An evaluation of design-build as procurement method for

An Evaluation of Design-build as Procurement Method for Building and Civil Engineering Projects in South Africa

by

Kobus Grobler

Dissertation

Submitted in partial fulfillment of the requirements for the degree

MAGISTER INGENERIAE

in

ENGINEERING MANAGEMENT

in the

FACULTY OF ENGINEERING

at the

RAND AFRIKAANS UNIVERSITY

Supervisor: Prof L.Pretorius

Johannesburg May 1999

Biographical profile of the author

Kobus GrObler Pr Eng Chartered Eng BSc Eng Civil MSAICE AlStructE

Rand Afrikaans University: Student number 9608306

Graduated from the University of Pretoria at the end of 1977. Spent first four years with consulting civil engineers as a design engineer. The following five years he worked as contracts manager for civil engineering contractors. Started Concrete Structural Engineers cc in 1987. The firm specializes in design and construction of reinforced concrete structures.

Acknowledgements

The author would like to thank the responding companies and organizations for the generosity with their time in responding to my questionnaire and to those granting me an interview.

An Evaluation of Design-build as Procurement Method for Building and Civil Engineering Projects in South Africa

Abstract

Recent studies in developed countries such as the United States of America and United Kingdom proved that the design-build procurement method experiences extraordinary growth. In the Far East this approach is also gaining in popularity. The recently completed 414 million pound Pergau Hydroelectric Project in Malaysia, is an excellent example, where design-build was used most effectively to the benefit of all role players.

This research seeks to determine the position of design-build in the building and civil engineering fields in South Africa. Questionnaires and personal interviewing were used to collect the primary data.

The main findings of this South African research are: (1)Approximately 29% of building and civil engineering projects are delivered by the design-build approach; (2)Design-build was overwhelmingly preferred as procurement method; (3)Design-build can lead to: shorter project duration; reduction in cost; enhanced constructability of the design; better relations and less disputes and claims; (4)This concept also has the advantage of single-point responsibility; (5)It can be used on any size project; (6)The main concerns were: high cost for bidding, especially of the design function; lack of an appropriate form of contract; a well defined scope of the work is essential; (7)Respondents perceived a bright future for design-build in South Africa.

Design-build has the potential to integrate the functionally separate groups of the traditional project team, which can lead to better co-operation and relations. This can ultimately result in an improvement in the three critical project performance criteria, i.e. time, cost and quality.

Samevatting

Onlangse studies in ontwikkelende lande by. die Verenigde State van Amerika en die Verenigde KoninIcryk, het bewys dat die ontwerp-bou projekverskaffingsmetode buitengewone groei toon. Hierdie metode is ook besig om in die Verre Ooste veld te wen. Die onlangs voltooide Pergau Hidro-elektriese Projek in Maleisie (414 miljoen pond), is 'n uitstekende voorbeeld waar die ontwerp-bou metode voordelig toegepas is tot voordeel van alle partye.

Hierdie navorsing het ten doel om die posisie van ontwerp-bou in die bou- en siviele ingenieursvelde in Suid-Afrika te bepaal. Met behulp van vraelyste en persoonlike onderhoude, is die prim'ere data ingewin.

Die hoofbevindings van hierdie Suid-Afrikaanse navorsing is: (1)Ongeveer 29% van bou- en siviele projekte word voltooi deur ontwerp-bou; (2)Ontwerp-bou is oorweldigend verkies as die gunsteling projekverskaffingsmetode; (3)Ontwerp-bou kan lei tot: verkorte projektydsduur, vennindering in projekkoste; verbeterde uitvoerbaarheid van die ontwerp; verbeterde verhoudinge en minder verskille en eise; (4)Hierdie konsep hou die voordeel van enkelpunt-verantwoordelikheid in; (5)Dit kan gebruik word as verslcaffingsmetode op enige projekgrootte; (6)Die belangrilcste probleemareas is: hoe koste tydens tendering (veral van ontwerp); gebrek aan 'n toepaslike kontrak; goed-gedefinieerde uiteensetting van die werk is nodig; (7)Respondente voorspel 'n blink toekoms vir ontwerp-bou in Suid-Afrika.

Ontwerp-bou het die potensiaal om die afsonderlike groepe van die tradisionele projekspan te integreer. Dit kan lei tot verbeterde samewerking en verhoudinge wat op sy beurt kan lei tot verbetering in die kritiese projek maatstawwe: tyd, koste en kwaliteit.

Table of Contents page

Chapter 1: Introduction and Research Objectives 1

1.1 Introduction 1

1.2 Problem statement 4

1.3 Introductory background 5

1.4 Research objectives 8

1.5 Research approach 10

1.6 Conclusion 10

Chapter 2: Literature Review 12

2.1 Introduction 12

2.2 Reasons why owners select design-build as procurement method 12 2.2.1 Reasons as determined by a research survey of Songer and Moolermar 3 (1996) 12

2.2.2 Specific benefits of design-build 16

2.3 Factors influencing the success of design-build projects 27 2.3.1 Factors as determined by a research survey of Songer and moolenaar9(1997) 27

2.3.2 Owner's interaction in the design process 33

2.4 Some success criteria for projects 34 2.4.1 Canadian study of Dozzi Hartman. Tidsbury and Ashrafi 11 (1996) 34

2.4.2 American study of Puddicombel3(1997) 35

2.4.3 Concluding discussions on success criteria for projects 37

2.5 Further aspects of design-build, including areas of concern 38 2.5.1 The type of project and owner for which the design-build approach is

most suitable 38

2.5.2 Attitudes of the professions 39

2.5.3 Owner representation 40

2.5.4 Areas of concern 41

2.5.5 The future of design-build 42

Table of contents (continued) page

2.6 Award, compensation methods and forms of contract 43 2.6.1 Award methods 43 2.6.2 Compensation methods 45 2.6.3 Forms of contract used on design-build projects 50

2.7 Summary and Conclusions 52

Chapter 3: Survey Methodology and Data Collection 58

3.1 Introduction 58

3.2 Methodology 58

3.3 Development of the questionnaires 59

3.4 Questionnaires to selected parties 60

3.5 Personal interviewing 61

3.6 Telephonic follow-up calls 61

3.7 Response 62

3.8 Limitations 63

3.9 Summary and Conclusions 64

Chapter 4: Research Results and Analysis 65

4.1 Introduction 65

4.2 Results and Analysis 65

4.2.1 Construction sectors 65

4.2.2 Designers' and contractors' speciality 66

4.2.3 Experience of respondents of the design-build method 67

4.2.4 Involvement of designers and contractors in the public and private sectors 68 4.2.5 Percentage of projects delivered by the design-build concept 69 4.2.6 Comparing design-build with other procurement methods on project selection

criteria 73

Table of contents (continued) page

4.2 Results and Analysis (continued) 4.2.7 Attitudes of the role players on certain issues related specifically to

design-build 78 1)Relations between designers and contractors 78 2)Resistance from professionals 80

4.2.8 The preferred design-build alternative 82 4.2.9 Evaluation of the form of contract, award and compensation methods on

design-build projects 84 1)Form of contract 84 2)Award methods 87 3)Compensation methods 88

4.2.10 Future of design-build 90 1)Areas of concern 90 2) Future of design-build 93

4.3 Summary of Research Results and Conclusions 94

Chapter 5: Conclusions and Recommendations

99

5.1 Introduction 99

5.2 Summary of essential research findings and conclusions 99 5.2.1 Findings from the Research Review 99 5.2.2 Summary of essential findings and conclusions of this South African

Research Survey. 101

5.3 Concluding Remarks and Recommendations 110 5.3.1 Concluding Remarks 110 5.3.2 Recommendations 1 1 l

List of References 112

List of Figures and Tables 115

Appendix A: (Copy of Questionnaire) 118

Chapter 1: Introduction and Research Objectives

1.1 Introduction

The procurement of construction projects requires a balance of quality, time and cost, consistent with the owner's requirements and budgetary constraints. This requires effective briefing, indicating exactly what the owner of the project wants, and the choice of an appropriate procurement method.

Design-build is a procurement method where design and construction are under one umbrella. One entity is responsible for both the design and construction of the project. The owner of the project deals only with the principal agent and signs only one contract, thus single-point responsibilty.

From a comprehensive research review it appears that the contractor is usually the principal agent and employs a design consultancy to carry out the design. One can argue that the main reason for this set-up is that the construction value of a project usually over-shadows the design costs.

However, in this research, three variations of design-build are investigated:

The contractor is the principal agent with the designer as a sub-contractor to the contractor.

The designer is the principal agent with the contractor as a sub-contractor to the designer.

Design and construction by one company specializing in both design and construction. It can be described as the "super design-build".

Under the first two types, the principal agent's company is contractually joined to the owner and responsible for both the design and construction in accordance with the owner's requirements. Although the designer and contractor are two separate companies, and need an internal contract, the owner deals only with the principal agent.

J.B.Shah 1 (1996) favours the second type where the designer is the principal agent, argueing that it is more desirable to have the contractor (normally non-professional) working under the design professional.

At this stage there are not many companies in the building and civil engineering fields specializing in both design and construction. It appears as if this alternative takes more shape in consortiums, which are formed specifically for large projects.

In design-build contracts, the client/owner finances the project. In design-build-finance contracts, also called turnkey contracts, the design-build entity also finances the project, and payment is made at the completion, when the "key" is turned over-(C.M.Gordon2 1994). Financing the contract, however, falls beyond the scope of this paper.

