Study Shows Popularity of Design-Build Contracts Grows
A partial video screenshot of a visualized I-15 Tropicana project in Las Vegas. Image: NevadaDOT
Owners continue to award more consruction projects under design-build contracts, a new study by the Design-Build Institute of America and consultant FMI concludes. According to the study, if design-build continues growing at the same rate, it will account for $400 billion worth of work in the U.S. by 2025,.
In 11 key non-residential market segments, the delivery method will account for 47% of U.S. construction spending, up from 42% in the five-year period ending in 2020. The study foresees design-build claiming 16% of highway/street work, 15% of school construction and 13% of manufacturing.
Design-bid-build's share of construction spending will fall by 2025, to 15% of construction spending in the segments studied, down from 23% now, the study forecasts.
Competitive best-value selection, the study reports, is the most frequently used way of choosing a design-build contractor. But progressive design-build, which involves the design-build contractor and owner in the earliest phases of project development, "continues to be a procurement approach of growing interest across the industry," according to the study.
"As our nation considers the passage of historic infrastructure investment, it's clear design-build will play a significant role in delivering the nation's most time and cost-efficient projects to our communities," says Lisa Washington, DBIA CEO..
The study, called the Design-Build Utilization Update, confirms what is generally recognized: that design-build is a permanent major tool for project-delivery and can no longer be classed as an alternative project delivery method to traditional design-bid-build awards.
DBIA has over the years successfully lobbied at the state level for enabling legislation to permit the process to be used for state-funded public works.
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According to DBIA's website, 26 states and the District of Columbia now permit use of design-build for all kinds of public projects. North Dakota and Iowa limit its use to one political subdivision, agency or project type. In Wisconsin, Pennsylvania and Alabama, design-build is still a limited public works option. In the others, design-build is "widely permitted," DBIA reports.
Firms that perform $25 million worth of work each year or less are accumulating more experience with the method, according to the study.
There is still resistance where local or regional contractors protest the award of a big design-build project to larger national or regional firms, especially when it is made on a best-value basis.
Opponents in Colorado have mounted efforts to curtail contract awards made without traditional low-bid pricing. A Nevada company, Las Vegas Paving, which was eliminated as a contender for the prime contract on the large I-15 Tropicana interchange and road project in Las Vegas, recently complained about the price submitted by the designated likely winner, Kiewit. It is charging $40 million more for its scope of work than a losing proposer. That contract, not yet formally awarded, is being selected in a best-value process.
To assess the design-build market size, FMI consulted public data and modeling of the design-build market by region, interviewed 46 industry stakeholders and conducted an electronic survey of 279 other stakeholders. In addition to highways and streets, education and manufacturing, the study covered commercial, office, transportation, health care, water and wastewater, communications, lodging, amusement and recreation construction.
Half of all survey respondents reported that design-build exceeded project expectations, and three out of four characterized design-build experiences as good or excellent.
