Defining and Comparing Design-Bid-Build and Design-Build
According to FMI, a consulting and investment banking firm, 42% of US-based construction projects used Design-Build agreements and 23% used Design-Bid-Build during the years 2016-2020. Figure 1.1 below shows the basic differences between the two project delivery methods.
Figure 1.1
What Is Design-Bid-Build?
The DBB method consists of three phases: 1) the Design phase, 2) the Bid phase, and 3) the Build phase. While the previous point seems obvious, it helps clarify the process.
Design-Bid-Build is a good option for new commercial construction where the owner of the project needs both professional design and construction services while also needing to closely monitor the project, and account for its budget. It’s also a good fit for projects that are required to procure professional design services by qualifications-based selection (QBS) regulations and constructors by competitive bidding.
Although it can be a lengthy contracting process, it allows the designer/architect and general contractor to work directly for the owner but under separate contracts.
The owner works with the design team to develop the necessary contract documents such as, drawings, renderings and specifications. Once the design is finished, it is sent out for GCs to bid on the project. It can take at least 2-4 weeks for contractors and subcontractors to price a project.
The design team and the owner evaluate the bids and determine which GC is best to contract with, and once the contract is finalized, construction starts can be scheduled and material and equipment can be ordered.
The above is a very general and simplified way to look at the Design-Bid-Build method, but for the sake of comparison, it is a good start to understand the idea behind construction contracting.
When Should Design-Bid-Build be Used?
Design-Bid-Build is best for linear project sequences where one step is completed before the next is set to begin. DBB works best for projects where the owner needs complete design control, and for less complicated projects that are budget sensitive but not necessarily time sensitive. Public and municipal entities mostly use this construction delivery method as required by state statutes and is also used by some private developers who are strictly looking for low-cost bids.
What Is Design-Build?
Design-Build helps streamline the project construction process by combining the design and construction phases into a single contract, and by promoting collaboration from beginning to end.
Depending on who the contract is with, DB projects can be architect-led or contractor-led. Architect-led agreements are generally used on projects that have a high complexity of design, such as new buildings or remodels. Contractor-led projects usually don’t rely on difficult design, and involve repetitive work, such as infrastructure projects. Regardless of which way the contract is written, the architect and contractor are usually contractually connected, and one of them is connected to the owner and takes point on the project.
The beginning of the Design-Build process starts with the owner of the project drafting an initial project design and asking for project proposals from various design-builders. These proposals play the role of bids in the DBB method, representing a design-builder’s “best” price for the project at hand. The important difference between a bid and a proposal is that proposals include notes on the project design, while bids don’t alter the project design. Owners typically select the proposal that provides the best value for the project without sacrificing design original design elements.
When Should Design-Build Be Used?
A Design Build contract is ideal when the project owner wants one entity to be responsible for both design and construction. Design-Build is usually the preferred contracting method under a tight schedule. DB contracts are often awarded through negotiation rather than through a bid process.
Advantages and Disadvantages of Project Delivery Methods
Design-Bid-Build
The Design-Bid-Build delivery of a project can generate a competitiveness among the bidders, allowing for the project owner to choose the cost that fits the budget. While DBB promises to result in the lowest construction price when compared to other methods, an obviously huge advantage, it can require the owner of the project to put up a lot of cash in the design phase. Construction cannot begin prior to the design of the project being finalized and signed off, so timelines can be delayed.
During the design phase, the GC is not able to provide design feedback, possibly further stalling the work down the line. And once again, the crux of it all, the payments to contractors and suppliers need to flow through multiple layers of those workers.
As opposed to the Design-Build delivery, DBB does not provide a trusted builder to provide early cost and schedule input to maintain an owner’s budget and timeline. When the bids collected during the competitive bidding process do not meet the owner’s/developer’s expectations, the project can come to a standstill for redesign and re-engineering. If that happens, more time and more cost will likely be necessary to advance the project.
Design-Build
The Design-Build method promises a cohesive, collaborative effort between contractors and sub-contractors. It allows the parties, the design-builder and subconsultants, to work together on the design, which in an ideal world of design and construction expertise, should provide for a shorter timeline. But let’s take things a step further. As explained earlier, DB may not have a bidding process to select a “best-value” team, instead using qualifications-based selections to make sure that that the design-builder that is selected has credentials and the team needed to execute the project. This doesn’t mean that DB cannot use a best-value method, design-builders can provide different combinations of teams that fit the project needs that could carry different fees and costs, this gives the developer the opportunity to pick the team with the lower-priced proposal.