Design-build is not a new concept. A.D.Songer and K.R.Molenaar 3 (1996) confirmed that thousands of years ago, the master builder was responsible for both design and construction. The code of Hammurabi, the King of Babylonia, is the world's oldest building code that we are aware of. It was written approximately 2200 B.C.- (D.Kaminetzlcy4 1991). This code, promulgated literally an eye for an eye. The builder just could not afford to make a mistake in either design or construction. There were no split liabilities, the builder could not blame anybody else. Structures were very reliable and enduring as many of these ancient buildings are still standing today and admired by mankind. These buildings were all constructed by the design-build method.

Songer and Molenaar3(1996) continue to say that, during the Renaissance, broadly considered the period between 1400 and 1600 A.C., projects became more complex and the functional need for specialization arrived. Architecture and construction developed as distinct professions and the design-build concept by the master builder diminished. The design function became a professional occupation (architects and engineers), whilst the actual construction, belonged to craftsmen and businessmen.

During the 1800's, as statutory and case law developed, the separation of design and construction evolved from functional to legal. Courts maintained that architects were only liable in cases of negligence, whilst the contractor faced much stricter liability. As these liabilities became defined, design-bid-build emerged as the primary project procurement method - (Songer and Molenaar' 1996).

This method is known today as the "traditional" method. In this method the design and construction are not under one umbrella - they are separated. Design is normally carried out by a design consultancy, whilst construction is carried out by a separate entity, usually a contracting company. With this approach the owner first appoints the designer and signs a contract with him. The owner produces a clear and comprehensive statement, called "the owners brief', indicating exactly what is required and the constraints within which the building / project is to be provided.

Besides being responsible for the design, specifications, and construction drawings, the designer also compiles the construction contract document, and normally acts as representative for the owner. This usually includes handling the bidding and award to the successful contractor and supervising the construction process. With this procurement method the owner therefore enters into two separate contracts, one with the designer, and one with the contractor.

Activities are usually in series in the traditional design-bid-build procurement method. First the design, specifications, drawings, and construction contract document are prepared. Then the contract goes out for bidding whereafter the contract for construction is awarded to the successful contractor. Only then can the contractor start with procurement activities, such as ordering of materials, appointing of sub-contractors if required, establishing, etc. In situations where special materials and fabrication are required, the actual on site construction might only commence quite some time after award of the contract.

Unlike the traditional method, some activities can be done in parallel in the design-build method, leading usually to a shorter overall project completion time - (I.Ndekugri and A.Tumer5 1994). Buying of some materials, appointment of sub-contractors, and certain construction activities can overlap design. On building contracts, for example, bulk earthworks can usually be completed whilst detail structural design is in process. Construction proceeds as details come available.

According to Songer and Molenaar3(1996) the inflationary 1970's and the litigious 1980's encouraged owners to reconsider the traditional procurement method. The desire for time and cost efficiency paved the way for other methods such as design-build, management contracting, and construction management, as viable alternatives. Although it appears as if the traditional method is still the most popular procurement method, there is a noticeable trend towards especially design-build.

With the re-appearance of design-build, this ancient procurement method, the oldest known to mankind, one can say that it has completed the full circle. What the industry is experiencing in fact, is a trend towards integration. With the separation of design and construction in the Renaissance period, each group developed over the years its own culture, with different goals and success criteria, resulting in lack of co-operation and hostile relationships in many instances. Time over-run, budget overspending and disputes, are encountered in many projects delivered by the traditional method, with its separate design and construction functions. Design-build has the potential to integrate the former functionally separated groups of the traditional project team, which can lead to better co-operation and relations. This can result in less disputes and claims, better quality, time and cost savings.

1.2 Problem statement

Recent studies in developed western countries such as the United Kingdom and United States of America, proved that design-build experiences extraordinary growth. In the Far East, the Hong Kong government is effectively using the design-build method, especially where the innovative integration of design and construction is thought to be critical - (J.B.Miller6 1997).

The multi-million pound Pergau Hydroelectric Project in the Far East, in the Northern Peninsular of Malaysia, is an excellent example where design-build was used most effectively to the benefit of all the role players - (E.McEwan, I.W.Luke and J.Idiculla 7 1997). It appears as if this method is gaining field in most developing countries with progressive manufacture and construction industries. (During the 1980's and early 1990's, manufacturing production increased in Malaysia by nearly 10% annually, assisting Malaysia's economy to expand nearly 6% anually between 1980 and 1992 - (Microsoft Encarta 1996 Encyclopedia 8).

South Africa is a country in political transformation and uncertainty. The question is, whether local role players will follow the trend towards design-build, or hold to the known traditional method where everything around them is changing. There is a perception, true or false, that design-build is not as well established in South Africa than is the case in developed countries. It seems as if the traditional design-bid-build method is still preferred and used extensively in South Africa.

Questions that have often been asked in recent times are:

What is the current position of the design-build procurement method in the South African construction market?

What is the attitude of the relevant role players towards design-build?

It is therefore necessary to determine the current position of design-build as a procurement method in South Africa. An extensive survey into this matter could be of great value to all the role players in the industry, designers, contractors, and owners of engineering projects in South Africa, including design-build companies entering the market.

1.3 Introductory background

Three recent studies on design-build in the United Kingdom and Unites States of America indicated clearly that there are many reasons why this procurement method is selected more and more by owners of building and civil engineering projects. In fact, it experiences fast growth.

A research paper by Ndekugri and Tumer 5 (published June 1994), on the topic of "Building Procurement by Design and Build Approach", indicates that design-build experiences fast growth in the United Kingdom. In 1989 the design and build share of the United Kingdom construction industry was between 15% and 25%.

Figures suggest that the design-build method's proportion of construction will increase into the 21st century. In fact, most owners, designers and contractors in the United Kingdom, were of the opinion that this method of project delivery will increase in popularity. This research focused mainly on the building industry in the United Kingdom.

According to a research study by Songer and Molenaar 3 (published November/December 1996), design-build has experienced extraordinary growth in recent years in the United States of America. This research represented the building and civil engineering sectors in the United States with the primary goal to assess attitudes of owners (public and private) towards the design-build method of project delivery. The authors stated that the U.S. Department of Commerce predicts that 50% of all non-residential construction will be constructed by the design-build method by the year 2001.

Abovementioned two independant researches in the United Kingdom and United States of America, produced similar results to a large extent. According to these two studies, the reasons why the design-build procurement method is selected by owners, can be summarized as follows:

One of the main reasons given for the selection of design-build is that this procurement method leads to shorter project duration. Design-build is selected primarily to save time.

Some owners prefer design-build to secure a fixed project cost and fixed time schedule before the start of detailed design. Thus established cost and time schedules.

The design-build method involves less disputes and claims as one entity is responsible for all matters of design and construction.

This method also frequently results in improved constructability of the design. This is achieved by having the contractor communicating with the designer at the very beginning of the design process.

This approach has been used successfully on any size project, from very small and simple to large and complex.

All the reasons given for design-build's growth and factors accounting for its popularity should lead to a reduction in overall project cost. All the role players (owners, designers and contractors) in the United Kingdom (survey of Ndelcugri and Turner 5 1994) perceived this method as "providing better value for money, particulary.where time for completion is of essence".

This was echoed by owners of the United States of America - (survey of Songer and Molenaar3 1996). They indicated that the primary reason why they select design-build is "to take advantage of the time savings inherent in the process", thus effectively leading to cost savings.

In the March 1997 publication of the Journal of Construction Engineering and Management, a follow-up research by A.D.Songer and K.R. Molenaar 9 was published. Their main goal was to identify the appropriate project characteristics for a successful public-sector design-build project. In other words, what is necessary for design-build projects to be successful. Understanding which project characteristics are critical for success, is of utmost importance for improved public agency implementation. Public-sector owners ranging from federal, state, and local goverment, were surveyed.

The results of this survey demonstrated that there are 15 primary project characteristics that affect public-sector design-build project success. Of the 15 project characteristics, 5 proved to be critical in all projects:

Well defined scope.

Shared understanding of scope.

Owner's construction sophistication.

Adequate owner staffing.

Establish budget.

The remaining 10 project characteristics influence success on a project-by-project basis and will receive more attention in the literature review section. The authors stressed the point that the definition and understanding of project scope is the most important element for design-build project success.

Another prominent factor leading to the popularity of this approach, is the flexibility built into the design-build system. The inherent flexibility of this approach makes it possible to take full advantage of the contractor's knowledge and preferred methods of construction. In practice, the author has experienced that this factor is one of the most beneficial elements of the design-build procurement method. Designs can incorporate the contractor's knowledge and the preferred method of construction, leading to enhanced constructability and quality of the design which in many cases lead to shorter project duration and a reduction of total project cost. This is possible because the contracting staff can have inputs into the design right from the preliminary design stage.

This is of course not possible with the traditional design-bid-build method as the design is normally complete by the time the contractor is appointed and it is too late to exert any significant influence. Designs that are tailored to suit preferred construction methods usually lead to shorter project duration and a reduction in project cost.

The Pergau Hydroelectric Project constructed in Malaysia, is one example where the flexibility of the design-build concept assisted in several instances to meet the tight project completion schedule. This multi-million project (approximately 414 million pound), commenced in 1991, with a contract duration of 68 months. The main contractor, a British-Malaysian joint venture, managed both the design and construction with funding assistance provided by the British Government. With this concept it was possible to provide designs to suit the preferred method of construction. This was done on the dam construction, the Terang pumping station, reregulating pond, and the access roads. In all these situations, the intimate involvement of the contracting staff in the design process, made it possible to use designs to suit the preferred method of construction. According to McEwan, Luke and Idiculla '(1997) this offered a lower risk against programme overrun and safety hazards for construction in an environment that is subjected to heavy tropical rainfall.

