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Minnesota Design-Build Workshop “Evolution and Varieties of Design-Build” November 29 - 30, 2000

Minnesota Design-Build Workshop “Evolution and Varieties of Design-Build” November 29 - 30, 2000 Project Delivery & Procurement – Brief History 1420 – Cathedral at Florence 1852 – Founding of ASCE & A 1862 – Use of Master Builder for Wartime Projects

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Minnesota Design-Build Workshop “Evolution and Varieties of Design-Build” November 29 - 30, 2000

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  1. Minnesota Design-Build Workshop “Evolution and Varieties of Design-Build”November 29 - 30, 2000

  2. Project Delivery & Procurement – Brief History 1420 – Cathedral at Florence 1852 – Founding of ASCE & A 1862 – Use of Master Builder for Wartime Projects 1878 – General Contractors Association 1917 – Wartime Integrated Project Delivery 1923 – Engineering and Production Contracts

  3. History of Integrated Services (continued) 1947 – Navy Housing 1962 – NASA Space Program 1972 – Brooks Act; Qualifications-Based Selection 1978 – AIA Revisits its Policy on Construction 1984 and 1996 – Federal Design-Build Procurement Laws 1999 – TEA 21 Design- Build Provision

  4. Design-Build Institute of America • Driven by market demand • 701 companies engaged in Design-Build • $46 billion in volume • 170,000 employees • Inclusive of all firms in Design-Build • Center of Expertise in Design-Build • Staff office in Washington, D.C.

  5. Design-Build Overview • Innovative approach to project delivery • Team of qualified design and construction professionals • Operating under a single contract • Single source accountability • At risk for cost, schedule, quality and management of the project (except where the owner retains responsibility)

  6. Design-Build Advantages • Single point of responsibility for owner • More professional relationship with constructor • A/E and constructor on the same team providing unified recommendations to owner • Fastest delivery system • Design submission and pricing project at proposal stage possible • Earliest knowledge of firm costs • Allows most innovations / options for owner to select • Delivers high quality • Allows clearest definition of risks • Least claims and litigation

  7. Design-Build Disadvantages • Owners pushed for earlier and timely decisions • New learning curve for owners • Different process in front end of project • Barriers in some states with procurement and licensing • Use of new insurance/bonding products • Resistance among those not familiar with approach

  8. Owner’s Decision Tree • ACQUISITION PLANNING/ DELIVERY SYSTEM CHOICES -- Overall Delivery Process • PROCUREMENT/PURCHASING CHOICES -- How are we going to buy goods and services? • COMMERCIAL TERMS OF CONTRACTS CHOICES -- Should our agreement be based solely on knowing costs up front or should we emphasize performance and cost reasonableness?

  9. Delivery Systems Options • Design-Bid-Build • Construction Management “At Risk” • Design-Build • Variations on above themes

  10. Sole Source/Strategic Alliance Qualifications-Based Selection/RFQ Source Selection with Discussions (Best Value) Source Selection without Discussions (Best Value) Fixed Budget/Best Technical Response Weighted Criteria (Criteria are identified and proposal scored) Adjusted Low Bid (Price Divided by Technical Score) Low Bid (IFB) Procurement/Purchasing Options

  11. Subjective and Qualitative Factor(s) Best Value: Subjective, Qualitative and Quantitative Factors Price-Based Factor(s) “Brooks” A/E Selection Sole Source Negotiated Source Selection Competitive Negotiation Weighted Criteria Fixed Budget/ Best Design Adjusted Low Bid Two-Step Sealed Bidding Low First Cost Bidding Bilateral Discussions - Choice Based on Qualitative/ Subjective Factors Formal Discussions - Choice Based on a Combination of Qualitative and Quantitative Factors Unilateral Choice, Based on Qualitative and Quantitative Factors Unilateral Choice, Based on a Single Quantitative Factor Procurement/Selection Spectrum

  12. Commercial Termsof Contracts • Cost Reimbursable • Cost Plus Fee • Guaranteed Maximum Price • Fixed Price/Lump Sum • Unit Price

  13. Design-Build Structural Variations • Joint Venture • Integrated Firm • Constructor-Led • Designer-Led • Developer-Led • Owner-Led

  14. Design-Build Operational Variations • Direct Design-Build • Design Criteria Design-Build • Preliminary Design Design-Build

  15. Percentage of Design (As included in or required by Design-Build RFP) Usually Best Value or Qualifications-Based Procurement Typically Low Bid-Based Procurement Direct Design-Build -10% to 10% Design Criteria Design-Build 5% to 25% Preliminary Engineering Design-Build 20% to 35% Design Draw-Build 35% Design or Greater -10% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% Pre-Design

  16. Market Penetration of Major Project Delivery Systems

  17. “Classical” Project Delivery (Design-Builder warrants to Owner that design documents are complete and free from error) “Traditional” Project Delivery (Owner warrants to Contractor that design documents are complete and free from error) Program Program Program Program Point at which firm project costs become known Negotiation Competitive Proposals/ Evaluations Design Working Drawings/ Specs Bids Design Working Drawings/ Specs Budgets Contract Cost Contract Cost Design-Build Project Delivery Design-Build Project Delivery Contract Cost Subcontract Bids Negotiated Selection Design-Build Construct Construct Competitive Selection Design-Build Contract Cost Design-Bid-Build Fee-Type Const. Management Knowledge of Price

  18. Construction Industry Institute Study • 351 Projects • 5K to 2.5M SF • Various types / Industry sectors • Compared performance between DBB, CM@R, & DB • Performance evaluated Cost, Schedule, Quality areas

  19. Construction Industry Institute Study • Design-Build Performance compared to Design/Bid /Build • Unit Cost - 6% less • Construction Time - 12% faster • Project Time (design & const)- 33% faster • Quality on a 10 point scale - • Start-up; Call Backs; O&M; Exterior & Structure; Interior; Environmental; Equipment • DB outperformed D/B/Bin every category

  20. Construction Industry Institute Study • Best performing projects- • Owner decision making • Good scope definition • Excellent team communication • Qualified contractors • Worst performing projects- • Constructor engaged late in design • Limited team experience • Onerous contract clauses • Poor decision making process • No pre-qualification process

  21. Federal focus on implementation Two Phase Selection TEA 21 authorization Agency Adoption States’ use expanding DB allowed - 28 DB restricted - 14 DB not allowed - 8 DB and the Public Sector

  22. The Future of Integrated Services Delivery • Ascendancy of Facility Asset Firms and Specialty Design-Construct Firms • More Cross-Disciplinary Teams Solving Customer Problems • Multi-Skilling at the Professional and Trade Levels • Linked Technology – Labor, Materials and Equipment, Prices and Schedule in the heart of the project - Performances, Geometries, Costs and Milestones at Inception and Operation

  23. Jeffrey L. Beard Design Build Institute of America Ph. (202) 682-0110 jbeard@dbia.org www.dbia.org

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