DESIGN-BUILD PROCUREMENT APPROACHES

John D. Doller, P.E. Carollo Engineers, Inc.

Agenda

• Procurement Goals

• Evaluation Options

• Types of Procurement

• Considerations for Selection of Procurement Type

Procurement Goals

• Attract the best competition from the qualified DB teams

• Obtain an acceptable market price for DB services

• Obtain acceptable contract terms to meet Owner’s project objectives with acceptable risk allocation

Evaluation Options

Qualifications Cost

Evaluation Options

Qualifications Cost

Qualifications Based Selection

Price Based Selection Best Value Selection

Design-Build Procurement Approaches

Design-Builder is selected based on Qualifications

alone.

RFQ A price for the project is developed

at a specified level of design and could be GMP or Lump Sum

Qualifications Based Selection

Design-Build Procurement Approaches

Design-Builder is selected based on price alone

(i.e. lowest responsive price)

RFP

(requires some level of design)

Qualifications Based Selection

Price Based Selection

Design-Build Procurement Approaches

Design-Builder is selected based on a

combination of qualifications and

price

RFP or RFQ&RFP

Qualifications Based Selection

Price Based Selection

Best Value Selection

Qualifications Based Selection

ADVANTAGES • Reduces procurement time and cost

• Most qualified Design-Builder is selected

• High degree of Owner control

• Owner defines/negotiates scope, quality, price and schedule

Project Definition

Predesign Final Design

Construction Startup

Qualifications Based Selection

DISADVANTAGES

• May not be legally permissible

• Is counter to “public low bid” psyche

• Could be “tough sell”

• May need to engage a procurement advisor

Project Definition

Predesign Final Design

Construction Startup

Qualifications Based Selection

QUALITATIVE CONSIDERATIONS * Qualifications * Experience

* Technical Approach * Management Approach

* Risk Allocation * Key Personnel

* Team Organization * Schedule Control

* QA/QC Approach * Insurance / Bonding

Project Definition

Predesign Final Design

Construction Startup

Price Based Selection

ADVANTAGES

• Price certainty at time of proposal submission

• Detailed technical information provided

Project Definition

Predesign Final Design

Construction Startup

Price Based Selection

DISADVANTAGES

• Large time investment in procurement

• Greater effort to review proposals

• Owner input only during procurement development

• Life-cycle cost considerations limited

Project Definition

Predesign Final Design

Construction Startup

Price Based Selection

Predesign Final Design

Performance Based Prescriptive Based

INNOVATION CONTROL

Performance vs. Prescriptive

Predesign Final Design

Performance Based Prescriptive Based

INNOVATION CONTROL

Performance Based Prescriptive Based

• Maximum potential for cost savings through innovation

• Maximum transfer of design-related performance risk

• Relatively low costs to prepare RFP / Proposal

• Substantial control over project design and O&M costs

• Proposal selection can emphasize project design build costs

• High level of project definition at time contract is signed

ADVANTAGES

Performance vs. Prescriptive

Predesign Final Design

Performance Based Prescriptive Based

INNOVATION CONTROL

Performance Based Prescriptive Based

• May result in higher O&M costs

• Proposal evaluation and selection is more complex

• Potential for decreased participation due to higher preparation costs

• Limited Owner input into design after proposal is accepted

• Procurement duration is longer

• RFP preparation is more costly due to high level of design

• Design risk not clearly assumed by the Design- Builder

DISADVANTAGES

Best Value Selection

Cost Qualifications

ADVANTAGES

• Price certainty at time of proposal submission (maybe)

• Detailed technical/qualifications information provided

• Depending upon cost component – collaboration can still exist

Best Value Selection

Best Value Selection

Cost Qualifications

DISADVANTAGES • Large time investment in procurement

• Greater effort to review proposals

• Life-cycle cost considerations limited

Best Value Selection

Weighting Costs and Quals

Progressive D-B

Progressive Design-Build In a progressive design-build procurement, the design-builder is selected primarily based on qualifications before substantial design is completed. Together, the owner and the design-build team advance the design, incorporating the details desired by the owner and providing the owner with cost input regarding options the owner is considering. This open-book approach enables the owner to make well-informed decisions on the overall quality of the project. (Chapter 3, page 25)

Progressive Design-Build

Design/Builder

Design Development and Construction Design Definition

Owner

PM/OA

100% Guaranteed maximum price established at the right time: Risk and contingency reduced, schedule needs met

Construction estimating can start very early in design, allowing comparison of specific technical solutions

First fully detailed estimate can be used to establish a scope baseline. Estimating process is “open book”

“Progressive” estimates keep owners informed and support-informed scope adjustment decisions

Owners can use third-parties to verify cost . . . . . . and go to the hard-bid market if needed (the “off-ramp”)

Progressive Design-Build

Design/Builder

Design Development and Construction Design Definition

Owner

PM/OA

100%

• Investment in projects, not procurements

• Offers owners maximum flexibility/opportunity to collaborate on design/permitting

• Minimizes overall schedule

• Owners have an “off-ramp” in case of permitting issues or if GMP can’t be negotiated

• Very successful evolving model

Considerations for Selecting Procurement Approach

• Project Goals and Objectives

• Legal Feasibility

• Level of Design Definition

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