The designer of this multi million pound fast-track project stated that in the design-build arrangement, there is opportunity for both the design and construction parties to set aside the normal constraints encountered with the traditional method, and to form a partnership, that can benefit both sides and ultimately the project itself.

The contractor also praised this method, and felt a prerequisite for the successful execution of a design-build project is "a relationship of mutual trust, confidence and understanding between the design engineer and the contractor".

As with any method there are also disadvantages. The United Kingdom survey of Ndekugri and Tumer 5(1994) stated that the only serious concern expressed was about design liability and related insurance matters. Mother finding by them was that size and complexity of projects presented problems only when there were inadequacies in the owner's brief. This is of course confirmed by Songer and Molenaar 9(1997). As mentioned earlier, owners of public projects in the United States of America, viewed a well defined scope to be the most important project characteristic that affects design-build project success. This is of course due to the fact that owners have less control over the design in design-build projects, than is the case in the traditional method with separate design. However, it remains a fact, that an inadequate / ill defined scope, will lead to problems in any procurement method.

Mother concern mentioned by Ndekugri and Tumer 5 (1994) is that although attitudes have changed significantly, contractors still experience resistance from the professions -(architects and quantity surveyors).

Although this is a worrying concern, it might give a skew perception of the design-build approach. It must be seen in the context studied by Ndekugri and Tumer 5 (1994), where the contractor is the principal agent with the design professional/s employed by the contractor. Abovementioned authors noted that there is a perception that contractors is still regarded by these professions as of low esteem.

However, the outlook of the professions might be completely different in the other design-build concept where they are the principal agent and the contractor sub-contracting to them.

1.4 Research objectives

After studying the very positive experiences towards the design-build method, one is positive that this project delivery approach can also have enormous benefits for the local South African construction industry.

To reap the full benefits of this approach it must be implemented on a wide scale. It was mentioned, however, that there is a perception that design-build is not as well established in South Africa than is the case in other developed countries.

There is therefore a searching need to determine a realistic position of design-build as a procurement method in South Africa. In other words, what percentage of projects are delivered by the design-build approach. This is the primary goal of this research.

Secondly, it will be most valuable and useful to determine which of the three design-build alternatives is most often used. These figures can be of great value for role players in the industry, including new entities entering the design-build market.

Thirdly, it is necessary to compare design-build with other procurement methods on important project selection criteria and to determine which procurement method is preferred by the role players.

The fourth goal is to determine attitudes of the local role players on certain issues related specifically to design-build, including negative factors, i.e. matters that were regarded to be of concern in other studies. Two topics that immediately come to mind are design liability and the resistance experienced by contractors from designers and quantity surveyors. It will be most useful to compare resistance from local professions towards the contractor (principal agent) with the United Kingdom survey. In addition to the United Kingdom survey, this survey also strives to measure the resistance experienced in the other design-build concept, i.e. resistance from contractor's professional staff towards the designer (principal agent), as well as relations in general between the staff of the design and contracting teams in the three design-build approaches.

The fifth goal is to assess which of the three design-build alternatives is most popular.

The next goal is to evaluate the award and compensation methods, as well as the form of contract preferred on the design-build concept of project delivery. Design consultants are usually appointed, and the fee is usually a certain percentage of the contract value. Construction work is usually subjected to competitive bidding on fixed price. Lately, however, it is perceived by a section of the construction industry, that construction work is negotiated more often. On design-build projects, the perception is that most small and simple projects are negotiated on fixed price, whilst large and complex projects are usually subjected to competitive bidding on guaranteed maximum price or cost plus.

The last goal of this study is to assess the future of design-build in South Africa.

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1.5 Research approach

The methodology developed to research these objectives is:

A comprehensive literature review to gather more information on this procurement method, and to identify selection factors against which attitudes of local role players towards the design-build method, can be determined. In addition, a research review is of tremendous value to gather negative factors on the topic of design-build, as experienced by other role players in other countries. The response of local role players towards these matters are important for comparison purposes. In addition, the gathering of secondary data is of great importance in any research, amongst other, it keep us from "reinventing the wheel".

Survey questionnaires were developed to gather the primary data. Understandably the questionnaire to owners is slightly different than the one distributed to designers and contractors. For an adequate evaluation of attitudes it is necessary to obtain information from all the role players, i.e. owners, designers and contractors. Although the attitudes of owners are of primary importance as they normally select the method of project delivery, the input from designers and contractors are of no less importance as they are the people actively involved in the process. Questions concentrated on the seven objectives mentioned in the previous section.

Personal interviewing of selected parties and organizations was carried out to provide validation and clarity to the survey results.

The research methodology was developed along the guidelines of D.R.Cooper and C.W.Emory 10(1995).

1.6 Conclusion

After studying the introductory part of this dissertation, one comes to the conclusion that design-build has the potential to integrate the former functionally separated groups of the traditional project team. Integration can lead to enhanced co-operation and relations, resulting in less disputes and claims, better quality, shorter project duration, and cost savings.

The design-build method of project delivery is experienced very positively and growing fast in two of the most developed countries in the world, namely, the United Kingdom and United States of America. It is also used successfully in some countries in the Far East.

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One can assume that this will most probably be the case in most developing countries with progressive manufacture and construction industries. A case in point is the success achieved with this method in the multi-million pound Pergau Hydroelectric Project in Malaysia in the Far East.

However, there is a perception that design-build is not as well established in South Africa as is the case in other developed countries. There is therefore a searching need to determine a realistic position of design-build as a procurement method in South Africa.

This research seeks to obtain answers to the following objectives:

To determine a realistic position of design-build as a procurement method in South Africa. This is the main objective of this research.

To assess which of the three design-build alternatives is most often used.

To compare design-build with other procurement methods on important project selection criteria and to determine which procurement method is preferred by the role players.

To determine the attitudes of local role players on certain issues related specifically to design-build.

To assess which of the three design-build alternatives is most popular.

To evaluate the award and compensation methods, as well as the form of contract preferred on the design-build concept of project delivery.

To assess the future of design-build in South Africa.

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Chapter 2: Literature Review

2.1 Introduction

The main objectives of a literature review for this study are to:

Identify reasons why owners select design-build as a procurement method.

Acquire factors influencing the success of design-build projects.

Determine success criteria by which the success of projects are judged.

Gather more information on design-build, including areas of concern.

Evaluate the award and compensation methods, as well as the form of contract preferred on the design-build concept of project delivery.

This information provides the necessary background on this subject and forms the platform from where it is possible to launch this research.

2.2 Reasons why owners select design-build as a procurement method

2.2.1 Reasons as determined by a research survey of A.D.Songer and K.R.Molenaar3(1996)

Songer and Molenaar3(1996) did a recent research study on "Selecting design-build: public and private sector owner attitudes", in the United States of America, and published their findings in the November/Desember 1996 publication of the Journal of Construction Engineering and Management.

The study concentrated on attitudes of owners (public and private sector) of constructed facilities towards design-build as procurement method. Their first research goal was to gain insight into owner design-build selection factors and secondly to compare differences in public and private owner design-build attitudes.

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The methodology developed by the authors to collect the data was:

Identifying primary selection criteria specific to the design-build method through an exhaustive literature search This enabled them to produce seven design-build selection factors, as listed in Table 2.1

A survey questionnaire containing these seven selection factors was developed and distributed to 290 owner oganizations. Owners were requested to priority rank the selection factors (1 through 7, with 1 being most important). It was qualified that only owners with at least one design-build project experience, should respond.

Table 2.1: Design-build selection factors and definitions (adapted from Songer and Moolenaar3) Establish cost:

Reduce cost:

Establish schedule:

Shorten duration:

Secure a project cost before the start of the detailed design.

Decrease the overall project cost as compared to other procurement methods (design-bid-build, construction management, etc).

Secure a project schedule before the start of the detailed design.

Decrease the overall project completion lime as compared to other procurement methods.

Reduce claims: Decrease claims and litigation.

Large project size/complexity: The project's shear magnitude is too complex to be managed through multiple contracts.

Constructability/innovation: Introduce construction knowledge into the design early in the process.

Of the 290 questionnaires distributed, 182 responded, representing a 63% response rate, 49 did not have the required experience and another 25 had invalid responses. A final total of 108 responses qualified for analysis, which is 37% of the original 290 distributed questionnaires. Of the 108 responses, 63% were owners from the public sector and 37% were from the private sector. A breakdown of the construction type revealed 83% represented the building construction, 14% industrial and 3% represented heavy and highway. The cumulative construction experience of the owners that responded was 1683 design-build projects amounting to over $12.75 billion of construction worth.

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Survey results of the first goal:

The results of the survey, from combined owners (public and private-sector), are summarized in Table 2.2 (Respondents were requested to rank the selection factors 1 through 7, with 1 being most important and 7 least important).

Table 2.2: Ranking of design-build selection factors (adapted from Songer and Moolenaar31996) Selection factor mean srxire Rank Highest score Lsnycsisrsire.

Shorten duration 2.48 1 1 7

Establish cost 3.26 2 1 7

Reduce cost 3.82 3 1 7

Constructability/innovation 3.94 4 1 7

Establish schedule 3.99 5 1 7

Reduce claims 4.58 6 1 7

Large project size/complexity 5.92 7 1 7

Analysis of results

The selection factors are sorted by mean score. Highest score (1), meaning most important and lowest score (7), meaning least important, are also tabled.

From the results it is clear that there is one main reason why owners select design-build, and that is: shorten duration. The dominance of the shorten duration (most important factor) and large project size/complexity (of least importance), is clearly evident. The mean scores of the middle five criteria are much closer.

