01 thomas ppt

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Copyright © 2013

Design-Build at 20 – Emerging Trends and Lessons Learned in the

First 20 years of Design-Build

“Integration is Our Foundation"

What is Design-Build?

Design-Build Project Spotlight

National’s Baseball Stadium, Washington, DC – the nation’s first LEED certified

sports stadium.

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What is Design-Build?

Design-Build is a method of project delivery in which one entity (design-builder) forges a singlecontract with the Owner to provide for architectural engineering design services and construction services

……. we’re talking about “integration of design/engineering/construction” and NOT simply “assigning tasks”!

Plans Specs+ = Contract

Emphasis on Compliance: You are buying a Product

Low Bid+

Design-Bid-BuildTwo contracts are used to accomplish design and construction.

CONTRACT WITH ENGINEER

CONTRACT WITH CONSTRUCTOR

Contract

THIS IS WHERE THE COST

COMPETITION TAKES PLACE

The “Traditional” Way – Design-BID-Build

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+ = Contract

Plans

Specs

InnovativeIdeas

Creative Approach

Great Past

Performance+

Design-Build…a single contract is used to accomplish

design and construction.

Within the Owner’s Established Budget

CONTRACT WITH DESIGN-BUILD TEAM

THIS IS WHERE THE ENTIRE COMPETITION TAKES PLACE

The “Better” Way – Design-Build

Emphasis on Behavior: You are buying a Service

“SUDDENLY -A HEATED EXCHANGE TOOK PLACEBETWEEN THE KING AND THE MOAT CONTRACTOR”

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History of Project Delivery

Systems

Design-BuildProject Spotlight

I-35W Replacement BridgeMinneapolis, MN.

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History of Project Delivery

• Origins of the Master Builder

• The Rise of Professionalism

• Effects of the Industrial Revolution

• Professional Societies

• Legal Separation of Design & Construction

Project Delivery Historical Perspective

1795 B.C.

Code ofHammurabi

1456141240 B.C.

Brunelleschi –quintessential design-builder

Alberti – First modern day

architect

1960s 1980s

Private SectorDesign-Build

Miller Act Separation Design &

ConstructionEstablishment

of DBIA &MOP

1993

Passage of Federal

Acquisition Reform Act

1996

CURT 1st WP Calling for Wholesale

Change

AIA-CCIPD Model

DBIADesignation

Program

Vitruvius – 1st

Doc. Of Design &

Construction

Rise of Professional

Societies

1850s

Public SectorDesign-Build

1935 2002 2004 2006 2011

Master Builder Separation Integration

Renaissance Industrial Revolution

Information Age

Brooks Act

1972

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History of Project Delivery:The Master Builder

• Code of Hammurabi: Obligation of design & construction to society (1795-1750 BC)

• Vitruvius: Documentation of design and construction practices (40 BC)

• Brunelleschi: quintessential Design-Builder & innovator (1377-1446)

History of Project Delivery:The Rise of Professionalism

• Alberti: first intentional separation of the art from the craft (1456)

• Established architecture as a profession distinct from the science of engineering & construction

• From the 15th century into 19th century, Architects retained responsibility for both design & construction

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History of Project Delivery:The Evolution of the Industry

ASCE – American Society of Civil Engineers

AIA – American Institute of Architects

AGC – Associated General Contractors

1852

1857

1918

CSI – Construction Specifications Institute

ABC – Associated Builders & Contractors

ASA – American Subcontractors AssociationAIC – American Institute of Constructors

CMAA – Construction Management Assoc. of America

USGBC – US Green Building Council

LCI – Lean Construction Institute

DBIA – Design-Build Institute of America

CURT – Construction Users Roundtable2000

1997

1993

1966

1948

1950

1971

1982

1993

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Return to Integration

• DBIA founded in 1993 to help standardize and advocate for an already emerging design-build industry

• Integrated Project Delivery (IPD)

• Building Information Modeling (BIM)

• Sustainable Design (Green/LEED)

• High Performance Contracting (LEAN - Toyota Production Model)

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History of Project Delivery:Professional Societies

• Greater professional specialization

• Increase in specialized knowledge

• Promotion & advocacy of professional interests & markets

• Ethical standards of practice

• Rise of conflict-of-interest issues

What are Federal Officials Saying about Design-Build

Jag R. Bhargava, Deputy Director, GSA

“With only four years between groundbreaking and full occupancy, we had to find a way of doing it. The only method I could think of was design-build.” On the new Census building.

