Tuesday, December 16, 2014

Why Designers and Contractors Sometimes Don't Like Design-Build

Design-Build is growing in popularity among public agencies.  It can be a good tool, but depending on how the selection process is structured, it can be problematic and cause unintended consequences for the project, owner, and Design-Builder. 

Price in the selection process:  One of the key issues to decide in developing a Design-Build selection process is how much price be considered.  There are two basic models on this.
  • Limited prices:  In this model, often known as Progressive Design-Build, the owner asks for cost or price-related factors, perhaps the fee (overhead and profit) and general conditions costs.  The construction cost is then negotiated when the design is sufficiently complete.  This avoids requiring the Design-Builder to come up with a complete cost early on when not enough is known about the project.
Steve McNutt
  • Full price:  In this model, the owner asks the competing firms to submit their full price for designing and building the project as part of the selection process.  There are serious challenges associated with this model.  Rather than try to summarize those problems here, I refer you to an excellent, short, and very readable article by Steve McNutt, Principal with NAC Architecture in Spokane, WA that appeared in the Seattle Daily Journal of Commerce on October 30, 2014.  Click here to read the article: "D/B competitions: a high-stakes poker game you can't win."
Washington state law:  RCW 39.10.330 was modified in 2014 to permit public agencies to request in the selection process "cost or price-related factors" (Progressive Design-Build), rather than the complete price.
Mike Purdy's Public Contracting Blog
© 2014 by Michael E. Purdy Associates, LLC


Anonymous said...

I live in the upstate New York region and this area is by and large design/bid/build for public work but quite a bit of design/build for private work. I far and above prefer to do design/build. The design/bid/build process around here is fully of highly dysfunctional and corrupt processes which inflate prices and push down overall value.

Mike Purdy said...

If Design-Bid-Build is not managed properly, it can be very problematic. Public owners who venture into Design-Build need to have the appropriate expertise to manage this different project delivery method.