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Although the owners feel strongly about two of the seven factors (shorten duration is most important and large project size/complexity of least importance), all selection factors scored at least one number 1 ranking. This indicates that for any particular project, any one factor can be a significant reason for choosing design-build.

In general, owners select design-build to shorten duration, but for specific projects the motivation for selecting it may be to establish cost, to reduce cost, to reduce claims, or any of the other factors.

The second research objective was to compare public and private owner attitude towards design-build. The survey results for this goal are displayed in Table 2.3.

Table 2.3: Comparison of public and private sector responses (adapted from Songer and Moolenaata1996)

Selection factor Combined Mean Rank

public sector Wan Rank

Private sector Mon Rank

Shorten duration 2.48 1 2.46 1 2.53 1

Establish cost 3.26 2 3.50 2 2.85 2

Reduce cost 3.82 3 3.72 3 4.00 4

Constructability/innovation 3.94 4 3.88 4 4.05 5

Establish schedule 3.99 5 4.31 6 3.45 3

Reduce claims 4.58 6 4.01 5 5.55 6

Large project size/complexity 5.92 7 6.12 7 5.58 7

Although there are differences between the rankings of public and private owners, they do not appear as significant as one might have expected, taking into account the inherent differences in public and private procurement procedures. Three of the seven rankings are identical, i.e. the two top priority rankings: shorten duration (1st ranking) and to establish cost (2nd ranking), and the selection factor that is of least importance to owners (7th ranking), large project size/complexity.

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The cost and time schedule aspects are very interesting to evaluate. As expected both sectors strive for a shortened duration, ranked first, for both. Both sectors would also like to secure the project cost before the start of detailed design (establish cost), ranked second, for both. Decrease the overall project cost (reduce cost), as compared to other procurement methods, is ranked third for the public sector, whilst it is ranked fourth for the private sector. The private sector in the United States considered to establish schedule, more important than to reduce the overall project cost, as they ranked it third, whilst the public sector ranked it only sixth. The reason might be that in many instances private owners hire or rent out the project, for example, building, and would like to sign contracts in advance with hire / rent clients and therefore need an established occupation date. The public sector however, seldom hire out projects, and an occupation date is less critical, which explains the sixth ranking.

Law suits are normally more clumsy to deal with in the public sector, there are more red tape involved, and this might be the reason why "reduce claims" is ranked fifth compared to sixth for the private sector.

Generally speaking however, selection attitudes can be treated as equivalent for both sectors.

Conclusion

Design-build is increasingly becoming a viable alternative method for project delivery in the United States of America. The main reason why owners (public and private sector) select design-build is for shortened duration - to decrease the overall project completion time as compared to other procurement methods. In general, owners select design-build to shorten duration, but for specific projects the motivation for selecting it may be to establish cost, establish schedule, to reduce cost, reduce claims, or enhanced constructability. Despite the differences in public and private procurement procedures, design-build selection attitudes can generally be considered as equivalent.

2.2.2 Specific benefits of design -build

Note: Although it is the purpose to discuss additional reasons why owners select design-build in this section, more background information is supplied on important issues such as: constructability, time, cost, and quality. For clarity, it was decided to separate the survey results of Songer and Molenaar 3 (1996) from other surveys.

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1)The advantage of single-point responsibility

There is a perception that with the design-build process there are less grey areas of responsibilty as the owner deals only with one entity and that the single-point responsibility works to the advantage of the owner.

A research paper by I. Ndekugri and A.Tumer 5, published in June 1994 in the Journal of Construction Engineering and Management, with title "Building procurement by design and build approach", provides valuable information on this matter.

A postal survey of architects, contractors and building owners in the United Kingdom was carried out. A total of 200 organizations were contacted. Of these, 74 (37%) responded. Further detailed interviews were conducted with 11 leading organizations.

Of particular interest is that most of the respondents are leading organizations in the construction industry, with a considerable number operating multinationally. Mother observation is that the survey was completed by very senior management in the organizations. The survey therefore represented the thinking of people working at the heart of the industry. This makes the views expressed more noteworthy and makes the survey more valuable.

On the topic of single-point responsibility, architects and contractors responded according to this general perception that with design-build there are less grey areas of responsibility. However, the response of the owners was surprising as can be seen in Table 2.4.

Table 2.4: Perceptions of value of single-point responsibilty (adapted from Ndekugri and A.Turner5)

lkspondenta Advantage No advantage 1201101.1snow

Contractors 85% 15% 0%

Architects 63% 25% 12%

Owners 11% 89% 0%

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The majority of owners felt that the extent to which they reaped the potential benefits depended on soundness and concise nature of their brief. In other words, they only reap the benefits of single-point responsibility, if they provided a clear and comprehensive scope of the work.

2)Quality of design and constructability

The advantage of better constructability achieved in the design-build process, was pointed out in section 2.2.1, where Songer and Molenaar 3 (1996) pointed out, that owners in the United States of America, viewed constructability as the fourth most important reason why they select design-build as procurement method.

It is however worthwhile to obtain more survey results and examples how better constructability through the design-build method benefitted major projects throughout the world.

Ndekugri and Turner 5(1994) mentioned in their research survey in the United Kingdom, that with the traditional approach, the designer, through his design decisions, commits the owner to approximately 80% of the project costs by the time the contractor is appointed. The logical thinking is therefore that owners can save money and have a more constructable project by having a contractor communicating with the designer at the very beginning of the design process, which is the case with design-build. The industry was consulted on this issue via the Ndekugri and Tumer 5 research survey, and the respondents were asked to indicate their perceptions of cost savings from constructability, as indicated in Table 2.5.

Table 2.5: Perceptions of cost savings from constructability (adapted from Ndekugri and Turner5)

Respondent Very high High Marginal Noun

Contractors 25% 62% 13% 0%

Architects 0% 50% 50% 0%

Owners 0% 56% 44% 0%

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It is important to note that more than 50% of all respondents, including designers (architects), believed that the design-build approach can lead to high reduction in costs through improved constructability of design.

C.M.Gordon2(1994) noted in his research study "Choosing appropriate construction contracting method", that another limiting factor of the traditional process is the growing inability of the designer to know everything of construction. The constant need for designers to increase their technical design capabilities and their concerns regarding professional liability, seldom allow them to gain enough construction experience.

Gordon2(1994) mentioned that this can be detrimental to constructability, value engineering, and other construction planning tasks during design if the contractor's input is not available in the pre-construction phase. In the design-build approach however, the contractor can be involved right from the beginning of the design stage and advantage can be taken of his knowledge and preferred method of construction leading to better constructability and improving the design ultimately. In many instances this should lead to shorter project duration and a reduction in project cost.

The Construction Owners Association of Alberta (COAA) in Canada organized a workshop on "Construction Best Practices" in May 1994 in Edmonton, Alberta. In preparation for it, a task force was established to look into best practices in the areas of more-stable owner-contractor relationships, constructability review/value engineering and related issues. P.Dozzi, F.Hartman, N.Tidsbury and R.Ashrafi l I presented the findings of the task force in their paper "More-stable owner-contractor relationships", which was published in the March 1996 publication of the Journal of Construction Engineering and Management.

The study was conducted using a questionnaire and interviews to gather primary data. The task force contacted 30 major organizations, and 16 responses were received. The authors claimed that although this is a small sample, it represented a wide cross section of leading owners (public and private), designers, and contractors in Alberta. A high level of expertise is available in this area due to the fact that a number of international construction, engineering, and owners, have their offices in Alberta.

On the subject of constructability, the study came to the following conclusions:

• The focus of the industry on obtaining the lowest price fails to exploit constructability, alternative methods and materials, and teamwork. Often contractors offer constructability as a free service, but end up with higher prices.

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• There appears to be a growing awareness among the owners of the advantages of using performance specifications that allow more innovation and input by the contractor. It was reported that design-build projects give high attention to constructability. One can argue that any method (such as design-build), where the functions of design and construction are integrated, should be able to take full advantage of the contractor's expertise and preferred methods of construction. The authors reported that there was concensus that any change initiative must come from owners, as they are the main beneficiary and because they effectively control the procurement selection method, and contract content.

In the 414 million pound Pergau Hydroelectric Project, constructed in Malaysia, the flexibility of the design-build concept, made it possible to provide designs to suit the preferred method of construction. This was done on the dam construction, the Terang pumping station, reregulating pond, and the access roads. According to McEwan, Luke and Idiculla7(1997), this offered a lower risk against programme overrun and safety hazards for construction in an environment that is subjected to heavy tropical rainfall.

Another major project that benefitted tremendously by the inherent flexibility of the design-build method, was the 370 million pound underground cooling water system for the new 1000 MW Barking Reach Power Station on the Thames estuary of London. J.F.Evans and D.J. Hodgkins 12(1997), the principal civil engineer and project manager respectively, of Balfour Beatty Projects & Engineering Ltd in consortium with GEC Alsthom Power Plants Ltd, reported in their technical paper on this project, that a wide range of tunneling and shaft sinking techniques were used to overcome the difficult ground conditions, which included the ill-famed Thanet Sand. The authors reported that although many technical problems were encountered, the easy and direct contact between designers and constructors which was made possible by the design-build approach, helped to ensure that the award-winning project, was completed on time and within budget. They commented that the design-build concept "enabled easy and direct contact between designers and constructors and allowed real benefits to accrue in the areas of value engineering, problem resolution and constructability".

Upgrading and expansions to the Ambassador Bridge, the busiest international crossing between the United States and Canada, is another project that benefitted tremendously by an innovative design-build approach. J.B.Shah 1 presented a technical paper on this project in the July/August 1996 publication of the Journal of Management in Engineering. Unlike in most design-build contracts where the contractor is the principal agent, the design professional here took full charge of the design-build project. This project was designed and built according to state and federal standards, within the budget and the tight schedule of twelve months.

