Public Owners Combat Rising Costs Via Alternative Delivery Methods And Design Phase Tools

Staff | September 28, 2010

Design-build is clearly the alternative delivery method that public owners are most familiar with, according to a new study by PinnacleOne, one of the nation's leading construction consulting firms. More importantly, almost four-fifths (79 percent) of the public owners who are familiar with design-build believe it is effective in reducing construction costs, higher than any other method. This was especially true of owners in the Northeast and Midwest.

"With public owners reporting an average price increase of more than 16 percent on construction project bids, they are leaving no stone unturned in their efforts to reign in costs," said Jim D'Agostino, executive vice president of Program Management Services for PinnacleOne. "The study shows clearly that these owners view alternative delivery methods, especially design-build, as one strategy to achieving that end. A strong majority also view constructability reviews, value engineering, third-party confirmations of estimates, and the retention of a construction management advisor as important steps to take during the design phase to reduce overall costs."

These are just a few of the findings in The 2006 PinnacleOne Pulse of U.S. Public Construction survey which examined the opinions of 166 public owners involved in construction projects throughout the United States.

Major findings on program management:

  • Familiar Methods. Owners have become familiar with multiple project delivery methods. Approximately three-quarters of public owners are familiar with the design-build (77 percent) and selective-bidding (74 percent) delivery methods, trailing only the traditional design-bid-build method (87 percent) in familiarity. Levels of familiarity with construction management at risk (61 percent), construction management multi-prime (59 percent), job/task order contracting (51 percent), and public finance/lease back (50 percent) were somewhat lower among owners.
  • Cost Effectiveness. Clearly, public owners familiar with alternative delivery methods view them as a means to reducing project costs. The design-build method was cited by almost four-fifths (79 percent) of the owners as effective in reducing construction costs, the highest of any method. A majority of the owners felt that selective-bidding (70 percent), job/task order contracting (67 percent), construction management at risk (64 percent), and construction management multi-prime (60 percent) can also assist in trimming budgets. Public finance/lease back was not viewed as an effective method to reduce costs by a majority (53 percent) of the respondents.
  • Design Dollar Decliners. More than four-fifths of the owners believe constructability reviews (84 percent) and value engineering (82 percent) during the design phase are effective tools for reducing project costs before a project is awarded. Three-quarters (75 percent) of owners feel retention of an agency construction manager (CM advisor) is effective in reducing project costs before a project award. A similar number (74 percent) feel utilizing third-party confirmations of architect and engineer estimates can serve the same purpose.
  • Industry and Geographic Preferences. While design-build was seen as the most effective delivery method for reducing costs (79 percent) nationally, it was viewed even more favorably by owners in the Northeast (100 percent) and Midwest (95 percent). Owners in the transportation sector (80 percent) were more likely than those in the government sector (59 percent) to view a selective bidding list as a cost-reducing strategy.

The 2006 PinnacleOne Pulse of U.S. Public Construction study was a national telephone survey conducted by Market Measurement, Inc., an independent market research consulting firm, that examined the attitudes of public owners on construction issues related to project costs, program management, energy/environment, and dispute resolution. The survey was conducted in August of this year.

About PinnacleOne

PinnacleOne is a national construction consulting firm focused on providing program and project management and construction claims services to its clients. It is headquartered in Phoenix, the firm has offices in Los Angeles, Irvine, Sacramento, San Francisco, and San Diego, Calif.; Phoenix, Tucson and Yuma, Ariz.; Hartford, Conn.; New York; Boston; Baton Rouge, La.; and Williamsburg, Va.