Copyright © DBIA 2003 2003 Edition An Introduction To Design-Build.

Copyright © DBIA 2003

2003 Edition

An Introduction ToDesign-Build

Design-Build Overview

• D-B Defined/Introduction

• Milestones in Recent D-B History

• Major Project Delivery Systems

• D-B Performance, Procurement and Process

• D-B Utilization

continued

Design-Build Overview, continued

• DBIA Resources– DBIA Publications/Website: www.dbia.org– DBIA Contracts

• D-B Legislation/Trends

Design-Build Defined

Design-Build is a method of project delivery in which one entity (design-builder) forges a single contract with the owner to provide for architectural/engineering design services and construction services. (Design-build is also known as design/construct and single source responsibility.)

Design-Build Introduction

• Rediscovered approach to project delivery

• Team of qualified design and construction professionals

• Operating under a single contract

• Single source accountability

Milestones in Recent Design-Build History

1940s Naval Facilities Engineering Command uses the

Capehart and Wherry Housing Programs thatemploy design-build

1962 National Aeronautics and Space Administration

(NASA) uses design-build

1968 Department of Housing and Urban Development

starts use of forms of design-build: Turnkey,Operation Breakthrough

1969 Associated General Contractors (AGC ) appoints

“Turnkey Committee”

Milestones in Recent Design-Build History

1972 Congress Passes Qualifications-Based Selection

(Brooks Act) for A/E Contracts

1975 AGC Publishes first edition of Standard Agreement

Between Owner and Design-Builder

1978 The American Institute of Architects (AIA) adopts

a policy permitting members to do design-build

1984 Competition in Contracting Act places competitive

negotiation on par with competitive sealed bonding

1985 AIA publishes family of design-build documents

Milestones in Recent Design-Build History

1986 Military Construction Authorization Act permitstrial use of design-build: Each branch is

permittedto use design-build on three projects a year

1990 General Services Administration issuesDesign Criteria Project Guide

1991 AIA adopts policy acknowledging the use of design-build in the public sector

1993 Design-Build Institute of America established

Milestones in Recent Design-Build History

1995 Engineers Joint Contract Documents Committee(EJCDC) issues design-build contracts

1996 Legislation (Davis Amendment) enacted permitting

use of two-phase selection for federal design-build

projects

Major Acquisition/Project Delivery Systems

I. Design-Bid-Build

II. Construction Management

III. Design-Build

Project Delivery: A comprehensive process including planning, design, construction and other services, necessary for organizing, executing and completing a building, facility or project.

Acquisition/Project Delivery Systems

I. Design-Bid-Build• A/E prepared plans and specifications• Low dollar bid from general contractor• Separate contracts from owner for design and

construction

Owner

A/E Constructor

DesignConsultant

Subcontractorsand Suppliers

Acquisition/Project Delivery Systems

II. Construction Management• Agency construction management• “At-risk” construction management• Separate contracts for design and construction

Owner

A/E GC/TradeContractors

DesignConsultant

Specialty Contractors

And Suppliers

At-Risk CMAgency CM

Owner Agency CM

A/E GC/TradeContractors

DesignConsultant

Specialty Contractors

And Suppliers

Acquisition/Project Delivery Systems

III. Design-Build• Design and construction under a single contract

• Construction typically begins before design is complete

Acquisition/Project Delivery Systems

III. Design-Build – Integrated Firm or Joint Venture

Owner

Design-Builder

Consultants,Specialty and Subcontractors,

Manufacturers/Suppliers

Acquisition/Project Delivery Systems

III. Design-Build – Constructor-Led

Owner

Design-Builder

DesignConsultant

Specialty and Subcontractors, Consultants,

Manufacturers/Suppliers

Acquisition/Project Delivery Systems

III. Design-Build – Designer-Led

Owner

Design-Builder

ConstructorSpecialty and Subcontractors,

Consultants,Manufacturers/Suppliers

I. Design-Bid-BuildAdvantages and Disadvantages

A. Advantages of Design-Bid-Build1. Comfortable “old” way of doing things2. Suitable for competitive bidding3. System of checks and balances4. Established legal precedent5. No legal barriers in procurement and licensing6. Insurance and bonding are defined

