Design-Build Project Delivery in Water Infrastructure
Today, design-build (DB) continues to grow in popularity in the water sector, and there are plenty of reasons for owners to continue to favor it.
For one, it offers the potential for improved project outcomes – especially on complex projects – over traditional design-bid-build (DBB) delivery. Design-build projects can often be delivered faster and with greater cost-saving opportunities. Consider also that more state and local governments are opening up to collaborative delivery methods, including design-build.
With flexibility throughout, it aligns planning, design and construction in one contract. It allows early collaboration between the owner, contractor and designer, which can improve constructability, balance risk allocation, foster innovation, and drive price and schedule certainty.
In the water/wastewater space, design-build projects have achieved success, and they continue to raise the bar for efficiency and quality standards.
ORIGINS OF DESIGN-BUILD
Design-build has existed for centuries and has supported the development of some of the world’s most iconic structures. While, over time, the various specialists have been compartmentalized, the same creation of the silos has also shown the limitations to the DBB method.
In the 1990s, it was considered alternative or even unconventional, despite its deep roots. That’s when a group of industry visionaries, who believed it to be a better way to build, coined the name “design-build” and started the Design-Build Institute of America (DBIA). Today, DBIA continues to promote the model and educate around its best practices through the sharing of successful outcomes and availability of industry-leading tools and resources.
DBIA projects that by 2026, nearly half of the non-residential projects in the U.S. will be delivered using design-build.
Design-build has experienced highs and lows along its centuries-long journey as a delivery model. However, its prevalence in today’s world isn’t just a momentary interest; it has had staying power and continues to thrive as a mainstream approach to building for a variety of reasons. Economic reasons for the continued rise include the delivery method’s ability to drive cost and schedule performance reliability and foster best possible project outcomes. In addition, technological innovations continue to tip the scales toward design-build as the delivery method can spark innovation on perpetually more complex projects.
WHY DESIGN-BUILD?
The design-build delivery model brings many benefits, six of which are listed below.
Single Point of Accountability
With a single entity responsible for both design and construction, clients have a clear point of contact throughout the project lifecycle, which simplifies communications, reduces the administrative burden and minimizes the potential for disputes.
Collaboration, Transparency and Flexibility
Design-build’s high level of collaboration and transparency between the owner, contractor and designer – the one-team concept – fosters strong relationships and mutual trust. Working as a unified team facilitates the flexibility to quickly make changes that improve processes and cost and schedule certainty.
Early, one-team collaboration, which includes operations and maintenance staff, allows all parties to voice concerns and share suggestions during the conceptual phase when design revisions are often the most cost effective.
Quality and Performance
Employing a qualifications-based selection (QBS) approach, alongside past performance evaluation, can drive quality results, compared to relying solely on price-based selection criteria. The American Council of Engineering Companies (ACEC) advocates that this type of selection when choosing a design-builder is not only more efficient but also less expensive in the long run when factoring in total lifecycle costs. This was uncovered in years of use following the 1972 federal passage of the Brooks Act, where federal and many state and local governments used QBS in the procurement of architects and engineers.
Risk-Sharing
Design-build contracts often incorporate performance guarantees and risk-sharing mechanisms, transferring certain risks from the client to the design-builder, who, of course, is contractually obligated to deliver a project that meet’s the client’s needs. During the process, conflicts between the owner, contractor and designer, which are not uncommon with DBB delivery, can be significantly reduced or even eliminated.
Opportunities for Innovation and Cost Savings
The design-build process enables value engineering and collaborative brainstorming that produces practical innovations, project enhancements and cost savings. Owners can encourage or restrict innovation on a design-build project through prescriptive- or performance-based requirements.
Faster Timeline
Early contractor involvement enables concurrent design and construction activities. By overlapping the design and construction phases, design-build supports reduced schedules and fast-track delivery.
CHALLENGES OF DESIGN-BUILD
As with other delivery methods, design-build has a few challenges owners should consider. Some common challenges are listed below.
Detailed RFP Documents
Preparing the RFP documents for traditional design-build can be time consuming. The owner must sufficiently define the project requirements and scope of work to enable proposing firms to accurately estimate the cost. This is not applicable to progressive design-build and construction-manager-at-risk methods where the design-builder helps define the scope in the preconstruction phase.
Lowest Price vs. Higher Quality
Owners may not get the lowest price with design-build delivery compared with DBB, therefore, price vs. speed to delivery (and other design-build benefits) should be considered on a project-by-project basis.
Selection Process
Careful evaluation of proposals is critical with design-build because the design-builder holds significant responsibility. Owners must conduct a thorough analysis of the capabilities, experience and project approach of each proposer to ultimately contract with the most-qualified design-builder.
