by Michael Kenig on September 15, 2011
Holder Construction Company
Past-Chair of AGC of America Project Delivery Committee
Author of Project Delivery Systems, 3rd Edition, 2011, AGC of America
The evolution of CM/GC in vertical construction has been going on for over 25 years. Owners, both public and private, have been using the CM/GC delivery method on vertical construction as a technique to help maximize the return they get on their capital investments for decades. As someone who has watched as this evolution took place, the learning curve is strikingly similar for almost every owner. The first hurdle is always convincing the board or governing body that the process can be executed in a manner that can be done openly and fairly while still maintaining a competitive pricing. Then, almost always, the first couple of attempts using CM/GC are a struggle as the owner's own in-house staff goes through the learning curve of managing a very different contract and contractual relationship.
With the industry consensus that there is no one perfect project delivery method and most agreeing that every project should be taken on a case-by-case basis, more and more owners, not just public owners, but also an increasing number of departments of transportation, have added CM/GC to their tool box as a viable option to deliver horizontal and other transportation projects. As illustrated in data collected by AGC) of America (http://www.agc.org/cs/industry_topics/project_delivery/cmatrisk) this trend continues to spread to many States.
Surveys have shown, that like Utah's experience, many owners believe that the process allows them to get the greatest value for the dollars they spend. An FMI/CMAA survey of owners in 2006 indicated that a majority of owners believed that CM/GC "offers the best value."
The good news for the transportation industry is that, though CM/GC as a delivery method may be relatively new for departments of transportation, there are almost three decades worth of lessons learned and improvements that have been made to this delivery method on the vertical construction side, most of which are transferable to horizontal construction. These include areas such as getting legislative approval, CM/GC selection procedures, open-book contracts specifying things such as how to define and manage contingencies, and best practices on how to overlap design and construction allowing schedules to be accelerated while still maintaining proper controls.
Using CM/GC to deliver a project is not a guarantee of success. Things can go wrong and when they do, they must be managed. However, one of the secrets that usually only owners with extensive experience using a collaborative, open-book contract appreciate is that regardless of whether they are able to prove they received the absolute lowest possible price, they almost always get a better project. They get more value for the dollars they spend. It might be in the form of higher quality, shorter schedules, fewer change orders, or better designs. Owners using CM/GC almost always end up spending their limited dollars where they get the most value for their constituents.