Panel Discussion: Benefits and Risks of Various Project and Contract Structures in Construction-PPT Presentation

PPT Presentation

Pdf Summary

The panel examined why performance-based design and the Observational Method (OM) remain underused in construction, despite their potential to improve safety, cost, and schedule. Drawing on Karl Terzaghi and Ralph Peck, it described OM as a process of designing from available information, identifying uncertainties, monitoring actual conditions, and adjusting the design during construction when needed.<br /><br />Panelists cautioned that prescriptive requirements alone do not guarantee safety. Overly conservative designs can create unnecessary work, increase costs and construction exposure, and encourage shortcuts or reduced attention to monitoring. A performance-based approach can better account for uncertainty, provided that observations and contingency actions are planned carefully.<br /><br />Collaborative contracting models—including Progressive Design-Build, CMGC, and CMAR—may support OM by enabling risk-sharing and early discussion of project uncertainties. Contract mechanisms can range from triggers for additional work based on measured performance to target pricing, open-book design, and alliances. Suitability depends on whether OM offers a lower base cost than alternatives and whether the parties can establish clear, aligned incentives.<br /><br />For public projects, tools such as a Reference Concept Design, Geotechnical Baseline Report (GBR), performance criteria, and qualifications-based procurement can support transparent procurement and a shared understanding of conditions. A sound OM plan includes investigation, an agreed baseline covering a range of conditions, a base design, measurable performance indicators, contingency designs, and predefined triggers and response plans.<br /><br />The discussion also highlighted broader challenges: overcoming adversarial contracting cultures, demonstrating value for money, maintaining owner and contractor commitment through key personnel, extending collaboration to subcontractors and consultants, and building trust. The central message was that the lowest bid may not yield the lowest risk-adjusted project cost; successful collaboration depends on transparency, appropriate incentives, and shared responsibility for risks and opportunities.

Keywords

performance-based design

observational method

construction safety

geotechnical baseline report

progressive design-build

collaborative contracting

risk-sharing

performance criteria

uncertainty management

project procurement