The construction industry is often known as a very highly fragmented industry with a large number of activities involving different parties and professionals such as architects, engineers, quantity surveyors, contractor teams, suppliers, financiers and others. By being a fragmented industry, management efficiency and competency in the industry is needed to gain a higher level of competitiveness. The needs for such an approach has become more important and more pronounced, not only due to the increased size and complexity of building projects but also as a result of growing participation by international contractors.
Due to the competitive nature of the construction industry, it's no surprise that design-build continues to be the fastest growing method of project delivery in the country. However, this fast-track approach is not only gaining popularity among owners, it's also becoming the method of choice for more and more developers/contractors and design professionals. It is not only more cost effective, it also creates a teamwork environment in which all parties work together to ensure success. This results in a higher level of quality and workmanship, quicker turnaround time, more attention to detail, and less chance for error.
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This method involves the owner securing a single contract with a general contractor, who, in turn, contracts for architectural, engineering and construction services. The selected general contractor may have in-house architectural and engineering services, or the contractor may have to subcontract these services with individual architectural and engineering firms. Either way, the general contractor is responsible for those contracts under their contract and provides the single point contract to the owner.
The design and construction method is the way to enjoy both, with this approach the owner selects and contracts with an architect, preferably one with extensive design experience, for design and engineering services. Immediately following the architectural selection, the owner begins to interview quality general contractors. That way the owner and general contractor will not have any contractual agreement for the design phase. However, some general contractors may have a contract with a small-stipulated sum amount for pre-bid services. This amount is usually credited towards the final construction contract once final bidding is complete.
With these steps completed, the construction team is in place: the owner, the architect and the contractor. The strength of this relationship is already founded on trust, experience and quality. A design team with the owner's best interests in mind is assembled, and a quality general contractor is now available to provide early preliminary cost estimates during schematic design and design development phases of drawings. The general contractor and owner will draw up an agreement.
Under this agreement, the basis of payment is the cost of the construction plus a negotiated fee. The contract should include a guaranteed maximum cost with any savings at the end of the project retained by the owner. This is an open book approach where all cost and fees are open to the owner and architect for review. Competitive bids for all work scope categories are provided. Generally, owners experience far less problems during the construction phase under the negotiated contract arrangement, mainly because usually few change orders occur due to the greater involvement and improved communication of the architect, general contractor and owner, especially during the bid period.
The complexities that arise in managing projects are tackled through restructuring project organization, improving management commitment, strengthening project-planning activities, ensuring project quality, managing project risk objectively and integrating project activities through management information systems. These would not only ensure completion of projects in fast track, but also improve project effectiveness in terms of quality, cost effectiveness, team building and in turn overall productivity of the project organization would improve.