Pete Swift, Deputy Chief, Design and Construction Branch

“ We at the Federal Bureau of Prison have been doing design-build since the FAR regulations changed. Our primary reasons back then were that we would eliminate a lot of the claims we were getting and we had a large workload. Over the years we have not had a claim on any design-build project we have done.”

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What are Federal Officials Saying about Design-Build?

Joseph Gott, Chief Engineer and Director of Capital Improvements, NAVFAC“ At NAVFAC, we do about 75 percent of new construction design-build. The largest reason we select a project for the design-build delivery vehicle is the single point of accountability and responsibility. We have an A/E and a design-build constructor on the same team and have a contract with one company.”

Paul Parsoneault, Construction Management Team Leader, Military Programs Branch, USACE“ There was no way possible to execute an historically large mission using the traditional delivery system. We determined that, in terms of the Army, the default delivery system is designed-build…Primarily because we can deliver more quickly, we can leverage the innovation of industry to provide us with the most cost effective solutions to our requirements.”

Design-Build Utilization

Federal Agencies using Design-Build 75%+ :

Navy Facilities Engineering Command

Army Corps of Engineers

State Department

Bureau of Prisons

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Other Federal Agencies Using Design-Build

General Services Administration

Veterans Administration

Department of Agriculture

Department of Interior

Design-Build Meets Your Requirements

• Fully Competitive• Fast Start-Up Schedules get met• Lower Cost • Higher Quality• Greater Owner Satisfaction• Reduces litigation, change orders and cost

growth• Meets budget constraints• Improves America’s competitiveness• Puts people to work faster, finishes

work faster, costs less

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Design-Build Performance(Comparison of Design-Build vs. CM-at-Risk vs. Design-Bid-Build)

6% Lower Cost

12% Faster Construction Time

33% Faster Project Completion

Higher quality in all measured categories

SOURCE: Construction Industry Institute (CII)/Penn State Research comparing 351 projects ranging from 5K to 2.5M square feet. Projectswere of various types and from various industries.

•Examined influence of 19 factors on:

•Several types of delivery systems•Cost control•Schedule control•Construction speed•Delivery speed

Delivery System StudyConstruction Industry Institute (CII)/Penn State 1999

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Metric DB vs. DBB

CM@R vs. DBB

DB vs. CM@R

Unit Cost 6.1% lower 1.6% lower 4.5% lower

Construction Speed 12% faster 5.8% faster 7% faster

Delivery Speed 33.5% faster 13.3% faster 23.5% faster

Cost Growth 5.2% less 7.8% more 12.6% less

Schedule Growth 11.4% less 9.2% less 2.2% less

Re: “Comparison of U.S. Project Delivery Systems,” Mark Konchar & Victor Sanvido, Journal of Construction Engineering and Management, Vol. 124, No. 6 (1998), pp. 435-444.

Comparison of Project Delivery Methods (CII/Penn State Study)

Research Study

Parameter

CII Penn State (US)

DB vs. DBB

Reading DB Forum (UK)

DB vs. DBB

Unit Cost 6% Less 13% Less

Construction Speed 12% Faster 12% Faster

Delivery Speed 33% Faster 30% Faster

Comparison (continued)

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•D-B delivers equal or higher quality

•D-B out performed traditional D-B-B in every category on a 10 point scale

•Startup•Call Backs•O&M•Exterior & Structure•Interior•Environmental•Equipment

Comparison for Quality

Design-Build Performance (Transportation)(Comparison of Design-Build vs. CM-at-Risk vs. Design-Bid-Build)

11% Lower Cost

36% Faster Project Completion

Higher quality in all measured categories

Ralph Ellis, Zahar Herbsman & Ashish Kumar, Evaluation of the Florida DOT’s Pilot Design-Build Pilot Program. University of Florida, College of Engineering, Gainesville, FL.

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Making the Design-Build Decision

Where is the Industry Headed?


