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Several weeks ago, we introduced the idea that there are better ways to select a Contractor than to ask Contractors to submit bids at the end of the contract document phase. In previous posts, we discussed the pros and cons of design/build and Construction Manager as Constructor (CMc). We complete this series by discussing selecting a Contractor through negotiation.

Unlike Design/Build and Construction Management, there is no industry-defined method or set model of contracts to define a negotiated selection of a Contractor. In fact, what type of contract to use should be part of the negotiation.

The primary reason to select a Contractor through negotiation is that the Owner has an established relationship with a Contractor. The Contractor may have built previous buildings for the Owner. Often this means the Owner trusts that the Contractor understands their expectations for cost, schedule, and quality. What remains is to determine what is the best contractual relationship between Owner, Contractor, and Architect.  Should it be design/build where the Architect works for the Owner? Should the Contractor function as Construction Manager, taking on preconstruction responsibilities for budget, schedule, and constructability reviews? A review of the pros and cons for each method described in our previous posts will provide guidance when addressing these questions.

The other type of negotiated process occurs when the Owner does not have an existing relationship with a contractor, but still wants the contractor selected early in the project. Blueline has a process for this that provides the Owner with both quantitative and qualitative information for decision-making. Typically, we complete a conceptual design that includes a detailed floor plan, building elevations, 3-D views, a preliminary site plan and an outline narrative describing the materials, systems, and performance requirements of the building. This conceptual design package is then distributed to several (we recommend three, but no more than five) Contractors. Each Contractor is asked to provide the following information related to the conceptual design:

  • A non-binding conceptual budget for the design
  • A non-binding schedule for the project
  • A list of potential cost savings or areas where design decisions will have significant cost impact
  • Examples of similar projects the Contractor has completed
  • Three references from the Owner of similar projects
  • Demonstration of their ability to provide preconstruction budgeting and scheduling services

In addition, we ask the Contractors to provide the following data:

  • A stipulated, binding fee for the work
  • A list of items they typically include as part of their general conditions
  • Their bonding rate and capacity. (Even if project does not need to be bonded it speaks to the volume, quality, and performance of company over time.)
  • Their cost for preconstruction services and the number of budgets and updates they are willing to provide.

Based on these answers, one or more of the Contractors is brought in for a face-to-face interview. In this interview, the team can ask questions that shine a light on their project management style. Typical questions can include, but are not limited to:

  • What do you believe is critical to delivering a project on-time and on-budget?
  • How will you choose sub-contractors for this project?
  • How do you handle conflict among project team members?
  • What is distinctive about your company?

This process can take four to six weeks, but if completed before detailed design work is started, can provide tremendous value to the Owner. When the Architect and Contractor work as a team for the good of the Owner, projects go from good to great. Let Blueline help you negotiate to find the right contractor for your project. Contact us at www.blueline.team.

Randy Seitz 
President | Client Service Leader | Architect

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