In this video, Jim explains that, in the design-build method of construction project delivery, the project owner issues a single contract to a design-build team. Jim also discusses the different ways a design-build team can be configured.
- I told you that in the traditional design-bid-build method of project delivery, the owner has two distinct and separate contracts. Again, one with the designer, who is hired first, and another with the construction company or a general contractor, who bids on the work after the design is complete. Now let's talk about a method where the owner has a single contract that includes both design and construction. Under the design-build method of project delivery, the owner contracts with the design-build team. This team can be a joint venture between a contractor and a design firm, it can be a single firm with in-house capabilities for design and construction, or it could simply be a contractor that hires a designer as it's consultant.
And now yes, it could also be a design company that also hires a contractor, but really these teams are more often led by the contractor, since construction companies are much more likely to be the entity that's used to taking the risk in these types of ventures. However this team's formulated, as far as the project owner is concerned, it's a single entity that's being hired to complete the design and construction of the project. In this arrangement the owner can avoid some of the disputes that can arise when the owner has separate contracts with a designer and a builder, and sometimes has to play referee between the two.
Under design-build, the owner usually presents a preliminary scope that includes rough design requirements, or project goals, and these are used as the basis for designing and constructing the project. At some point early in the process, the design-build team will present the owner with a price to complete the design and construction, and they'll then be responsible for the coordination and execution of all of that work themselves. So a common scenario for design-build project might be something like an owner that has a piece of land and wants to build a speculative office building.
After the owner develops the requirements for the building, which are going to be rough requirements. Things like required square footage, or leasable space requirements. They then develop their budget, and they can look for proposals from design-build teams that would completely take over the process once they're awarded the job. That award is often based on a combination of that team's capabilities, their proposed rough design, and their lump sum price. Here where I'm from, we've also seen some of the state departments of transportation utilize the design-build method of project delivery for transportation projects, or horizontal construction projects.
What this has done is it's allowed them to engage several large design-build teams to simultaneously each develop different schemes or rough designs for the project. These teams might each get paid a set fee for this preliminary design development, and then the department of transportation can select a team based on their combination of the approach to the project, their experience, and their lump sum price to complete the work. Sticking with this example, the agency probably expends fewer internal resources, and they might be able to run more projects, because once they award the work to a design-build team, there's less coordination on the part of the owner than there would be if they had separate contracts for design and construction.
And they have a fixed price that shouldn't be affected by claims of design issues, or constructibility problems. Another advantage is that the overall design-build schedule can be compressed since a single design-build team could begin construction prior to the plans being 100% complete, like they would need to be back in that design-bid-build method. Other considerations here, though, include the fact that the owner does lose some involvement in the design details.
In this method, the design-build team is really only obligated to deliver a structure of projects that meets those initial specifications outlined by the owner. Meaning that those initial specifications really need to convey the owner's needs and wants in order to avoid later claims for change orders based on scope changes. Now on some projects, the owner may not be able to provide that level of detail at the onset of the project. They may need, or may want, the input and experience that can be provided by consultants during that design phase.
So let's continue, and take a look at a method that attempts to address this issue, while still getting some of the benefits of this design-build scenario.
- Payment and procurement methods
- The design-bid-build method
- The design-build method
- Construction manager at risk (CMAR)
- Integrated project delivery (IPD)
- Selecting a project delivery method
- Procurement laws
- Delivering the best value to the owner
- Qualifications-based selection
- Changes in the way you are paid