/GC selection: Qualifications based; does not incorporate any weighting for the Construction Cost of Work. Rather, selection is based on weighting of predefined criteria with the award going to the offeror that best meets the predefined criteria; selection criteria must include weighting of some cost factors at 50% unless otherwise approved. Typically these include General Conditions or Fee costs.
Design-Build Bid
Design-Build—Bid is a niche project delivery option. It requires a level of Owner sophistication to exercise quality control throughout the design and construction process. However, its simplicity is ideal for Owners with clearly documented standards but relatively few management resources. It also provides for the early involvement of a “best qualified” Constructor/Designer. For school projects in Alaska with a state contribution, Design-Build is an alternate delivery method and requires a specified approval by both school boards and DEED.
There are two prime players: The Owner and the Design-Builder. [The Designer (architect) and the Constructor (general contractor) are combined into one entity.]
The three-question test has the following result:
Are the Designer and Constructor contracts combined? YES
Is the Construction Cost of Work a selection criteria? YES
Is the Total Construction Cost the sole selection criteria? YES
Design-Builder selection: Based on Total Design and Construction Cost with the award going to the lowest responsible and responsive bidder.
Design-Build—Best Value
Design-Build—BV is the least common of the three primary project delivery options. It requires a level of Owner sophistication to exercise quality control throughout the design and construction process. However, its simplicity is ideal for Owners with clearly documented standards but relatively few management resources. It also provides for the early involvement of a “best qualified” Constructor/Designer. For school projects in Alaska with a state contribution, Design-Build is an alternate delivery method and requires a specified approval by both school boards and DEED.
There are three prime players: Owner, Designer and Constructor (general contractor). The relationship of these parties is depicted in the graphic at the right.
The standard three-question test can be applied to determine, from these relationships, whether a delivery option falls into the Design-Build category. Those three questions and their results are as follows:
Are the Designer and Constructor contracts combined? YES
Is the Construction Cost of Work a selection criteria? YES
Is the Total Construction Cost the sole selection criteria? NO
Under this delivery method, selection of the Design/Builder is based on some weighting of Total Construction Cost including the Construction Cost of Work with the award going to the Design/Builder that best meets the predefined qualifications and cost selection criteria.
Design-Build—QBS
Design-Build—QBS is a lesser used project delivery option. It requires a level of Owner sophistication to exercise quality control throughout the design and construction process. However, its simplicity is ideal for Owners with clearly documented standards but relatively few management resources. It also provides for the early involvement of a “best qualified” Constructor/Designer. For school projects in Alaska with a state contribution, Design-Build–QBS requires that cost elements other than the Cost of Work provide 50% of the evaluation. Design-Build—QBS is an alternate delivery method and requires a specified approval by both the recipient entity and DEED.
There are two prime players: The Owner and the Design-Builder. [The Designer (architect) and the Constructor (general contractor) are combined into one entity.]
The three-question test has the following result:
Are the Designer and Constructor contracts combined? YES
Is the Construction Cost of Work a selection criteria? NO
Is the Total Construction Cost the sole selection criteria? NO
Design-Builder selection is not based on any weighting of the Construction Cost of Work. Rather selection is based on weighting of predefined criteria, with the award going to the Design-Builder that best meets the predefined selection criteria. Selection criteria must include weighting of some cost factors at 50% unless otherwise approved. Typically these include General Conditions or Fee costs.
Delivery Options Evaluation Process
Using the Department of Education & Early Development’s Project Delivery Methods Handbook, the district’s project manager assessed a series of Determining Factors. These factors are established by DEED and include items related to a project’s schedule, the ability of the district to define the scope of the project and potential for changes, the district’s internal resources available to execute the project and its preference for structuring contracts and finally, any regulatory or legal constraints. Primary considerations under each of these categories were reviewed and evaluated, the results of which are included in the later sections of this document. [Optional: In an effort to confirm the basis of assumptions, particularly regarding possible project schedules and construction methods, the project manager also interviewed specialists with experience in these areas. These are listed in the contributor’s section of the study’s acknowledgements.}
Results
This analysis indicates the [Project Name] project has a high likelihood of success under the [enter method] project delivery method. However, the anticipated success of this method is dependent on the following factors:
[List/discuss any schedule-related issues.]
[List/discuss any budget-related issues.]
[List/discuss any scope-related issues.]
Project Delivery Options
The XYZ School District reviewed the following matrix of project delivery options—each defined by a unique combination of contract type and selection method—discussed in the Department of Education & Early Development’s (DEED) Project Delivery Methods Handbook .
The district recognizes that the default method established in regulation is the Design-Bid-Build delivery method, However, because it is a key principle of project management that benefits may be available to Owners when the traditionally distinct entities of the Designer and the Constructor are strategically aligned or even merged, XYZSD has undertaken to analyze the permissible alternative project delivery methods for possible use on it’s [Project Name] Project (DEED #XX-XXX). This document provides the results of that analysis.
