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• Written by: admin
• April 17, 2025

FPCM Blog No.3 May, 2025

Design-Build vs. CMAR vs. Lease-Leaseback: Which Delivery Method is Right for Your Project?

Selecting the right project delivery method is one of the most consequential decisions school districts make when embarking on capital improvement programs. This choice influences everything from team dynamics and risk allocation to schedule flexibility and budget control. Yet with several viable options available, districts often struggle to determine which approach best serves their specific needs.

At FPCM, we guide educational clients through this critical decision-making process by evaluating each project’s unique characteristics and the district’s priorities. Let’s explore the three most common delivery methods for educational facilities in California—Design-Build, Construction Manager at Risk (CMAR), and Lease-Leaseback—examining their strengths, limitations, and ideal applications.

Design-Build: Single-Source Accountability

How It Works

In the Design-Build model, districts contract with a single entity responsible for both design and construction services. This approach integrates architectural, engineering, and construction expertise under one contract, creating a unified team from project inception through completion.

Key Advantages

• Streamlined Communication: With one point of contact for both design and construction, information flows more efficiently
• Faster Delivery: Overlapping design and construction phases can accelerate overall project timelines
• Early Cost Certainty: Price commitments often come earlier in the process compared to traditional delivery methods
• Reduced Change Orders: The design-builder assumes responsibility for coordination issues that might otherwise result in changes
• Simplified Contract Management: Districts manage one primary contract rather than separate agreements

Potential Challenges

• Less Design Control: Districts have fewer check-points during the design process
• Reduced Competitive Pricing: Design-build teams are typically selected before detailed pricing is available
• Team Selection Complexity: Evaluating combined design-build teams requires more sophisticated procurement processes

Best For

Design-Build delivery typically excels when:

• Project schedules are aggressive
• Programs include multiple similar projects (allowing for replication)
• The district has clearly defined requirements and limited design changes anticipated
• Budget certainty is a high priority
• The district has limited internal resources for project management

Construction Manager at Risk (CMAR): Collaborative Preconstruction

How It Works

CMAR brings the contractor into the process during design development, but maintains separate contracts between the district, designer, and contractor. The construction manager provides preconstruction services during design, then transitions to construction delivery—typically with a Guaranteed Maximum Price (GMP).

Key Advantages

• Preserved Design Control: Districts maintain direct contractual relationship with designers
• Preconstruction Expertise: Contractors contribute constructability insights during design
• Transparent Costs: Open-book pricing provides visibility into subcontractor costs
• Phasing Flexibility: Projects can be fast-tracked with early packages while design continues
• Balanced Risk: The GMP approach allocates risk appropriately between parties

Potential Challenges

• Complex Relationships: Managing three-way partnerships requires active district involvement
• Potential Design-Construction Disconnect: Despite collaboration, design ownership remains separate from construction
• Limited Price Competition: Final pricing typically comes from a single contractor
• GMP Negotiations: Establishing the guaranteed maximum price can become contentious

Best For

CMAR delivery typically works well when:

• Projects involve complex phasing or occupied renovations
• Constructability expertise is valuable during design
• The district wants significant input throughout design
• Projects benefit from early contractor involvement but need design flexibility
• Transparency in subcontractor selection is important

Lease-Leaseback: Progressive Development

How It Works

Unique to California’s education sector, Lease-Leaseback allows districts to lease property to a developer who constructs facilities and leases them back to the district. Modern Lease-Leaseback typically involves preconstruction services followed by construction under a GMP or other pricing structure.

Key Advantages

• Team Qualifications Focus: Selection can prioritize qualifications and best value over lowest bid
• Early Collaboration: Contractors join the team during design, similar to CMAR
• Flexible Pricing Models: Can incorporate progressive GMP development as design advances
• Relationship-Based Approach: Fosters partnership rather than adversarial dynamics
• California-Specific Solution: Tailored to the state’s education code requirements

Potential Challenges

• Regulatory Navigation: Compliance with specific education code provisions
• Public Perception: May require more stakeholder education than traditional methods
• Evolving Legal Framework: California’s regulations around Lease-Leaseback continue to develop
• Process Familiarity: Not all contractors have extensive experience with this method

Best For

Lease-Leaseback typically excels when:

• Best value selection (beyond lowest bid) is important to the district
• Projects benefit from contractor input during design
• The district wants to foster team collaboration
• Schedule flexibility is needed during design development
• The district desires a relationship-based approach

Making the Right Choice: Key Considerations

When guiding districts through delivery method selection, FPCM evaluates several critical factors:

Project Complexity

More complex projects often benefit from early contractor involvement through CMAR or Lease-Leaseback, while straightforward projects may be well-suited to Design-Build efficiency.

District Capacity

Districts with limited internal project management resources may benefit from Design-Build’s single-source accountability, while those with robust facilities departments might leverage the greater control offered by CMAR.

Schedule Requirements

When time is critical, Design-Build’s concurrent design-construction approach offers advantages. For phased renovations, CMAR or Lease-Leaseback provides greater flexibility.

Budget Constraints

All three methods can provide effective cost management, but through different mechanisms. Design-Build offers early price certainty, while CMAR and Lease-Leaseback provide greater transparency throughout.

Risk Tolerance

Design-Build shifts more risk to the design-builder, while CMAR and Lease-Leaseback distribute risk more evenly between parties.

Procurement Regulations

District procurement policies and state regulations may limit options or create additional procedural requirements for certain methods.

FPCM’s Approach: Method-Neutral Guidance

At FPCM, we remain delivery method-neutral—focusing instead on which approach best serves each project’s specific needs. We bring experience managing successful projects under all three delivery methods, allowing us to provide unbiased guidance.

Rather than promoting a one-size-fits-all solution, we help districts evaluate options through structured workshops that consider:

• Project characteristics and constraints
• District priorities and values
• Schedule imperatives
• Budget considerations
• Risk allocation preferences
• Market conditions

This methodical approach ensures delivery method selection aligns with project goals rather than defaulting to familiarity or preference.

Beyond Selection: Execution Excellence

While choosing the right delivery method is crucial, success ultimately depends on proper implementation. FPCM’s experienced team provides:

• Customized procurement documents tailored to each delivery method
• Appropriate contract structures that protect district interests
• Team integration strategies that maximize collaboration
• Stage-appropriate management techniques for each delivery approach
• Consistent oversight that ensures accountability regardless of delivery method

By combining thoughtful delivery method selection with disciplined execution, districts can realize the full potential of their capital improvement programs.

This is the third article in our PMCM Excellence series. Next week, we’ll explore “From Master Plan to Move-In: What a Turnkey PMCM Firm Really Delivers.” Follow FPCM to ensure you don’t miss this valuable insight for your next capital improvement project.