Updating Project Delivery and Contract Strategies

RT-DCC-06 Topic Summary
RT DCC 06

Overview

A project delivery system (PDS) defines the overall project execution framework, the roles and responsibilities of project participants, the language in the contract, and the timing of its signing. The selection of a PDS is a fundamental decision that must be made in the early stages of project development. CII Research Team 165 provided a structured procedure for PDS selection almost 20 years ago and captured its findings in Implementation Resource 165-2, Owner’s Tool for Project Delivery and Contract Strategy Selection User’s Guide.

Since IR165-2, there has been a significant increase in industry interest in the finer points of PDSs. The renewed attention included the rise of more collaborative PDSs, such as Integrated Project Delivery (IPD) and Integrated Industrial Project Delivery (I2PD), which was IPD tailored specifically for industrial projects. Members of the downstream and chemicals (DCC) sector have more options than ever when they consider project delivery system selection, motivating factors, and conditions for success.

To this end, Research Team DCC-06 (RT-DCC-06) reexamined the PDS selection methods currently being used in the DCC sector, advanced the understanding of how a PDS is selected, standardized commonplace terminology in PDS, and quantitatively evaluated the benefits and limitations of different PDS options in use. The team identified four PDS categories and 11 subsystems, then developed a PDS assessment rubric and decision support tool, which takes the form of 36 driving statements within 10 factor groups. The tool presents predictive scores for the four PDSs’ ability to succeed in achieving each specific driving statement’s objective. Using the assessment rubric will reinforce the selection of principal PDS, and the series of decision trees provided in the subsystem selection tool help the reader winnow down the subsystems available for that PDS.

Key Findings and Implementation Tools

1 : Creating a PDS concept file

RT-DCC-06 created a concept file that defines the four most prevalent PDSs:

  1. Design-Bid-Build (DBB)
  2. Design-Build/Engineer-Procure-Construct (DB/EPC)
  3. Construction Manager at Risk or Construction Manager as Agent (CMR or CMA)
  4. Integrated Project Delivery (IPD)
     

The concept file discusses each PDS in turn, providing the following specific information (FR-DCC-06, page 7):

  • Definition and description
  • Key concepts that distinguish that delivery system from the others
  • Indicators of applicability (when to apply)
  • Conditions for successful application (how to apply)
  • Cautions (what to avoid)
  • Definition of success
Reference: (FR-DCC-06)

2 : Developing driving statements and factors for selecting a principal PDS

Once the user has used the concept file to obtain a clear understanding of the applicability and strengths of each major PDS, the PDS assessment rubric uses a series of driving statements to help the user assess the relative merits of the four principal PDSs.

The research team developed the rubric to show how well each PDS addressed each driving statement by applying the following three-point scale:

3 –  Most Appropriate. This PDS has the highest degree of success in achieving the goal of the driving question or statement.
2 –  Somewhat Appropriate. This PDS will permit some objectives of the driving question to be achieved but may not do so as intuitively or as completely as a PDS that scores “3.”
1 –  Least Appropriate. Using this PDS may make it difficult to realize the objective of the driving question. Consider other choices.
X –  Does Not Apply. This PDS, due to either its contracting mechanism or other internal factors, does not permit the driving statement to be achieved. This PDS should not be chosen for that application. 
 

The report provides instructions to facilitate tailoring the rubric to consider the unique circumstances a project may experience.

This figure shows a sample series of driving statements and the PDSs’ corresponding scores (FR-DCC-06, page 15).

Reference: (FR-DCC-06)

3 : Identifying the subsystems of project delivery

The team represented the 11 subsystems with “equations” of a sort, which assigned appropriate parties the following five responsibilities of a project:

  1. Project Management – includes cost control, schedule control, change management, and safety.
  2. Engineering – includes design detailing, requests for information (RFI) administration, design variations, design administration, and document control.
  3. Procurement – includes purchasing and scheduling delivery of major equipment and supplies throughout the project.
  4. Construction Management – includes the day-to-day oversight of the project, scheduling of subcontractors, work sequencing, site risk management, and constructability.
  5. Construction – includes executing the day-to-day construction of the project.

Thus, as the figure above shows, in Subsystem 1 the owner (O) is responsible for project management, while an EPC firm is responsible for the other four project responsibilities. This is written as “O+EPC” in the context of the report. The following graphic summarizes the 11 equations that resulted from this process.

As is noted in the report, no subsystem fundamentally altered its PDS to such a degree that it became a fifth PDS (FR-DCC-06, page 23).

Reference: (FR-DCC-06)

4 : Developing flowcharts for selecting among PDS subsystems

Once stakeholders have gained an understanding of which principal PDS to use, the report helps them determine which subsystem of that PDS might best suit their project by applying flowcharts such as the one shown in the figure. With each answer, the user assembles the equation of the best-suited subsystem (FR-DCC-06, page 25).

Reference: (FR-DCC-06)

5 : Comparing disparate projects by applying the Project Performance Score

To quantitative compare project performance under all four principal PDS categories, RT-DCC-06 collected and analyzed 96 projects. The team calculated a Project Performance Score (PPS) for each project by using six factors with standardized definitions, as shown in the figure below (FR-DCC-06, page 41).

 

The team’s analysis showed that IPD was the best performer in four of the six PPS factors, while CM was the best performer in two. (In the figure below, each best score is shown in boldface, while the worst is italicized.) As a result, the team recommends that the DCC sector consider IPD as a significant option when selecting PDSs for upcoming projects.

Reference: (FR-DCC-06)

Key Performance Indicators


Research Publications

After the Revolution: Understanding a Decade of Change in Project Delivery Systems and Their Impact on Project Performance - FR-DCC-06

Publication Date: 05/2021 Type: Final Report Pages: 86 Status: Tool


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