Then the 1990s saw the advent of design-build. That approach may have been around since the times of the pharaohs, but the concept of assigning all responsibilities of design and construction to a single integrated contract suddenly became a new answer to the need for speed in project delivery and an end to litigiousness. As construction firms became more sophisticated and clients increasingly looked outside their own staffs to plan and oversee large construction programs, the concept of program management took off.
Alternate project delivery, and management precepts underlying CM and program management, have become pervasive in the industry. The notion that CM and design-build are "alternative" methodologies is something of a misnomer now.
Revenue for the ENR Top 100 Design-Build Firms and the Top 100 CM At-Risk Firms alone amounted to nearly $100 billion in 2003, almost $80 billion just from projects in the U.S.
|THE TOP 100 DESIGN-BUILDERS | STORY | LIST ||
|CONSTRUCTION MANAGERS-for-FEE | STORY | LIST ||
|CONSTRUCTION MANAGERS-at-RISK | STORY | LIST ||
|THE TOP 40 PROGRAM MANAGERS|
But these delivery systems were not totally immune to the overall downturn in the construction market. In 2003, revenue for the ENR Top 100 CM-for-Fee Firms and the Top 100 Design-Build Firms declined significantly from 2002 levels. The Top 100 CM At-Risk Firms somehow managed to withstand the economic pressure, with revenue up last year.
Program management continues to gain momentum, with 40 firms ranked on ENRs list this year. Many firms have been using their CM experience to provide clients with program management services. "Program management is critical to clients with large, complex programs," says Tom Bishop, URS senior vice president for construction services. "There are numerous ways a project can go wrong and the organization and design of a project is just as critical to the success of the project as the construction phase." Using a program manager to coordinate all phases of the project helps clients to look at the project or program as a whole and not just a series of parts, he says.
CM firms are capitalizing on an owners increasing desire, or financial need, to stick to its knitting. "They are recognizing that CM is not a core competency in house," says Doug Sharp, president of Jones Lang LaSalle Americas Inc., which is new to the Top CM list. "They see that they need to get higher level skills, best practices and take advantage of leveraged buying power." The firm, a unit of a real estate developer, is managing $3 billion of total project capital costs "at any one time," he says. "We have achieved on average 10% savings on [owners] historical capital spending."
Joseph Seibold, vice president of construction management for Carter & Burgess, agrees. "Once, owners thought that they needed a CM firm but waited until the contracting phase to hire one," he says. "This prevented the CM from helping oversee planning and design."
Program management, in particular, allows firms and owners to see the common processes in all projects. "We can ask what are the regular processes common...roject delivery has evolved by fits and starts over the past 20 years. As corporate clients began downsizing their facilities staffs in the 1980s, construction firms stepped up to the plateand into the shoes of owners to assist, and sometimes take over, management of projects. These included contractors that parlayed their management skills to take on construction management duties on an at-risk basis.