Hamburger Link

News & Events

How Integrated Multi-Prime Project Delivery Contracting Strategies Benefit Healthcare Capital Facilities Development Projects

The complexities of developing large healthcare projects requires attention to early planning and development of an appropriate procurement strategy, along with careful selection of the right team members who have the experience to deliver reliable outcomes over the long haul.

Integrated multi-prime project delivery (IMPD) strategies can play a key role in creating measurable economic benefits - including expedited times to market on large, complex healthcare capital facilities projects.

Delivering these large design and construction projects on budget and schedule is one of the main challenges for long-duration projects, simply because of the enormous amount of work involved. Healthcare facilities executives contemplating large, complex capital expansions must identify the most effective and appropriate contracting strategies for their healthcare projects early in the planning process. Innovative, time-tested, integrated contracting strategies managed with a rapid, multi-track project development process allows for greatly abbreviated timelines and can deliver measurable economic benefits. A true IMPD approach also can lead to improved team collaboration by enabling key technical resources to participate in the planning, design, and engineering decisions earlier in the project development process, which, in turn, promotes innovation, helps reduce errors and omissions, and supports a fast-track project delivery for Owners with a pressing need to be first to market.

This paper utilizes research published by Edward Rojas, Associate Professor in the Department of Construction Management at University of Washington, and as presented in the Journal of Construction Engineering and Management and archived in the American Society of Civil Engineers (ASCE) library. His research presents a systematic analysis of the primary issues of single vs. multi-prime contracting with the purpose of providing objective data to illuminate the debate. A statistical analysis of project bids and final costs from a national sample of state construction projects reveals that construction projects organized with multiple prime contracts tend to have 5% less direct costs than projects using a single prime contractor. Moreover, approximately 80% of these savings are attributable to lower bid costs for multi-prime projects.

The results of this study are in agreement with theoretical bidding models and efficient risk allocation models conducted over the past decade. Theoretical bidding models suggest that in the absence of disruptions, multiple prime contracting strategies for construction projects should have lower direct costs than a single construction manager/general contractor prime contracting approach.

 

Additionally, specialty contractors often bear economic and contractual risks with the single prime contracting method, such as: bid shopping, subjective scope gaps, credit risks, payment delays, and third-party disputes. Efficient cost allocation models suggest that specialty contractors will often lower their bids and forego premiums they might otherwise charge in response to single prime “ pass through” contracting.

 

Integrated Multi-Prime Delivery Contracting: What Is It?

Integrated multi prime project delivery (IMPD) is a collaborative alliance of people, systems, business structures, and practices delivered through a proven process that harnesses the talents and insights of key project participants to optimize project results, increase value to the Owner, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction . Integrated multi-prime contracting is a variation of the design-bid-build delivery model. The Owner contracts directly with multiple prime contractors and consultants with specific disciplines – design, general construction, structural, site work and civil, mechanical, and electrical, among others. The Owner holds direct contracts with each party to perform specific aspects of design and construction. The Owner typically is represented by an experienced project executive who administers the contracts, where the construction manager is still responsible for logistics and coordination of means and methods of construction between primes on site. Contracts can be competitively bid, generally via a Request For Proposal (RFP), or can be negotiated directly depending on Owner’s preference and project demands.

The Owner typically engages an experienced Owner’s agent, either as construction manager “agent” or owner agent serves as the project manager,   managing all aspects of the project from conception through completion. The Owner’s agent also spearheads all administrative functions, manages the schedule, oversees the budget, coordinates procurement strategies, and all third-party activities, including administering the contracts of multiple prime contractor and or project consultant resources.  Success under the integrated multi-prime contracting delivery model is tied heavily to the Owner agent’s effectiveness in coordinating contractors, managing the schedule, and leading a collaborative team approach. 

Types of Multi-Prime Contracting

Multi-prime contracting can be executed in two ways: Phased contracting, or Trade contracting.

Phased Contracting

As the name implies, phased contracting involves multiple project phases, and the project is bid for each of those phases, including site work, site utilities, and general construction packages. In this scenario, the Owner’s agent manages and coordinates the individual contracts for project phases and manages all costs during phased procurement and execution. The Owner has greater overall control over the schedule since the agent facilitates procurement in order for earlier delivery of the key critical path activities in the overall schedule.

Trade Contracting

Under trade contracting, the Owner holds contracts directly with each trade contractor, and the agent coordinates contracts in the best interest of the Owner. This method may or may not be used for schedule acceleration, but rather to meet public sector regulatory procurement requirements.

The Benefits of an Integrated Multi-Prime Project Delivery Contracting (IMPD):

IMPD focuses on removing traditional trade boundaries while eliminating layers of overhead and the complexity that all-too often add time and cost to large multi phased healthcare projects. Sophisticated Owners, experienced healthcare facilities executives, and knowledgeable real-estate developers recognize traditional design - bid - build project delivery methods do little to improve collaboration, improve cost controls, or help accelerate time to market. Integrated multi-prime project delivery allows key technical and supply chain resources to share knowledge and expertise earlier in the planning and engineering phases of a project, which helps Owners save time and money through better communication and improved project management controls. 

Why Use It?

IMPD contracting is a method to fast track construction or for emergencies. Work can be bid for each discipline of construction, giving the Owner flexibility to bid portions of the work as soon as the design of that aspect is complete. This gives the Owner control of the overall schedule while also controlling overhead costs. Multi-prime contracting gives the Owner opportunities to procure materials directly from suppliers to avoid contractor mark-ups and ensure materials are ready when needed. Owners can also benefit from increased competition among the various prime contractors who when given an opportunity to participate as a key member of the team, can provide more bids that are competitive because they are contracting directly with the owner and not through a third-party. IMPD can help increase competition because specialty contractors are not working under a general contractor, which gives them the opportunity to share their knowledge and technical experience early in the design and engineering process. This early input helps the entire project team mitigate risk by reducing errors and omissions through improved communication and direct access to the trade resources who will actually be performing the work.

For access to the full article, contact us at news@hammesco.com