Design-build versus design-bid-build: which one’s better?

Every construction project and the circumstances surrounding it is different. Some projects are public, and some are private. Some are complex, and some are simple. For each unique project, there’s a more appropriate delivery method. Selecting the best delivery method for the project can help reduce overall risk and bring the project in on schedule and on budget. When comparing different project delivery methods, such as design-build vs design bid build, some things to consider are the budget, the design and function of the building, the risks involved, the schedule, and the owner’s expertise. 

 

While there are numerous project delivery methods, let’s look at two of the most popular and compare design-build versus design-bid-build. Here are the pros and cons of each approach. 

 

The Design-Build Delivery Method

In recent years, the design-build delivery method has been gaining in popularity. Reports indicate this method is now used on up to 40% of building projects in the U.S. One reason for the popularity of design-build versus design-bid-build is that the design-build delivery method is well-suited for complex projects and fast-track construction. And faster delivery is often a priority these days.

 

Design-build is a contracting approach in which a single entity, the design-builder, assumes responsibility for the design, construction, commissioning, and turnover of a project. The owner hires a design-builder rather than contracting with an architect/design firm separate from the construction company. Typically, the design-builder is contractually responsible and bears the risk for the project.

 

Design-build versus design-bid-build projects are also characterized by high levels of collaboration and early input from multiple trades. 

 

Many organizations, including the American Society of Civil Engineers, the Construction Industry Institute, and the International Group for LEAN Construction, have conducted studies on the design-build approach. These organizations found that design-build significantly outperforms other methods in cost performance, speed of delivery, number of change orders, and necessary rework.

 

A recent study by Penn State compared the design-build versus the design-bid-build approach and found that the design-build projects had a 6% reduction in change orders, delivered 33% faster and cost 6% less. 

 

Here are some of the pros and cons of the design-build approach. 

 

Pros for the design-build delivery method:

 

  • For the owner, it’s a very straightforward, one-stop-shop approach. Once the design-builder is selected, it takes responsibility for the project. The owner assumes less risk with this approach. 
  • It brings everyone involved in the project, including subcontractors, to the table early. Everyone brings their particular expertise and provides input before the design is finalized. This is an efficient, cost-effective approach that often leads to completed projects faster while costing less than similar projects using other delivery methods. 
  • It promotes improved communication and collaboration. Since everyone has early input with design-build versus design-bid-build, and the design-builder is responsible for the project, there is little blaming and finger-pointing if something does go wrong.
  • It simplifies the process for payment requests and approvals by eliminating extra layers of management. This means subcontractors and suppliers typically get paid faster and more consistently. 
  • It reduces the number of change orders and related upcharges and the amount of rework. 
  • Since construction can begin while the design plans are still in development, the project is typically completed faster.

 

Cons for the design-build delivery method:

 

  • The owner has the least amount of input in the project and relies upon the professionalism, skill and integrity of the design-builder they hire. The design-builder is in the driver’s seat, so the owner doesn’t benefit from the “checks and balances” system inherent in the design-bid-build delivery method. It’s difficult for owners to know if they have received the best price for the work done. 
  • There’s an increased chance of a conflict of interest between the design-builder and the owner with design-build versus design-build-bid. The design builder’s priority is to complete the job as fast as possible and reduce cost, while the owner’s priority is a higher-quality project. 
  • The contractor, acting as design-builder, may be tempted to stay with what he knows to be efficient, disregarding novel ideas and new materials that could make the project innovative and unique. 
  • Competitive bidding may be removed from the process, making it difficult for subcontractors to get involved in the project. 
  • Design-builders may need to purchase additional liability insurance since they are taking on responsibility for these projects. 

 

The Design-Bid-Build Delivery Method

 

The design-bid-build delivery method is the traditional standard for construction projects and historically the most popular method. It differs from the design-build delivery method in several key ways. For one, the owner contracts with both an architect/engineer for the project’s design and a contractor to construct the project. 

 

It is also a straightforward, sequential process with one task following the completion of the one preceding it. First is the design phase, where the owner negotiates for the architect/engineering firm’s services to develop the project design. Once the owner approves the design, construction firms are called to bid on the job based on the approved design. Typically, the lowest bidder is awarded the job. Finally, the construction phase begins. 

 

The design-bid-build delivery method is best suited for less complicated, predictable projects with a strict budget and a flexible completion schedule. It is often used for large, public projects and is often the delivery method required by public and municipal entities. 

 

Here are some of the pros and cons of the design-bid-build versus the design-build approach. 

 

Pros for the design-bid-build delivery method:

 

  • With the design-bid-build delivery method, everyone knows the process, and their roles are better defined. For inexperienced owners, the method is easier to follow because of its sequential process. 
  • Owners have more control of the design and construction process. They have a built-in system of “checks and balances” since there are separate contracts for the design and project construction. 
  • At least upfront, design-bid-build versus design-build offers the lowest price because, with design-bid-build, the lowest bids are typically accepted. 
  • Since the design team is responsible directly to the owner and not the contractor, they are incentivized to build quality into their designs. 
  • The sequential process used by the design-bid-build delivery method simplifies the scheduling process. Plus, having firm design drawings to work from helps the contractor with the scheduling process.

 

Cons for the design-bid-build delivery method:

 

  • The owner, who is responsible for the completeness and accuracy of the architect drawings, bears the most risk for the project in the design-bid-build versus the design-build delivery method.
  • Having to manage two contracts can make a design-bid-build project more complicated than a design-build project. 
  • Lack of collaboration early in the design process means the project design can’t take advantage of the contractor and subcontractors’ expertise. For example, the contractor can’t provide input on more cost-effective materials or construction methods. 
  • Often there’s little collaboration and communication during the construction phase. Design-bid-build versus design-build may create an adversarial environment, with the contractor controlling the project’s scope and expense and the architect controlling quality.
  • While the cost is often initially lower than design-build projects, costs can rise if additional drawings or redesigns and change orders are required. The resulting delays drive the costs up, as well. 
  • Actual construction doesn’t begin until after the design plans are finalized and the bidding process complete, so design-bid-build projects take longer to complete. Since the project phases are sequential, a delay in one can cause a domino effect on the entire project. 
  • Poor communication can lead to delays in payment for subcontractors and even payment disputes.

 

In summary

Each project delivery method has its advantages and disadvantages. When it comes to design-build versus design-bid-build, let the project specifics be your guide to selecting the most appropriate delivery method.