GSA Proposed Rule to Provide Guidance on the Construction Manager-as-Constructor Project Delivery Method
Construction and Procurement Law News, Q2 2019
A GSA proposed rule, if adopted, will provide direction for the “construction manager as constructor” (“CMc”) project delivery method. CMc is widely used in the private sector – the American Institute of Architects (“AIA”) has an entire family of template contracts dedicated to CMc – and GSA has entered CMc contracts. But the GSA regulations, as of now, lack any real guidance on this method.
The proposed rule includes a robust definition of CMc: “design and construction are contracted concurrently through two separate contracts and two separate contractors. Unlike the traditional design-bid-build delivery method, under the CMc delivery method, the Government awards a separate contract to a designer (i.e., architect-engineer contractor) and to a construction contractor (i.e., CMc contractor) prior to the completion of the design documents. The Government retains the CMc contractor during design to work with the architect-engineer to provide constructability reviews and cost estimating validation. The CMc contract includes design phase services at a firm-fixed-price and an option for construction at a guaranteed maximum price.”
The cornerstone of CMc is the early engagement of the contractor. Design-phase collaboration between the contractor and designer is intended to facilitate innovation, reduce the number of design-related change orders during the construction phase, and promote early detection of errors and conflicts in the drawings. CMc also has economic advantages, set forth in GSA’s Economic Impact Analysis (“EIA”): GSA estimates that the rule will result in net deregulatory savings of $238,535 per year.
There is also evidence that CMc reduces schedule growth, on average saving 71 calendar days, which reduces administrative costs. The contractor can share savings of the cost reductions when it completes the construction work for lower than the guaranteed maximum price. The GSA’s EIA determined that CMc facilitates conversion to firm-fixed-price contracts, especially in tight labor or material markets, and has lower “sunk costs” and barriers to entry than design-build contracts.
This proposed rule should be no surprise to the contracting industry, and it appears to be a welcome change. According to GSA, the proposed rule reflects the expressed needs of the construction industry. If adopted, the new rule will provide much-needed guidance and potential cost saving measures to GSA contracts. Comments closed on January 7, 2019, though GSA has not yet adopted the rule.