But what is striking is that the Top 100 CMR revenue numbers for domestic projects rose 15.9% over 2016 figures, to $121.58 billion in 2017. This more than makes up for the 30.4% drop in revenue from international CMR projects, which fell to $10.66 billion in 2017, from $15.31 billion in 2016.

The DB list provides a similar contrast between domestic and international project delivery. Overall, the Top 100 DB firms had a total revenue of $107.15 billion in 2017, up 4% from 2016. However, revenue from domestic DB projects grew a robust 9.6%, rising to $84.35 billion in 2017. On the other hand, international DB revenue dropped 12.8% in 2017, thanks in part to a falloff in huge engineering-procurement-construction projects in the international mining, power and petroleum markets.

To put the strong growth in DB and CMR in a broader context, domestic DB revenue has grown 54.3% from 2011, when the construction recession ended, to 2017. This is well ahead of the growth in the overall market. At the same time, domestic CMR revenue has grown 89.4% from 2011 to 2017.

The growth in alternate project delivery is continuing unabated. The Washington, D.C.-based Design-Build Institute of America commissioned a market study by industry consultant FMI Corp., Raleigh, N.C., on the use of design-build in the market. “The FMI report, which will be released in late June, shows design-build is now used on 45% of the projects in the building sector, and that use should grow by 17% over the next three years,” says Lisa Washington, CEO.

Washington says design-build is growing in surprising new markets. “Its greatest growth recently has been in the education sector,” she says. Washington also notes that design-build is growing in regions that have long resisted its use. “People in New York City have seen design-build’s success on local infrastructure projects and are growing more interested in how it would work on their projects.” She says an upcoming DBIA conference in New York City sold out quickly.

---

Related Links:
ENR 2018 The Top 100 Design-Build Firms
ENR 2018 Construction Management-at-Risk Firms
ENR 2018 The Top 100 Project Delivery Firms PDF

---

Markets Are Booming

Many companies are noting a surge in design-build in the buildings sector. “We’ll continue to focus on projects where our design-build delivery method can bring the greatest value, which tend to be largely apartments, distribution centers and senior housing,” says Dave Bangasser, CEO of Opus Design Build. However, he says demand is still strong in Opus’ other major markets, such as commercial offices and institutional and student housing. “Our portfolio is also expanding to include healthcare projects, as there is a growing demand in this sector also,” he says.

One of the biggest design-build projects in the buildings sector is the $1.2-billion expansion of the Jacob K. Javits Convention Center on Manhattan’s far West Side. The project is a joint venture between Turner Construction and Lendlease. Using design-build gave the JV the flexibility “to facilitate major project changes more efficiently while realizing savings to both the bottom line and overall schedule,” says Jeff Arfsten, COO, Lendlease US Construction.

For example, the JV has changed the foundation design for the four-level truck staging area, which is 50% of the center’s 1.2 million square feet of expansion, and has altered the construction plan for the superstructure from steel to cast-in-place concrete, Arfsten says. “Streamlining project delivery in this way transforms the relationship between designers and builders into an alliance, which fosters collaboration and teamwork.”

Alternative project delivery also is making a big impact on the infrastructure sector. PC Construction has been working on major projects in the water sector using both DB and CMAR. For example, PC’s $300-million Atlanta Water Supply Program is a CMAR project that will address Atlanta’s goal of achieving a sustainable water infrastructure and add flexibility in systems operation. “We are about halfway through the second phase of mining for the tunnel,” says Jay Fayette, PC’s president.

Another firm that has seen a surge in alternative project delivery in infrastructure is Garney Cos. “We had some great fortune the last 18 months with collaborative delivery work. We feel we’ve really become one of the top in the industry for this delivery model and bring real value to the clients as a true design-builder,” says Jason Seubert, COO. Garney is overseeing the design, construction and financing of the $844-million San Antonio Water System Vista Ridge Water Supply Project in Texas, which includes a 142-mile pipeline.

Many firms say that design-build provides a level of flexibility by letting the design and construction teams work together to solve problems. Many firms  are now fully integrated design-builders doing most of the work in-house. These firms say this model gives them even greater agility in meeting challenges, such as workforce shortages or potential price spikes anticipated by the recent imposition of tariffs on imported steel and aluminum.

For example, fully-integrated Opus Design Build is doing the major design and construction in-house, which “allows us to be responsive and flexible to rapidly make design changes to accommodate such market dynamics without negative impact to the project,” says Bangasser. Further, being an integrated design-build firm allows Opus to “look at the whole picture and identify where possible stress points may arise and proactively develop solutions up front.”

Some design firms are now moving into the integrated design-build arena. “Every major architect is trying to figure out how to integrate design into construction. Our subsidiary, Henderson Building Solutions, provides integrated design-build services,” says Dustin Schafer, senior vice president for Henderson Engineers, Lenexa, Kan.

Henderson Building Solutions bids the equipment the client needs for the project, and then the engineering group designs around that, “which helps eliminate waste and makes our design bids extremely accurate,” Schafer says. “When you collaborate like that, you don’t have to design for the worst case. You work out ahead of time what’s needed and then design around it, forming a better model.”

Learning To Communicate

The movement toward alternative project delivery is not without its difficulties. Many firms say the costs and risks of putting together a bid proposal on a design-build project are much higher than for traditional bids. Design firms in particular say that much of the cost for preparing a proposal falls on their shoulders and there often is little they can do to recoup the expenses if the bid fails.

Contractors also are complaining. “Alternate delivery is becoming more common, even for relatively smaller pursuits. This increases the procurement timeline and requires contractors to commit additional resources to bid,” says Ashok Patel, CEO of OHL North America.

Another problem is the lack of training in best practices in alternative project delivery. “With the implementation of alternative delivery methods, there is a demand for more integration between companies,” says John Carlson, senior vice president for Sundt. “What’s needed today is more education and training of professionals and students for the leadership and communication skills necessary for successful integration of multiple entities in delivering projects.”

In response to the increased demand for training in alternative project delivery, DBIA now plans to update the core curriculum for its design-build certification exam, which will be introduced in September. Washington says this planned update has had the unintended consequence of having people flock to get into the certification program now, rather than face a new curriculum. “There are currently 3,000 in the certification pipeline with 500 getting certified this year,” she says.

There are a few firms that are beginning to push the boundaries and are looking at a vertically integrated model of project delivery, where a firm can provide not just design and construction services, but also planning, technology, materials and manufacturing as part of the construction process.

J. Peter Devereaux, CEO of Southfield, Mich.-based architect Harley Ellis Devereaux, has been an interested observer and participant in this trend. He says HED is currently working with both Menlo Park, Calif.-based Kattera and Chicago-based Skender and “we have been watching, with great interest, their efforts to implement a more efficient and vertically integrated design and construction process.” Devereaux says some designers despair over this development and others are excited over the possibilities.

Katerra is particularly interesting, as it recruited top executives from the major design and construction firms in an effort to explore the outer reaches of project delivery efficiency. In January, an equity investor team led by Japan’s SoftBank Group Corp. invested $865 million in Katerra. Katerra recently acquired Vancouver, B.C.-based architect Michael Green Architecture (see p. 53), which has a particular expertise in cross-laminated timber.

Devereaux says several venture capitalists, along with huge corporations like Amazon and Google, are widely believed to be investing big money in similar ventures that will greatly disrupt and change the way the industry has delivered projects for the past century. “There is no future in trying to forestall it, but rather, we should embrace this change.” Whatever the future holds, “our practices will be different,” he says.