Streamlining project delivery

Design-build is gaining momentum with owners
Friday, March 1, 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.

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.

Benefits of design-build construction
The popularity of design-build is found in its advantages. One is the potential for design innovation. Owners can benefit from creativity generated by close collaboration between designer and constructor. Subject to intellectual property rights, design and construction innovations can then be used by contractors and designers in 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 that 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. Disputes over “extras” and delays that typically arise when designers and contractors are separately retained in traditional delivery can be avoided. Savings can also be realized through early ordering of materials.

Design-build can also offer shorter timeframes for project delivery, which is 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.

Design-build considerations
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.

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 that then subcontract design responsibilities to an architecture or engineering firm.

The decision by an 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 the Vancouver office Miller Thomson LLP.

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