- Design-Build and Construction Management
Procurement methods which combine or rearrange design, inspection
or construction services (such as design/build or construction
management) may be used with Rural Development written approval.
Prior concurrence must be obtained from the National Office and the
Office of General Counsel if the contract amount exceeds $250,000.
Grant funds cannot be used for either of these procurement methods.
1. The owner's written request to use an unconventional
contracting method with a description or the proposed method and the
selection process used to acquire the CM of DB services.
2. A proposed scope of work describing in clear, concise
terms the technical requirements for the contract. It should
include such items as:
a. A non-technical statement
summarizing the work to be performed by the contractor and the
b. The sequence in which the work
is to be performed and a proposed construction schedule.
3. A proposed firm-fixed-price contract for the entire
project which provides that the contractor shall be responsible for:
a. Any extra cost that may result
from errors or omissions in the services provided under the
b. Compliance with all Federal,
State and local requirements effective on the contract execution
4. Where noncompetitive negotiation is accepted by the
Agency, an evaluation of the contractor's performance on previous
similar projects in which the contractor acted in a similar
5. A detailed listing and cost estimate of equipment and
supplies not included in the construction contract but which are
necessary to properly operate the facility.
6. Evidence that a qualified construction inspector who is
independent of the contractor has or will be hired.
7. Preliminary plans and outline specifications.
8. The owner's attorney's opinion and comments regarding
the legal adequacy of the proposed contract documents and evidence
that the owner has the legal authority to enter into and fulfill the
There are two types of Construction Managers: Construction
Manager as Constructor (CMc) and Construction Manager as Advisor (CMa).
A CMc acts in the capacity of a General Contractor and is
financially and professionally responsible for the construction.
This type of Construction management is also referred to as
Construction Manager "At Risk". The construction contract is
between the owner and the CMc. The CMc in turn subcontracts
for some or all of the work. Fees for the CMc typically fall
in the range of four to seven percent of the cost of
construction, depending on the scope of work and its complexity.
The CMc must carry the Agency required 100 percent surety and
insurance, typically required of the general contractor of a
A CMa acts in an advisory capacity to the owner on issues related
to construction management. The actual contract for
construction services should be between the owner and a general
contractor. The contract for the position of CMa is subject to
free and open competition, just as is the contract for construction
services by the general contractor. Fees for a CMa should be
in the range of one to three percent depending on the scope of
service and its complexity. Duplication of services among the
architect and the CMa must be avoided and adjustments to fees should
be made accordingly. The Agency requirements for surety and
insurance cannot be held by the CMa. Full surety and insurance
must be provided by the general contractor.
The Design/Build (DB) method of construction is one in which
architectural and engineering services normally provided by an
independent consultant to the owner are combined with those of the
general contractor under a single source contract. These
services are commonly provided by a DB firm, a joint venture between
an architectural firm and a construction firm, or a company
providing pre-engineered buildings and design services. The
entity (company) or (individual) that is the DB firm, with whom the
owner has the contract, must have 100 percent surety (typically
bonding) and insurance, including professional liability insurance
and errors and omissions insurance, in its own name, rather than in
the name of other firms it hires to execute any part of the work of
design or construction.
Due to the complexity and variability of how different
contractors and architects define DB and CM it is recommended that
the owner, DB, CM and Rural Development meet prior to the
application to work out details.
Contact the State