• 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 results expected.

     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 contract.

     b.  Compliance with all Federal, State and local requirements effective on the contract execution date.


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 capacity.


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 contract.


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 project.


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 Architecture.