Carilion Roanoke Memorial HospitalRoanoke, VA

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Design-Build State Public Procurement Map 1993

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Distinguishing Project Delivery

Systems


Lake Pleasant Water Treatment PlantPhoenix, AZ

Project Delivery Defined

• A comprehensive process including planning, design, construction & other services, necessary for organizing, executing & completing a building facility or project

• Three fundamental Owner decisions:

What Project Delivery System?

What Procurement

Method?

What Contract Format?

Developing the “Acquisition Strategy”

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Familiar Project Delivery Methods

• Design-Bid-Build (D-B-B)• Sometimes called “Traditional”

• Construction Management at Risk (CM@R)• Also known as CM/GC

• Design-Build (D-B)

Importance of the Project Delivery Method

• Establishes when the parties become engaged

• Influences the choices of contractual relationships among the parties

• Influences ownership & impact of changes & modifications of project cost

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Project Delivery

• Always 3 basic parties involved in the project delivery process:

Owner

Designer

Contractor

Design-Bid-BuildContractual Relationship

Characteristics • Three linear phases:Design, bid and build

• Three prime players: Owner, designer, constructor

• Two separate contracts:

• Owner to designer

• Owner to constructor

ResponsibilitiesOwner

Designer

Constructor

Program, finance, management

Prepares plans & specs, normal services

Prime & sub construction

Owner

Designer Contractor

Sub-Contractors

Sub-Consultants

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Why Owners Might Choose Design-Bid-Build (D-B-B)

• Owner has control over the entire process

• A/E works directly for Owner

• The contractor works directly for Owner

• Allowed in public procurement

CM-at-Risk Contractual Relationship

Owner

Designer CM-GC

Sub-Contractors

Sub-Consultants

Characteristics • Three linear phases: Design, bid, build or may be fast tracked

• Three prime players: Owner, designer, CM-constructor

• Two separate contracts:• Owner to CM-constructor• Owner to designer


CM-Constructor

Designer

Program, finance

Provides pre-construction & project management services, coordinates design prior to construction, is prime with the subcontractors

All normal services

Two Part ContractPre-Construction Services (Design Assist)

& Construction

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Why Owners Might Choose CM-at-Risk (CM@R)

• A/E works directly for Owner• More professional relationship with Contractor• Earlier knowledge of costs• Earlier involvement of Constructor possible• Two contract system is less change for Owner• Project delivery faster than traditional Design-Bid-Build• Works well for:

• Projects governed by significant schedule constraints• Projects requiring complex phasing• Projects containing budget limitations requiring a construction

cost guarantee during design• Projects that will benefit from value engineering

Design-Build Contractual Relationship

Characteristics • Integrated process-overlapped design & construction

• Often fast tracked• Two prime players:

Owner & design-build entity • Entity can take on many forms• One contract -

• Owner to Design-Builder


Design-Builder

Program, performance requirements, & finance*

Design & construction. Can include programming & post construction services

* D-B can expand services to include programming, finance, operate, etc

Design-BuildEntity

Owner

A/E - SubConsultants

Sub-Contractors

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Design-Build Entity Structural Arrangements

• Integrated firm

• Contractor led

• Designer (A/E) led

• Joint Venture

• Developer led

Joint-Venture

5%

Integrated Design-

Builder

28%

Designer-Led

13%

Contractor-Led

54%

Source: Zweig White

Percentage of Design in the RFP

-10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70%

Pre-Design

Design/Draw-Build35% Design or Greater

Pre-Design Design-Build-10% to 5%

Design CriteriaDesign-Build

5% to 20% Preliminary Engineering Design-Build 20% to 35%

Design

CRITERIA DOCUMENTS(Describes End Result)

BRIDGING DOCUMENTS(Prescribes How To Achieve End Result)

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Why Owners Might Choose D-B (continued)

• Single point of responsibility for Owner

• Professional relationship with Contractor & Designer

• A/E & Constructor on the same team providing unified recommendations to Owner

• Errors are addressed - not used as excuses or claims

• Early Constructor involvement enhances constructability

• The Owner needs an early cost commitment

• Project will benefit from value engineering & innovation

• Project requires a construction cost guarantee during design

• Complex Project - requiring close coordination of design & construction expertise

Why Owners Might Choose D-B (continued)

• Fewer changes, fewer claims & less litigation• The Owner considers controlling project risks under one entity

a high priority• Allocate risks to those who can best manage • Owner “out of middle”• Earlier knowledge of firm costs• Design submission & pricing project at proposal stage possible• Faster, more cost-effective delivery system• The Owner wishes to fast track the project• Project requires complex phasing• Owner is able to specify performance requirements &

specifications

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Contractor Involvement . . . When?