One of the down sides of DB delivery is the projects slated to be delivered by the DB method normally have their subcontractors hired ahead of time, making it difficult for new subs to participate and build their DB project expertise. Another glaring disadvantage for the GC of the project is that they can carry an added liability because they do not usually carry design errors and omissions insurance coverage.
Financial and Temporal Dynamics
When any company starts a new project, time and money are two of their most important considerations. As you contemplate the advantages of design-build versus design-bid-build, understanding the financial and time-based specifications of each can help you make your decision.
Cost Efficiency in Focus: Design-Build vs. Design-Bid-Build Delivery Method
Due to the design-build process combining the design and bidding processes, you can expect DB to come at a lower cost to you. In most cases, the designers, consultants and subcontractors are all part of one organization, allowing them to “bundle” their services for a discount. This is great news for you, as you can pay less for the same services, and good for them, as it helps them better advertise their services.
In the design-bid-build method, it’s more likely you’ll work with different organizations throughout each part of development, resulting in higher costs. However, this can give you the added benefit of getting to choose the best of the best during each part of your project.
Accelerating Construction Timelines
Just as the streamlining of design and bidding in DB can save you money, it can also accelerate your project’s timeline. Instead of taking time to go through the design process and then having to wait as it goes through bidding, both steps can happen simultaneously.
The faster you get through the planning stages, the sooner you can start construction, allowing you to keep your schedule tight or extend the construction period to ensure everything is assembled according to your plans.
Selecting the Optimal Delivery Method
With so many clear benefits and the outlined drawbacks in each delivery method, making the right decision for your project can be a challenge. Here are our tips for finding the right contractor and ultimately choosing DB or DBB for your needs.
Best Practices for Contractor Selection
Whichever type of construction delivery method you choose, finding the right contractor can make or break your project. These tips will help you make the right decision for your specific job:
- Consider the needs of your project: Every construction project is a little different, and it’s up to you to find the contractors and construction teams that can bring your vision to life best. Consider the style of your project and what aspects are most important to you or your client. From there, you can explore contractors that specialize in those areas.
- Take time to interview and check references: Even if you’re on a limited schedule, checking your contractor’s references and qualifications is a step you cannot skip. Their history will tell you everything you need to know about what kind of work they do and whether you can rely on them to do their job well, on schedule and within your budget.
- Understand the contractor selection process: Whether you decide to pursue design-bid-build or design-build methods, make sure the contractor you choose is on the same page. They may expect a bidding war or non-competitive negotiation, and you should be prepared to meet those preferences.
Design-Bid-Build vs. Design-Build: Determining the Suitable Delivery Method
Ultimately, design-build might be the better choice for you if:
- Your project is complex and requires collaboration between architects, construction teams and subcontractors.
- You’re on a tight deadline and need to stay on a strict schedule.
- You have a strict budget and cannot afford to spend more than you have to.
However, these considerations may make design-bid-build the better option for your needs:
- Your project is publicly funded or otherwise requires you to go through a fair bidding process.
- Your project is constructively simple and does not require the expertise of subcontractors.
- You’re able to maintain a longer project timeline and prefer clearly defined parts.
Political and Regulatory Impacts to Project Delivery Methods
Most states have full or widely permitted Design-Build authorization. While the use of DB is growing, there are some officials that feel DB lacks the historical data to back up its benefits and could also interfere in project transparency. Another concern is DB projects may bring teams from outside the project area possibly taking jobs from local teams.
North Dakota and Iowa still prohibit the use of Design-Build. Wisconsin is the most recent state to allow design-build, though as with many states, the momentum is slow. In August 2019, the state enacted a bill that required its Department of Transportation to maintain an inventory of at least five highway projects that could be awarded to Design-Build teams. The bill, Act 18, also created a new DOT department focused on streamlining project delivery, promoting efficiency, and facilitating Design-Build project delivery on transportation projects
Design-Build played a vital role in 2009 delivering projects through the American Recovery and Investment Act (ARRA) and with the vote on the upcoming Infrastructure Investment and Jobs Act (IIJA), there may be ample opportunity for new contracts and new opportunities for Design-Builders and new subcontractors to play within the arena.
The Future of Design-Bid-Build and Design-Build
According to the Design-Build Institute of America (DBIA), although perhaps a biased resource, Design-Build is the best performing delivery system for both schedule and cost and is expected to deliver nearly half of all construction dollars spent in 2021.
As forecasts show the use of DB delivery growing, its use in construction projects will build the historical data needed to back up its further use and popularity as time progresses. Figure 2.1 below shows projected DB projects in dollars. Each region of the United States is expected to see an increase in Design-Build projects, this growth can hopefully make Design-Build projects more widely accepted and used.
Figure 2.1
Design-build construction put in place by census division (Assessed Segments)
