design-build vs design-bid-build

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One of the first things you need to decide on when building your new home or embarking on a home improvement project is the project delivery method. This article on project delivery methods by Dalia Sadany talks about the pros and cons of the two commonly used methods (Design-Bid-Build and Design-Build) as a guide to help you decide which best suites your needs. The article also provides useful tips on hiring entities offering Design-Build turnkey services and how to know which are genuine

TRANSCRIPT

Page 1: Design-Build vs Design-Bid-Build

In former articles ,I have elucidated on the disciplines of all team players in the process of constructing your dream home such as The Architect , The Interior Designer, The Landscaper as well as The Contractor in all his various practices .I have highlighted the definition , the responsibility and the job expectation of each one of the eminent practitioners. A clarification was also presented on the vital factors necessary to be fulfilled in choosing the appropriate professional, the most successful methodology in dealing with them and broad rules of calculating their fees.

We progressed In the previous article about the legendary profession of the ancient Masterbuilder and historical developments through the ages leading to the emergence of the architect and contractor as two distinct professions, as opposed to one eminent, capable individual. The rationale that derived the necessity to dedicate that last article to the mythical Masterbuilder was the progressive will to explain to you the two means of construction methodologies of Design-Bid -build known as DBB and Design and Build known as DB. But before diving deep into this controversial topic , let's recap the historical development through the ages leading to reemergence of a profession where the architect and the contractor would be a sole entity known as Masterbuilder but applied practically as a singular unit that applies today the method of DB.

HISTORY & TRENDSIn ancient times well into the 19th century the Masterbuilder worked with the project Owner providing both design and construction as one seamless service. To perform one without the other was unheard. Although some craftsmen like Michel Angelo took on separate design contracts and others like Leon Battista Alberti (Italian Architect and Author) wrote about establishing the art of architecture as a profession distinct from engineering and construction, it wasn’t till the Industrial Revolution that the separation was made possible. The reasons for this included an increased demand for design expertise as well as the trend toward specialization and division of labor. This was supported by the emergence of professional societies such as the American Institute of Architects (AIIA) in 1857 as well as formation of architectural colleges and passing of architectural licensing laws in 1897. The separation was made absolute in 1935 with the passage of the Miller Act which required contractors on federal projects exceeding a certain amount to post performance and payment bonds. The implication was that project

Owners from then on had to contractually engage the services of an architect to perform design services and a contractor to perform construction services resulting in what is commonly known today as the Design-Bid-Build project delivery method. With it the specialization of services increased and new professions emerged like interior designers, interior decorators, finishing contractors, landscape architects, landscape contractors, etc.

The late 20th century witnessed renewed interest in reviving the Masterbuilder method to address some of the flaws in Design-Bid-Build. As a result, a modern version of the Masterbuilder emerged whereby an integrated team of design and contracting professionals provide both design and construction services under one contract in what is commonly known today as the Design-Build project delivery method.

Throughout my articles I have always reiterated “Use Pros to do a Pros Job”. Building a new house 150 years ago the decision was simple – hire a Masterbuilder. Today the same Owner has several options to choose from.

Which Pros to Hire?

1. Hire the Maximum Pros Needed: In this Option shown in Diagram-1, the Owner hires a specialized design pro and a specialized contracting pro at every stage of the home building process thereby using the maximum pros needed. Contractually this means several sequential Design-Bid-Build contracts till project delivery.

2. Hire Two Pros: In this Option shown in Diagram-2, the Owner hires one full service designer and one full service

contractor to perform all the necessary design and contracting services till project delivery. In this context, the full service designer may employ or subcontract certain design specialists. Likewise the full service contractor may employ or subcontract certain contracting specialists. Contractually this means two Design and Construction contracts till project delivery.

3. Hire One Pro: In this Option shown in diagram-3, the Owner hires one entity (or an integrated team of designers and contractors) to perform all design and contracting services required till project completion. Contractually this means one Design-Build contract till project delivery.

"Dalia Sadany ASK Magazine's design consultant, Chief Designer & Founder of Dezines Architecture & Interiors, Managing Director & Partner of Decon Contracting as well as the creator of the new furniture brand GUSH is dwelling into the world of Architecture, Interior Design landscaping ,and Contracting."

