The use of design/build as a project delivery system continues to grow in the United States. However, the adoption of design/build in the public sector has lagged the private sector since its rediscovery in the 1990s. This lag in the public sector is not because federal, state and local governments and their agencies have not seen the advantages of design/build. On the contrary, there have been a number of pilot programs and demonstration projects at all levels of government over the past 15 years that have shown that design/build can be as advantageous for the public owner as the private owner. So what has been causing it? The lag in public sector use of design/build has been primarily due to the laws and regulations that govern the procurement of design and construction services by public entities. Today, these laws and regulations are changing and the use of design/build is growing in the public sector. Electrical contracting firms need to be aware of this expanding market in the public sector, understand federal, state and local government design/build requirements in their market area, and be prepared to take advantage of this trend as it continues to develop.
Design/build is the project delivery system where a single entity is responsible for providing both design and construction services to the owner. This single-point responsibility for both design and construction is the primary reason for design/build’s increased popularity with private and public owners. The owner has only one contract for the complete delivery of the project.
Under the traditional design/bid/build project delivery system, the owner has two separate contracts: one for design and another for construction. As a result, the owner is contractually in the middle between the designer and the contractor. Not only does this arrangement hinder communication between the designer and contractor throughout the project, but it can also result in the owner being in the middle of any disputes that arise due to either the quality of design or construction.
Additionally, owners are often unable to resolve post-construction operational problems because of disagreement between the designer and contractor as to whether the problem is due to design or construction.
With design/build, the owner contracts with one entity for both design and construction. This single entity is referred to as the design/builder and can be the designer, general contractor/construction manager (GC/CM), specialty contractor or other firm, such as a developer.
For commercial projects, the design/builder is usually a GC/CM although the design/builder could also be a specialty contractor when the work to be performed is primarily within the specialty contractor’s expertise.
For example, if the project involves upgrading a building’s service entrance, then the electrical contracting firm might take on the role of design/builder and subcontract the general construction and other required specialty construction work to others.
In addition to single-point responsibility for the design and construction of the project, design/build projects typically result in other advantages for the owner, such as reduced risk, improved quality, lower costs, less time from concept to completion, reduced administrative burden, and fewer change orders and disputes.
Problems with contractually required work that are discovered during or after construction are the design/builder’s responsibility to resolve whether the problem resulted from design, construction or both. The design/builder is solely responsible for meeting the owner’s needs and expectations as required by the project contract documents. As a result, owners feel like they get greater value for their construction dollar with design/build and they feel that the completed project better meets their needs and expectations.
With design/build, the focus is on meeting the needs and expectations of the owner throughout the project, whereas with traditional design/bid/build project delivery, the focus during the construction phase is on completing the project in accordance with the plans and specifications—which may or may not embody the owner’s needs.
Public sector design/build impediments
In the public sector, the major impediment to widespread adoption of design/build has been procurement laws and regulations, which were put in place and are strictly enforced to protect the public interest, at all levels of government.
These laws and regulations attempt to prevent a public entity from purchasing goods and services based on personal preference or political affiliation. Procurement laws and regulations were designed to allow any qualified supplier to compete on a level playing field with other qualified suppliers based on the government’s stated requirements. In the end, the system was designed to reward efficiency and innovation among suppliers by awarding the contract to the lowest responsible bidder.
Public procurement laws and regulations work well with traditional design/bid/build project delivery where the designer prepares detailed plans and specifications for a project and then the government agency puts the contract documents out to bid and selects the contractor based on lowest bid. All contractors are bidding on the same project.
However, the main advantage of design/build is the ability of the designer and contractor to work together throughout the design and construction process to meet the owner’s needs and objectives. This means that the owner needs to select the design/builder before detailed design is complete, making selection based strictly on price very difficult and risky for both the owner and design/builder.
As a result, price is usually just one factor in selecting the design/builder, with other qualitative factors such as the design/builder’s conceptual design, experience and expertise, and management plan being considered when trying to select the proposal that provides the best value to the owner.
The selection of a design/builder based on qualitative factors rather than a low bid conflicts with public procurement laws and regulations as discussed above. As a result, public owners have tried to work around this by requiring very detailed designs from competing design/build firms that demonstrate compliance with the stated project criteria by allowing selection based on price.
While this approach allows selection based on price, it results in a substantial investment by each of the competing design/builders that will only be recovered by the successful proposer. This method may also preclude qualified design/builders from participating in the competition because of their inability to absorb the time and cost commitment of the required detailed design if they are unsuccessful.
Many public owners today are using review committees composed of the owner, design professionals, facility user, and others—along with a predetermined point system—to evaluate design/build proposals and select the successful design/builder. This provides an objective and transparent method of selecting the design/builder and eliminates the need for costly detailed design in the selection process.
Public sector barriers disappearing
At the federal level, Part 36 of the Federal Acquisition Regulation (FAR) governs contracting for design and construction services by federal agencies. Subpart 36.209 has been a part of FAR for
years and addresses construction contracts with designers. This subpart states that no contract for construction may be awarded to the firm that designed the project or its subsidiaries of affiliates except with agency approval.
However in the mid-1990s, Subpart 36.3 was added to Part 36 and allows the contracting officer to use a two-phase design/build selection process where certain criteria are met. The first phase is used to shortlist design/builders based on the proposed technical approach and qualifications. In the second phase, the successful design/builder is selected based on the submission of detailed technical and price proposals. This process requires detailed design work as part of the second proposal phase.
The use of design/build and the rules and regulations that govern its use vary greatly from state to state. Most states either currently have legislation that allow the use of design/build on state projects and many of those that don’t are currently considering it. Just like at the federal level, the electrical contracting firm must be aware of the state design/build requirements and procedures.
In addition, the electrical contracting firm needs to be aware of state licensing laws that might restrict the use of design/build or how the design/build team is structured. For instance, do the state’s professional licensing laws prevent the designer from working for the contractor or vice versa?
There are a several very good and up-to-date Internet-based resources available that the electrical contractor can use to keep abreast individual state design/build legislation and requirements. The American Institute of Architects (AIA) provides a summary of passed and pending legislation on a state-by-state basis for design/build at www.aia.org/adv_st_resources. Similarly, the Design-Build Institute of America (DBIA) provides a summary of recently passed design/build legislation by state at www.dbia.org/ind_info/lawspassed.htm.
Public design/build and the EC
Design/build is being used increasingly by public entities. Public design/build projects include office buildings, schools, courthouses, healthcare facilities, military facilities, and others including infrastructure projects such as roads and bridges.
Design/build in the public sector could represent a significant market for the electrical contractor as new legislation and regulations clear the way for more design/build use on federal, state and local government projects.
The electrical contractor needs to be aware of the public entity’s design/build regulations and procedures before deciding to submit a proposal because they vary by level of government as well as by agency.
In addition, the electrical contractor must also thoroughly understand the selection process because submitting a design/build proposal is both time consuming and costly. EC
GLAVINICH is an associate professor in the Department of Civil, Environmental and Architectural Engineering at The University of Kansas and is a frequent instructor for NECA’s Management Education Institute. He can be reached at 785.864.3435 or firstname.lastname@example.org.