Delivery is important, whether it’s for someone giving a speech, a baseball pitcher trying to strike out a batter, or a comedian trying to get a laugh. We’ve heard it said, “It’s all in the delivery.” Another area in which delivery is important is church construction. Construction “delivery” refers to the contractual relationships between the customer (church), the architect, the contractor and, possibly, a construction manager. These relationships significantly impact the design, quality, cost, speed, stress, and ultimate success of a construction project. A church that enters into a construction project with a full understanding of the available construction delivery options will reap tremendous benefits that it might otherwise miss.

The most common delivery methods are “traditional,” “design-build,” “construction management at risk,” and “construction management as agent.” Following are brief descriptions of each.

Traditional – This has been the primary delivery method for a very long time and has the church hiring an architect and contractor independent of each other, followed by the contractor hiring his own subcontractors. The church takes a lot of responsibility in this method in that it must manage the relationship between architect and contractor.

Advantages:

• Well-defined roles and responsibilities for the team.
• Allows more contractors to bid.
• May initially provide the lowest cost for the project.
• Allows the church much control over the end product.
• Allows the church to select the best architect and best contractor.

Disadvantages:

• Slower process than the others.
• Lower likelihood of budgets being met (especially since architects are often off in their budgeting).
• Must guard against the low-cost contractor not understanding the project completely.
• Church has limited input on the subcontractors that are hired.
• High potential for change orders and conflict.
• The church must often act as referee between the architect and contractor.

Design-Build – This delivery method has become quite popular over the past decade or two. It teams the architect and contractor together as one party for the church to deal with. In my experience, architects and contractors are anxious to promote themselves as design-build, but the extent of their relationship (and the resulting benefits) can vary greatly. In the purest definition of the term, the architect and contractor would be part of the same company, but this is rare. More typically, they are two independent parties who are willing to join forces for a particular project (whether or not they’ve teamed up in the past is a critical element to know).

Advantages:

• The church has only one point of contact and accountability.
• Typically comes with a guaranteed maximum price contract so the church’s risk is minimized.
• There are no change orders other than those which the church produces.
• It can be a much quicker process.
• The church does not have to be as involved.
• The church does not have to be a referee between the architect and contractor.

Disadvantages:

• Since a guaranteed price is established early in the process, the design-builder may sacrifice quality of finishes, etc. to stay within the contractual cost.
• The design work is completed earlier in the process, forcing the church to settle on design elements very early.
• Might not pair the best architect with the best contractor for the church.
• Quality control is the responsibility of the design-builder with limited checks and balances.

Construction Management at Risk – This method is very similar to the traditional method, except a construction manager is inserted into the role of the contractor (although he is not the builder).

Advantages:

• The construction manager represents the church early on in budget management.
• The church may still have some input in the selection of subcontractors.
• All work is competitively bid, but a guaranteed maximum price can be established early.
• Can be a faster process than traditional method.
• Management fees are locked in very early in the process.

Disadvantages:

• The architect may not readily take input from the construction manager.
• The construction manager will likely make money on change orders and, therefore, will aggressively seek them.
• The church must guard against the manager valuing future relationships he may have with the various subcontractors over his one-time, current relationship with the church.

Construction Management Agency – A construction manager is brought in to serve the church throughout the process, essentially acting as the church’s professional representative. For this to be effective, the manager must be brought in at the very beginning and included in the design phase. Both the church and manager will have direct contact with the architect and subcontractors, but it is the church that will have the contractual relationship with each of these parties.

Advantages:

• Faster process than traditional.
• The construction manager is a more reliable source for budgeting than an architect alone.
• The church has total control over the selection of subcontractors.
• The construction manager is responsible to deliver the project on budget and on time.
• The manager has incentive to help the church find low-bid subcontractors.

Disadvantages:

• The incentive to find low-bid subcontractors can also be a disadvantage by incenting the use of low-cost, under-qualified workers.
• The architect may not readily take input from the construction manager.
• The manager has no responsibility for the subcontractors.
• The final price is received later in the process than with design-build, and costs may not be guaranteed.
• The church must maintain a high level of involvement and will take on more risk with multiple contractual relationships to manage.
• The church must guard against the manager valuing future relationships he may have with the various subcontractors over his one-time, current relationship with the church.

There are other delivery systems as well, including many hybrids. Ultimately, it is incumbent upon the church to understand the basic delivery systems available and the advantages and disadvantages of each. This aspect of construction is important enough to make it a reason for a church to select or disqualify an architect and contractor. In choosing a delivery method, the church needs to consider its tolerance for cost overruns, the importance of its timeline, the level of stress its leaders can endure, the qualifications of its own people who will be representing the church, and their capacity for overseeing the project.

I would be happy to discuss your project with you and to answer any questions you might have. May your delivery be smooth!

David Graf
Vice President for Lending

Elements of this article were taken from a presentation made by Ryan W. Phillips of Vertex Engineering Services, Inc.