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3)Time, cost and quality

These three factors are of utmost importance in any project. They cannot be treated independently, one affects the other. Trade-offs between the goals of time, cost, and quality have been one of the central concerns of project management-(M. S .Puddicombe 13 1997).

It was illustrated in section 2.2.1 that owners in the United States of America, ranked shortened project duration first and cost saving as third priority why they select design-build as procurement method-(Table 2.2 survey of Songer and Molenaar 3 1996).

The research survey by Ndekugri and Turner 5(1 994) tested amongst other matters also the perceptions of role players in the United Kingdom on these three very important issues.

Contractors, architects and owners were questioned to indicate perceptions of owners' satisfaction regarding: completion time, cost and quality on design-build projects.

The responses of role players (in percentage) on these matters are summarized in Table 2.6. (1 for low, 5 for very high satisfaction)

Table 2.6: Perceptions of owners' satisfaction towards design-build (adapted from Ndekugri and Turner5)

Respondents Satisfaction with costs Satisfaction with time Satisfactiontliquality -1 2 3 4 5 1 2 3 4 5 1 2 3 4 5

Contractors 0 4 12 52 32 0 0 12 48 40 0 0 31 59 9

Architects 0 0 25 50 25 0 0 43 28 29 0 10 30 40 20

Owners 0 0 44 44 11 0 0 33 67 0 0 0 67 33 0

The figures show that all resondents have high perceptions of the satisfaction of owners towards completing projects on time, within budget and to the required quality as experienced in the design-build approach.

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a)Time

Ndekugri and Tumer5(1994) came to the conclusion that the design-build approach, compared to the traditional method, reduces the completion time of projects in many instances.

Two main reasons were given:

Buying of materials, appointment of sub-contractors, and construction can overlap design with the design-build method.

Secondly, in the drawing up of specifications, the contractor has a superior knowledge of the state of the industry in so far as lead times of key items of materials and components is concerned, and will usually arrange his plans to minimize delay in their procurement.

P. D. V.Marsh 14(1995), "Pain and J.Bennett 15(1988), and A.Griffith 16(1989) also indicated that design-build usually results in shorter total project duration than with the traditional procurement method.

J.Nahapiet and H.Nahapiet 17(1985) argued in their paper, "The vexed question of project performance", that fast results can be achieved with all forms of contract. From their survey they concluded that fast constructed projects were those where the owners were substantially involved in the management of the projects, either through strong direct involvement or through construction management.

One can argue that with design-build the owner is normally not directly involved, but fast results can be achieved by:

Good management.

Good working relations between the designer and contractor.

Taking advantage of better constructability offered by the design-build method.

The two reasons mentioned by Ndekugri and Tumer 5(1994):

Overlapping construction procurement activities (like buying materials) and actual construction of certain work with design.

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• Take advantage of the contractor's superior knowledge of the state of the industry in so far as lead times of key items of materials and components is concerned to minimize delay in their procurement.

b)Cost

It is still fresh in the memory that owners in the United States ranked cost saving third, for reasons why they select design-build, whilst perceptions of designers, contractors and owners in the United Kingdom were also high of owners' satisfaction towards cost effectiveness of the design-build method.

Many supporters of design-build argue that the time saving aspect of design-build is the main reason why this method is more cost effective than the traditional design-bid-build method. Not only can the contract price be lower, but the owner can take occupation much earlier, hence the new end product (building, etc), can earn revenue sooner for the owner. A rand earned today due to early completion is worth more than a rand earned three months down the line due to another method that has a longer completion time. G.J.Thuesen and W.J.Fabrycky l8 (1994 calls this the "time value of money". In fact, not only has the earlier revenue earning power, its purchasing power is more than revenue received later in times of inflation.

P.D.V.Marsh 14comments in his fourth edition (1995) "Contracting for Engineering and Construction Projects", that by making the design part of the competitive tender, as is the case with design-build, it encourages innovation and should result in lower project costs. This makes sense, because with the traditional method, it is usually only construction that is subjected to competitive tendering, as the design consultancy is usually appointed with the fee normally a percentage of the construction value. One can argue that although the percentage is usually less for larger contract values, there is no real incentive for a competitive design, and designers tend to play safe and over-design, resulting in higher total project costs. There is a perception amongst contractors that many designers are not used to competition tendering and risk taking, and are therefore hostile towards the design-build method and prefer the status quo.

Marsh "(1995) states further that by placing maximum responsibilty for the project in the hands of one organization (design-build entity), it reduces the need for the owner to employ his own resources or engage consultants. He confirmed that on design-build contracts, the Department of Transport (United Kingdom), experienced a substantially reduced staff on site, especially from consultants, with resultant economies in cost.

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Some supporters, including respondents of the United Kingdom survey of Ndekugri and Turner5(1994), Table 2.5, and respondents of the Alberta, Canada survey of Dozzi, Hartman, Tidsbury and Ashre 11 (1996), argued that there are noticeable savings from constructability provided by the design-build concept. The input of the contractor into the design phase at an early stage leads normally to better constructability and reduction in costs.

Mother factor is that many design-build projects stipulate a maximum guaranteed price that gives owners the necessary peace of mind towards the cost aspect of the project.

B.Curtis 19(1989), observed from interviews with senior management in client, professional, and contracting organizations, that project costs can be controlled where the extent and timing of the project can be varied to suit the needs of the particular project. This can be done by sub-contracting packages at a late stage when the design information is more complete and prices obtained are accurate and up to date. One can argue that with the close interaction between designer and contractor in the design-build method, this cost saving is more obtainable than with the traditional method where the design and construction functions are separated.

Curtis 19(1989), argued further that there are so much possibilities in traditional contracts for extras to be claimed that the initial tendered price generally does not mean much.

c)Quality

Perceptions of designers, contractors and owners in the United Kingdom in the survey of Ndekugri and Turner5(1994), were high of owners' satisfaction towards quality on design-build projects - (Table 2.6).

One can argue that the better constructability flowing from the design-build method, should lead to better quality. By tailoring designs (wherever possible) to take full advantage of the contractor's knowledge and preferred methods of construction, quality can improve.

As mentioned in the beginning of this dissertation, the integration of design and construction functions by the design-build approach, should lead to enhanced co-operation and relations between designers, which amongst other things, also should have a positive spin-off towards quality.

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In conclusion one can say that achievement of time, cost, and quality goals may be assisted by good design. Good design not only implies superior technical quality, but also constructability. S.C.Ward, B.Curtis and C.B.Chapman 20 argued in their paper "Advantages of Management Contracting - Critical Analysis" (June 1991), that the management contractor, in the management contracting method, can with his knowledge of current costs, market conditions, labour and material availability, inject realism into feasibility studies and designers can design to suit prevailing market conditions. A good design takes full advantage of the contractor's construction know-how and his preferred method of construction.

One can argue that the contractor in the design-build concept provides a similar service to the designer, than the management contractor provides in the management contracting procurement method, but with the difference that he is actively involved in the construction. The management contractor on the other hand, is mostly acting in a professional capacity, employing work contractors, and exercises co-ordination, time, cost and quality control. However, in the traditional method the contractor is normally excluded from the design phase, and advantage is usually not taken of his construction know-how.

4)Less legal disputes

It is a common perception that design-build involves less risk of litigation or arbitration proceedings than the traditional method. The arguement is that the principal agent (the contractor, in the study of Ndekugri and Turner' 1994) is responsible for all matters of design and construction, including matters regarding fitness of the building for its purpose. This assumption received the agreement of the majority of the respondents in the United Kingdom (79% of contractors, 86% of architects, and 89% of owners). However, many qualified their answers stating that the reduction in disputes is dependant on certain factors such as:

Clarity of the owner's brief and the contractor's proposals.

The use of unamended standard forms.

The stipulation of a maximum guaranteed price.

The avoidance of variations.

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The designer of the fast-track multi million Pergau Hydroelectric Project stated that in the design-build arrangement, there is opportunity for both the design and construction parties to set aside the normal constraints encountered with the traditional method, and to form a partnership, that can benefit both sides and ultimately the project itself. The contractor also praised this method, and felt a prerequisite for the successful execution of a design-build project is "a relationship of mutual trust, confidence and understanding between the design engineer and the contractor".

J.B.Winter21 argued in "New roles in contracting" (1989), that in the traditional contract situation, the main contractor might be content to sit and wait for information from the designer, knowing well that late information could mean a successful claim and a delay that might be used to disguise delays of his own making. This clearly will lead to disputes and claims, not to talk of the time lost in the process. One can relate this back to the separation of design and construction functions encountered in the traditional method. As mentioned in the beginning of this dissertation, the separation of designers and contractors lead to different cultures with different goals and success criteria, resulting in lack of co-operation and hostile relationships in many instances. Differences on the three important performance factors, time, cost, and quality, usually come to the fore, and many projects suffer time over-run, budget overspending and disputes.

Puddicombe 13 (1997) confirmed that "the designer's apparent lack of concern for general contractor profitability, is perhaps the most prominent difference, as this alone could be a source of significant conflict and disintegration". One can argue that the integration of the design and construction functions, "partnership" between designer and contractor, in the design-build concept, should lead to better co-operation and relations, resulting in less disputes, time loss, and cost over-run.

The Canadian survey of Dozzi, Hartman, Tidsbury and Ashrafi 1 1 (1996) reported some interesting and valid comments on disputes and claims for procurement methods in general:

Many contract disputes are known about (by at least one party), quite some time before they are dealt with. One can assume the party knowing about the dispute, is the one intending to claim.