Contractual Complexity
Design-build contracts are more complex than DBB contracts. A clear and comprehensive design-build contract is necessary to mitigate potential legal and financial risks.
Less Control of Design
In design-build, the client is very involved in design collaboration with the contractor and designer. However, the design-builder leads development of the design. Relinquishing this total control can be a concern for some and a positive for others.
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SELECTING A DESIGN-BUILDER
There are several different types of methods used to select a design-builder. A few of them to note:
Quality-Based Selection (QBS)
In this case, the design-builder is selected based solely on its qualifications, such as experience, expertise, history with the client and more. According to the DBIA, owners who choose a design-builder based largely on qualifications see significant benefits such as increased teamwork, proactive behavior and collaboration. According to the ACEC, research shows the use of QBS for projects can be more efficient and less costly than a selection process focused solely on price.
Best-Value Selection
This method is based on a combination of qualifications, technical factors and price – and on a fully-developed design. It can be a challenge to achieve the right blend of the factors, but it ultimately can help owners and prospective design-builders align on a range of considerations. In a two-phase approach to best-value selection, qualifications are the first evaluation factor, and firms are then shortlisted to go to the next step. And that’s where project approach, technical solution, fee and best-value are evaluated.
Sole Source
This model is when one supplier is selected in a non-competitive process. An entity may rely on one supplier in this case for a particular service or need and the owner and design-builder negotiate directly to arrive at mutually agreeable terms and conditions.
Low Bid
This method of selecting a design-builder is just as it sounds; the proposer with the lowest price is the selection. Although price is often a factor in selection, relying solely on the lowest price may not always add up to the best-value for the project owner.
DESIGN-BUILD VARIATIONS
The design-build model has evolved over time to incorporate several variations. While all of the models here have their own nuances and slight differences, they share the fact that all have a single point of accountability.
Fixed-Price Design-Build (FPDB)
This delivery method is exactly as it sounds: a single, fixed-price is established for the total package (design, construction, startup and commissioning). Often, the owner will have the scope of work and project requirements fully defined, which enables proposing firms to accurately arrive at a project cost estimate. Once selected, usually from a blend of qualifications and price, the design-builder and owner collaborate on the concept that meets the owner’s requirements and ultimately agree on a final project price. From there, the design-builder continues the design and carries the project through construction, startup and commissioning. In this method, the owner has assurance of the final price; the design-builder assumes the risk for delivering at the fixed-price.
Progressive Design-Build (PDB)
Unlike FPDB, in a PDB model, the project often is not fully defined when the design-builder is selected. In this case, the owner and design-builder collaborate to progress the design to 60-90%, all the while the design-builder provides open-book cost estimates. To close out this Phase 1 activity, once the owner and design-builder reach agreement on design definition and cost estimates, the design-build firm prepares a contract price proposal. If this meets the owner’s expectations, Phase 2 – featuring completion of design and construction, startup, commissioning, and more – can begin. If the price proposal doesn’t meet the owner’s expectations, the owner can take an “off ramp” and bid the project in a different method.
Design-Build-Operate (DBO)
DBO is one of several execution variations that combine other components beyond those in a typical design-build (design, permitting, procurement, construction, acceptance testing and commissioning). In the case of DBO delivery, a single entity, typically a contractor or consortium, is responsible for the entire project lifecycle, tasked with all the elements of the design-build contract with the added element of operations for a specified period, often including maintenance and sometimes financing. DBO streamlines coordination between design and construction phases, promotes efficiency, transfers risks to the entity managing the project, and supports an integrated, holistic approach to infrastructure development. Other elements that can be added to design-build models are finance, own and maintain.
Engineering, Procurement and Construction (EPC)
EPC delivery, prevalent in sectors such as energy and industrial, offers clients a turnkey solution, minimizing their involvement in the construction process while providing certainty in terms of project cost and schedule. EPC delivery is often preferred for projects with well-defined scopes and where clients seek a single point of accountability for project completion. This approach ensures tight integration between design and execution and emphasizes cost-certainty through fixed-price contracts. The client provides project specifications and requirements with the EPC contractor assuming full responsibility for delivering the project within agreed-upon scope, schedule, and budget parameters. The EPC contractor bears the responsibility and risk associated with project delivery.
LONG-LASTING VALUE OF DESIGN-BUILD
Design-build and its benefits have endured. The delivery method offers clients the opportunity to manage a single contract on a complex project. It brings opportunities for collaboration to drive constructability and practicality. It allows project teams and owners to share and balance risks. It also brings the ability to move project schedules at a faster pace and, in addition to schedule certainty, it allows for cost-certainty as well. Design-build projects can be achieved in multiple ways; there’s flexibility in how design-builders can be selected, in the scope they’ll handle and in how they deliver.
Design-build has proven it’s here for the long haul.
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