How Owners Choose the Right Delivery Model

Introduction

Large capital projects are defined by complexity. Long schedules, evolving scopes, market volatility, and high financial exposure mean that early decisions have long-term consequences. Among the most critical of these early decisions is the selection of the contract strategy and delivery model.

The chosen delivery method determines how risk is allocated, how costs are controlled, how interfaces are managed, and how disputes are avoided or amplified. It defines who carries responsibility for design, procurement, construction, and performance, and it shapes the commercial behaviour of all parties throughout the project lifecycle.

There is no universally best contract model. Each project requires a strategy aligned with its technical maturity, risk profile, market conditions, and the owner’s appetite for control. This paper provides owners with a structured overview of common delivery models and practical guidance on when to use which approach, from a commercial and risk perspective.

KQi’s expertise lies in helping owners make these decisions deliberately and early, before contractual structures harden and flexibility disappears.

Overview of Contract Delivery Models

Design-Bid-Build (DBB)

Design-Bid-Build is the traditional delivery method in which design and construction are contracted separately and sequentially. The owner first appoints a designer to complete the full design, followed by a competitive tender for construction.

When it works well
Scope and design are well defined and unlikely to change. Cost competition is a priority. Schedule pressure is moderate. The owner values independent design oversight.DBB offers clarity of roles but provides limited flexibility once construction begins.

Commercial considerations
Construction price is competitive but only known after full design. Limited contractor input during design increases change risk. The owner retains interface and design risk. Claims often arise from design gaps, ambiguities, or late changes.

Design-Build / EPC

Under Design-Build, or EPC in industrial projects, the owner enters into a single contract covering design, procurement, and construction. The contractor assumes overall responsibility for delivery, often on a lump-sum basis.

When it works well
The owner seeks single-point accountability. Schedule acceleration is required. Performance requirements can be clearly defined. The market is willing to accept risk.

Commercial considerations
Higher upfront price due to contractor risk premiums. Reduced owner control over detailed design. Lower interface risk for the owner. Disputes often relate to scope interpretation and performance criteria. Design-Build transfers risk but requires disciplined front-end specification and governance.

Two-Stage EPC / Progressive Design-Build

Two-stage contracting introduces early contractor involvement during FEED or early design, followed by a negotiated EPC or lump-sum phase.

When it works well
Scope is complex or evolving. Market appetite for lump-sum risk is limited. Early constructability input is valuable. The owner wants price transparency before commitment.

Commercial considerations
Improved price realism and risk allocation. Open-book pricing during early stages. Reduced claims risk through shared understanding. Requires strong governance to avoid loss of competitive tension.

This model balances collaboration with eventual price certainty and is increasingly used on complex industrial projects.

EPCm / Owner-Integrated Delivery

In EPCm or owner-integrated models, the owner retains direct contracts with suppliers and contractors, while an EPCm provider manages engineering, procurement, and construction on a reimbursable basis.

When it works well
The owner has strong internal project capability. Maximum control and transparency are desired. Scope flexibility is important. Market conditions make lump-sum pricing unattractive.

Commercial considerations
The owner retains execution and interface risk. Greater cost transparency but less certainty. Strong contract management is essential. Claims exposure shifts from contractor disputes to interface disputes.

This model rewards capable owners but requires mature governance and commercial discipline.

Construction Management at Risk (CMAR)

CMAR involves appointing a construction manager early to advise during design, followed by delivery under a guaranteed maximum price.

When it works well
Early cost and constructability input is needed. The owner wants design independence. Schedule overlap between design and construction is beneficial.

Commercial considerations
Early collaboration improves cost control. GMP provides partial price certainty. Success depends heavily on CM competence. Negotiated pricing reduces competitive pressure.CMAR sits between traditional and integrated models, blending collaboration with risk transfer.

Partnering, Alliancing, and Integrated Project Delivery (IPD)

These models are based on shared risk and reward, open-book accounting, and collective responsibility for outcomes.

When they work well
Projects are highly complex or uncertain. Long-term collaboration is required. Stakeholders are aligned and experienced. Traditional risk transfer is ineffective.

Commercial considerations
Reduced adversarial behaviour and claims. High upfront effort to establish trust and governance. Less suitable where parties lack collaborative maturity. Success depends on behavioural alignment, not just contracts.

These models focus on best-for-project outcomes rather than fault-based risk allocation.

How Owners Should Choose the Right Strategy

Selecting the right contract strategy requires a structured assessment of several key dimensions.

Project complexity and scope maturity
The less defined the scope, the less suitable fixed-price models become. Complex, brownfield, or first-of-a-kind projects benefit from early contractor involvement and flexible structures.

Risk allocation and market appetite
Risk should sit with the party best able to manage it. Transferring excessive risk to contractors often leads to inflated pricing, defensive behaviour, or claims.

Schedule drivers
If speed is critical, models allowing overlap of design and construction are preferable. Sequential approaches may protect quality but extend timelines.

Cost certainty versus flexibility
Fixed-price contracts offer certainty but reduce flexibility. Reimbursable or target-cost models offer adaptability but demand stronger oversight.

Owner capability
Contract strategies must align with the owner’s internal resources. Owner-integrated models require experienced teams and robust contract management systems.

The Commercial Reality

Most commercial outcomes are determined before construction begins. Decisions made during pre-FEED and FEED phases often lock in risk profiles that cannot be corrected later through contract administration alone.

Claims, disputes, and cost overruns are rarely caused by execution alone. They are symptoms of misaligned contract strategies, unrealistic risk transfer, or insufficient early-stage governance.

Conclusion

Contract strategy is not a legal formality. It is a commercial decision with lasting impact. Owners who deliberately align delivery models with project realities achieve greater predictability, fewer disputes, and stronger outcomes. Those who default to familiar models often pay for that choice later through claims, delays, and loss of control.

The most successful projects treat contract strategy as a core discipline, applied early and supported throughout execution.

KQi supports owners at this critical decision point. We help define delivery strategies that reflect market reality, project complexity, and commercial objectives, transforming uncertainty into structured, executable frameworks that protect value from day one.