Contractors withhold claims until the project is complete or nearly complete because they do not want to spoil relations with the owner. To a lesser extent, this was also experienced in relationships with consultants. One must mention that in design-build with its integrated set-up, relations between designer and contractor should normally be much better.

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Construction contracts distribute risks unfairly to the contractor and sub-contractors. It was felt that contracts do not apportion risks unfairly to the owner or the design consultant. Some of the respondents felt that there is a need for a mechanism to allocate risk to appropriate parties. Some contractors argued that owners should absorb risks that are not under the direct control of the contractor. One feels that this experience of unfair distribution of risks might be experienced world wide.

Design consultants who act as project administrators on behalf of their clients (eg. traditional method) are often not completely objective in decisions regarding contract issues and interpretations.

The authors recommended pre-award discussions to clarify and reach understanding about contractual issues and to ensure effective administration of the contract. This could minimize disputes and claims.

2.3 Factors influencing the success of design-build projects

2.3.1 Factors as determined by a research survey of A.D.Songer and K.R.Molenaar 9

In March 1997 a follow-up research paper by A.D.Songer and K.R. Molenaar 9 was published in the Journal of Construction Engineering and Management under the title "Project characteristics for successful public-sector design-build".

The main goal of this research study was to acquire characteristics for successful public sector design-build, in other words, to access factors influencing the success of design-build projects in the public-sector.

The methodology developed by the authors to study this objective was:

A comprehensive literature review, to identify initial lists of appropriate project characteristics for successful design-build projects and success criteria by which owners judge the success of projects completed by this method.

Unstructured interviews to define and filter the project characteristics.

Questionnaires were subsequently developed and forwarded to 211 owners of public sector projects.

Structured interviews to provide additional insight into project characteristics.

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Appropriate project characteristics and definitions (adapted from Songer and Moolenaar9)

Well defined scope: The owner has a precise understanding of the project scope before it is submitted to the design-build team.

Established budget: The project has a fixed cost before it is submitted to the design-build team.

Established completion date: The project has a fixed schedule or finish date before it is submitted to the design-build team.

Standard design specifications: The project can utilize design specifications similar to existing projects.

Technology advanced: The project uses unique or specialized building techniques.

Owner's construction sophistication: The owner has the ability to precisely define the project scope, either with in-house staff or with a pre-construction consultant.

Adequate owner staffing: The owner has a project manager or staff that can be dedicated to this specific design-build project.

Owner's risk aversion: The owner prefers to shift some of the traditional risks (eg. design errors and omissions) to the design-builder.

Owner's willingness to forego design input: The owner is willing to give up a large amount of design input after design-builder selection.

Current state of the market: The amount of work available in the area and the bidding climate therein.

Availability of design-builders: The number of local designers, contractors, and design-build firms with experience.

Size of project: The size and dollar amount of a project as compared to others available for design-builders.

Type of contract: Whether the project is being awarded as lump sum, unit price, cost-plus, guaranteed maximum price, fixed fee, or other.

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. Shared understanding of scope: The owner and design-builder share a clear understanding of functional and technical performance required in the finished product.

Alternative financing options: The project is using or can utilize third party financing (eg. build-operate-transfer).

Songer and Molenaar9(1997) surveyed a wide range of public-sector owners in the United States of America. This included project managers, engineers, contract officers and administrators, architects, and technical advisors. Of the returned questionnaires, a total of 88 owners had sufficient experience of this method, representing a 42% valid response rate.

A breakdown of public-sector owners that responded revealed: 72% federal, 17% state, and 11% local government. The type of construction distribution was as follows: 87% building, 6% industrial, 4% heavy and highway, and 3% other.

The cumulative construction experience of the owners that responded was 763 design-build projects totaling over $7.6 billion of construction worth.

Results

Results of main goal (to acquire characteristics for successful public-sector design-build projects), are listed in Table 2.7. (A rating scheme of 1 to 6 was used, with 6 being the highest rating and 1 the lowest).

Table 2.7: Appropriate project characteristics for successful design-build projects (adapted from Songer and Molenaar9)

Characteristic description

Mean score Rank Highest score Iawest score

Well defined scope 5.41 1 6 2

Shared understanding of scope 5.22 2 6 1

Owner's construction sophistication 4.62 3 6 1

Adequate owner staffing 4.57 4 6 1

Established budget 4.35 5 6 1

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Table 2.7: Appropriate project characteristics for successful design-build projects (continued) (adapted from Songer and Molenaar 9) Characteristic description

Mean score Rank Highest score Lowest score

Established completion date 4.16 6 6 1

Availability of design-builders 3.79 7 6 1

Owner's willingness to forego design input 3.78 8 6 1

Owner's risk aversion 3.72 9 6 1

Standard design specifications 3.56 10 6 1

Technologically advanced 3.20 11 6

Type of contract 3.17 12 6 1

Size of project 3.16 13 6 1

Current state of the market 2.97 14 6 1

Alternative financing options 1.78 15 6 1

Analysis of results

The project characteristics are sorted by mean score. What is of particular importance is that all characteristics scored at least one maximum rating of 6. This confirms that each characteristic is important. By analysing the mean scores, the dominance of the first two rankings, i.e. well defined scope and shared understanding of scope, is clearly evident. The 3rd to the 14th ranked characteristics follow a rather constant reducing mean score gradient, whilst there is a large drop from 14th to 15th (Alternative financing options). Owners in the United States of America felt clearly that, alternative financing options, has little impact on project success.

The dominance of the top ranked characteristic is illustrated more clearly in the form of a frequency histogram. The frequency histograms for the 1st ranked (Well defined scope) and 9th ranked (Owner's risk aversion) characteristics, are shown in Fig 2.1.

25 6 20 ci) 15 a 10 u_

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Well defined scope (1st ranked characteristic)

80

a 40

20 LL

0 Ranking (from 1 to 6)

Owners risk aversion (9th ranked characteristic)

Ranking (from 1 to 6)

Fig 2.1: Frequency histograms for the 1st ranked (Well defined scope) and 9th ranked (Owner's risk aversion) characteristics (adapted from Songer and Molenaar')

A substantial positive skew is evident in the 1st ranked characteristic, (Well defined scope). The prominant skewness indicates that the majority of owners rated this characteristic high (highest score of 6). The histogram for the 9th ranked characteristic (Owner's risk aversion) has no strong positive or negative skew. The absence of skewness for this characteristic indicates that owners have differing views as to its impact on project success.

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Structured interviews of five key public-sector design-build representatives were conducted by Songer and Molenaar 9(1997) to give more insight into the project characteristics. Expert interview results were very close to the large owner survey, with two exceptions, "established completion date" and "standard design specifications". The large survey ranked established completion date 6th, whilst it was ranked 9th, by the experts. Experts argued that established completion date is only critical with certain projects, and generally speaking this characteristic could be somewhat flexible in order to achieve the best outcome. Mother noticeable difference in rankings is the higher ranking (6th) that experts give to standard design specifications, comparing with the 10th ranking in the large owner survey. The expert explained the higher ranking due to its association with "well defined scope".

Songer and Molenaar 9(1997) felt that the structured expert interviews offered valuable experimental insight into the ordering of the project characteristics. It further confirmed the validity of the top 5 project characteristics.

Conclusion

Of the 15 project characteristics, 5 were found to be critical :

Well defined scope.




Established budget.

The survey proved that these 5 characteristics are critical in all projects, in other words, they have major influence or impact on the success of design-build projects. The other 10 characteristics influence success on a project-by-project basis.

In conclusion the authors felt that well defined scope and shared understanding of project scope, are of utmost importance to ensure successful design-build projects.

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2.3.2 Owner's interaction in the design process

In the March 1994 publication of the Journal of Construction Engineering Management, C.M.Gordon2, noted in his article, "Choosing appropriate construction contracting method", that owners must assess how much interaction they want to have with the designer during the design of the project. He argued that this can have a major influence on the selection of a procurement method. This interaction is important to owners if the design needs to be highly creative or functional fitness for purpose is essential. With an independent designer, as is the case with the traditional method, or management contracting, the owner has complete interaction and control over the design. He continues to say that the owner has much less control over the design, in design-build, turnkey and BOT (build-operate-transfer) projects.

Owner's willingness to forego design input, was ranked 8th influencing the success of design-build projects - (Table 2.7, Songer and Molenaar's 9 1997). One remembers that this characteristic scored at least one maximum rating, confirming that it is an important characteristic. It might not be critical on all projects, but it influences success on a project-by-project basis, confirming in principle what Gordon 2(1994) is advocating, namely, an owner would not be willing to forego design input on a project where design is critical.

J.B.Miller6(1997) confirmed the above. In Hong Kong the government is effectively mixing design-bid-build (traditional method) and design-build in the construction of major infrastructure facilities. The traditional approach is continuously being used in approximately 80% of the projects where design alone is critical. They prefer however design-build where the innovative integration of design and construction is thought to be critical. Owner representatives prefer design-build-operate and build-operate-transfer in circumstances where the innovative integration of design, construction, finance, and long-term operation is important.

The issue of owner interaction in the design process highlights again the importance of a well defined scope of the work. In design-build projects, where the owner usually has less interaction and control over the design process, a comprehensive scope of the work is critical - much more than where design is separated (traditional method). J.A. Rutgers and H.D.Haley22 confirmed the importance of a well defined scope in design-build projects in their technical article "Project risks and risk allocation" (September 1996). They argued that detailed scope of the work sufficient for an independent engineering review and evaluation is one of the key elements of an acceptable turnkey/ design-build construction contract.

