On a typical construction project, navigating the layers of management can be a challenge for everyone. Complex oversight makes it harder for the property owner to communicate with the people in charge, ensuring they are on the same page throughout the job. And extra layers of management at the top can make it harder for subcontractors and suppliers to get paid. In this introduction to design-build, we’ll show you how this increasingly common method of project delivery can help simplify the construction process, reducing delays and disputes.
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What is design-build construction?
Design-build construction is a project delivery method in which an owner signs a single contract that covers all aspects of design and construction. The intent is to eliminate the complexity of multiple contracts for the owner and to realize cost and time savings by streamlining responsibilities, reducing paperwork, and allowing work that would otherwise be sequential to be done simultaneously.
Design-build vs design-bid-build
Though there are other delivery structures, the main two methods employed in most general construction are design-build and design-bid-build.
The essential difference between the two is that in design-bid-build, the owner has separate construction contracts: one for design, and one for construction. In design-build, the owner signs only one contract, giving full responsibility for the project’s completion and success to a single entity.
Design-bid-build is considered the “traditional” approach, particularly in commercial construction. However, in the centuries-old tradition of building, it’s a fairly new development, having arrived on the scene some 150 years ago. In all of history before that, the “master builder” worked as both designer and contractor.
In a DBB contract, design and construction are commissioned under two entirely separate contracts. The most common are the AIA 101 between owner and contractor, and the AIA 201 between owner and architect.
DBB is adversarial by design. It charges the architect with the design of the building and makes him the owner’s representative. This is in opposition to the contractor, whose responsibility is to the contract and, ultimately, to himself. The idea is that the contractor will control scope and expense because it’s in his best interest, while the architect will control quality because it’s in the owner’s best interest.
Design-bid-build excludes the contractor from the design process, only involving them in the construction portion.
Design-Build uses one contract, like the AIA 141, for all aspects of the design and construction of the project, creating one responsible party.
This method encourages efficiency by streamlining communication and by removing layers of process and bureaucracy from the process. As a result, it is cooperative by design and depends on one primary relationship for success.
Design-build involves the sub-contractors in the design portion so that all work is familiar to them — and often informed by them — before they ever arrive at the jobsite.
Design-build management structures
The Design-build process fuses the architects and engineers (A/E) and the builders into one entity. The structure of that entity — and the relationship of designers and builders — can take many forms.
Relationship between A/E and contractor
- A/E as employee: In this design-build model, the design staff (architects, engineers, interior designers, etc.) are directly employed by the general contractor.
- A/E as subcontractor: In this version, the general contractor has the prime contract with the owner and hires the A/E team as subcontractors.
- Joint venture: In this arrangement, the contractor and the A/E firm establish a joint venture (one combined company) specific to the job to carry out the work as partners.
Which of the above structures an owner chooses is informed by many factors, including their relationships with the parties, the scale and complexity of the work, and any requirements from responsible agencies, particularly in the public sector. And within those structures, there are two more variables in design-build contracts.
Contractor lead vs architect lead
Either the contractor or the architect can take the lead in a design-build project, and which way it’s structured often depends on the specifics of the project.
- Contractor lead design-build: Typically used for projects where the contractor’s strengths are dominant. These are often projects that are more strictly functional in nature, like infrastructure work, industrial construction, and manufacturing.
- Architect lead design-build: In projects that require very complex and nuanced design, such as hospitals, museums, and high-dollar custom homes, the architect will often be the lead in the design-build entity, with the contractor operating as an employee, consultant, or joint venture partner.
Examples of common design-build projects
Though design-build has been on the rise for decades, it’s recent growth is significant. This is particularly true of large-scale and public projects such as manufacturing facilities, infrastructure projects and industrial developments.
Recent projects like the 68,000 square foot John W. Walstrum Center for Advanced Manufacturing Technology in Lakewood, Washington, and the eight-mile West Lake Corridor addition to Chicago’s South Shore Rail Line (which has already seen a cost reduction of $110 million from its $665 million budget) are high-profile reminders of the trust that private and public bodies are placing trust in design-build.
