Design-Build: Cyclical Trend Or Step Change?

Over the past two decades, the trend from traditional design-bid-build (DBB) construction project-delivery practices to design-build (DB) practices has grown. Is that merely a cyclical trend or a step change that is destined to be a fixture for a long time to come?

An examination of quantified savings potential shows why water utilities have gravitated to it in recent years. It might not represent the be-all, end-all solution for every project, but with appropriate deliberation it could very well be the answer for your next water utility upgrade.

Multiple Choice vs. Single-Source Responsibility

The best project delivery system option depends on the mix of a project owner’s level of experience, willingness or desire to be involved with day-to-day management and decisions, and tolerance to the risk of change orders. A project owner should also factor procurement methods (negotiated, low bid, best value, qualification-based, etc.) and contract formats (fixed price, cost plus fee, guaranteed minimum price, etc.) into the choice of a delivery method.

Here is a comparison of major project-delivery approaches that can be used exclusively or combined in hybrid variations:

• Construction Management At Risk (CMR). The CMR firm works for the project owner to provide input to an independent design-engineering company during the design process and to serve as a general contractor/manager during construction. It acts as an experienced interpreter to coach the project owner and to coordinate between separate design and construction firms.

• Design-Bid-Build (DBB). This three-phase process puts the project owner in control of managing the bidding process after receiving the design from a design-engineering firm. The winning contractor in that bidding process then takes responsibility for the construction. This method involves added time for the bidding process and places all decision-making responsibility with the project owner.

• Multi-Prime (MP). This approach is comparable to the DBB process, except for the fact that the project owner takes responsibility for managing multiple subcontractors instead of having a single general contractor handle that.

• Design-Build (DB). The DB process streamlines the project owner’s time, managerial commitment, and contact channels with a single entity, the DB firm. That DB firm then takes single-source responsibility for all aspects of the contract — from initial design concepts through to turnkey delivery. Unlike other project delivery methods, the DB approach minimizes the number of relationships a project owner must manage, while maintaining direct contact and control of the process. This streamlined approach also reduces turnaround time, confusion, and the potential for litigation on complex projects. According to the Design Build Institute of America (DBIA), 79 percent of owners choose DB to reduce their risk.

This report on DB use in water- and wastewater-specific applications demonstrates how it has been used historically, and why its adoption has been growing. The Water Design-Build Council also offers additional research reports with added insight for first-time DB users.

• Progressive Design-Build (PDB). This extension of the DB process helps to stimulate better communication among the project owner, design, and construction roles earlier in the project development process. It typically bases design-builder selection on documented qualifications as opposed to bidding on a preconceived set of requirements. This gives designers greater flexibility to generate innovative, cost-effective solutions in response to the project owner’s stated objectives. It is particularly valuable where projects tend to be complex and unique — a perfect match for water and wastewater construction projects.

The DBIA also offers a Design-Build Done Right Primer for project owners interested in learning more about the process.

The Proof Is In The Performance

A combined Construction Industry Institute (CII)/Penn State study documented the following average DB savings across 351 projects ranging from 5,000 to 2.5-million square feet:

• Cost
  • 6 percent lower unit cost than DBB; 4.5 percent lower unit cost than CMR
  • 5.2 percent less cost growth than DBB; 12.6 percent less cost growth than CMR
• Time
  • 12 percent faster construction and 33 percent faster project delivery than DBB
  • 7 percent faster construction and 23.5 percent faster project delivery than CMR
  • 11.4 percent less schedule growth than DBB; 2.2 percent less than CMR

The Trend Continues

According to research published by FMI Corporation, design-build construction spending is expected to account for 44 percent of U.S. construction put in place (CPiP) across 12 major industrial and commercial market segments during the period of 2018 through 2020. Water/wastewater DB spending is expected to grow to $34-billion, a compound annual growth rate of 4.8 percent, over the same period.

Early adoption of DB was seen mostly in larger projects, but the concept is now starting to make its way down into smaller projects (<$25 million). In the past year, projects of less than $10 million represent the highest frequency of DB use — 51 percent of the number of projects, but only 5 percent of the total DB spend. Conversely, large DB projects (>$250 million) represented only 2 percent of project frequency, but 47 percent of the construction value.

Is Design-Build Right For You?

Comparisons with past experiences can highlight the advantages of adopting a DB approach to an upcoming water/wastewater treatment project. Consider the following factors:

• More Accurate Budgeting.  Because of single-source responsibility, the implementation factors that can affect overall cost and quality are more likely to be considered during the design phase. Having representatives from multiple disciplines work within a single team structure enhances the ability to explore and evaluate the total-cost impacts of multiple approaches before proposing a specific execution.
• Clearer Communication. Complete responsibility for all aspects of design and construction within the DB firm, complemented by direct contact with the project owner, provides better continuity throughout the project and can minimize the need for change orders.
• Single-Source Accountability. In addition to streamlining communication for the project owner, single-source responsibility also streamlines work and billing for the design and construction personnel working under one umbrella. It eliminates the time, energy, and cost of defending competitive design approaches to the project owner. It reduces the likelihood of underestimated budgets between separate design and construction organizations. Integrated cost estimating and accounting systems can also make it is easier to track cost updates throughout the process.
• Collaborative Design Control. The contractual obligation for the design and construction teams of the DB firm to work collaboratively can streamline integration, reduce risk, save time, and lower costs without requiring the project owner to oversee every conversation or decision.