Source: http://www.constructiondive.com, March 15, 2016
By: Kim Slowey
The following is the third installment of Construction Dive’s “The Dotted Line” series, which takes an in-depth look at different construction contract types each month with expert input. Read the first two installments here and here.
Although the design-build process of construction has been used throughout the world for thousands of years — think the master builders of ancient Greece and Egypt — contractors often think of it as a “new” alternative to more familiar ways of contracting, such as the design-bid-build project delivery method.
So what’s the difference? Simply put, rather than an owner hiring an architect to perform project design and produce a full set of plans and specifications before a project begins — then putting that out to bid to different contractors to come up with a price acceptable to the owner — the design-build method turns those separate entities into a collaborative team that tackles the entire project, design and construction, together.

Benefits of design-build

There are many benefits to design-build, according to Bill Quatman, chairman of the Design-Build Institute of America (DBIA). First, he said, is the single point of accountability. “It’s a one-call solution for the owner in most cases,” he told Construction Dive. “There’s no having to get between the designer and contractor to work things out.”
Quatman added that the timesaving inherent in the design-build model is a plus. “You can start breaking ground and digging footings before you know what color the paint is on the wall or what kind of hinges are on the doors,” he said.
In addition, he said, collaboration between the project team early on addresses those issues that are costly to work out during the construction process. And if there is an issue that arises during the course of the project, the owner is in a position to see cost savings because the contractor has to absorb additional expenses around design errors and omissions.
However, he said that hands down the greatest benefit is the “one call” aspect of the arrangement. “We like to say design-build replaces finger-point responsibility with single-point responsibility,” Quatman said.
Bob Nartonis, senior vice president at Mortenson Construction, said that oftentimes, design-build is the best way for customers to maximize Mortenson’s experience in so many disciplines.
“Mortensen likes design-build because we feel we have expertise in many different building types that can help optimize the efficiency of the design process, meaning that we’re side-by-side, shoulder-to-shoulder with the design team solving problems and avoiding problems together,” he told Construction Dive.
Barbara Wagner, senior vice president at Clark Construction, said that that with a typical design-bid-build, the contractor has no idea why the project was designed the way it was or what the architect and owner were thinking as far as the outcome. “You learn all that as you’re building, which is too late to have input,” she told Construction Dive.
Wagner cited an example of one of Clark’s current projects, a $23 million design-build hospital project in California for which the owners have set aside a 5% contingency for changes. She said that because the design-build team has ensured proper coordination on the project, they have seen less than 1% in change orders, and those have been primarily scope-related.
Wagner, who has a master’s degree in engineering and a bachelor’s degree in architecture, is a fan of design-build for that exact reason — the opportunity to get involved early in the design phase of the project and to be able to provide input at that level.

Possible downsides to the method

The design-build process, however, is not without its critics.
In January, the Journal of Engineering and Construction Management published a study that asserted approximately half of design-build projects result in cost overruns. The DBIA quickly disputed the study results and claimed the researchers were “off the mark” and did not take into consideration the possibility of the additional costs of owner-initiated scope changes.
Another challenge facing design-build is the legality of the structure in some states, according to John Patrick Curran, partner at Sive, Paget & Riesel in New York. He said design-build contracts have to be carefully written to be considered valid due to trade and professional licensing.
Wagner said Clark uses its own form of contract, as the company was engaging in design-build prior to tailored forms coming available. However, she said that Clark also works with the American Institute of Architects’ design-build forms, as well as DBIA forms in the course of their work.
Nartonis said Mortenson bases its agreements on the DBIA suite of contracts because they are written from a collaborative perspective of owner, contractor and architect, giving teams options involving “those sticky issues that are worth discussing upfront before you engage in the project.”
And of course, there are some things common to all contracts, such as making sure they are as detailed as possible when it comes to risk and responsibilities. Curran said he uses every type of contract form but added that there are “myriad ways” to word a contract to change its meaning. “The division of responsibility needs to be fully fleshed out and in clear language,” he said.

How a project can be successful with design-build

And as far as critics who claim that only certain projects lend themselves to design-build, or any project delivery method for that matter, these experts agree that as long as there is an experienced team in place and everyone knows their responsibilities and risks, any project could be a successful design-build project.
“There are very successful projects done in any method, and there are bad projects done with any method,” Quatman said. “A quality designer-builder and owner can have success under any model.” In fact, Quatman said statistics show that chances for success increase using design-build over other methods of project delivery.
Nartonis said that to increase the chances of success, “The contractor needs to be prepared to fully engage in the design process.”
“If it doesn’t get started correctly, and it’s not a collaborative team approach upfront, and if the team members are not working together in understanding what the customers success factors are, then that’s where you’re going to get off the rails,” he said. “And it’s very difficult to get back on the rails once that happens.”
Wagner said success comes down to the people running the project, their experience and their ability to work together as a team. “You have to have the right type of people with the right mentality that are willing to work together to find the best solution and to have a clear understanding of what risks they’re taking,” she said.
“I would compare it more to a symphony,” Quatman added. “If you get a bunch of musicians without a conductor, and they’re all playing their own instruments without any coordination, it’s a mess. Then the conductor gets up there, and everyone plays a beautiful symphony because they’re all working together. They’re on the same page, literally, and it’s a coordinated effort. I think that with design-build, if you get that team working together from day one, all playing from the same page and working toward a common goal, that’s what successful design-build is.”