Due to the competitive nature of the construction industry, it's no surprise that design/build continues to be the fastest growing method of project delivery in the country. However, this fast-track approach is not only gaining popularity among owners, it's also becoming the method of choice for more and more developers/contractors and design professionals. Why the recent increase in acceptance? Sure, it's more cost effective, but that's not all. It also creates a teamwork environment in which all parties work together to ensure success. This results in a higher level of quality and workmanship, quicker turnaround time, more attention to detail, and less chance for error.
According to statistics compiled by the Design/Build Institute of America, design/build is here to stay. In fact, the organization's most recent projections indicate the percentage of design/build contracts will hit the 55% mark of all construction projects by the year 2015. If you're not convinced yet, the data just keeps coming. A 1998 article in Engineering News Record reports the rate of increase in design/build volume reflects a healthy increase of approximately 27% over the previous year. Construction management consultants at FMI agree design/build is the wave of the future; projecting that 50% of all projects will be design/build by 2005. Since design/build continues to replace traditional methods of project delivery and penetrate the market, it's important for consulting engineers as well as contractors to understand the concepts behind this popular approach.
Why use design/build?
Owners continue to fuel the rapid growth of this method. One of the main advantages is design, procurement, and initial construction can commence well in advance of the final design. This, in turn, shortens the completion time. While a more traditional delivery system can accomplish this "fast-track" concept, it falls into some disrepute using traditional delivery methods. This is due to the potential for contractors to claim extras. Obviously, this would not be the case with design/build because the contractor monitors the design.
Sponsored by the Construction Industry Institute, a recent research study showed design/build projects usually have less cost overruns and a faster construction schedule than other delivery systems. It also indicated these projects, particularly when performed by teams who have worked together before, compare favorably with other delivery systems when it comes to quality; meaning how you measure the operability of the project at turnover.
Other advantages include single point responsibility, minimized claims for extras, and the feasibility of obtaining overall performance warranties. Such warranties are generally not feasible in traditional construction since neither the contractor nor the designer is in complete control. Thus, no one willingly assumes the responsibility for failure to perform. Only with design/build is a single entity sufficiently responsible to give out such warranties.
Despite the benefits, there are some potential drawbacks when using the design/build process including less owner control, loss of checks and balances (because the designer no longer owes his or her allegiance to the owner), and difficulty in obtaining competitive bidding. For a design/build project to succeed, project solicitations must include detailed plans and specifications. This ensure the designer's response to the owner's objectives are met in terms of scope, schedule, quality, and cost objectives.
Exceptions to the rule
In addition to the conventional model of design/build, where the contractor or developer leads the team and retains design professionals as consultants, there are two variations of this process worth reviewing.
The bridging method uses a two-phase approach. The owner retains a bridging consultant; a design professional responsible for developing conceptual design documents (incorporating all of the owner's requirements). A project's success depends on the quality of these documents. Why is this so important? If the owner does not precisely define his or her requirements, disappointment as well as potential litigation among owner, contractor, and designer are inevitable. The bridging consultant also performs a cost and compliance (C/C) review. The conceptual design documents are then competitively bid, and the C/C review is used for evaluating the proposal. The bridging consultant is a critical player in the evaluation process (since at this stage the owner must make the major decisions affecting the success or failure of the project). This person's responsibilities usually extend beyond this evaluation stage, however, this varies from owner to owner, and project to project.
The designer-led design/build approach is a team effort offering the owner an interesting variation of the conventional design/build method. Instead of entering into a guaranteed price agreement with a developer or contractor, who then designs and builds at that price, it is the architect or engineer who enters into the agreement and brings the general contractor on board. Design-led design/build can offer professional and financial rewards to the professional design team as well as achieve a project that will be more satisfactory to the owner. Prior perceived objections to design/build projects can be overcome by careful structuring of the contractual relationships between owner, designer, and contractor. A lawyer familiar with construction contract law and procedures is an essential part of this design team.
Each of the approaches explained above is viable and offers advantages as well as disadvantages to the various parties involved (i.e., owner, developer/contractor and design professionals).
The owner's standpoint. Since the price is guaranteed, the owner's main concern is to have all functional and aesthetic requirements satisfied and the project completed on an accelerated schedule. Since the developer/contractor conventionally retains the design team in the design/build process, the quality of the design is difficult for the owner to control; unless the solicitation documents and contract detail all required information. These documents allow fora clear understanding of the owner's needs; a key factor for achieving success. Performance-based documents are better than prescriptive-based ones. However, sometimes specifics are critical. For example, if the owner needs a duplex receptacle every 50 sq ft, he or she must call out this requirement.
The bridging consultant approach addresses this matter directly. The owner retains a design professional whose responsibility is to develop a conceptual design. This requires the owner and consultant to go through a programming and planning exercise, which leads to conceptual documents. Programming defines the owner's needs, and planning outlines the implementation method. Then, these documents are issued as a bid package, accompanied by the evaluation criteria to analyze the proposals on cost, quality, and responsiveness to the owner's needs. The advantage of this process is twofold. Not only will proposals be more responsive to the owner's needs, but they will also enable him or her to compare competitive design/build quotes based on the same conceptual design package.
