Design-Build: Heaven or Hell

Use the compound modifier "design-build" in the company of those who have used it, and you'll probably get an equal dose of horror and success stories.

The design-build construction delivery method is a process that can offer flexibility and cost savings for owners, architects, design consultants, and general contractors.

However, like any other project, it can lead to cost overruns, unsatisfactory results and major headaches if not managed properly. A parks and recreation practitioner looking to build a facility should know the pros and cons of design-build and decide if it's a good fit for the project.

Bid & Build

In a standard Design-Bid-Build project, the owner issues a Request for Proposals (RFP) to hire an architectural design firm that employs the appropriate architects, engineers and consultants. The owner works with the design firm to produce a set of construction documents, which are then used to bid out the project to general contractors.

The design firm can be the owners' representative to ensure that the contractor carries out the project according to the plans. The degree to which this service is provided varies with the negotiated contract between owner and design firm. The quality, experience and integrity of the design firm also influence the effectiveness of contract management.

Predictably, the more services the firm renders, the higher the cost. It can range from occasional site visits or inspections at certain points in the project, to a predetermined inspection schedule, unannounced visits, certification of payment requests and authentication of change orders.

In the standard Design-Bid-Build process, the owner deals separately with the architect and contractor, and may even have to deal with other specialty contractors outside the two main contracts. It can become a very time consuming and complicated process for the owner to manage.

In a perfect world, the three parties (owner, architect, contractor) work as a cohesive team through the construction phase, communicating on a daily basis, meeting at least weekly to anticipate upcoming problems and work them out. Realistically, it doesn't always work out that way.

In a Design-Build project, the owner prepares an RFP that goes out to general contractors, who are expected to either provide design services in-house if they have them, or more commonly to sub-contract with a design firm. During the review of proposals, the owner will evaluate the general contractor and all sub-contractors, including the design element.

Once the owner has made a decision, only one contract is executed, with the general contractor, who is held responsible for all aspects of the project. The owner only has to directly communicate with the general contractor's representative on the job, generally referenced as a superintendent.

There should be daily communication between the owner's representative and the superintendent on all aspects of the job. If the superintendent isn't meeting the owner's needs, the owner has the option of going directly to the contractor for satisfaction.

What it Takes

While the difference between standard and design-build contracts appears simple, the implications are vast. Actually, the concept of design-build is relatively new in the modern construction industry. Until the 1970s it was used mostly in agricultural and utilitarian structures, such as pre-engineered buildings. Even today, it is not recognized as an accepted method of construction in some states.

The American Institute of Architects (AIA) Web site goes into great detail on the different acceptance levels among the 50 states.

In a written report, the site states that, "The design-build approach to project design and construction has been embraced in certain states and regions throughout the country, while in other areas state legislatures have been slow to enact legislation that would pave the way for its use…"

The report cites several potential reasons for this reluctance, including culture, tradition, labor union participation, legal systems and interest group strength. However, there is also strong evidence that design-build is entering its heyday.

According to attorney and licensed architect G. William Quatman, Esq., and architect/design-build expert Martin Sell, the design-build method currently has 40 percent of the U.S. construction market.

During a presentation at the CNA-Schinnerer 44th Annual Meeting of Invited Attorneys this June, they said industry forecasters predict that the design-build method will overtake the traditional method within the next decade.

The general contractor has traditionally been the lead agency with whom the owner contracted, putting the architectural firm in a subordinate position to the contractor. However, many architectural and engineering firms are looking for ways to assume that lead role either as the prime contractor or in a partnership with the contractor.

According to Quatman and Sell, the subordinate role of architect to contractor carries several drawbacks common to other subcontractors. These include diminished contact with the owner, payment and contractual issues, and most disturbing to architects, loss of control and ownership of project designs.

Until 1978, the AIA barred members from participating in design-build projects and actually considered it a violation of their ethics and code of conduct. Pressure from members and a growing demand from owners for the design-build method prompted the AIA to repeal that rule.

However, according to a 2003 AIA survey, only 20 percent of AIA member firms reported offering design-build services. That meant that 80 percent weren't offering design-build either as the lead agency or as a subcontractor.

The subject of design-build is so intense that an institute has been established to promote its use. The Design-Build Institute of America is a membership organization founded in 1993 to advocate single source project delivery within the design and construction community.

"The design-build method of project delivery embraces architecture/ engineering and construction services under a single contract, thereby re-integrating the roles of designer and constructor," its Web site tells visitors. "DBIA members include practitioners from all project phases, plus public- and private-sector project owners."

The DBIA exists to lead the expansion of design-build across all industries and markets. The spiritual premise of design-build is to return to the time honored past when the master builder had complete accountability for the entire design and construction process.

The DBIA web site provides a thorough background on the design-build concept, which they date back to ancient Greek days when master builders "accepted full responsibility for integrating conceptual design with functional performance." The design-build process offers reassurance that the design and construction industries can deliver comprehensive services.

That observation points out one of the major challenges for the owner using the standard "design-bid-build" method of construction. Often times, the two most important members of the project –- the architectural team and the construction team -- aren't working with each other toward a common goal, and in too many cases end up working at odds with each other.

The owner who is not accustomed to working these projects can get caught in the middle of the fray and can end up being the biggest loser. There are a number of ways this can happen...

In simplest terms, architectural firms can sometimes design projects that are too complicated or impossible for contractors to build, due to unforeseen sight conditions, within an owner's budget constraints. Essentially, form overshadows substance. However, this is often not discovered until the job is bid out or underway. Then the owner is in a position of having to value engineer the project to get it to fit the budget.

It's not always the designer's fault. Sometimes in spite of their best estimates, the construction cost depends on the market, which can change quickly and unpredictably. But either way, the onus is on the owner to make the hard decisions.

Sometimes the winning contractor has bitten off more than he can chew, but it isn't discovered until after the contract is signed. While the designer can assist in making the contractor stick to the plan, it is still the owner who is in the unenviable position of either having to try and justify costly change orders or value engineer the project to death. Careful review of contractor qualifications and references prior to hiring, and not being focused only on the "low bid" can avoid this problem.

In the final analysis, the owner must decide which form of construction is best for the project. In arriving at the answer, there are several questions the owner can answer that will lead to the right decision:

· Does the owner have a qualified project manager on staff to closely oversee the entire process from design to bidding to construction. If so, then design-build might be advisable. But this is very time consuming so that project manager will be spending a lot of time on it, especially if it is a large or complicated project.

· Does the owner only want to execute and manage only one contract? If so, design-build would work. However, expect to give up some degree of direct control on design. If the project isn't too complicated or high profile, this might be ok.

· Is the project high profile (much public scrutiny) or very complicated, such as a renovation and expansion of a major facility? If so, maybe design-build isn't the way to go. On a project such as this the owner may want the increased design oversight that design-bid-build offers. The architectural firm can also assist in preparing professional public presentations.

· Does the owner have a good system and staff to evaluate construction bids? If not, it may be better to go design-bid-build so the architectural firm can assist with that very important function.

· Is the owner working with a very constrained budget? If so, the generally lower cost of design-build may be the best route, especially on fairly routine projects. The savings can go directly back into the construction.

The bottom line is that both the traditional and design-build construction methods have pros and cons, and wise owners will thoroughly educate themselves on both in order to make a well-founded decision.

Randy Gaddo is Director of Leisure Services (parks, recreation and library) in Peachtree City, Georgia, and has gained first-hand experience as project manager on a wide variety of projects. He is currently the city project manager for a $5 million library renovation and expansion, being done as a design-bid-build. He is also project manager on a series of design-build restroom/concession buildings and several other design-bid-build projects.