Design-Bid-Build

CM-at-Risk

ConstructionDesign & Bid

Design & BidConstruction

Extensive Contractor Involvement Possible

No Project Contractor Involvement Overlapped

design & construction

Speed to market considerations…

Design-Bid-Build

Design-Build

ConstructionDesign & Bid

Construction

Extensive Contractor Involvement

No Project Contractor Involvement

Contractor Involvement… When?

Key Subs included in

design phase

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Who is Responsible for Plans & Specs?

• Spearin Doctrine

• Implied warranty of sufficiency of plans & specs

• 1918 Federal case - dry-dock in the Brooklyn Navy Yard –Contractor relied on government provided plans & specs

• Now widely accepted – Federal & most states

• 2 warranties by Owner• the plans & specifications are accurate• they are suitable for their intended use

• Reliance had to be reasonable

Procurement Methodologies


Navy Yard Metro WestWashington, DC

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Procurement Options

• Limited Competition• Sole Source (direct)• Negotiation

• Open Competition• QBS (Qualifications-Based)

• Price and design are not selection factors• BVS (Best Value)

• With Criteria Documents• Owner’s criteria provided to shortlisted proposers• Selection based on qualifications, technical solution &

price

• With Bridging Documents• Plans & specs are developed beyond +/- 20%• Usually leads to low price selection

• Low Bid

Sole Source

• Description• Common private sector approach

• Commence with professional services to establish project scope, budget & schedule

• Contract format options are cost plus, GMP, target price or lump sum

Not generally applicable to Public Sector

work.

Not generally applicable to public

sector

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Sole Source

• Owner approaches only one firm; no competition

• Often used when Owner & Builder, CM, or Design-Build firm have a long-standing business relationship

• Also used when only one firm can provide highly specialized services

• Also used for emergency situations

Open Competition: Qualifications-Based (QBS)

• Description• Competitive process based on qualifications &

project approach ONLY - No price

• Commence with professional services to establish project scope, budget, & schedule

• Contract format options are cost plus, GMP, target price or lump sum

More & more Owners are turning to QBS due to

control of selection process & less resources for

implementation

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QBS Keys to Success

• Set aside traditional selection processes• Develop clear definition of project

requirements• Administer selection process professionally• Use balanced contract language• Let reward reflect risk• Ensure early involvement of Design-Builder

QBS Key Considerations

• Allows Owner benefit of early contractor involvement in the programming stage

• Owner has significant control & collaborative environment with Design-Build team

• Competitive process• Procurement process can be simple & non-intensive• Ability to secure competition through equipment &

construction packaging under cost based contract formats

• May not be applicable to public sector work due to procurement laws (depends on local authority)

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Open Competition: Best Value (BVS)

• Best Value selection - combination of qualifications, technical & cost criteria (Qualitative & Quantitative)

• Best Value ranges from qualifications-oriented to price-oriented selections

• Best practice is 2-phase process• RFQ - Shortlist based on qualifications

• RFP – Proposals include price, technical approach, & design

Best Value Keys to Success

• Set aside traditional processes/relationships• Shortlist offerors• Consider the need for an Owner’s Design-Build

consultant• Provide criteria in lieu of bridging documents in RFP• Develop performance-based criteria in lieu of

prescriptive specifications• Limit design direction in RFP• Provide a stipend (honorarium) for shortlisted teams

not selected

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Best Value Keys to Success (continued)

• Ask for reasonable submission requirements

• Adequately disclose selection criteria & weighting

• Consider financial requirements of proposals

• Best value vs. low price emphasis on scoring


• Balance responsibility/risk in contract language

• Disclose project budget & schedule

• Conduct a balanced evaluation

• Establish adequacy & certainty of funding

• Create unbiased, knowledgeable selection panels

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• Conduct separate evaluation of price & qualitative factors

• Promptly award the contract

• Debrief unsuccessful offerors

• Use lump sum contracts when selection is based predominantly on price

Best Value Key Considerations

• Provides Owners significant flexibility while maintaining competitive environment

