Design-build projects

Popularity found in its advantages
Thursday, February 28, 2013
By Owen Pawson

Touted as a time and cost-saving measure, design-build project delivery has taken the North American construction industry by storm. It is now used in 40 per cent of all non-residential construction projects in the U.S., including 80 per cent of military projects and 50 per cent of projects worth more than $10 million. Canada has kept pace. The Canadian Design-Build Institute promotes design-build in Canada. Additionally, the Canadian Construction Documents Committee (CCDC) has model design-build contracts.

While design-build agreements can vary, their defining feature is that owners contract with a single entity to design and construct their project. That entity bears sole legal responsibility for both aspects. This contrasts with traditional delivery methods where design and construction are undertaken by separate entities, each having their own contract with the owner.

The popularity of design-build is found in its advantages. One of those is the potential for design innovation. Owners can benefit from creativity generated by close collaboration between designer and constructor – for example, the use of new technologies or materials and features that reduce project cost while meeting aesthetic sensibilities. Subject to intellectual property rights, design and construction innovations can then be used by contractors and designers in their future projects.

To take full advantage of the single point of contact and responsibility for design and construction, owners should develop a comprehensive description of project requirements, including functional relationships, performance specifications and clear details about expected level of finish. During delivery, the owner deals solely with the design-builder for any issues related to either design or construction. The design-builder is then responsible for resolving those issues, ensuring compliance with local laws, codes and regulations, and ensuring delivery conforms to requirements found in the design-build agreement. From a legal perspective, standard agreements combined with professional design standards can offer reduced litigation risk for all parties.

Lower costs can be another design-build advantage due to the close relationship and synergies between the designer and the builder that start at conceptual design. Then, during construction, the design-builder has an incentive to reduce the number of design changes – also an advantage for the designer. Additionally, disputes over “extras” and delays that typically arise when designers and contractors are separately retained in traditional project delivery can be avoided. Finally, savings can be realized through early ordering of materials. It appears the greatest potential for cost-saving may be in larger works projects (for example, water and waste-water treatment projects) given the recent study of the American Society of Civil Engineers (ASCE) that reported savings of up to 43 per cent compared to traditional project delivery.

Design-build can also offer shorter timeframes for project delivery – certainly an attractive feature for owners. Contractors and designers can also benefit from reduced timeframes as they may be able to take on more projects over time. Because design and construction are coordinated and collaboratively delivered, alternative design proposals can be provided to owners for review before they are completely finalized, again with the potential to accelerate project delivery. Shorter project delivery times are greater for larger projects – a 33 per cent schedule reduction was reported by ASCE for water and waste-water treatment projects.

Design-build delivery is not necessarily appropriate for every project. For owners, it is often difficult to compare design-build proposals where the designs are radically different. For this reason, owners should consider having third party expertise to aid in this evaluation as well as to assist with performance review and decisions during project delivery. Cost control may be difficult in design-build depending upon the detail found in the owner’s statement of requirements and performance specifications. Owners selecting design-build delivery should ensure the performance level and quality of materials and workmanship are fully described. Contractors, conversely, should be aware of quality obligations and their responsibility to deal with design-related costs arising during project delivery.

There are also liability issues to consider in design-build. Design-builders should carry adequate professional liability (errors and omissions) insurance. Owners should review the design-builder’s coverage because typical “contractor” liability policies may not extend to damages caused by faulty design. Also, single-point responsibility will not always reduce finger-pointing between contractors and designers – project delivery can be impacted if the designer and contractor are in a heated dispute.

Some design professionals argue design quality is improved if they can focus on creative and innovative design without worrying about construction constraints or contractor interference. Certainly, this concern is not mollified by the typical makeup of design-build teams, which are usually led by contractors who then subcontract design responsibilities to an architecture or engineering firm.

The decision by the owner to deliver a project by design-build ultimately depends on the objective, scope, complexity and timing specific to the project. However, current trends in the design and construction world suggest design-build will only continue to increase in prominence as a project delivery mechanism in the years to come.

Owen Pawson is a partner in Miller Thomson’s Vancouver office.

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