According to a 2018 study by FMI consultants for the Design-Build Institute of America, design-build is expected to make up 44% of construction spending in the segments studied.
Segment leaders in design-build
- Manufacturing construction, responsible for 16% of DB contracts
- Educational construction, responsible for 15% of DB contracts
- Highway/street construction, responsible for 14% of DB contracts
The growth is being driven, in part, by changes in the law. In recent years, states across the country have revised their procurement laws to allow for, and even encourage, design-build contracts in-state work for an expanding number of job types. To date, all but two US states allow design-build in at least some of their public works projects.
Pros and cons of design-build
As with any competing forms of procurement, there are upsides and downsides to each and the decision rests with the owner. The general downside for owners in design-build is that the A/E no longer works for them, so the role of advocate now rests solely with the owners themselves. This leaves owners vulnerable to contractor conflicts of interest and adds to the work and attention required to properly supervise the work. The upside to owners is that the improved efficiency in the process typically leads to reduced costs, reduced construction time, and fewer disputes.
Pros of design-build
- One liable party: This makes conflicts easier to resolve, as the blame game is mostly taken out of play.
- Efficiency: Fewer lines of responsibility makes for streamlined communication and quick resolution of problems. Also, DB projects can often be fast-tracked, allowing for the final design work to be done after construction has begun reducing project time.
- Collaboration: Since Design-Build tends to include everyone, including subcontractors and suppliers in the process for the very beginning, design-build projects are often more collaborative and involve less conflict. Design-Build contracts can easily make value engineering part of the process, installing a feedback loop for improved materials or specifications.
- Project costs: By involving the actual builders in the design phase, efficiencies are realized and cost-saving measures considered before the design is finalized.
- Fewer disputes: Design-build projects create fewer disputes on average than design-bid-build. In fact, a Victor O. Schinnerer benchmarking and claims study shows that from 1995-2004, only 1.3% of claims against A/E firms were made by design-build contractors.
- Direct payment: By streamlining the payment process and keeping all pay requests and approvals under one roof, payment can be expected to be faster and more consistent on DB projects, reducing delays and disputes over payment, hopefully reducing the need for mechanics liens.
Cons of design-build
- Conflicts of interest: The contractor has a financial incentive to reduce costs and time that may be in conflict with the owner’s desire to have a higher-quality project. This is an inherent conflict in that the contractor’s responsibility for the project ends at the point the owner’s responsibility begins, so priorities are often different — and the results are not always successful.
- Less innovative design: Designers working for contractors are often discouraged from exploring new ideas and materials because it’s most efficient, always, for a contractor to go with what they know. For an owner looking for a signature project or an innovative strategy, this can be a hindrance.
- Requires more engagement from the owner: Without an unbiased advocate in the A/E team, owners take on significantly more responsibility to manage the work and are far more reliant on the professionalism, skill, and integrity of the contractors they hire.
- No bidding restricts access for subs: For a subcontractor, it can be harder to get work if competitive bidding is removed from the process.
- Increased liability: Though all A/E professionals carry liability insurance, folding that work into the contract for construction can add additional liability for the general contractor.
To bid or not to bid, that is the question
Ultimately, design-build is not the answer for every construction project. Some of the questions an owner might ask are:
- Are the expected cost and time savings worth the extra attention required by an owner?
- Is the building type suited to tried-and-true construction methods and design?
- Does the project require highly specific design considerations or expertise only available from a specialty design firm?
- Can I find a design-build company that can be trusted with every aspect of this project?
Similarly, contractors and suppliers considering a design-build contract will want to review the past performance of the general contractor and/or the architect involved. Have they completed similar design-build projects in the past? Do they have a track record of good project management? And, perhaps the most important question at the end of the day, does the business have a history of mechanics liens or slow payment on their record?
For the many projects for which it’s suited, design-build has been proven to be efficient and cost-effective and to reduce construction claims and payment disputes.