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2.4 Some success criteria for projects

2.4.1 Canadian study of Dozzi, Hartman, Tidsbury and Ashrafi l 1

Dozzi, Hartman, Tidsbury and Ashrafi 11 (1996) addressed the issue of success criteria by which the success of projects are judged, in their paper "More stable owner-contractor relationships". Background information on data collection of this survey is covered in section 2.2.2 under the topic: Quality of design and constructability.

Leading owners (public and private), designers, and contractors, felt that the following are the major performance criteria for projects:

Meeting schedule.

Meeting budget and quality.

Meeting fitness for purpose.

They added also the following criteria (not ranked in order of priority):

Owner's satisfaction.

Maintaining trust.

Absence of confrontation in managing differences, minimum changes, and disputes.

Energy efficiency and satisfaction with safety requirements.

An interesting and valid observation was that if the project was profitable for the contractor, chances were greater that the owner was also satisfied.

These criteria are general criteria by which project success are measured, and not only directed at design-build projects.

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2A2 American study of M.S.Puddicomben

This author's research study was published in September 1997 in the Journal of Construction Engineering and Management, under the title "Designers and Contractors: Impediments to Integration".

One of the hypotheses stated is: The design and construction function have different goals and success criteria for a project. (This assumes project delivery methods where design and construction are separated, for example, the traditional method). Respondents were asked to rank 9 success criteria and 3 goals.

The respondents consisted of main contractors and architects from firms in the United States of America. All were highly placed in their firm with the majority involved in overall corporate management. The responding companies covered a broad range of sizes. Response rates were: 49% (78 surveys) for contractors and approximately 39% (74 surveys) for architects. The author felt that the response rates were high and ascribed it to the fact that the issues addressed were an area of great interest to the respondents.

1)Ranking of project success criteria

Respondents were requested to priority rank the 9 success criteria (1 through 9, with 1 being most important and 9 least). The results are shown in Table 2.8.

Table 2.8: Ranking of project success criteria (adapted from M.S.Puddicombe 13) Success criteria description Architects

Mean score Bank Main Contractors Mean score Rank

Met quality specifications 2.5 1 3.4 2

Met schedule 3.0 2 2.5 1

Minimal surprises 4.3 3 6.3 8

No claims by owner 4.5 4 5.5 6

Safety 4.7 5 4.3 4

No claims by contractors 5.1 6 6.0 7

Produced cost savings for owner 5.4 7 5.3 5 Met main contractor profit 7.3 8 3.8 3 Met sub-contractor profit 8.3 9 7.6 9

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Analysis

Meeting quality specifications and meeting schedule are the two top rankings for architects and contractors, although not in the same order. Meeting schedule is highest for contractors. One can argue that if a contractor meets the schedule, he will usually make a profit.

The greatest difference is on meeting main contractor profit. This criterium is ranked 8th by architects and 3rd by contractors. One must however remember, that this survey is typical of projects where the design and construction functions are separated, for example, the traditional method. When disputes were discussed earlier, the apparent lack of concern designers have towards contractors' profits, was pointed out as it could be a source of significant conflict and disintegration. It can be argued that the low ranking, 8th, architects had for the main contractor's profit, would have been quite different, had the parties been involved in a design-build project where the design and construction functions are integrated.

The variable, minimal surprises, was ranked in reverse order, namely 3rd by the architects and 8th by the main contractors.

2)Ranking of goal criteria

Results are listed in Table 2.9 and are based on average weighting.

Table 2.9: Ranking of goal criteria (adapted from M.S.Puddicombe")

Goal description Architects. Main Contractors

Quality 0.54 0.49

Cost 0.27 0.30

Schedule 0.19 0.21

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Analysis

It is very encouraging that designers and contractors were in agreement on these important goal criteria, i.e. quality, cost and schedule. What is even more encouraging, is the fact that quality was considered more important than the other two criteria.

2.4.3 Concluding discussions on success criteria for projects

J.R.Meredith and S.J.Mantel 23(1995) warned rightfully in their book "Project Management - A Managerial Approach", about the pitfalls of meeting the specified end date, at the expense of meeting project specifications. Stringent deadlines, based only on business reasons, are often given by clients or sponsors with little or no regard for the reality of attainment.

The tragic United States of America space shuttle accident in 1986 is a very relevant example. The American shuttle program was falling behind in its planned launch programme, and was meeting stiff competition from the European Space Agency's unmanned Ariane programme for the orbiting of satellites. Then on January 28, 1986, the space shuttle, Challenger, was destroyed about one minute after launch because of the failure of a sealant ring on one of its solid boosters - (Microsoft Encarta 1996 Encyclopedia 8). According to Meredith and Mante1 23(1 995), this accident is a tragic reminder of what can happen when meeting the specified date becomes too important. Seven astronauts were killed in the disaster, the project delayed for years and NASA's image was damaged severely. In the aftermath of this disaster, the 0-ring seals on the solid rocket booster were re-designed. A presidential commission placed much of the blame on NASA's administrative system and its failure to maintain an efficient system of quality control.

There are however numerous examples of more tragic accidents in the field covered by this paper, due to too much emphasis on meeting target dates. One that immediately comes to mind is the catastrophic collapse of 30 floors of a residential complex under construction at Bailey's Crossroads, Alexandria, Virginia on March 2, 1973. D.Kaminetzky4(1991) confirmed that this accident happened due to premature removal of props of the lower floor slabs below the 24th floor slab under construction. Floor after floor collapsed, from the 24th to the bottom floor, killing 14 workers and more than 30 were injured.

Whilst it can be argued that designers and contractors should know better and not be pressed into situations where meeting target dates takes priority over quality, it remains a fact that this phenomenon is happening too often.

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It is the author's view that it is the responsibility of all the role players in the industry to put quality / reliability as priority number one by which successes of projects will be judged.

2.5 Further aspects of design-build, including areas of concern

2.5.1 The type of project and owner for which the design-build approach is most suitable

This was one of the issues respondents (owners, architects and contractors) were surveyed on in The United Kingdom survey of Ndekugri and Tumer 5(1994).

For a long time there was a school of thought, known as the "garden shed image", that considered design-build suitable only for small and simple structures. One question specifically asked respondents their view on this garden shed image. Interesting, all owners who responded disagreed with this image, whilst 98% of contractors strongly disagreed with the image. Most respondents submitted lists, details and photographs of large and complex buildings they had constructed under the design-build procurement method. These projects included TV studios, hospitals, football stadia, nuclear power stations, sewage treatment works, etc. With architects, 25% agreed, whilst 38% disagreed, with the rest not expressing any opinion. Ndekugri and Tumer 5(1994) confirmed that the view of architects has to be seen against the background that to the majority of architects, the design-build concept had once been heresy, mainly because architects could not live with the fact to be employed by a builder who acts as principal agent.

Most of the respondents indicated that for an unsohisticated owner who does not have any knowledge of the workings of the industry, the design-build method, may not be advisable. It came out clearly in the survey that in design-build projects, the owner should have sufficient knowledge (or acquire a consultant), to produce a clear and comprehensive statement (owners brief or scope of the work) indicating exactly what is required and of the constraints within which the building / project is to be provided.

Public-sector owners in the United States of America agreed with abovementioned findings, as they ranked, well defined scope and owner's construction sophistication, 1st and 3rd out of a total of 15 characteristics, influencing the success of design-build projects - (refer survey of Songer and Moolenaar 9 I997, Section 2.3.1, Table 2.7).

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In section 2.3.2, Gordon 2(1994) noted that owner interaction is important on projects where the design needs to be highly creative or where functional fitness for purpose is essential. According to him such projects are best procured by the traditional method, or management contracting, where an independent designer is used, and the owner has complete interaction and control over the design. He argued that the design-build method is not ideal for such projects, as the owner has much less control over the design in this procurement method. Having "much less control over the design in design-build, is the main reason one can argue why a well defined scope is such an important factor for owners in design-build projects.

J.B.Miller6(1 997) confirmed the above. In Hong Kong the government is effectively mixing design-bid-build (traditional method) and design-build in the construction of major infrastructure facilities. The traditional approach is continuously being used in approximately 80% of the projects where design alone is critical. They prefer however design-build where the innovative integration of design and construction is thought to be critical.

2.5.2 Attitudes of the professions

Ndekugri and Tumer 5(1994) confirmed the attitudes of the professions (architects and quantity surveyors) in the United Kingdom had been very hostile in the past towards design-build. They felt that this may be ascribed to the low esteem in which the contractor/builder was regarded by these professions, and the fact that they are usually employed by the contractor in the design-build concept. It was seen as a compromise of professional standards to be employed by a contractor. According to the authors attitudes have changed significantly.

Ndekugri and Turner 5(1994) stated further that in the United Kingdom the professional bodies have abolished the restrictions on the movement of their members in the industry. One reason for that was that the standing of the contractor has improved tremendously. Another reason is the cyclical falls in the workload of the professions have forced the change. A third reason is that some private sector owners have realised that the traditional design-bid-build process does not necessarily provide them with the best deal as far as economics are concerned.

The perceptions of the United Kingdom respondents towards resistance from the professions are summarized in Table 2.10.

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Table 2.10: Respondents' perceptions of resistance from the professions (adapted from Ndekugri and Turner3)

Respondents lIcsistauceimmArchitccts Resistance from Quantity Surveyors Very stroll!, Strong None

Very strong Strong

Contractors 16% 82% 2% 13% 65% 22%

Architects 25% 74% 1% 10% 68% 22%

Owners 44% 56% 0% 0% 89% 11%

Analysis

When analysing these figures it is important to note that in the United Kingdom the contractor is mostly the principal agent in the design-build concept. It is clear that there is still considerable resistance towards design-build from the professions in the United Kingdom. One might argue that the professions might have a completely different outlook on design-build should they be the principal agent with the contractor employed by him/her.

