Project Delivery Fundamentals

Making the Grade: Design-Build for University Students

Making the Grade: Design-Build for University Students

Welcome to DBIA’s Webinar Series

Christine WilliamsDBIA Special Projects Manager

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Project Delivery Fundamentals

Today’s Presenter

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S. Richard Benton, P.E., F.ASCE, FDBIASR Benton & Associates, LLCAdjunct Professor George Mason University

Today’s Objective

Understanding the differences in project delivery methods is the foundation of good project delivery. The delivery method establishes when parties become engaged; it influences the choices of contractual relationships; and it influences ownership and impact of changes and modification of project costs. It is important to choose a delivery method that best meets the unique needs of each project. This course introduces you to commonly used project delivery methods along with their pros and cons.

The Basics

• To build infrastructure, there needs to be a design• Owners provide the financing and establish the purpose• Design is done by architects and/or engineers• Construction is done by contractors

• Prior to the mid 14th century, design and construction was done by a single entity (i.e., the Master Builder)

• Since then design and construction became segregated• More recently (last 30 years) there has been a desire for greater

collaboration between the designer and builder, thus a return to the Master Builder concept

DBIA Formation

• Formed in 1993, DBIA is the only organization that defines, teaches and promotes best practices in design-build project delivery.

• Currently has 5,000+ members with chapters across the US, formed into 14 regions. Members are Owners and practitioners (e.g., builders, engineers, architects, academics).

• Has a certification program for those who can demonstrate knowledge and experience in Design-Build Best Practices.

Project Delivery Methods

• Definition: The project delivery system is the method used by an agency or owner for organizing and financing design, construction, operations, and maintenance services for a structure or facility by entering into legal agreements with one or more entities or parties.

• Five commonly used project delivery methods:• Design-Bid-Build• Multi-Prime Contracting• Construction Management at Risk• Design-Build• Integrated Project Delivery

Design-Bid-Build

Design-Bid-Build (DBB) Characteristics

Design-Bid-Build Characteristics

• Owner controls design team selection• Owner responsible for design details• Process is well-established and understood

• Consistent with public sector procurement laws • Prevalent delivery system through 20th century

• Linear sequence is incompatible with expediting project delivery• Contractor’s input is absent during design process• Typical procurement approach:

– A/E typically selected on qualifications– General contractor typically selected on low price

• Potential for A/E and contractor to be adversaries

Multi-Prime Contracting (MP) Characteristics

Multi-Prime Contracting Characteristics

• Similar organizational structure to DBB• Mandated by statute in some states• Allows use of pre-existing contracts already in place• Allows some expediting of work due to phasing• Major difference with DBB

• Owner has to manage and coordinate multiple contractors• Owner attempts to reduce cost of paying for a general contractor

Construction Management at Risk (CMAR) Characteristics

Construction Management at Risk Characteristics

• Similar organizational structure to DBB• Different terms are used to describe the process (e.g., CMAR, CM/GC, GC/CM,

and CMc)• No direct contractual relationship between contractor and designer• Major differences with DBB

• Contractor provides preconstruction services • Contractor commonly selected by Qualifications Based Selection (QBS) or best value• Negotiated Guaranteed Maximum Price (GMP) contracting approach common• Open-book estimating process• Construction cost determined before design completed• CMAR might not be the builder• Limited authority for its use on Federal projects

Design-Build (DB) Characteristics

Design-Build Characteristics

• Owner contracts with single entity for both design and construction (i.e., single point of responsibility)

• Designer and contractor have a direct contractual relationship• Multiple organizational structure types for design-build entity

• Contractor provides input during design process• Takes advantage of MacLeamy Curve concepts• Structurally encourages innovation and value enhancement

• DB entity has responsibility for performance vs. compliance w/ prescriptive specifications

• Allows expediting project delivery (i.e., fast tracking)• Wide spectrum of contracting approaches (e.g., lump sum, GMP, target pricing)• Typical procurement approach: QBS or best value

MacLeamy Curve

Progressive Design-Build

• A variation of DB project delivery• Many believe the next step after CM before embracing traditional DB

• Characteristics• QBS selection of DB entity• Very early selection of the team• Normally selection w/o a price - eventually coming to a Guaranteed Maximum

Price (GMP) or Fixed Price• Key is that it transfers design responsibility, but allows intensive involvement of

Owner in design development• Sector using it the most is water/wastewater projects

Integrated Project Delivery (IPD) Characteristics

Integrated Project Delivery Characteristics

• Multi-Party Agreement – all parties equal (in theory)• Shared financial risk and reward based on project outcome• Liability waivers between key participants• Financial transparency between key participants• Collaborative decision-making

• Typical procurement approach: QBS or target pricing approach• Used in Private sector (still quite limited at this time)• Requires a different type of behavior of all participants

