Public Information:

Contract Relationship Options

1. Design-Bid-Build (Traditional, clean-cut method): This is the most recommended method for savings. The owner initiates a contract with the architect and defers General Contractor services until blueprints are complete. The architect's legal obligation is always to the owner, completely, start to finish. The architect (design professional) prepares construction documents with the engineering team so the project can be submitted for permits and sent out to competitive bid. The architect usually leads the bid process and, by agreement, can even serve in some type of "construction manager" capacity while representing the owner. This method has some higher design costs, yet it lowers construction costs substantially by securing competitive bids in the climate of a construction bid-war. The merit to this method is that it can reduce overall project cost while also having representation by the architect in the total process sequence. As results, this relationship offers the best control of design and construction quality in the finished product.

2. Owner-Build (“On Your Own”): Although not recommended, the owner could contract separately with the contractors of each trade. The owner takes the lead role and is responsible for getting bids and acts as construction manager, coordinating the work of individual subcontractors. You would think this has potentially the lowest cost, but it may have the highest cost assuming risk of things going wrong. In this case, the owner assumes the role of the General Contractor and “saves” the General Contractor’s fee (approximately 10% of construction cost). The pitfall is that it can result in project overruns if the owner fails to control costs throughout the bid and construction management processes. The owner will often piggyback a construction manager onto the project or ask for special services from the architect which could add more cost than the 10% savings. This option potentially has the longest time frame for project completion, depending on the owner’s knowledge and how much time the owner has available to work on. The owner has to factor in the cost of his/her own time as well which always is counter productive. Subcontractors may not be loyal to owners as they would be for there Que of repeat work with a General Contractor. Also, the quality of construction work may be hampered due to inadequate coordination between overlapping trades. This is more likely to result in additional cost than other contracting methods.

3. Design-Build (Turnkey): The owner contracts with a single entity for both design and construction. A designer—in most cases a draftsman, or sometimes an architect teamed with a licensed engineer—works with the design/build team, as the designer's legal obligation is sometimes tied directly to the contractor. See Conflict of Interest... for additional information.

4. Pre-manufactured Home (Vendor Relationship) Has potential low construction cost with very poor resale value. Construction materials may be required to meet county fire codes, which can add to cost. Many areas may not allow such construction due to zoning issues. Potentially the quickest construction erection if desired model is available, yet the appearances and design options are limited by the manufacturer. Remodeling and alteration not available, thus lacking flexibility for the future alteration or additions, unlike conventional field construction. Financing institutions are not providing construction loans beyond the property value which means it takes more capital. Additionally you will not be able to refi a loan for shopping future rates due to risk that the banks have with this construction method.

Contact: John Salat at freeingwinds@earthlink.net or call 949-235-4847