• Opportunity to optimize aesthetics & performance for a given price

• May limit Owner collaboration with project team during the selection process

• Procurement process may be time consuming & resource intensive

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Low Bid

• Description• Competitive

• Award criteria – price based selection with lowest responsive bid & responsible bidder

• Using low bid in D-B has implications for the Owner

Low Bid Key Considerations

• Traditional• Non-subjective selection• Review process is fast & simple• Loss of Owner control of design after contract award• Loss of Owner collaboration opportunities with project

team• Price driven selection• “Preparing” for procurement process is time consuming

& resource intensive• No incentives for innovation or exceptional performance• You’ll get what you paid for…no more, no less

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Choosing the Right Project

Delivery System


EPA Region 8 HeadquartersDenver, CO

Which Project Delivery Method is Best?

• Each construction project has a unique combination of factors:

• Project-specific factors

• Organization-specific factors

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Which Project Delivery Method is Best? (continued)

• There are a number of relevant questions an Owner needs to answer in choosing a delivery system:

• An Owner must make an objective assessment of factors surrounding each project

• An Owner needs to understand the benefits & drawbacks of each delivery method

Which Project Delivery Method is Best? (continued)

• The decision should be directly related to the:

• Attributes of the project to be undertaken

• Ability of the Owner to staff the project appropriately

• Program & performance issues that the Owner has identified for the project

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Process for Selecting an Approach

• Matching Owner & project characteristics to project delivery system options

• Matrix approach

• Brainstorming sessions

• Computer-based programs

Sample Matrix

Criteria Criteria Weight

DBB Multi-Prime

CM at Risk

DB Other

Schedule Flexibility 25 4

100

9

225

6

1506

150

Owner design control 20 10

200

10

200

6

120

6

120

Awarding on best value 18 3

54

3

54

8

144

8

144

Low initial cost 15 9

135

9

135

5

75

6

90

Promoting team work 12 4

48

3

36

7

84

8

96

Establishing early price 10 5

50

2

20

7

70

9

90

Totals 100 587 670 643 690Rank each delivery method relative to criteria on a scale from 1 (low) to 10 (high)

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Design-Build PLUS

• The Design-Build entity can contract to provide added services beyond design & construction services:

• Financing & asset management• Feasibility studies• Site acquisition• Planning & Programming• Supply chain analysis• Design-Build Maintain & Operate• … and various combinations of the above

When Design-Build Goes Wrong

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Worst Practices

Three most important Worst Practices to avoid:

• Vague or gone-too-far Bridging/RFP(limits creativity, exposes Owner/Agency to change orders)

• Inviting many D-B teams to design for free if stipends are inadequate (exploits designers)

• Low-price-only selection, closed books (‘low-ball’ bids limit quality, induce change order claims and reduce design to minimal drafting)

D-B Team Selection – Worst Practices

• Too many on selection committee

• No interviews, or separate interview days, or interviewing more than three teams

• Selection Process changed midstream

• Complex ‘points’ scoring system

• Low price is the sole criterion

• Subcontract terms set after selection

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Teaming Risks – Worst Practices

• GC and A/E join up after RFP is issued

• D-B team has little or no pre-proposal interaction with the Owner/Agency or each other

• A/Es are ‘at-risk’ for costs of proposal design effort (little or no stipends)

• Design contract and/or fee arrangements are not defined until award

In Summary

• Project delivery selection is critical to overall project success

• Project delivery method selection is not arbitrary

• Best practice: • Early planning & a complete understanding of

the various project delivery, procurement, and contracting options

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Design-Build Institute of America

Design-Build Institute of America is a Registered Provider with The American Institute of Architects Continuing Education Systems. Credit earned on completion of this program will be reported to CES Records for AIA members. Certificates of Completion for non-AIA member are available on request.

This program is registered with the AIA/CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing, or dealing in any material or product. Questions related to specific materials, methods and services will be addressed at the conclusion of this presentation.

For More Information . . .

Richard ThomasDirector, State/Local Legislative Affairs

[email protected]

Design-Build Institute of America

1331 Pennsylvania Ave. NW

4th Floor

Washington, DC 20004

202-682-0110

www.dbia.org