By Jordan Miller, Contributing Writer

With healthcare construction already up 12 percent over the same period last year, there are no signs that projects are slowing down. That leaves healthcare facilities, owners and managers trying to best manage their time and resources for a growing number of projects. 

A range of construction procurement options are available to help owners and managers oversee projects. Selecting the most appropriate procurement strategy for a project is fundamental to its success. It affects cost, schedule, quality and team relationships. 

The procurement method is driven by the structure of the project team, which includes the owner, owner’s representative, architect, engineers, managers and contractors. It can play a crucial role in project optimization. 

Four procurement methods are commonly used, and depending on the project’s scope, choosing the best method can help an owner or manager operate as efficiently and effectively as possible.

Design-bid-build 

The most traditional, well-established project delivery method is design-bid-build (DBB). The process starts with hiring an architect to design through to construction documents. Once the design is complete, the owner solicits bids from contractors and selects a winning bid, typically based on the lowest price. 

The DBB process has benefits and is ideal for reducing costs and creating equity among contractors, even though it provides the least collaboration. Using DBB, an owner has separate contracts with an architect and a contractor, and the parties only collaborate once the design is complete and construction starts. 

The biggest challenge with DBB is that the architects and contractors cannot work together to develop the scope of work. The method’s sequential nature limits the contractor’s involvement throughout the design phase, which can increase the need for change orders if contractors identify constructability issues. 

That said, DBB can be ideal for a team with a fully defined project, such as a series of similar clinics that are part of a long-term growth strategy. It also works well with straightforward, repetitive projects that might not need early input from a contractor. 

Design-build 

There is a growing trend toward using design-build (DB) for healthcare construction projects. This method offers faster project delivery, increased stakeholder collaboration and better cost control than DBB. 

DB is unique because the owner holds only one contract with a design-build entity that provides design and construction services. Most design-build entities are led by a general contractor that partners with an architect, though some dedicated design-builder firms have licensed architects, engineers and contractors on staff. 

While DB technically has three phases, they are overlapping and fast-tracked, not sequential. Once the owner selects the DB firm and the design reaches a certain level, construction can begin, and the team works toward a final design. 

The DB method offers the advantage of one point of contact for the owner, which streamlines communication and minimizes conflicts between partners. Because the design and construction phases overlap, it often leads to faster project completion. 

The DB method has challenges, mainly that owners and managers might have less control over the design process compared to other methods. The potential for conflicts of interest exists because design-builders might prioritize cost and schedule over quality or other project objectives. 

For healthcare construction projects on a fixed budget, the DB method can be a good choice. It brings less risk to the owner and more to the DB entity because they have specific project parameters to meet. Healthcare projects that require input from several stakeholders, healthcare providers or specialists can benefit from DB because the integrated design and construction process can efficiently address the diverse needs of different medical specialties. 

Construction management at risk 

Somewhere between DBB and DB in terms of benefits and risks is the construction management at risk (CMAR) method. A practice becoming more common in the construction industry, CMAR allows for a greater spread of risk and control across a project team. 

In this method, the owner or manager selects the contractor midway through the design process, and they provide pre-construction services consistent with milestone cost estimates, constructability review and long-lead procurement. Similar to DBB, the owner has contracts with the architect and the contractor. CMAR contracts typically include provisions for managing project risks, potentially reducing the owner's risk exposure. 

Two benefits of the CMAR method are the direct owner relationships and the early involvement of the contractor, allowing them to collaborate and provide input during the design process, ideally resulting in fewer change orders later. 

Conversely, because collaborative decision-making occurs between the owner, designer and contractor, the project's complexity grows due to the coordination needed among the parties. These complex relationships might lead to conflicts if not managed effectively. 

CMAR benefits from involving an owner’s representative, mainly to help manage costs and schedules, ensuring the owner gets the best value. An owner’s representative also can advocate for the owner on design decisions or whether to bring partners in early, allowing the owner to focus on hiring the best team for the job. 

The CMAR procurement method can be particularly beneficial for healthcare construction projects that require a high level of coordination, specialized expertise and risk management, such as large hospital expansions, complex renovations and infrastructure upgrades to critical-care facilities. 

Integrated project delivery 

Integrated project delivery (IPD) is also gaining popularity in healthcare construction, especially for larger, more complex projects. Much like CMAR, this approach fosters collaboration from the outset among all stakeholders, including the owner, designer and contractor. In this arrangement, all partners share risk and reward. 

Because responsibility is decentralized, IPD requires a strong level of trust and collaboration among partners. This method sees limited use because of its highly collaborative nature and the need for stakeholder alignment. While it is not widely used, the method is gaining popularity, especially on the West Coast for more complex projects. 

While IPD and CMAR are similar, they have distinct differences. IPD is highly collaborative among stakeholders very early in the project. Team integration can vary more with CMAR, still allowing for collaboration but not as comprehensively as IPD. 

The decision-making process can vary between the two methods, with IPD allowing for a more inclusive process for all stakeholders involved, while CMAR can maintain a more traditional project hierarchy where the owner is the ultimate decision-making authority. 

IPD can be a preferred method for large-scale medical center developments, new hospital campuses and projects that involve many stakeholders. 

Choosing a method 

Each construction procurement method has advantages and disadvantages, and the most suitable method for a healthcare construction project depends on project goals, budget, schedule and the level of collaboration desired among project participants. 

There has been a growing trend towards using DB, CMAR and IPD for healthcare construction projects. These methods offer benefits that include faster project delivery, increased collaboration among project stakeholders and potentially better cost control. DB and CMAR are particularly common due to their ability to streamline the project-delivery process and facilitate collaboration. 

IPD is gaining popularity in healthcare construction, especially for larger projects because it promotes collaboration and shared risk among all project stakeholders, including the owner, designers and contractors. 

For a detailed guide on these construction procurement methods, visit the RLB Healthcare Procurement Tool. 

Jordan Miller is associate principal and resident manager for Rider Levett Bucknall’s Denver office.