Having agreed to a set project delivery method options, the next step taken by XYZSD was to determine which of the options is most appropriate for the particular project under consideration. This analysis does not assume there is only one possible option for project delivery. However, while no one project delivery option is perfect, the district believes one option may be better suited than another based on the unique requirements for a particular project. The requirements for the [Project Name] project were evaluated to determine which of the various options would most likely produce the best outcome for the state and the school district.
As part of the analysis, the district implemented a variation of the DEED recommendation of establishing a “group of trusted advisors”. This effort primarily consisted of gathering some expertise in areas of [list field(s)]. That knowledge, combined with in-house expertise regarding the work effort and timelines related to project design and the education process, was used to provide the needed reality check on the determinations made under each delivery option.
The Project Environment
Every project occurs in the context of a unique environment, an environment consisting of a variety of both physical and philosophical factors. This environment bears greatly on the successful maturation of a project. That maturation occurs in four typical phases: planning, design, construction and occupancy. These can occur sequentially or may be overlapped (see illustration).
The main characteristics of a project’s environment consist of its schedule, the need and ability to establish and define its scope, the resources available to the project, the risks associated with the project and the external constraints placed on the project.
Although identifying and coping with the factors in a project’s environment is both complex and an ongoing task until completion is achieved, the focus of this analysis is primarily project initiation not project execution. The district will use the luxury of this focus to narrow our determination of primary factors from the overall project environment to those that bear most directly on determining the “best” project delivery method. The district is further assisted in this effort by one of the external factors for school construction projects receiving state aid. This external factor is that the Design-Bid-Build project delivery option is the standard project delivery method for school construction projects. However, if we can recognize there are some primary factors affecting particular projects that might eliminate this delivery method or make it untenable without significantly increasing risk, an alternative is provided for.
Determining Factors Analysis
Establishing Determining Factors
The district’s analysis groups the Primary Factors into five categories as shown in the table below, taken from the DEED Handbook:
By addressing these Primary Factors, the district was confident it could guide the selection of the most appropriate delivery option and increase the chances for a successful project.
The first two categories are grouped as Need Factors. These factors determine the need to move away from the Design-Bid-Build delivery method established as the standard delivery method for projects administered by DEED. In the following section, Delivery Method Selection, XYZSD will demonstrate how the project’s environment establishes the need versus the desire or preference for a delivery method other than Design-Bid-Build. The remaining three categories are grouped as Success Factors. These are the elements of the project environment that can determine how likely a project is to succeed in using an alternative project delivery method and which of the delivery options is most appropriate. Many of these are tied to the XYZSD’s ability to execute the project in a non-traditional method. Regardless of whether the project environment shows a need to move away from the department’s standard delivery method or to apply the standard method, XYZSD will demonstrate it both has chosen and that it has the ability to manage the factors of the project environment aligned with the successful implementation of the project delivery option selected.
Evaluating Determining Factors
For each factor, there is a Critical Question that should be considered. Grouped within the five categories, each primary factor is listed along with its critical question, appropriate commentary and the ramifications associated with the answer. Need factors are addressed first.
Need Factor #1: Schedule/Necessity to Overlap Phases
Primary Consideration: Tight Project Milestones or Deadlines
Critical Question: Is overlap of design and construction phases necessary to meet schedule requirements?
Discussion: [Enter information on project schedule.]
Schedules supporting the analysis offered can be reviewed in Appendix A.
Ramifications: [Summarize impacts of schedule discussion on this primary consideration.]
_____________________________________________________________
Primary Consideration: Amount of Overlap of Design and Construction Phases
Critical Question: Is there time to complete the Design Development stage of the design prior to starting construction?
Discussion: [Enter information on how overlap might address project schedule.]
Ramifications: Enter conclusions of schedule discussion on this Need Factor.]
Need Factor #2: Ability to Define the Project Scope/Potential for Changes
Primary Consideration: Scope Definition
Critical Question: Is the scope of work difficult to define?
Discussion: [Enter information on project scope definition.]
Ramifications: [Enter impacts of scope discussion on this primary consideration.]
_____________________________________________________________
Primary Consideration: Potential for Changes During Construction
Critical Question: Is there a significant potential for changes during the construction phase?
Discussion: [Enter information on project scope change potential.]
Ramifications: [Enter impacts of change discussion on this primary consideration.]
_____________________________________________________________
Primary Consideration: Need/Desire for the Contractor’s Input During Design
Critical Question: Is input from a Constructor during design required or desired?
Discussion: [Enter information on how contractor input might address project scope issues.]
Ramifications: Enter conclusions of contractor input discussion on this primary consideration.]
_____________________________________________________________
Primary Consideration: Flexibility to Make Design Changes After Construction Cost Commitments
Critical Question: Are your design and scope requirements fully defined?
Discussion: [Enter information on how changes after cost commitments relate to project scope issues.]
