Successful construction project requires careful planning and selecting the right delivery method. In Finland, several different delivery models are in use, each determining the allocation of roles, responsibilities and risks of each contracting party. Choosing the right delivery method can ensure smoother project delivery and it can even speed up the total project delivery time.
The Project delivery method defines Contractual Responsibilities Within a Construction Project
The successful delivery of a construction project requires careful planning and seamless collaboration between all parties involved. As each project is unique, the chosen delivery model should be tailored to the specific requirements and objectives of the project.
In Finland, a wide range of project delivery methods are used to suit different types of construction needs and end-uses. The project delivery method determines, through contractual arrangements, which party is responsible for each aspect of the project.
Several factors influence the selection of a suitable model, including the client’s expertise, available resources, and risk tolerance, as well as project-specific characteristics such as complexity and the likelihood of changes during the project. Choosing the right model is key to ensuring the smooth progression and success of the project.
Typical project delivery methods in Finland
Project delivery methods can be categorized from various perspectives, such as the allocation of responsibilities, the roles of different stakeholders, or the basis of payment. These models are not mutually exclusive, and in some cases, they can be combined to achieve the best outcome. The selection of a procurement strategy should always be project-specific, considering the distinctive features of the project.
In the picture below, project delivery methods are categorised according to the allocation of contractual responsibilities:
1. Design-Build Contracts (DB)
In Design-Build (DB) contracts, a single contractor is responsible for both design and construction. This model is particularly popular when the client wishes to reduce administrative burden and management effort.
Advantages:
- Requires low participation from the client during construction
- Good cost certainty
Challenges:
- Changes during execution are typically challenging
Typical pricing model: Lump sum (fixed price)
Typical projects: Residential buildings, industrial halls, and other standardised projects
2. Technical Design Build Contract
In this method, the client prepares an advanced-level design, but the contractor is allowed to propose alternative technical (ie. HVAC) solutions. Design responsibility is transferred to the contractor after the contract is signed.
Advantages:
- Greater client influence on the end result compared to traditional DB
Challenges:
- Predefined general solutions may significantly limit contractor’s design input
- Changes during execution are typically challenging
Typical pricing model: Lump sum
Typical projects: Residential and industrial buildings with standardised requirements
3. Design-bid-build
In Design-bid-build (DBB), the client manages the design phase and appoints a main contractor to deliver the entire construction works. Subcontractors may be used, but the main contractor holds full responsibility for project delivery.
Advantages:
- Clear allocation of responsibilities
- Good cost predictability
Challenges:
- Longer project duration because project phases do not overlap
- Limited scope for changes
Typical pricing model: Lump sum, unit price, or cost-plus
Typical projects: Suitable where minimal changes are expected (if done with lump sum pricing)
4. Split Contract
With Split contract, the client manages the design and splits the projects into multiple contracts for different parts of the project, while appointing one contractor as the principal contractor. This allows for separate tendering of different work packages.
Advantages:
- Potential cost savings through competitive tendering of individual packages
- Individual project parts can be procured separately at different times
Challenges:
- Coordination and accountability issues between contractors
- Unclear scopes of different contracts
Typical pricing model: Lump sum, unit price, or cost-plus
Typical projects: Where minimal design changes are expected (if done with lump sum pricing)
5. Project Management Contracting
Under a Project Management contract, the client enters into design agreements in their own name, leads the design process, and approves the plans. The construction management contractor acts as a construction expert and coordinator who, in collaboration with the client and the principal designer, organizes, supervises, and monitors the implementation design. The contractor also acts as the main contractor during the construction phase.
Advantages:
- High flexibility and client influence
- Construction can be started during design phase
- Shorter overall schedule due to overlapping design and construction
Challenges:
- Requires active client involvement
- Cost uncertainty
- Administratively demanding and complex
Typical pricing model: Cost-plus with target budget or target and mazimum price
Typical projects: Projects requiring parallel design and construction phases, complex projects, projects likely to have changes during the project.
6. Project Management Consultancy
In this model, project management responsibilities typically lie with the project management consultant, or in some cases, with the client themselves. Consequently, contracts for construction management consultancy services follow the KSE (General Conditions for Consulting Services) rather than the YSE (General Conditions for Building Contracts). The project is divided into smaller work packages (trade contracts), each contracted separately in the client’s name. In client-led construction management, the client holds responsibility for site management; in service-led construction management, this responsibility lies with the consultant.
Advantages:
- Maximum flexibility and client influence
- Fast mobilisation and shorter programme through design-build overlap
- Full benefit of cost savings returned to the client
Challenges:
- Requires significant client engagement
- Complex to manage
- Full cost risk remains with the client
- High administrative burden (e.g., managing warranties and multiple contracts)
Typical pricing model: Lump su, unit price, or cost-plus; Pricing model can vary in different trade packages
Typical projects: Fast-track projects, projects with incomplete design, or where the client seeks full control
7. Alliance Contracting
The Alliance model is based on open collaboration and shared objectives, where risks and rewards are jointly managed. Typically, the alliance includes the client, main contractor, and lead designer under a single integrated contract.
Advantages:
- One contract – one common goal
- Flexibility and jointly developed solutions
Challenges:
- Requires high levels of trust and close collaboration
- Complex contractual framework
- Heavy administrative processes
Typical pricing model: Cost-plus with target budget
Typical projects: Complex and change-sensitive projects with overlapping design and construction phases
Summary
A wide variety of procurement models are available to suit different types of construction projects. The right method ensures streamlined delivery and a successful outcome. It is essential to assess the specific needs and features of the project early on and to consider the client’s role and available resources.
No single method fits every project, and each comes with its own set of risks. While contractual arrangements may allocate risks to different parties, no model is completely risk-free. For example, fixed-price contracts may still involve additional work and changes not identified during the planning phase. In complex projects, risk allowances are often priced high, which may significantly inflate costs—even if those risks never actualize.
If you need assistance in selecting the project delivery method that best aligns with your project’s objectives, please don’t hesitate to contact us.
Tuomo Lindstedt
Director, Construction Management
+358 50 330 4422
tuomo.lindstedt@premico.fi
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