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18 ASK OCTOBER 2012 19ASK OCTOBER 2012

Page 2: Design-Build vs Design-Bid-Build

Contractually Option-1 and Option-2 are similar in that they are both Design-Bid-Build formats with the difference only being in the number of contracts the Owner administers till project delivery. On the other hand Option-3 is a Design-Build format. Therefore having decided to work with pros the first thing the prospective home Owner should do is decide which method to use. Should he or she use Design-Bid-Build or Design-Build? And if Design-Bid-Build should he or she use the maximum number of pros or two? To answer these questions we first need to fully appreciate the differences between both methods.

WHAT IS DESIGN-BID-BUILD?

Design-Bid-Build is the most orthodox usable project delivery method. It is also known as the traditional method despite being around for only 150 years. In this method the Owner enters into two sequential contractual arrangements. The first arrangement is between the Owner and the designer and the second between the Owner and contractor. In this structure there is no contractual relationship between the designer and contractor, and the owner is the laison between both parties.

The Design-Bid-Build Process

This method involves three separate sequential phases as follows:

• Design Phase: Designer prepares a complete set of design drawings and material specifications with input from the Owner

contractor. Accordingly the designer is impartial and looks out for Owner’s interest till project delivery.

5.Easier to Bring in Own SubcontractorThe Owner is significantly involved

throughout the building process. Accordingly project Owners can bring in their preferred subcontractors to the project with relative ease compared to the Design-Build method. However, it is important to note that bringing in own subcontractor lengthens delivery schedules and could jeopardize the flowing workmanship of all contractors hired under the general contractor.

Disadvantages of Design-Bid-Build

1. Owner Involved in Conflicts and DisputesResponsibility for quality and project

delivery is shared between designer and contractor. Since design and construction of a new project is a complex undertaking conflicts and disputes between the designer and contractor is not unusual. “Finger pointing” is common occurrence with each blaming the other. One major source of conflict is errors and omissions in the workshop drawings and material specifications. The Owner is usually drawn into these conflicts and ends up paying the price of correcting the situation.

2. No Constructability Input in Design Process

The awarded contractor joins the project team after completion of the design phase. By that time detailed workshop drawings and material specifications are complete and sent out to pre-qualified bidders. That means there is no contractor input in the design process (costs, availability, methods, technology, etc) that could otherwise improve project design.

3. Slow Project DeliverySlow project delivery is one of the major

drawbacks of this method. Design-Bid-Build is a sequential process lengthened by the bidding phase. Further the design phase could vary from a few months up to a year and sometimes more. In the construction phase time is wasted

• Bid Phase:The Owner sends out the complete set of design drawings and specifications to several pre-qualified contractors to present bids awarding the contract to the lowest bidder.

•Build Phase:Contractor builds the project in strict adherence to the set of design drawings and material specifications under the supervision of the designer.

Advantages of Design-Bid-Build

1.Project Fully DefinedThe project is fully defined with detailed

workshop drawings and material

in back and forth between designer and contractor due to errors and omissions in the design drawings and material specifications as well as design alterations and change orders.

4. Costs Unknown Until Late in the Process The designer prepares cost estimates as

design work progresses, typically when the workshop drawings and material specifications are 100% complete. While this may give the Owner an indication, there is no cost certainty until the design phase is complete and construction bids received. By that time costs may exceed budget leading to design alterations and change orders.

What is Design-Build?As mentioned earlier the Design-Build project delivery method is the modern version of the masterbuilder system - the oldest project delivery system in history. As mentioned this version developed in response to certain problems that emerged over time in the use of the traditional Design-Bid-Build method.

In this method the Owner hires a Design-Build entity to design and build the project turnkey. Contractually this means one single contract for both the design and contracting instead of one contract for design and another for contracting as in Design-Bid-Build.

The Design-Build entity (or integrated designer contractor team) can take on several forms as follows:

• Single company with in-house capabilities

• One company subcontracting the other

specifications before bids are solicited from pre-qualified bidders. In the design phase the designer would have spent months and sometimes up to a year with the Owner defining project requirements (preferred style, needs, requirements, budget, etc) and incorporating it in the design before the Owner was satisfied with final outcome. This means that there should be no room for uncertainty about what the Owner wants and what the contractor is required to do.

2.Competitive Bidding Lowers CostThe construction contract is awarded by

competitive bidding to the lowest bid. First, the Owner pre-qualifies contractors after going through a careful selection process. The pre-qualified bidders are then motivated to give their lowest bid because they know they are competing with others and that price is the basis of selection. Moreover since the project is fully defined pre-qualified bidders don’t have to increase their bid to allow for contingencies.