I. Design-Bid-BuildAdvantages and Disadvantages

B. Disadvantages of Design-Bid-Build1. Confusing responsibilities - all parties have

different agendas

2. Disagreements go through owner

3. Owner bears design adequacy risk

4. Too much case precedent

5. Project delivery can be slow

6. Not always cost efficient

II. Construction ManagementAdvantages and Disadvantages

A. Advantages of Construction Management1. Multi-year track record, used since the 1960s2. Preconstruction involvement3. Additional management oversight controls

B. Disadvantages of Construction Management1. Not fundamentally different from design-bid-

build2. Agency CM places much risk on owner3. Innovation is not encouraged/rewarded

III. Design-BuildAdvantages and Disadvantages

A. Advantages of Design-Build1. Single point of responsibility

2. Owner freedom from coordination between A/E and constructor

3. Savings - in schedule and potentially in cost

4. Improved risk management

5. Early knowledge of firm costs

6. Rewards innovation

III. Design-BuildAdvantages and Disadvantages

B. Disadvantages of Design-Build1. New territory - parties assuming different

risks2. Institutional barriers - procurement and

licensing3. Owner relinquishes some control4. Limited availability of insurance/bonding

products5. Complexity/learning curve

Procurement/Purchasing PhilosophiesPrescriptive-Based Procurement

Advantages1. Provides descriptive documents for

proposers

2. Owner will control outcome before proposers submit technical/design solutions

3. Easier to establish firm budget before advertising project

Procurement/Purchasing PhilosophiesPrescriptive-Based Procurement

Disadvantages1. Restricts creativity of design-builder in

developing proposal

2. Places greater design risk on the owner

3. Reduces options for developing a project that could shorten overall schedule

4. Severely impedes innovation

Procurement/Purchasing PhilosophiesPerformance-Based Procurement

Advantages1. Leaves maximum flexibility for the design-

builder

2. Allows design-builder to optimize costs

3. Allows design-builder to integrate design and construction effort to reduce schedule

4. Minimizes risk to owner for design adequacy

Procurement/Purchasing PhilosophiesPerformance-Based Procurement

Disadvantages1. Risk of owner not being satisfied with project

scope

2. Owner relinquishing control

3. Difficulty in comparing proposals on an “apples-to-apples” basis

Procurement/Selection Spectrum

Sole Source

“Brooks”A/E

Selection

NegotiatedSource

Selection

CompetitiveNegotiation

WeightedCriteria

FixedBudget/

Best Design

AdjustedLow Bid

Two-StepSealedBidding

Low FirstCost

Bidding

Subjective and Qualitative Factor(s)

Price-Based Factor(s)

Best Value: Subjective, Qualitative and Quantitative

Factors

Bilateral Discussions -

Choice Based on Qualitative/

Subjective Factors

Formal Discussions - Choice Based on a

Combination of Qualitative and Quantitative Factors

Unilateral Choice, Based on Qualitative

and Quantitative Factors

Unilateral Choice, Based on a Single Quantitative Factor

Design-Build andBest-Value Procurement

• Historically designer only selections are qualifications-based

• Historically constructor-only selections are low price-based

• With the procurement of design-build services, one can combine the two into a best value selection

continued

Design-Build andBest-Value Procurement, cont.

