In Texas, meanwhile, the DOT is authorized to use design-build on up to three $150 million-plus projects annually, but local gov- ernments with a population less than 100,000 are not authorized to use design-build. In an area devastated by Harvey, that’s a problem. The DBIA brought the issue to Texas Governor Greg Abbott’s attention in a September letter written by Lisa Washington, the organization’s executive director and CEO. “Given the enormity of the reconstruction challenges facing Texas, the state needs the ability to innovate, building stronger and smarter, while also maximizing project dollars and delivery times on vital post-Harvey projects,” Washington said. “The need is immense and the response must be equal to that challenge. As governor, you have the emergency authority to ensure design-build can deliver in Texas just as it has in so many other communities rebuilt after a disaster.” According to the DBIA, Abbott did not expand design-build au- thorization for Harvey recovery. The common criticism of design-build is that it weakens competi- tion, is only good for large projects, encourages favoritism, and that it paves the way for large out-of-state construction companies to come in and take work from local firms. The DBIA, of course, dismisses those criticisms, pointing to the fact that design-build projects take place across the spectrum, from projects like the $3 million Shake Shack in Dallas, to the $1.4 billion Northeast Water Purification Plant in Houston, cur- rently the largest design-build project in the country. (see page 18) The Federal Highway Administration is quantifying the role design-build is having on highway construction. While its report concluded that design-bid-build will be in use for many years, preliminary results of the study are illuminating for design-build. According to the survey of 291 projects completed between 2004 and 2015, alternative contracting methods — which include de- sign-build-low bid, and design-build-best value — are employed across all project sizes, save time, accelerate cost certainty, and increase project intensity. The study found that design-build-best value projects have the highest levels of agency-directed change orders among alterna- tive forms of delivery. However, the study also found that more than half of the change orders were implemented when the project award was lower than the engineer’s estimate, meaning the change order could have brought increased value to a given project. That’s essentially what happened in Boston, where the Massachu- setts Bay Transportation Authority is building the 4.7-mile exten- sion of the Green Line to the suburbs of Somerville and Medford. Having previously fizzled — the original joint venture, White- Skanska-Kiewit, was booted from the project for various reasons
DESIGN-BUILD AT-A-GLANCE Design-build contracting is a method of project delivery in which the design and construction phases of a project are combined into one contract, usually awarded on either a low-bid or best-value basis. This can provide significant time savings compared with the more traditional design-bid-build approach in which the design and construction services must be undertaken in sequence. Benefits include: • Cost savings • Schedule reduction • Reduced litigation • Risks associated with design errors and omissions are transferred from owner to the design-build team Source: U.S. Department of Transportation
DESIGN-BUILD STATISTICS Of the states using design build: •
95 percent use design-build for highways 65 percent use design-build for bridges
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9 percent use design-build for rail Completed transportation design-build projects: • 800 percent increase from 2002 through 2016 Design-build advantages: • 34 percent faster delivery • 11 percent less schedule growth • 93 percent of projects on-time or ahead of schedule Value range for design-build projects: • From $25 million and less to more than $200 million Notable design build projects: • U.S. 90 Bridge, Bay St. Louis, Miss. ($283 million) • State Route 42, Greene County, N.Y. ($14.1 million) • Long Island Railroad & Metro North MTA, New York ($634 million) • Chevron Headquarters, Covington, La. ($79.8 million) • I-35WBridge, Minneapolis ($265 million) • Pentagon Reconstruction, Arlington, Va. ($501 million) • Carlsbad Desalination Plant, Carlsbad, Calif. ($583 million) • Union Station, Denver ($374.8 million) • Mesa Towers, Irvine, Calif. ($96.7 million) Progressive design-build: • Uses a qualifications-based or best-value selection, followed by a process whereby the owner then “progresses” toward a design and contract price with the team. Potential obstacles to progressive design-build: • Restrictive procurement regulations • Awarding without full completion on the overall design-build contract price • Owners may be uncomfortable in exercising the “off ramp” in the event parties cannot reach commercial agreement on the design- builder’s proposal • Subcontractor procurement challenges • Lack of interest in changing approaches Source: Design-Build Institute of America
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june 2018
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