3.Relative Ease of Assuring Quality ControlDuring construction the awarded contractor

strictly adheres to and follows the detailed workshop drawings and material specifications prepared by the designer. Accordingly the designer can easily control quality during site inspections by comparing what is required with what has been done. If the documented requirements are not met, it is up to the contractor to correct the work at their own expense.

4. Designer Looks out for Owner’s Interest The designer is contracted by the Owner

to design the project and supervise execution. There is no contractual relationship between the designer and

• Joint venture or partnership between a design and contracting company

The first two forms are more common in residential type projects with the last with commercial projects.

The critical aspect is that the Owner contracts with a single entity, offering a single point of responsibility over design and contracting till project delivery. This simple difference transforms the relationship between the designer and contractor in Design-Build format from one based on one supervising the other (as in Design-Bid-Build) to one based on collaboration and teamwork resulting in cost and time savings as well as better productivity.

The Design-Build Process

• Design: A. Preliminary Design:Preliminary design prepared based on input

from Owner with constructability input provided by contractor factored in the design to insure design fits and budget realistic.

B. Authorization to Proceed with Detailed Design:

Once Owner is satisfied with outcome of preliminary design the Owner authorizes designer to start preparing detailed design.

• Build:The construction phase commences as

portions of the detailed design become available. The contractor purchases materials and equipment and starts on the early construction work such as plumbing, electrical work, air-conditioning, excavation, etc.

DALIA SPEAKS

20 ASK OCTOBER 2012 21ASK OCTOBER 2012

Page 3: Design-Build vs Design-Bid-Build

Advantages of Design-Build

1. Time SavingsFirst by combining selection of both

designer and a contractor in one step, Design-Build eliminates time lost in the bidding process. Further this method allows the entity’s contractor to start construction before the entire design is completed. Accordingly there is a significant fast tracking due to overlapping of the design and construction phases which saves time. Moreover the collaborative project management between the entity’s designer and contractor means the work can be done faster and with fewer problems. The resulting time savings translates into lower costs and Owner could move in to his new home earlier.

2. Budget ManagementThe entity’s designer and contractor work

together as an integrated team evaluating alternative designs, material specs and methods to tailor a solution that meets Owner’s design and budget requirements. Accordingly the construction cost is known earlier on during the design process. Cost inputs are provided by the team’s contractor according to the designer’s specs and the Owner takes “go or no go” decisions early on. This ensures that the Owner plays a key role in arriving at final construction cost that meets his or her budget. Consequently this reduces the risk of cost overruns due to fewer design alterations later on.

3. More FlexibleIn Design-Build the decision to proceed

with project is done before substantial design cost and with early knowledge of final project cost. Therefore the Owner

The Design-Bid-Build method has its advantages with the main disadvantages being:

• More stressful to administer As mentioned earlier , the disadvantages of

the Design-Bid-Build method such as long project delivery schedules, High risk of cost overruns and exceeding budget and more stress to administer, these cons will be compounded if the Owner administers several Design-Bid-Build contracts in one project (as in Option-1). The project will most likely take a lot longer to complete, exceed budget by far and very stressful to manage. Not to mentions the fees of hiring 7 different pros is very expensive. On the plus side the Owner benefits from the maximum design and construction expertise he or she can get. Option-1 is probably more suited to a project Owner where:

• Cost is not an issue

• Delivery schedule not important

• Has preference to use 2 or more pros in different areas of specialization but in the same field such as interior designer and landscape designer

Tips: How to decide which method best suits your needs?Both Design-Bid-Build and Design-Build formats are applied to all project types from small apartments to large villas and for new home construction and renovation. If you answer “Yes” to any of the following then Design-Build is more appropriate for you.

• Do you have a good idea of your requirements (design and budget)?

• Do you have a budget ceiling which is inflexible and need an early cost commitment?

can opt out with relative ease and go to the Design-Bid-Build format if he desires. Moreover making alterations to design or material specifications during the construction process can be done easily compared to the Design-Bid-Build.

4. Single Point of Contact & Responsibility The Design-Build entity is responsible and

accountable for issues relating to quality, cost and delivery schedule. Therefore the Design-Build entity is motivated to deliver a successful project that meets the Owner’s expectations, budget and quality standards. Further having only one entity to deal with makes for greater clarity of communication and reduces risk of misinterpretation of Owner requests. Moreover Owner doesn’t waste time coordinating between several parties as in Design-Bid-Build.