• Best-value selection - combination of technical and cost criteria

• Best value ranges from qualifications to price oriented selections

Design-Build Structural Variations

OwnerIntegrated

Design-Build Firm

Owner Joint Venture

Owner A/E Prime

Owner GC Prime

A/E

Constructor

Constructor

A/E

Percentage of Design(As included in or required by Design-Build RFP)

-10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70%

Pre-Design

Usually Best Value or Qualifications-Based Procurement

Typically Low Bid-Based Procurement

Design Draw-Build35% Design or Greater

Direct Design-Build-10% to 10%

Design CriteriaDesign-Build5% to 25%

Preliminary Design

Design-Build 20% to 35%

Percentage of Design(As included in or required by Design-Build RFP)

• 30% design or more leads to price oriented selection

• Less design provided or required - more emphasis on technical/qualifications criteria or on design-builder’s proposed solution

• Owners initially provide or require more design in D-B procurements

continued

Percentage of Design, cont.(As included in or required by Design-Build RFP)

• After initial experiences owners provide or require less design– Recognition of cost and time required to

prepare a design that may not be ultimately constructed

• Experienced owners prefer more emphasis on qualifications

Influence vs. Expenditure CurvesDesign-Build Team on-board early allows best opportunity to achieve objectives

PERFORM BUSINESS PLANNIN G

PERFORM PRE- PROJECT PLANNIN G

EXECUTE PROJECT OPERATE

FACILITY

I N F L U E N C E

E X P E N D I

T U R E S

RAPIDLY DECREASING

INFLU ENCE LOW INFLU ENCE MAJOR

INFLU ENCE

EXPEND ITURES INFLU ENCE

High

Low Small

Large

Market Penetration ofMajor Project Delivery Systems

35%

9%

50%54%

65%

72%

82%

40%

9%10%9%12%

12%

9%

5%

25%30%

45%38%

15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1985 1990 1995 2000 2005 2010 2015

"Traditional" design-bid-build

Construction Management (at risk)

Design-Build

Construction Industry Institute Study

• 351 Projects

• 5K to 2.5M S.F.

• Various types/Industry sectors

• Compared performance between D-B-B, CM at Risk, and D-B

• Performance evaluated Cost, Schedule, Quality areas

Construction Industry Institute Study

• Design-Build Performance compared to Design-Bid-Build– Unit Cost - 6% less– Construction Time - 12% faster– Project Time (design and construction) -

33% faster

Construction Industry Institute Study

• Quality on a 10-point scale -– Start-up; Call Backs; O&M; Exterior and

Structure; Interior; Environmental; Equipment

– D-B equaled or outperformed D-B-B in every category

Drivers for Design-Build

• Early Completion• Reduced Owner Staffing• Single Source Responsibility• Reduces Uncertainty• Less Conflict• Potential for Lower Costs• Increased Quality• Equal or Increased Innovation

Design-Build National Trends

• Increasing use in public sector at all levels of government

• RFPs include less design specifics, more oriented toward achieving performance objectives

• Selections place increasing value on qualifications over price

continued

Design-Build National Trends

• Large design-build projects becoming more complex

• More industry sectors using design-build– Transportation/public utilities– K-12 educational facilities

• More owners see advantages of single contractual responsibility and a multidisciplinary team

continued

Design-Build National Trends

• Part of more integrated solutions which include financing, operation, maintenance, and/or ownership

• More designers, particularly engineering firms, are placing themselves in an at-risk role by leading design-build teams

continued

Design-Build National Trends

• Federal agencies, particularly the Federal Bureau of Prisons, the Naval Facilities Engineering Command, and the Corps of Engineers, are leading the trend in the public sector toward increased use of design-build

• New Federal design-build legislation in the last three years includes pilot programs for Federal Aviation Administration and the Civil Works Program of the Corps of Engineers and a major provision in the federal-aid highway program (TEA-21)

Your Help Is Needed:

• Licensing reform

• Procurement law reform

• Adoption of ABA Model Procurement Code

Removing Statutory Barriers

• State laws require modification

• Champions must emerge within states

• Joint industry/owner teams effective

• Example statutes available

• Lack of knowledge of D-B a barrier

• Education - a major effort

• Consult DBIA/others