Turnkey projects, such as energy performance or design-build contracts, are often used because they expedite the design and construction process. Often times, to achieve an accelerated schedule, an owner is locked into a guaranteed maximum price (GMP) upfront resulting in little or no control over the details of the project. Those in the construction industry know the saying “the devil is in the details” is more than a saying—it’s real life. The details of a project can be the biggest opportunity for high value and conversely they can be the cause of the most disappointment.
A stepped delivery process provides the owner continued control over the scope, as well as the cost. Do not pay too much for a project! Hold off on the GMP until the design is sufficiently developed. If the project does not look like you thought it would, or costs more than you expected, you can still walk away.
How do you incorporate a stepped approach into a turnkey project?
Stage your project in three basic milestone steps: (1) study phase, (2) design phase and (3) construction phase. At the time of the RFP request a lump sum cost for the study and a percentage fee on top of labor and material for the design and construction phase fees. This way you can execute contracts progressively at each phase that only authorize work for that phase. As a result, you retain control over the costs, scope and quality of your project since the decision to move forward to the next step rests solely on you as the owner.
The following schedule related language can be incorporated into your RFP to help ensure this approach is taken for your project.
As an owner, you should never have to relinquish control over your project. By employing a stepped approach, you can evaluate and decide at the end of each phase if you want to proceed to the next. Just remember the three milestones: (1) study phase, (2) design phase and (3) construction phase. Ball in your court.
Written by: Jason Denue, PE, REP, Associate Principal