5. Less Stressful To AdministerIn Design-Build the Owner is involved in

the design process till satisfied with the final outcome and authorizes designer to proceed with detailed drawings. The Owner is not involved in the contracting process and does not have to go site regularly. Further since the designer and contractor are one entity there are no conflicts and disputes to resolve or issues of coordinating between them as in Design-Bid-Build.

6. Better QualityThe Design-Build entity bears total

responsibility for design quality and cannot shift errors in design or construction defects to a third party. For this purpose the entity’s designer is greatly involved in managing the construction process till project delivery. Paying high attention to quality control and quality assurance is an important feature of this method.

Disadvantages of Design-Build 1. Limited Assurance of Quality ControlBecause the project is not fully defined

in detail (as in the Design-Bid-Build method) at the time of contract with the Design-Build entity the Owner may have limited basis to enforce the contract and little control over the quality of construction work.

• Do you need to move in to your house within 2 years?

• Do you have a busy life and haven’t the time to be 100% involved?

• Are you doing this project as an investment?

• Is the design you have in mind complex requiring close coordination of design and construction expertise?

• Are you not familiar with the tedious details of either design , construction and their colleration and farnkly dont want to be neck-deep into them?

Tips: How to select Design-Build entity?A lot of designers and contractors claim to provide Design-Build turnkey solutions. How to know who is genuine or not:

• Ask about the contract – must be one point of responsibility for design and contracting

• Meet both designer and contractor (see chemistry between them)

• Ask about their history, experience and track record individually and together

2. Subjective Contract AwardBecause the project not fully defined the

Design-Build format cannot make use of competitive bidding where bidders bid on the same design. In the Design-Bid-Build method the designer’s contract making up 5-10% of project cost is awarded based on subjective criteria (reputation, experience, etc) while the contractor’s contract making up 90-95% of total project cost based on objective criteria (lowest bid). In comparison in Design-Build the contract is award totally based on subjective criteria like reputation, experience, qualifications and best value.

3. Contracting Cost might be Slightly higher Design-Build entity is responsible for all

aspects related to design and contracting and since the project is not fully defined the Design-Build entity usually increases the costs on some items for contingency purposes to cover unseen risks.

4. Designer Not ImpartialAs the designer and contractor are one

entity, the Owner cannot rely on the designer to be impartial and look out for his interests during the construction process. Under Design-Bid-Build, the designer will conduct site inspections, review bills of quantity and change orders, and assist in resolving disputes between Owner and contractor. To overcome this risk some Owners employ their own adviser knowledgeable in construction, increases costs and animosity that Design-Build is intended to avoid.

5. Difficult to Use Own SubsThe Design-Build entity is responsible

for issues relating to quality, cost and delivery schedule. Some Owners, for one reason or another, have preferred subcontractors (carpenter, stonemason, etc) they want involved in the project. In general the Design-Build format is not very flexible with regards to using subs other than their own, but exceptions are made under strict guidelines.

Which Project Delivery Method is better?There is no perfect project delivery method. There are some advantages and disadvantages to both delivery methods. The project Owner has to appreciate the differences before deciding which method better suits his needs.

If a Project Owner requires one entity to be responsible for all aspects of the project from start to finish then Option-3, discussed earlier, is the appropriate choice. However, if the Owner, for any reason, decides on Design-Bid-Build method he or she is faced with two options – hire the maximum pros (Option-1) or 2 pros (Option-2).

• How many Design-Build projects have they done together (a good team should have a track record of 5 projects minimum)

• See portfolio and get into some details – ask about the budget, cost overruns, work orders and delivery schedules, etc (see if anything doesn’t sound right)

• Try to contact Owners of previous projects and ask about their experience with them.

That was an objective unbiased thorough study of both formats, I personally have worked on both methods over the years , as well as separate design and contracting assignments in several endeavors but as I am the first Egyptian female Masterbuilder , and a genuine advocate for the anti-segregation of both design and construction professions, with an accredited education and over 15 years of experience in these fields , that expertise has resulted in a more broad perspective and knowledge of the entire ,more coherent and less client stressful, Design and build process , with its obligations , hallmarks and taboos such as the necessity to keep the budgetary constraints of the client as an utmost importance and that during the construction phase , the architectural and design integrity must be maintained. These elements are the bible of a professional, capable DB entity to ensure a successful dream project evolving to reality.

You can reach me at my [email protected]

DALIA SPEAKS

22 ASK OCTOBER 2012 23ASK OCTOBER 2012