Ramifications: [Enter conclusions of changes to scope discussion on this primary consideration.]
Success Factor #1: Owner’s Internal Resources & Philosophy
Primary Consideration: Ability or Desire to Define and Verify Program and Design Content/Quality
Critical Question: Will the Owner utilize outside resources to verify quality?
Discussion: [Enter information on the qualifications and experience of the Owner’s staff to establish and review quality issues. Discuss internal tools and resources and the need for any outside resources.]
Ramifications: [Enter conclusions related to in-house resources and experience, and any need for outside/additional resources.]
____________________________________________________________
Primary Consideration: Experience with the Particular Delivery Method and Forms of Contracts
Critical Question: Are agency in-house personnel experienced in alternative delivery options or, if not, will in-house personnel be augmented by other agency or contracted personnel?
Discussion: [Enter information on how the qualifications and experience of the Owner’s staff. Discuss internal tools and resources and the need for any outside resources (e.g., architects, engineers, project managers, construction inspectors, etc.) Note limitation for managing any delivery method.]
Ramifications: [Enter conclusions regarding Owner experience and any impact on the project.]
_____________________________________________________________
Primary Consideration: Ability to Participate in Multiple Trade Contractor/Supplier Evaluations
Critical Question: Does the Owner need the ability to participate in the selection and evaluation of trade contractors or suppliers?
Discussion: [Discussion should include project schedule options, Owner personnel knowledge and experience, and the need to participated in the selection of subs and lower tier specialties.]
Ramifications: [Enter conclusions regarding the need to participate in acquisition of lower-tier contractors and the Owner’s internal or external resources.]
_____________________________________________________________
Primary Consideration: Desired Contractual Relationship and Ability to Recoup Savings
Critical Question: Does the Owner wish to have a complete and timely access to all of the Contractor’s Information?
Discussion: [Enter information related to the level of involvement in the Contractor’s information about the job.]
Ramifications: [Enter conclusions. Generally, if the Owner is not fully able to take advantage of an open, collaborative relationship among the parties for making financial decisions, then a qualifications based selection does not need to be considered under this factor.]
Success Factor #2: Desire for a Single Contract or Separate Contracts
Primary Consideration: Ability or Desire to Take Responsibility for Managing the Design
Critical Question: Does the Owner have in-house design resources qualified to oversee design professionals, and does the Owner have the ability to commit sufficient resources to design management?
Discussion: [Enter information about the Owner’s in-house resources for managing or executing Design. What experience is there and does it need to be augmented?]
Ramifications: [Enter conclusions about the Owner’s ability and desire to manage the design of the project or to assign that responsibility to another entity.]
_____________________________________________________________
Primary Consideration: Ability or Desire to Eliminate Responsibility for Disputes Between Designer and Builder
Critical Question: Does the Owner desire to hold a single entity responsible for coordination, collaboration, and productivity for the entire project?
Discussion: [Enter information on the ability and experience of XYZSD’ responsibility for resolving disputes between the Design and Construction entities.]
Ramifications: [Discuss the conclusions regarding the needs of the project to have Designer and Constructor entities integrated or the pros/cons of separation and the ability to manage such.]
Success Factor #3: Regulatory/Legal or Funding Constraints
Primary Consideration: Regulatory and Statutory Requirements
Critical Question: Do laws, rules, regulations, etc., permit the use of an alternative project delivery method?
Discussion: [Enter information about state (DEED) requirements for alternate delivery methods. Discuss the local requirements and allowances for alternative delivery methods.]
Ramifications: [Enter conclusions regarding law and regulatory issues. Consider timelines that may be needed.]
_____________________________________________________________
Primary Consideration: State Budget and Funding Cycles
Critical Question: Is funding available for construction at initiation of design?
Discussion: [Discuss the State’s budget and funding cycle and how they may or may not have an impact on the timing, sequencing and a subsequent recommendation of a project delivery option.]
Ramifications: [Enter conclusions such as: “Any of the permitted delivery options will work with complete project funding,” or other statement supporting the project environment.]
Delivery Method Selection
Although there are a number of factors in making a decision concerning which project delivery option to recommend, by the time a few primary factors are applied, it becomes apparent which options are least appropriate. By the process of elimination, the most appropriate option(s) can be determined.
Having used the DEED matrix of options and worked through its list of major factors to consider, the district is able to determine through a process of elimination, “Which project delivery options are least appropriate to recommend on this project?”
The order in which the primary factors have been applied in our analysis is driven by the approval process as illustrated in the DEED Alternative Project Delivery Approval Flowchart shown in Appendix B. An assessment of the Need Factors was applied to the project, any one of which may drive the need to use an alternate project delivery method. Next, the Success Factors were applied. These factors reflect judgments that were made regarding the district’s ability to be successful in implementing a particular delivery method.
The depiction of the DEED Project Delivery Options Matrix showing the project delivery options eliminated as a result of the districts analysis is included below.
[Note: Adjust markings above as required.]
In summary, the XYZ School District is proposing to use the [Enter name] project delivery method for the [Project Name] project. [Add additional support narrative as needed OR alternative outcomes based on information yet to be finalized or determined.]

