Lecture 2: AEC Industry Business Models

Question 1

Project Participants (4)

Answer 1

1. Owner
2. Design team
3. Construction team
4. Professional construction manager

Question 2

Owner

Answer 2

Pays for the facility and might own it after construction is completed.

Question 3

Owner’s Organization (5)

Answer 3

1. Capital project officer (CPO)
2. Financial officer
3. Owner’s project manager
4. Owner’s inspector
5. End users

Question 4

Types of owners (2)

Answer 4

Public and private

Question 5

Public owners

Answer 5

Government level, usually large infrastructure projects with well-defined procedures.

Question 6

Private owners

Answer 6

Ranges from real estate developers to one‐time projects, usually smaller projects with informal procedures. More innovative, cost‐efficient and flexible.

Question 7

Public-Private Partnership (PPP or P3)

Answer 7

Partnership between public and private owners to deliver large projects traditionally provided by public organizations.

Question 8

Advantages of PPP (3)

Answer 8

1. Financed by the private entity.
2. New infrastructure without tax increases.
3. Good for developing countries with a backlog of projects.

Question 9

Design Team

Answer 9

Architecture and engineering firm that holds a contract with the owner and collaborates with companies through consulting/subcontracting agreements.

Question 10

Construction team

Answer 10

Holds a contract with the owner and collaborates with specialty contractors through subcontract agreements

Question 11

Professional Construction Manager (CM)

Answer 11

Oversees entire project construction on behalf of the owner with no direct relationship to architects, engineers, or contractors. Many general contractor companies have construction manager services.

Question 12

Project delivery systems

Answer 12

The characteristics of how a construction project is designed and built and the responsibilities of the parties involved.

Question 13

Design-Bid-Build (DBB)

Answer 13

Owner contracts designers and builders separately. The design firm delivers completed design documents, then the owner solicits bids from contractors to perform the work.

Question 14

Cost estimate

Answer 14

A detailed calculation or assessment of the anticipated construction costs.

Question 15

Request for information (RFI)

Answer 15

Formal process for gathering information from other entities (clarification in designs, addressing constructability issues, etc…)

Question 16

Change order (CO)

Answer 16

Formal request that outlines modifications or changes to the original construction contract/documents.

Question 17

Bad communication

Answer 17

Increases cost and time of a project and decreases quality due to the amount of RFIs and COs.

Question 18

Shop drawings

Answer 18

Drawings with accurate details of certain items

Question 19

As-built drawings

Answer 19

Set of updated drawings accurately representing the final facility after its completion

Question 20

Advantages of DBB (3)

Answer 20

1. Most widely applied project delivery systems
2. Cost is already defined
3. Owner not too involved in the construction process

Question 21

Disadvantages of DBB (3)

Answer 21

1. Design not reviewed for constructability (many RFIs and COs)
2. Sequential: construction cannot start until design is done
3. Slow

Question 22

Design Build (DB)

Answer 22

A single entity manages design-build projects. The builder and designer work hand-in-hand to provide design, engineering, and implementation services.

Question 23

Advantages of DB (4)

Answer 23

1. Allows fast tracking
2. Good quality outcomes due to close interactions between design & construction teams.
3. Easy to respond to COs
4. Reduced time spent for formal communications b/w design & construction via owners

Question 24

Disadvantages of DB (3)

Answer 24

1. Pricing isn’t possible at the beginning
2. Risk of sacrificing quality to protect profit
3. Owners might need to be actively involved in the project