Design-Build: Doing More With Existing Resources
BY RICHARD THOMAS, LCP
Director, State & Local Legislative Affairs, Design-Build Institute of America
Passing legislation in Congress has never been an easy process, and the political partisanship that we have seen over the last decade made it even more painful and drawn out. Despite growing infrastructure needs, transportation funding has been flat for years; in the age of sequestration, decreases in funding are an unfortunate reality. Congress has not had the political will to either increase funding through tradition means or take a hard look at new alternative funding mechanisms. Without adequate funding, the major battles have centered on how to slice a shrinking pie. This lack of resources has meant lawmakers have had choose to between the lesser of evils, even it means sacrificing or reducing successful programs. There is another way. By simply changing the way we deliver our transportation projects, we can do more with our existing resources. While there is no substitute for increased funding of our transportation infrastructure, dramatically increasing the use of alternative project delivery methods like design-build could save many projects and programs from being cut or reduced even if a funding solution remains elusive.
We are all probably familiar with the traditional method of construction design-bid-build: a transportation agency will have two contracts, one with an engineering firm that will prepare design and specifications (or they do this in-house with their own staff) and one with the contractor. Once the design is complete it will be out for bids and the lowest bidder is selected to do the construction. This project delivery process separates the design and construction phases of project development, with the contracting agency assuming responsibility for the completeness and accuracy of the drawings and specifications produced by the design firm.
Design-build is a method of project delivery in which one entity – the design-build team – works under a single contract with the project owner to provide design and construction services (one entity, one contract, one unified flow of work from initial concept through completion). The design-bid-build method was recognized as the traditional form of procuring transportation infrastructure projects in the United States over the last century and became the only delivery option allowed in most states. It was not long, however, before the limitations of delivery method began to show. Because the only selection criteria allowed under this method is price, agencies increasingly found themselves saddled with poor quality construction and projects that come in late and over budget with little to no recourse. Since transportation departments are responsible for the design under this method, disputes between contractors and engineers often lead to costly change orders, lawsuits and delays on projects as well.
Design-build had always been used in the private sector with great success, but it was in the 1960s when it began to reemerge in the public sector. Government agencies on the federal, state, and local levels began experimenting with the design-build method in order to reduce the time and cost to complete their infrastructure projects. In 1993, The Design-Build Institute was established and tbegan to promote the delivery method. By 1996, Congress passed the Clinger-Cohen Act that authorized federal agencies to use the new two-phase design-build process on their projects. Today design-build is used extensively by most federal agencies.
In 1988 the Federal Highway Administration established an experimental project that would allow state transportation agencies to test and evaluate innovative contracting practices. This project was called the Special Experimental Project Number 14 (SEP-14). It allowed states to experiment with innovation contracting methods like design-build in order to determine if those benefits found in vertical construction would be true in the transportation sector. The result of the project lead to provisions in the TEA-21 transportation reauthorization bill in 1998. The bill authorized design-build on projects over $50 million as well as Public Private Partnerships (P3). TEA-21 paved the way for design-build at the state level and further expansion in future reauthorization bills. It was a modest start but within five years more than 20 states had limited design-build authority. Subsequent reauthorization bills streamlined the design-build process and today 45 states, plus the District of Columbia, authorize design-build in some fashion.
There are several reasons transportation agencies have turned to using design-build.
Urgency of the Project
When natural disasters such as hurricanes, floods or events like the collapse of the I-35W Bridge occur, DOTs need to respond quickly. In the case of Hurricane Katrina, traditional delivery methods were just up to the task. Floodwalls, levees, bridges, water pumping stations and other critical infrastructure were completed destroyed. Traditional delivery methods are designed and built sequentially, meaning construction would begin until the design was complete, which would have taken several months to a year. Without design-build, these projects would have been delayed.
The I-35W bridge collapse was catastrophic as well: A major river crossing was severed resulting in millions of dollars lost economic activity each day. The design alone would have taken close to a year using traditional methods. Using design-build, the bridge was designed and constructed in 14 months. These time savings are the rule not the exception with design-build, in fact design-build projects are typically completed 33 percent than traditional design-bid-build projects. By bringing the design team and the contractor together at the beginning of the process allows them to work concurrently and deal with scheduling considerations. It is not uncommon to see months if not years shaved off project delivery times using the design-build method.
Opportunity for Innovation
On traditional projects the only selection criteria is price; and since those contractors have no input into the design of traditional projects there is no incentive for innovation. In fact alternative ideas and concepts are not even allowed in most cases. Design-build is an integrated process that provides better communication and exchange of ideas. This leads new more innovated design and construction techniques and concepts. Creative solutions that bring value or speed up a project are rewarded. This is why design-build if often chosen for complicated major projects like major urban highways, rail and airport projects.
Single Point of Responsibility
With the traditional design-bid method the design and construction are done separately, often with leads to disputes between the design team and the contractor with the agency in the middle. On design-build projects the designer and contractor are part of one integrated team, omissions and errors are minimized and field generated change orders are virtually eliminated. The agencies administrative burdens are reduced by because the need to coordinate or arbitrate between separate design and construction entities is eliminated. With an integrated design-build team, scheduling considerations can be addressed up front, and projects are able to run faster and more cost effectively.
Cost of Project
With the contractor and designer working together from the beginning of the project, they are better positioned to determine accurate pricing on projects. Design-build contracts in the transportation sector are done on a fixed-price. This gives agencies gives better cost certainty at a relatively early stage of project planning. The speed in which design-build projects are accomplished can also lead to cost savings, particularly in those areas where construction costs are rising quickly. Studies have shown that design-build projects are typically delivered 6 percent more cost effectively than traditional construction projects.
The design-build project delivery method has revolutionized the construction industry over the last decade. The use of design-build has doubled in the last three years alone, both in terms of the number of projects and volume of those projects. Today most major projects—those in excess of $100 million—are delivered using the design-build method. Design-build is also closely intertwined with P3s as nearly every P3 project uses the design-build delivery method. One would think if we could deliver projects faster and more cost effectively without sacrificing quality that we would encourage its use at all levels of government and remove all barriers to this valuable tool. Indeed many states have done just that and the Federal Highway Administration has provided both encouragement and technical assistance to states through its “Everyday Counts” program.
While 46 states have authorized design-build in some fashion, many of those states put have statutory obstacles in place that impede the use of design-build. Most of these obstacles stem from turf protection. There are vested interests that profit from the old ways of doing business. They see the increased efficiency and completion as a threat to the status quo. Most DOTs want to have every project delivery option at their disposal, so they have the “right tool” for the right situation, but all too often industry groups use legislative gridlock to prevent them from using those tools. This gridlock not only costs taxpayers billions of dollars, it also prevents DOTs from delivering higher quality projects faster.
The solution to this gridlock is simple: Allow state and local transportation agencies to use all of those project delivery methods allowable under federal without limitations. This law change would have an immediate impact and not cost taxpayers. In fact, the savings would be in the billions of dollars and projects could be delivered in fraction of the time they are delivered today. The time to act is now.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of The Eno Center for Transportation.