EED Project Delivery Option Matrix

CONTRACT TYPES

SELECTION METHOD

DESIGNER & CONSTRUCTOR
(w/SEPARATE CONTRACTS)

DESIGNER/CONSTRUCTOR
(ONE CONTRACT)

Competitive Sealed Bid (Low Bid)
Total Construction Cost is sole criteria for selection

Design-Bid-Build

Design-Build-Bid

Competitive Cost Proposal
(Best Value)
Total Construction Cost weighted with other factors for selection

CM/GC
Best Value (BV)

Design-Build
Best Value (BV)

Competitive Qualifications Proposal
(Qualifications Based Selection)
Total Construction Cost is not a factor for selection

CM/GC
QBS

Design-Build
QBS

Planning

Design

Construction

Occupancy

Planning

Design

Construction

Occupancy

Need Factors		Success Factors
Schedule/Necessity to Overlap Phases	Ability to Define the Project Scope/Potential for Changes	Owner’s Internal Resources & Philosophy	Desire for a Single Contract or Separate Contracts	Regulatory/Legal or Funding Constraints
Tight Project Milestones or Deadlines	Scope Definition	Ability or Desire to Define and Verify Program & Design Content/Quality	Ability or Desire to Take Responsibility for Managing the Design	Regulatory and Statutory Requirements
Amount of Overlap of Design & Construction Phases	Potential for Changes During Construction	Experience with the Particular Delivery Method & Forms of Contracts	Ability or Desire to Eliminate Responsibility for Disputes Between Designer and Builder	State Budget and Funding Cycles
	Need/Desire for the Contractor’s Input During Design	Ability to Participate in Multiple Trade Contractor/Supplier Evaluations
	Flexibility to Make Design Changes After Construction Cost Commitments	Desired Contractual Relationship and Ability to Recoup Savings

EED Project Delivery Option Matrix

CONTRACT TYPES

SELECTION METHOD

DESIGNER & CONSTRUCTOR
(w/SEPARATE CONTRACTS)

DESIGNER/CONSTRUCTOR
(ONE CONTRACT)

Competitive Sealed Bid (Low Bid)
Total Construction Cost is sole criteria for selection

û

Design-Bid-Build

Design-Build-Bid

Competitive Cost Proposal
(Best Value)
Total Construction Cost weighted with other factors for selection

û

û

CM/GC
Best Value (BV)

Design-Build
Best Value (BV)

Competitive Qualifications Proposal
(Qualifications Based Selection)
Total Construction Cost is not a factor for selection

û

û

CM/GC
QBS

Design-Build
QBS

Project Gantt Schedule—Design-Bid-Build Delivery Option

Project Gantt Schedule—CM/GC Delivery Option

Project Gantt Schedule—Design-Build Delivery Option

EED Alternative Project Delivery Approval Flowchart

Sample School Capital Project—Project Delivery Options Analysis

XYZ School District Appendix B Page #

Sample School Capital Project—Project Delivery Options Analysis

XYZ School District Appendix A Page #

Sample School Capital Project—Project Delivery Options Analysis

XYZ School District Page #