The designer-led design/build projects offer the owner some advantages over the conventional design/build process. The contract between the owner and the design professional allows the owner to choose a contract that he or she can convert to a design/build contract at any time during this phase. For this to happen, the designer must have construction capability available on call; either from the designer's resources or by association with a contractor. This project approach allows the designer to have the job fast-tracked at a guaranteed price while still having control of the design. Plus, the arrangement allows the owner to competitively bid the project.
The consultant's point of view
As part of the design team, consulting engineers have to adjust to the reality that design/build projects, in one form or another, constitute an increasing portion of their practice. The traditional relationship, where the contractor takes the lead, occurred primarily because of the contractor's stronger financial status. However, times are changing. Now, there is an opportunity for the designer to play a more substantial role in the design/build process.
Design/build projects can also be financially more rewarding than conventional ones. But be warned: with reward comes risk. The designer now has construction responsibility. However, if the design team is properly structured, risks are minimal.
The first step for the designer is to establish an alliance with a financially sound general contractor. The second step is to establish a sister company to serve as the architectural/engineer (A/E) construction division, which enters into a master subcontract with the general contractor. After that, the design professional enters into a standard design contract with the owner. With this, they have the option to convert the contract into a design/build contract if the owner signs a guaranteed-price contract with the sister company. This guaranteed-price contract could be entered into at any stage of the process when the owner's objectives are sufficiently understood and both parties reach their desired comfort level.
What are the obstacles, and how might they be overcome? The major risk in the design-led projects is liability to the owner for construction defects and related problems. However, if the A/E is liable to the owner, the contractor is similarly liable to the A/E. As long as the contractor is financially sound and bonded, the designer's ultimate financial risk is minimal. By establishing two separate companies, the designer has separated his or her professional liability from non-professional liability. As more insurance companies become aware of this type of project, there is a growing market for insurance products specifically aimed at such markets.
The contractor's perspective
In the traditional design/build process, the general contractor takes the lead role. He or she brings the mechanical/electrical/plumbing (MEP) subcontractors onboard prior to establishing a contractual relationship with the owner. However, if this does not happen, the contractor relies on in-house expertise for establishing the MEP portion of the proposal price; with the intent of bidding the MEP trades after obtaining the contract. Either way, the MEP subcontractors will work with the on-board design engineers to formulate a design within the cost constraints established by the general contractor's agreement with the owner.
Since the MEP subcontractors are part of the design/build team, the only extras should be the owner's scope changes. There will be no opportunity to recoup losses on the base job by making it up in extras. And, if the solicitation documents were well prepared up front, reductions in quantity or quality will not be viable to make up for inaccurate pricing. On the other hand, the MEP trades have been working closely with the designer to make the project cost effective from their point of view.
If the design/build process is designer-led, the contractor's relationship with the designer is quite different. The design engineer's motivation is to develop cost-effective solutions. Here, there is a greater incentive to expedite the schedule because he or she has a financial interest in both cost and schedule. This should result in a more tightly run operation, bringing the project in on time and on budget. This allows the contractor to count on completing the work more efficiently. However, this process offers some risks to a careless contractor. But because the designer has a financial stake in the project, the contractor will find the designer more amenable to accepting contractor-initiated improvements to control costs and scheduling.
So whether you're sold on this type of project delivery is really not the issue. The bottom line is: Design/build is here to stay in both public and private sectors. Consequently, the sooner this industry adapts to it, the easier it will be to live with it.
SIDEBAR: Getting Started
The three principal project delivery systems used in the electrical industry today are: the design/bid/build method, construction management at-risk approach, and design/build process. Knowing the strengths and weaknesses of each can ultimately mean the difference between a profitable enterprise and bankruptcy.
Design/bid/build method. In this traditional method of delivery, the owner retains an architect, who brings engineering consultants onboard to form a design team. This team prepares final construction documents for the contractors' bids. While these documents reflect the owner's needs, uncertainties of the bidding process may lead to budgetary problems, delays, compromises in quality, as well as general malaise.
Construction management at-risk approach. With this system, the construction manager visits the project during the early stages of design and guarantees a price for the job. As a result, the manager monitors the design to ensure it stays within budget throughout the entire design process.
Design/build process. Here, the architect and engineer serve as part of the contractor's team; as a consultant or venture partner, rather than a consultant to the owner. Sometimes, the owner or owner's representative becomes part of the design/build team. Here, the team gets the project at a set price established in response to solicitation on documents the owner prepared. However, the design must fulfill the criteria set forth in these documents.
SIDEBAR: Design/Build Statistics
"A Comparison of United States Project Delivery Systems," a report by post-doctoral research scholar Mark D. Konchar at Penn State University, highlights the benefits of the design/build method.
- Design/build unit cost (final project cost divided by the area) was at least 4.5% less than construction management at risk and 6% less than design/bid/build.
- Design/build construction speed (facility gross square footage divided by the construction time) was at least 7% faster than construction management at risk and 12% faster than design/bid/build.
- Design/build delivery speed (facility gross square footage divided by the design and construction time) was at least 23% faster than construction management at risk and 33% faster than design/bid/build.