Construction Law Newsletter
Two Methods Frequently Used for Project Delivery
“Project delivery” in the design and construction industry encompasses the various processes necessary to complete a construction project. Such processes include design, construction, operation, finance, maintenance and overall risk management. The manner in which these processes are put together will have a significant effect upon the overall price, quality, and time of completion of the project. “Design-bid-build” and “design-build” are two of the project delivery methods commonly used in the United States.
Design-bid-build is the most widely used project delivery method and has been used in construction for over 150 years. As its name implies, it is characterized by its three phases: designing, bidding, and building. Under design-bid-build, the owner enters into two separate contracts: one for design and one for construction. Generally, the owner first contracts with design professionals (e.g., architects) for the preparation of construction documents. Then, using the completed design, the owner solicits competitive bids from contractors to build the project. Finally, the owner will award the project to a bidder, typically the lowest bidder, and enter into another contract for the actual construction of the project. Thus, the three primary players under this method are the owner, the design professional and the contractor; and the relationship among them can become slightly adversarial.
Advantages and Disadvantages of Design-Bid-Build
Advantages of using design-bid-build as a project delivery method include:
- Design professionals are active in the administration of the construction process; therefore, design intentions are followed
- Competitive bidding on the design results in a cost-efficient price for the project
- The owner has more control by actively participating in the design process
- Roles of the parties are clearly defined and well-established
- The process is widely applicable and well understood throughout the industry
- The contractor is excluded from suggesting materials and controlling projected costs since the contractor is not involved in the design process
- Design-bid-build is a linear, step-by-step process that is difficult to speed up in order to meet critical time schedules
- Commencement of construction is postponed until the construction plans are completed
- The process is cumbersome, formal, and expensive
- The owner is accepting liability for design in its contract with the contractor
- Pursuing a “least-cost” approach may require increased oversight and quality control
The design-build method was established to address some of the limitations and weaknesses involved with the design-bid-build approach, and it has gained increasing popularity. Under this method, a single entity performs architecture, engineering, and construction services. The design-build entity is often a joint venture of a designer and a general contractor. This method essentially eliminates the bidding process and offers the owner the ability to enter only one contract for the entire construction project. In other words, the design-build entity will be held responsible for the entire process, from concept to completion.
Generally, prior to design, the owner will hire the design-build entity based on qualifications, price, or both. During the designing process, the “building” portion of the entity provides input and estimates to help guide the design decisions. Thus, the two primary parties involved under the design-build scenario are the owner and the design-build entity.
Advantages and Disadvantages of Design-Build
Advantages of the design-build project delivery method include:
- Design and construction professionals work together as part of a project team
- Simultaneous design and construction allows critical time schedules to be met
- Work can be “fast-tracked” (a construction delivery approach which overlaps design and construction, thus decreasing the length of the project schedule)
- Costs can be better controlled due to early contractor involvement in the estimating and procurement of materials
- Using a single source will likely minimize disputes
- The lack of competitive bidding may result in a higher cost
- Disagreements about quality and design intentions may arise late in the project because construction documents are not complete when the cost commitment is made
- A major conflict of interest may be generated if only one entity serves as both the designer and contractor
- Projects might suffer from hidden reductions in quality when cost-savings and design changes are determined by the design-builder
- Changes to plans become increasingly difficult and expensive as work rapidly progresses
- The owner loses significant control and involvement in the process, making it difficult to ensure it is receiving the best value for its money
Other forms of project delivery methods may include “construction manager at risk” and “multiple-prime contracting” formats. All methods have proven to be highly effective and an owner’s selection of one over another depends on many factors such as budget, design, schedule, risk assessment, owner’s level of expertise and size of the project.
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