Best Project Delivery Method for a Project with Unknown Conditions

Practice Management
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Which project delivery method is best for a project with unknown conditions? I have encountered this question multiple times and each time the answer is a different project delivery method.

Depending on the question any of the following could be a correct answer:

Construction Manager as Constructor (CMc)
Construction Manager as Agent (Advisor)
Integrated Project Delivery (IPD)
Cost Plus Fixed Fee

According to the answer explaination from the BS Risk Management Virtual Workshop [Exercise A]:
Answer:
2. Given the undefined scope of the project, which project delivery methods are the most appropriate?
Cma - Cma is most useful in projects that are complex, have an undefined scope, or tight schedule.
IPD - IPD is best suited for projects where the scope of work is potentially complex or undefined.

Cost Plus Fixed Fee - AHPP p.514 Another variation of design-bid-build method is known as “cost plus fixed fee.” In this approach the contractor is selected at the completion of contract documents, but the scope of construction is unpredictable (due in part to unknown factors such as existing conditions). Under a cost plus fixed fee contract, the contractor is paid actual labor and material costs plus overhead for construction for coordination of trades on the site plus a fee that represents a fixed amount of profit that does not vary according to the total project cost, disconnecting the contractor’s profit from any increase in project costs. Added incentives may be added to the fee if the project finishes early or under the original budget.

As mentioned above, Cost Plus Fixed fee is a variation of Design-Bid-Build. But Procore says that Cost Plus or Cost Plus Fixed Fee is a type of construction contract like Guaranteed Maximum Price, not a delivery method. The the AIA Owner / CMc contract A133-2019 and the conventional Owner / Contractor A102-2017 contracts:

A133-2019 Standard Form of Agreement Between Owner and Construction Manager as Constructor where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price
and
A102-2017 Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price

use a cost plus fixed fee structure as well which further confirms that cost plus fixed fee is not a project delivery method, but a type of construction contract.

But I have seen sample questions where cost plus fixed fee is included with other project delivery methods and is the correct answer!

Anyway, getting back to the point of my question:

Can all of these project delivery methods be appropriate for a project with unknown conditions?

2

Excellent question @Citrillion! One important distinction here is that Cost Plus Fixed Fee is not a project delivery method, as noted in another thread (and as you’ve indicated in your post here):

Therefore, Cost Plus Fixed Fee can be used with a delivery method. It is appropriate to use on a project with unknown conditions because of its flexible compensation structure. The question may ask something like: Which project approach is most financially or contractually appropriate when the scope is undefined? - where either a project delivery method or construction contract type could be considered a correct answer.

Depending on the specific circumstances, CMa, CMc, and IPD could all be appropriate for a project with unknown conditions. You’ll want to consider early input (all parties at the table early on), flexible design-phase support, and collaborative arrangements. These three delivery methods help manage scope complexity and change, while Cost Plus Fixed Fee is a contract type that helps manage cost uncertainty.

When answering this type of question on the ARE, note any unique factors in the scenario that might point you in one direction versus another.

Hope this helps!

Kiara Galicinao, AIA, NCARB
Product Coordinator
Black Spectacles

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Thank you so much for this explanation @kiaragalicinao

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