5 Reasons to Negotiate Your Next Project

Weekly Tips & Advice

From The Executive Desk at Castle Black Construction

One of the most important decisions an owner has to make when making the decision to move on a construction project is selecting who makes us the project team and method the project should be delivered. What is project delivery? Well, in the construction industry there are many but the most common methods used are: Design-Bid-Build, Design-Build, and Construction Management. So overall, a project delivery method is your design and construction team and the process of how you want the construction project accomplished. Now, all of these methods have their pros and cons? This is another subject that I will discuss at a later date.contract-negotiation

While the design-bid-build method is the go-to choice for construction projects, there are a number of reasons why the negotiated approach has seen a surge in popularity and why it might be a better fit for you and your project. So, let me give you 5 good reasons why I feel the negotiated method is a much better process for everyone.

#5 Better Information – The collaborative process of negotiating allows you to be more informed about what’s going on with your project than you would if you went with the traditional design-bid-build method. With negotiated delivery, you get to be engaged from the very beginning, telling team members what you value most on your project. You get more information about how your money is being spent and recognize savings and benefits early in the process, while allows you to place value in the beginning stages. Which brings me to number….

# 4 Cost Savings – Managing your project budget begins when those critical and crucial design decisions are being made. Bringing the construction team, like Castle Black Construction, on board early in the design process allows them to maximize value by providing cost input into design decisions. It also allows them to capitalize on early purchasing of any necessary major equipment by locking in lower prices. Additionally, under a negotiated delivery format, any savings are returned to you based on contract negotiations, whereas under a design-bid-build delivery the Contractor retains 100% of any savings.EXECUTE

#3 Fewer Changes – What’s the easiest way to minimize changes during construction? You guessed it: Involve your construction team early during the design phase and prevent changes before construction even begins. Under a negotiated delivery system, your Contractor can provide invaluable pre-construction services, such as reviewing drawings for potential errors ahead of time, thereby reducing the number of changes. Fewer changes mean significant savings on any project. In contrast, if you go the design-bid-build route, you run a higher risk of changes during construction, which stop progress and cost you time and money.

#2 Partnership – In a negotiated delivery, the Contractor is part of your team and will always look for ways to add value to the project. The objectives of the Owner, Architect and Contractor are aligned early in the process to make up the project team. In contrast, the hard bid format can produce adversarial relationships, as the Contractor must look primarily at their own bottom line since their service has been purchased as though it’s a commodity….When everyone is a team, you WIN as one unit.

# 1 Increased Transparency – Negotiated delivery is built on the premise of a trust-based relationship between you and the project team. You get to see exactly how your money is being spent–not just a high-level recap, but detailed cost transactions showing where your money is going. Possibly more important than tracking expenses during construction is transparency in the preconstruction phase, which enables you to see and decide where you are going to spend your money before construction begins.