Contract Model Types
Understanding different project delivery methods and contract structures for infrastructure and construction projects.
Each contract model allocates risk, responsibility, and reward differently between owners, designers, contractors, and financiers. Selecting the right model depends on project complexity, risk tolerance, budget certainty, and delivery timeline requirements.
Contract & Delivery Models
The table below provides an overview of the most common contract and project delivery models used in infrastructure construction, ranging from traditional sequential approaches to innovative public-private partnerships.
| Contract/Model | Brief Description |
|---|---|
Design–Bid–Build (DBB) | Traditional "sequential" model: owner designs, then bids, then a contractor builds under a fixed-price or unit-price contract. |
Design–Build (DB) | Single contract for design and construction; faster delivery with one point of responsibility. |
Progressive Design–Build (PDB) | Two-phase DB: early services for design/pricing, then a negotiated GMP or lump sum once scope is defined. |
Engineering, Procurement & Construction (EPC / LSTK) | Turnkey contract: contractor delivers a complete, ready-to-operate facility for a fixed price and deadline. |
EPC Management (EPCM) | Contractor provides engineering and procurement and manages construction on owner's behalf; trade contracts held by owner. |
Design–Build–Operate (DBO) | One entity designs, builds, then operates the asset for a defined period; ownership stays with the owner. |
Design–Build–Operate–Maintain (DBOM) | DBO plus maintenance obligations during the operating term. |
Design–Build–Finance (DBF) | Private partner designs, builds, and provides construction financing; owner repays on milestones/substantial completion. |
Design–Build–Finance–Maintain (DBFM) | DBF plus long-term maintenance; common P3 model with performance-based payments. |
Design–Build–Finance–Operate–Maintain (DBFOM) | Full P3 concession: private partner handles DB, financing, operations, and maintenance for term. |
Build–Operate–Transfer (BOT) | Private partner builds and operates for a term, then transfers asset back to the public owner. |
Build–Own–Operate–Transfer (BOOT) | Similar to BOT, but the private partner owns the asset during the term before transfer. |
Build–Own–Operate (BOO) | Private entity builds, owns, and operates indefinitely (no transfer). |
Construction Manager at Risk (CMAR/CM-GC) | CM engaged early, then converts to a contractor delivering at a GMP with shared risk. |
Construction Management – Agency | CM acts as owner's agent (fee-for-service); trade contracts remain with the owner. |
Integrated Project Delivery (IPD) | Multi-party contract (owner/designer/contractor) with shared risk/reward and waivers to incentivize collaboration. |
Alliance / Project Alliance | No-blame, joint risk/reward model; owner and non-owner participants deliver under a single integrated agreement. |
Early Contractor Involvement (ECI / Two-Stage) | Contractor engaged early for constructability and target pricing; later converts to lump sum, GMP, or target cost. |
Target Cost (Pain/Gainshare) | Open-book cost plus fee with a target; underruns/overruns shared per agreed ratios. |
Lump Sum (Fixed Price) | Contractor delivers defined scope for a fixed price; highest price certainty for owner. |
Guaranteed Maximum Price (GMP) | Cost-plus up to a cap; savings typically shared, overruns above GMP borne by contractor (subject to allowances). |
Unit Price | Payment based on measured quantities at bid unit rates; useful when quantities are uncertain. |
Time & Materials (T&M) | Pay for actual labor hours and materials, often with markups; used when scope is uncertain or emergency works. |
Cost-Plus Fee | Owner pays actual costs plus fixed or percentage fee; can include incentives for cost/schedule/performance. |
Framework / IDIQ / Task-Order | Master agreement for repeat work; individual tasks are called off as needed. |
Job Order Contracting (JOC) | Indefinite-delivery model using preset unit prices for rapid, small-to-medium works. |
O&M / Performance-Based Maintenance | Long-term operations and/or maintenance with KPIs and performance payments. |
Concession Agreement | Private entity finances, develops, and operates an asset under a public license/lease for a defined term. |
Selecting the Right Model
Traditional Delivery
DBB, Unit Price, Lump Sum
- Clear separation of design and construction
- Higher owner control and oversight
- Competitive bidding environment
- Sequential phases may extend timeline
Integrated Delivery
DB, IPD, ECI, CMAR
- Single point of responsibility
- Faster project delivery
- Early contractor involvement
- Collaborative risk/reward structures
Public-Private Partnerships
DBFOM, BOT, BOOT, Concession
- Private financing reduces upfront public cost
- Long-term operation and maintenance included
- Performance-based payments
- Transfer of significant risk to private sector
Cost-Based Models
Cost-Plus, T&M, GMP, Target Cost
- Flexibility for uncertain scope
- Open-book cost transparency
- Can include incentive mechanisms
- Requires active owner involvement
Need Help Selecting a Contract Model?
The right contract model depends on your project's unique requirements, risk profile, budget constraints, and timeline. Our team can help you evaluate options and implement the appropriate delivery method for your infrastructure project.