An Introduction to Design-Build for Public Project Delivery

In recent years, the requirement that public owners use only the “design-bid-build” method for project delivery has been relaxed. Instead of preparing a design and then selecting a low-bid contractor, public owners in Oregon and Washington (and elsewhere) now have the option to hire a single design-builder based on qualifications and experience. Combining design and construction responsibilities, it is hoped, will allow better designer-contractor collaboration, shorten the total time needed to complete a project, and reduce contractor claims.

Design-build is growing in popularity with public owners, but it presents challenges and potential pitfalls for the unwary. Here are some comments and cautions.

1.         Owners. 

Public owners need to understand the scope of their legal authority to use the design-build method. Both in Washington and Oregon, certain public owners must get approval from a state board before using this method. There is an application process, which should be built into the project timeline.

A public owner begins a design-build project by preparing a Request for Proposals (“RFP”) that will be used to solicit proposals from design-build teams. The RFP is a specialized document that should be prepared under the supervision of people with training and experience in design-build. The RFP sets forth how the project is intended to function and provides measurable criteria (e.g., “the lobby must accommodate at least 100 people”). It includes any site investigation reports and highlights any special constraints (e.g., “the new wing should be architecturally compatible with the existing building” or “Colorado Boulevard must be open to parade traffic on January 1”). Owner requirements and constraints should be minimized so that the design-build team has maximum opportunity to deploy creative ideas. The RFP should include the proposed design-build contract.

The owner then selects a design-build team based on the qualifications and experience of the contractor and designer, as well as key subcontractors and subconsultants, which are scored according to announced criteria. The review process should be planned and carried out by owner staff with training and experience in design-build. The selection process should protect the intellectual property of the various proposers.

The owner should resist the temptation to turn the selection process into a full-blown design competition. Otherwise, the cost of proposing may drive qualified design-build teams away. One emerging option is a two-phase selection process: review of team qualifications leads to a “short list” of proposers who are asked to submit design concepts, in return for which the owner pays a proposal stipend.

2.         Contractors and Designers.

Preparing a design-build proposal requires close association between the contractor and designer as well as open communication with the owner. Requirements and constraints stated in the RFP may be relaxed if the owner gets an added benefit in return. Even the design-build contract may be subject to negotiation. The design-build team should study the proposed contract to see how anticipated project risks are allocated. For example, the owner usually takes the risk of unexpected subsurface conditions and scope changes, but the risk allocation depends on the specific contract terms. Sometimes certain risks are managed using contingency funds, in which case the terms under which those funds will be managed can be critical.

The contractor and designer will enter into an initial agreement for the proposal phase and then a second agreement if the team is selected. To avoid disputes later on, the initial agreement should outline the terms of the second agreement. In both agreements, collaboration is promoted if the parties share risks to the extent practical, including through insurance. It is reasonable to take into account the fact that the contractor stands to earn considerably more from the project than the designer does.

The designer may be accustomed to finishing the design before the contractor appears, but it must be open to contractor input and design ideas that make the project more constructible. The contractor may be accustomed to blaming construction problems on defects in the plans, but it must “buy in” to the design and look for ways to anticipate and resolve design errors or omissions at minimum cost. It is helpful to anticipate potential claims against the owner and to plan how to identify and pursue them. Co-location of design and construction staff may help.

3.         Conclusion.

In a short article it is impossible to do more than indicate some of the considerations that go into a successful design-build project. More information is available from the Design-Build Institute of America (dbia.org).

"An Introduction to Design-Build for Public Project Delivery" was originally published on May 20, 2015 by the Daily Journal of Commerce.