• Mutual Respect and Trust• Willingness to Collaborate• Open Communication

Pros/Cons of DBB

+Always done this way, requires no change+Owner works directly with Designer+Can use very prescriptive specifications so all details controlled by Owner+Almost anyone can bid-Stifles innovation-Longest time for delivery-Non-collaborative-Historically very litigious-Almost anyone can bid

Pros/Cons of MP Contracting

+Always done this way, requires little change+Can use very prescriptive specifications so all details controlled by Owner+Owner has control over who does the actual work+Can allow phasing or use of existing contracts-Stifles innovation-Requires very skilled Owner staff-Owner responsible for all coordination!!-Historically very litigious

Pros/Cons of CMAR

+Can obtain construction input during design, but all details still controlled by Owner+Not a big cultural change from DBB+Open book estimating+Requires little Owner staff-Can be faster than DBB, but slower than DB-Are you really getting the best construction advice?-Does CM firm have authority to accomplish anything?-Does the CM work for best interests of the project, or to justify their existence and value?

Pros/Cons of DB+Design risk assumed by DB firm+Will speed project delivery+Encourages collaboration+Historically minimizes disputes+Earlier knowledge of cost-Requires experienced firms and high trust-Details of design not controlled by Owner-Requires critical decisions by Owner much earlier-Requires funding for both design and construction earlier in the project timeline

Pros/Cons of IPD

+Risk shared by all firms+Might speed project delivery+Encourages collaboration and innovation+Best for high performance buildings (e.g., net zero)+Historically minimizes disputes+Truly open book estimating-Requires experienced firms & extremely high trust-Risk shared by all firms-Legality for public Owners is questionable

Benefits of Various Delivery Methods

Design-Build Usage Growing (18%)

Source: Charles Pankow/CII and FMI 2018 studies

28

Design-Build Market Share

29

Comparing and Contrasting DBB vs. DB

Design-Bid-Build• Must have design finished before

soliciting• Design and construction contracts

separately funded• Obtaining good constructability input

difficult• Owner retains design risk

Design-Build• Design not completed when soliciting –

ability to fast track• Contract value includes both design

and construction funding• Design includes constructability input

• Except for bridging documents, DB responsible for design risk

Comparing and Contrasting DBB vs. DB (Cont.)

Design-Bid-Build• Build what’s in Owner provided Plans and

Specifications• No incentive to deliver more• Prescriptive specifications• Subcontractors primarily selected low

price• Detailed estimating done once - prior to

submission of price proposal

Design-Build• Flexibility to innovate. DB completes

Plans and Specifications • Incentivized to deliver more• Performance criteria/specifications• Key subcontractors part of proposal

team• Conceptual estimating through detailed

estimating continually performed

Comparing and Contrasting DBB vs. DB (Cont.)

Design-Bid-Build• Budget follows the design• Cost primary selection factor

• Many opportunities for change orders/cost growth

• Owner arbitrates between A/E and builder

• Owner can use A/E to define requirements and delay decisions

• Two contracts to administer

Design-Build• Budget informs the design• Technical factors have greater

importance in selection decision• Fewer change orders and lower cost

growth• Owner out of the middle between A/E

and builder• Earlier need for Owner decisions

• One contract to administer

Comparing and Contrasting DBB vs. DB (Cont.)

Design-Bid-Build• Compliance is basis for acceptance of

work • Quality Assurance the responsibility of

Owner• True cost only after all change orders• Owner solely writes contract• Contractor focus on being cheapest on

bid day• Silos – Adversarial culture

Design-Build• Performance is basis for acceptance of

work • A/E as part of DB Entity performs QA

• Early cost commitment• Proposal becomes part of contract• Ability to select best value people/firms

• Collaborative approach

Conclusion: So Why Design-Build?

• Status quo is inefficient and adversarial• Speed of delivery• Predictability of price much sooner• Transfer responsibility and risk of project performance to DB• Facilitates innovative design solutions• Desire for greater collaboration - commonality of purpose• Enhances use of BIM, VDC, modularization, Lean principles, and greater

sustainability• Engages all parties to deliver greater value

Return of the Master Builder concept

1. The Owner’s Dilemma, Barbara Bryson with Canan Yetmen, ISBN 9780984084678

2. The Commercial Real Estate Revolution, Rex Miller, Dean Strombom, Mark Iammarino, and Bill Black, ISBN 9780470457467

3. Preparing for Design-Build Projects, Douglas Gransberg, James Koch, and Keith Molenaar, ISBN 9780784408289

4. Design-Build Essentials, Barbara Jackson, ISBN 9781428353039

Some More Resources

Next DBIA WebinarFRIDAY, JUNE 19TH 12:00PM-1:30PM (EDT)

DB 101: Diving into Design-Build

Baabak Ashuri, Ph.D., DBIA, CCP, DRMPGeorgia Institute of Technology