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Since the 1980s, some owners and developers of large capital projects have considered the design-build method of project delivery to be a cost-effective alternative to design-bid-build.
The proponents have seen design-build as a way to gain full control over schedule and budget, smooth out legal and contractual issues, and mitigate the boom-and-bust cycles of the 1980s and 1990s. Now that design-build has a 20-year track record, let's fill out the report card on a variety of grading criteria.
Reducing litigation: On this aspect, design-build earns a B-, because contractors on a design-build contract often neglect to formalize dispute resolution procedures. For instance, on one of our recent cases, an owner became dissatisfied with certain aspects of the HVAC design. The owner had the advantage of a clear dispute resolution clause between itself and the design-build team. But members of the design-build team had not even thought of developing a procedure to resolve differences between themselves.
Contract drafting: This elicits a C+ in the region. Even though there are specific requirements in New York State that design-build contracts specify the design professional's scope and fee, we have recently seen many instances where these requirements have been wholly ignored. The end result is that the design professional is treated contractually in the same manner as a trade subcontractor, a scenario that ties nearly every decision to profits with little regard to quality of design.
Constructability: This merits an A-, because design-build has encouraged the assessment of constructability at the outset of a project. If the design cannot be executed within budget, the design-builder faces financial risk. Matching scope to budget is emphasized at an earlier stage and has proven more effective.
Owner control: In this area, the method gets a C+, because once the design-build team is selected, the owner is likely to be out of the day-to-day information loop. The design-builder can then determine details rather than use the more collaborative approach common to traditional methods.
Change order elimination: This primary goal of design-build gets a B. If the right team has been assembled and communications between owner and design-builder are good, there should be reasonable expectations of no significant change orders. But it doesn't always work out that way.
On a recent project, we saw a quasi-governmental owner who incrementally changed the entire project concept - significantly altering the scope - without communicating its intentions to the design-builder. These changes delayed project delivery and put the design-builder on the brink of bankruptcy. Under traditional project delivery methods, the owner's desire to change the entire concept would have been a focus for the contractors and earlier resolution would have been more likely.
Avoiding complicated disputes: This aspect registers a C+. There are different kinds of conflicts on design-build projects, including thorny disputes that can arise among the team participants. Construction defects, errors, and omissions are not scrutinized as effectively or as early by a design-build team as they might be when a contractor and architect are separate entities.
Construction administration vigilance: This merits a B-. Design-build takes away the healthy tension between a design professional and contractor. Design and construction issues are best addressed when there is a deadline to make a decision. With both disciplines performing as one entity, the participants can defer decisions because the deadlines are not cued up as they would be on a design-bid-build project.
The report card is mixed for 20 years of experience with the design-build project delivery method. When appropriately selected and customized to the project, the process relieves the owner of many headaches. When it is not, the right quality, schedule, and budget may all be sacrificed.
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