Construction, Top 100 Firms, Design Build, P3, Alternative Delivery, CMAR, Construction Management At Risk
Owners continue to seek greater efficiency, less risk and tighter schedules. This is driving more of them than ever before to explore such project delivery methods as construction management-at-risk (CMAR), design-build and integrated project delivery. As a result, these project delivery methods are growing rapidly and are quickly replacing the traditional design-bid-build method as the go-to means of executing projects.
The growth in alternative project delivery can be seen in the this yearâ€™s rankings of ENRâ€™s Top 100 Construction Management-at-Risk Firms and Top 100 Design-Build Firms. The Top 100 CMAR firms had a combined revenue of $143.05 billion in 2018, up 8.2% from the $132.24 billion reported in 2017.
What is more interesting in the Top 100 CMAR, revenue numbers for domestic projects rose 9.6%, to $133.30 billion, in 2018 over 2017 figures. This more than makes up for the 8.5% drop in revenue from international CMAR projects, which fell to $9.75 billion in 2018 from $10.66 billion in 2017.
The design-build list provides a similar contrast between domestic and international project delivery. Overall, the Top 100 design-build firms had a total revenue of $107.66 billion in 2018, up 4.3% from 2017. However, revenue from domestic design-build projects grew a more healthy 5.9%, rising to $85.20 billion, in 2018. On the other hand, international design-build revenue dropped 1.5% in 2018, thanks in part to a fall-off in huge engineering-procurement-construction projects in the international mining, power and petroleum markets.
To put the strong growth in design-build and CMAR in a broader context, domestic design-build revenue has grown 69.6% from 2010, when the construction recession ended, to 2018. This rise comes despite a dramatic drop in big-ticket engineer-procure-construction projects in the oil-and-gas, power and mining sectors. In the same time period, domestic CMAR revenue has grown 108.4%.
What used to be considered alternative forms of project delivery â€śare becoming increasingly commonplaceÂâ€”to the point that theyâ€™re not really alternative anymore,â€ť says Scott Roux, senior vice president of Michael Baker International. â€śWe are pursuing this work aggressively yet thoughtfully, and anticipate it comprising a larger percentage of our overall portfolio going forward.â€ť
CMAR Is Surging
The market for CMAR has better than doubled in the past eight years for many reasons, as owners seek teamwork and earlier involvement in the design process than is typical in the traditional design-bid-build process. Many owners also have returned to CMAR after some bad experiences during the industry recession of 2008-10, when owners thought they could get cut-rate pricing using design-bid-build.
â€śDuring the downturn, many owners thought they would get the best price from design-bid-build, but that didnâ€™t always work out that well,â€ť says Dennis Cornick, executive vice president of Gilbane Building Co. So CMAR is returning to be the go-to project delivery method in the buildings sector.
CMAR also is making major strides in the public infrastructure market, particularly in the water and wastewater sector. For example, Clark Construction Groupâ€™s subsidiary Atkinson Construction is helping the City of Atlanta bolster its clean water system with the Atlanta Water Supply, Bellwood Quarry Tunnels and Shaft project, says Chip Hastie, executive vice president of Clark. Atkinsonâ€™s Underground Division has been working on the CMAR project over the last three years, constructing a water tunnel.
Design-Build Is Trending
Design-build also is rapidly expanding as the project delivery method of choice for many market sectors. â€śDesign-build is hot and trending,â€ť says Lisa Washington, CEO of the Design-Build Institute of America, Washington, D.C.
Washington points to two studies from last year that show both the growth and effectiveness of design-build. In June 2018, a joint study by DBIA and Raleigh, N.C.-based industry consultant FMI Corp. found that design-build is expected to grow 18% from 2018 to 2021 and will make up 44% of the nonresidential market by 2021.
The DBIA-FMI study was followed in November by a study of project-delivery performance by the Construction Industry Institute, an Austin, Texas-based industry research organization, and the Pankow Foundation, a McLean, Va.-based research grou