Property development relies on a close relationship between client developers and the contractors hired to complete these development projects. The paradigms that these contractors employ to deliver on property development contracts differ. The Design-Manufacture-Construct delivery method, which incorporates all development activity under one contact, is one of these paradigms. Here’s what you need to know about this delivery method, how it works, and how it stacks up to other methods.
More on the Design-Manufacture-Construct Delivery Method
The Design-Manufacture-Construct delivery method, known as DMC for short, is a construction project methodology. Sometimes referred to as design-build delivery method, DMC delivery focuses on construction projects being managed by a single entity that is responsible for the entirety of the project. DMC projects are turn-key processes that begin with property brokering and finish with project construction but also include any number of activities between these two goalposts.
It's a challenge to describe every single one of these related activities. However, typical DMC deliveries consist of design and engineering submittals and might even include project financing details as well. The DMC delivery method delegates every responsibility to the project in its entirety to the designer-manufacturer, with no subcontracting activity. In other words, a single contractor designs the construction plans, manufactures all the components in-house, and constructs it personally.
How DMC Delivery Differs from Other Delivery Methods
The DMC delivery method is not the only game in town, of course. The other prevalent construction methodology is known as Design-Bid-Build, or DBB. As a delivery method, DBB is preferred or even required in some situations, such as when state statutes require its use by municipal and public entities. However, because it incorporates a bidding process, private entities in search of low-cost bids also use it.
DBB clients differ from DMC clients in that they hire independent engineers, designers, and consultants to complete design plans that are the best reflection of a developer’s intent. The process then includes a public solicitation period where builders will compete by bidding for the construction contract. Clients review the bids and choose the one they are satisfied with. Cost plays a major role in this selection, as bids that will cost the client less are more likely to be selected.
The Benefits and Drawbacks of the DMC Delivery Method
Developers that choose DMC delivery method contractors often find that this delivery method offers increased efficiency when it comes to development timelines, as cutting out the bidding process means manufacturing and construction activities can begin sooner. This offers benefits for developers as they can get occupants into spaces sooner and begin earning money from these occupants sooner as well.
There are no “perfect” construction delivery methods, though, and DMC does have its drawbacks. First and foremost, many clients will hesitate to rely on a single entity for so many of the responsibilities for completing a project. Additionally, without the bidding process to provide competition, clients may not believe their contractor is providing them the most cost-efficient service because they can charge higher than they would otherwise due to the absence of this competition.
The Pros and Cons of Alternative Methods
In comparison, the design-bid-build delivery method has its own set of pros and cons. The core benefit of the DBB delivery method is cost savings to the client due to competition. Developers have their choice of multiple bids from multiple contractors, all of which have been motivated to develop innovative cost-saving measures without sacrificing build quality in the spirit of offering the most attractive contract to the developer.
By the same token, there are drawbacks to this approach. Individual team members, such as clients, builders, engineers, and planners tend to work less as a team under a DBB dynamic and instead are more singularly motivated to protect their own interests. Additionally, any builders, suppliers, and subcontractors are only bidding on what the design documents show; any miscoordinations or variations often result in arguments among clients, designers, and builders regarding responsibility for correcting these issues. The resultant arguments can slow the progress of the project overall.
Is the Design-Manufacture-Construct Delivery Method Superior?
Primary differences between the Design-Manufacture-Construct delivery method and the Design-Bid-Build delivery method mean that clients need to decide which delivery paradigm fits their needs. In some cases, this decision is already made, such as when state law requires government clients to rely on a bidding process. However, in cases where clients are free to choose one over the other, the “superior” choice will be the one that fits the client’s needs in the most complete manner.
DMC delivery methods are predicated on all parties to trust in the process and the expertise of all involved. Otherwise, feelings on the part of the client that they are not receiving a fair price on a contract that didn’t go through the bidding process are likely to undermine the project. In return, decision-making processes for the project will be streamlined, progress will be accelerated, and the entire experience from beginning to end is likely to be more satisfying for both the client and the contractor.
Meanwhile, Design-Bid-Build delivery methods are also dependent on a client’s trust and confidence in their chosen contractor, but in different ways. Clients that are willing to accept the risk that initial contractors have designed a complete set of documents that tick all the client’s boxes will benefit from a lower project cost. However, unexpected design deficiencies or costs during the bidding process may expose the developer to additional risks. Efforts to reconcile any of these exposures on the part of the developer are likely to have a negative impact on the performance of the project.
