For owners who choose Hard Bid instead of Negotiated Delivery, the choice often comes down to one simple motive: price. So when an owner purchases professional construction services based solely on price, they tend to see things differently. Those professional services start to look more and more like commodities, losing their value as the low-price mindset takes over; and as the value of the services declines, so does their quality. By the end of a hard-bid project, any up-front savings are often lost to drama, delays and defects, and the owner may actually feel like he paid too much—and for a low-quality building that took too long to complete.
So how can an owner avoid this low-price, low-return trap? The answer is simple: by focusing on value. While price is simply how much the owner pays, value is how much the owner gets in return for that price. Perhaps the best way to ensure maximum value on a construction project is to choose a Negotiated Delivery format and utilize a qualified professional Construction Manager. Unlike Hard Bid, Negotiated Delivery places more emphasis on a high-quality end result than a low up-front price. Does this mean negotiated projects cost more? Absolutely not! In fact, Negotiated Delivery formats offer both competitive pricing and great value.
Negotiated Delivery allows owners to balance their financial responsibilities with the need to ensure quality, schedule, and performance standards. These delivery formats allow owners to manage project risk by selecting construction teams based on qualifications—not just price. This is why so many public and private owners are choosing Negotiated Delivery, and in many cases, these owners are actually saving money and getting better results.
How is this possible? Here are some of the ways Negotiated Delivery formats provide better value:
- Less Risk for the Owner – Selecting a Construction Manager based on qualifications greatly reduces the financial risk of things like contractor bankruptcy, insufficient manpower, inability to complete a project, etc. Also, the Construction Manager pre-qualifies subcontractors and suppliers to eliminate supply-chain risk.
- Better Teamwork – In a Negotiated Delivery format, the Construction Manager usually comes on board early during the design phase to work with the architects, engineers and the owner right from the start. This type of productive collaboration means less conflict and less chance for costly litigation down the road.
- Better Design & Quality – Early involvement also allows the Construction Manager to provide valuable input regarding constructability, quality control, cost-saving alternatives, sustainability goals and features; and other value-added options to benefit the owner.
- Shorter Schedules – Another advantage of hiring a Construction Manager early is the ability to fast-track schedules and begin work much sooner than on hard-bid projects.
- Better Technology – Negotiated Delivery allows the entire team to fully leverage technologies like BIM (Building Information Modeling) during preconstruction.
- Fewer Change Orders – Early Construction Manager input reduces the number of costly, time-consuming change orders during the construction phase.
- Fewer Warranty Call-Backs – Better design and quality means fewer defects and warranty call-backs, saving the owner time and money—and preventing a lot of frustration.
As tempting as it may be to simply go with the lowest bidder, do you really want to “shop” for a new building the same way you shop for gallon of milk? Probably not. By shifting your focus to value, you open the door to better savings and better results. So, next time you’re in the market for professional construction services, choose Negotiated Delivery and get the best of both worlds—excellent value plus great pricing.