There are four ways that you can form a contract with SCS:
2. Construction Management
3. Cost of Work Plus a Fee/Guaranteed Maximum Price
Each delivery method involves relationships between the three principal parties to construction: the owner, the designer and the contractor. The relationship between these three parties will vary depending on which option you select. By themselves, no single method is better than the other, but depending on your project’s requirements, some options may be more appropriate for the needs of your project.
Design/Bid/Build, the traditional form of project delivery, is a linear progression of procedures starting with the design team working with the owner to develop a set of construction documents. Upon completion of these documents, the owner solicits lump-sum or unit-price bids from general contractors, like SCS. A variation of this method occurs on projects where the owner creates prime contracts for major divisions of the work. Common prime contracts include general trades, mechanical, electrical and site development. The prime contract list can be as extensive as the owner desires.
Construction Management is a project delivery system where the Owner enters into a contract with a qualified contractor, such as SCS, to assume a leadership role and provide management and administrative services. The Construction Manager (CM) participates in all phases of a project, working closely with the design team in furthering the interests of the Owner.
There are two types of Construction Management: Agency CM and At-Risk CM. The primary difference between the two is the amount of risk the Construction Manager assumes in performing duties for the Owner. Over the course of time, several hybrids of the delivery system have been created to service the various needs of the Owner, but they still fall within the category of Construction Management.
In Agency CM, the contractual relationship between the Owner and Construction Manager is similar to that of the Owner and Architect. The CM administers the work of prime contractors who contract directly with the Owner.
In At-Risk CM, the CM is also the constructor, performing its duties much like a general contractor.
Cost of Work Plus a Fee/Guaranteed Maximum Price
This option is an example of the Construction Management method where the Owner negotiates an agreement with SCS, the general contractor. SCS normally will provide the full range of pre-construction and construction services.
On cost plus-a-fee work, the contractor is reimbursed for the actual cost of construction, plus a fee. The fee is either fixed or a percentage of construction costs. The difference in Guaranteed Maximum Price (GMP) contracts is that the contractor sets a limit on the cost of construction. Costs above the GMP are borne by the contractor unless the GMP is modified by a change order. Costs less than the GMP result in a savings. Depending on the contract, the savings may be returned in full to the owner or shared between the owner and contractor at a pre-arranged percentage.
Design/Build is a delivery method where the Owner enters into an agreement with SCS, the contractor, to provide both design and construction services. This agreement is appealing to certain clients who seek a single point of responsibility, reducing the amount of time the Owner must devote to design and construction. However, the Owner must use caution with this method. Without a clear statement of scope and requirements, the agreement will not function effectively.