Ndekugri and Turner 5(1994) also questioned the respondents on the fees of professionals. There was a general concensus that fees were much lower than with the traditional approach. This might be an additional factor for the strong resistance still experienced from the professions. With the roles reversed, logical thinking says that the designer's fee would be higher, being the principal agent, and the contractor's profit reduced being the sub-contractor or employed by the designer.

2.5.3 Owner representation

Normally the owner appoints a representative to perform tasks on his behalf such as studying feasibility, obtaining consents from regulatory bodies, preparing the owners brief, and overseeing the project.

The research of Ndekugri and Turner 5 (1994) tried to determine the type of individual or organization usually employed by owners to perform these tasks.

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The results below show the percentage of time the different representatives performed these tasks:

Quantity surveyors: 41% of the time. Project management consultants: 21% of the time. Owner appointed employees: 27% of the time.

The figures of Ndekugri and Turner 5(1994) do not add up to 100%, but they conclude that it can be accepted that quantity surveyors are most commonly employed by owners to perform these tasks, taking into account that most project management consultants in the United Kingdom's building industry, are quantity surveyors.

2.5.4 Areas of concern

According to Ndekugri and Turner 5(1994) the only serious concerns expressed in their survey in the United Kingdom were about design liability and related insurance matters.

In most design-build projects, the contractor is the principal agent and takes on board responsibilty for design and will be liable for design related faults. He must therefore have insurance coverage equivalent, at the very least, to that of a design consultant on

traditional procurement contracts. Ndekugri and Turner 5 stated some of the concerns:

Firstly, the smaller and less experienced design-build contractors, most of whom originally started in traditional contracting, do not have sufficient understanding of matters relating to design liability and insurance implications of the design-build

concept.

Secondly, it appeared that many design-build contractors failed to insure against design liability. According to the authors, the standard form of design-build contract used in the building industry in the United Kingdom, the JCT81, does not require contractors to take out this insurance. One feels this is the heart of the problem.

Thirdly, the insurance industry has limited experience in providing design liability protection for contractors. The pool of underwriters is very small, resulting in high premiums. Coverage against liability for fitness of purpose, is basically unavailable.

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Stefan Tietz24 wrote an article "From Egan to the 21st Century" commenting on the Egan report (July 1998) "Rethinking Construction". The article of Tietz 24 appeared in the April 1999 publication of The Structural Engineer, the Journal of the Institution of Structural Engineers.

In this article, Tietz24(1999) highlighted the following concerns of the design-build approach:

Being the principal agent, and construction value over-shadowing design costs, the contractor's opinion tends to prevail if quality of design and construction savings come into conflict.

A more serious concern is when the supervisory part of the design team wishes to reject work which the contractor regards as adequate.

These concerns are usually also listed against the management contracting method of project procurement. In this method the client appoints a managing contractor who employs contractors to undertake all construction activities. He exercises co-ordination, and manages the performance factors, time, cost, and quality. In addition, he provides facilities for the contractors for their common use. The managing contractor usually also has some input in the design function, normally in the areas of constructability and material selection. Some owners also want the management contractor to be responsible for managing the design. Clearly there is the problem of who has to decide on quality standards.

In their researchiaper "Management Contracting-The Client's View" (1987), S.G.Naoum and D.Langfordz5 highlighted the problem of who has to decide on quality standards, the design team or the managing contractor. This is basically the question Tietz 24(1999) asked in the context of the design-build concept.

2.5.5 The future of design-build

In the beginning of this paper a research study by Songer and Molenaar 3(1996) indicated that design-build experienced extraordinary growth in recent years in the United States of America. The authors stated that the U.S. Department of Commerce predicted that 50% of all non-residential construction will be constructed by the design-build method by the year 2001. It was also mentioned that design-build experiences fast growth in the United Kingdom. Ndekugri and A.Tumer 5 (1994) noted that since 1985 there has been a rapid growth in the use of this procurement method.

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In 1989 the design-build share of the United Kingdom construction industry was between 15% and 25%. Figures suggest that the design-build method's proportion of construction will increase into the 21st century. Most owners, designers and contractors in the United Kingdom, were of the opinion that this method of project delivery will increase in popularity.

In both these surveys owners perceived this approach as providing better value for money, particularly where time for completion is important. The main advantages claimed by the respondents are: time saving, reduced overall project cost, better constructability, and reduction in disputes and claims.

In the Far East, countries such as Malaysia and Hong Kong are examples, where the benefits of this procurement method have been experienced. The time saving aspect of design-build, allowed the multi-million pound Pergau Hydroelectric Project Scheme in Malaysia, to be completed on time. This was mainly achieved because certain construction activities could be done in parallel to design, and because the intimate involvement of the contracting staff in the design process, made it possible to use designs to suit the preferred method of construction. Another advantage was the sound relationship experienced by the design and construction teams, resulting from the integration of these two functions, and the team effort which design-build encourages.

The Hong Kong government is effectively using the design-build method, especially where the innovative integration of design and construction is thought to be critical.

The research in this dissertation seeks to evaluate amongst other, also the future of design-build in South Africa.

2.6 Award, compensation methods and forms of contract

2.6.1 Award methods

The secondary information on award methods covers procurement methods in general.

The award method, as defined in this research, is the method used by the owner or his representative, to select the contractor. Contractor in this instance, can either mean the contractor in the traditional method doing only the construction, or the principal agent in the design-build concept, etc.

Gordon2(1994) stressed the importance of the award method because of the "one-off' nature of most construction projects, i.e. there is no "list price" what a project should cost.

Two methods are mainly used in awarding building and civil engineering construction contracts:

Competitive bidding.

Negotiated price.

It is commonly accepted that competitive bidding is the most economic way for an owner to award a project. The owner can choose any of the fixed price compensation methods (lump sum, unit price or maximum guaranteed price), and call in tenderers by closed and sealed bids. Competition forces contractors to sharpen their pencils to the advantage of the client. This award method has another advantage in that it eliminates the possibility of favouritism and corruption.

Negotiating a contract can produce a better relationship, but Gordon 2(1994) mentioned correctly that if only one contractor is involved, it is basically impossible to determine the market price for the work. The owner might get the contractor he wants, but might end-up paying too much for the project.

I.H.Seeley26(1993) suggested that from an owner's point of view, negotiations of a contract with a single contractor should only take place if it can be shown to result in real advantages to the owner. He argued there are a number of situations in which negotiating a contract may be beneficial to the owner and some are listed below:

The owner has a business relationship with the contractor.

The owner has recently completed a project through competitive bidding, and a similar project comes on programme.

A certain contractor is the only one available, or the only one with the required expertise and resources to successfully complete a specialized project.

At times of economic upturn, when construction work is readily available, and negotiation offers the best approach.

When a rapid start is important and competitive bidding will take too long.

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Where the original contractor has gone bankrupt, is one example where owners tend to prefer a negotiated price to complete the work. A rapid start is usually essential and competitive bidding normally takes too long.

2.6.2 Compensation methods

In practice three types of compensation methods are mostly used on building and civil engineering projects:

Fixed price.

Guaranteed maximum price.

Cost plus.

1)Fixed price

Fixed price contracts are normally either tendered on a lump sum basis for the complete works or on a bill of quantities based on unit prices for different activities and lump sum prices for preliminary and general items.

According to K.Grobler27 "Case for cost plus contracting"(1998), lump sum prices include for everything: labour; materials; plant and equipment; preliminary and general costs such as establishment and maintaining site facilities, insurances, provision of guarantees, supervision, general transport, de-establishment on completion, head office overheads, etc; and profit.

With lump sum compensation, no bill of quantities is provided and the tenderers have to determine quantities from the drawings. Clearly, well detailed drawings is of utmost importance, firstly to get realistic prices, as contractors tend to inflate prices to allow for uncertainties, and secondly to avoid disputes at a later stage - (K.Grobler 27 1998). Lump sum compensation serves all parties best in relative small contracts and where activities and details are clearly defined.

From the contractor's perspective, lump sum contracting exposes him to all the risk. Any cost above the lump sum is for his account, except for variations in design if the design was done by others such as in the traditional method. K.Grobler 27(1998) recommended this method only for contractors well skilled in tendering and contract management.

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However, lump sum contracts with well prepared specifications and detail tender drawings, skillfully tendered and managed professionally, can be very profitable for contractors. If a contractor feels the risk to over-run is minor, it stands to reap more profit than with other compensation methods. R.D.Gilbreath 28(1983) argued that the concept of cost risk can be viewed as "profit opportunity".

R.Pilcher29(1992) documented the following advantages of the lump sum method to owners:

The overall price for the work is known at the outset.

The owner is not too involved in the construction process itself

The risk and responsibility for the outcome of the project lies basically with the contractor. (Although it appears as a financial advantage to the owner, one must remember that at the end of the day the owner pays for this, as realistic contractors allow for real risks and sometimes also for imaginary risks in their prices. By absorbing some of the risks, the financial advantage might be much bigger for the owner -K.Grobler27 1998).

The evaluation of lump sum tenders is relatively straightforward.

R. Pilcher29(1992) noted however the following disadvantages of the lump sum method to owners:

The overall project duration is usually longer than the unit price method, because the design needs to be completed prior to asking for lump sum construction prices.

This type of compensation method is more prone to disputes and claims.

Gilbreath28(1983) added the following disadvantages to owners:

Knowing that there will be no changes in the lump sum price (except for changes to the scope), contractors may artificially inflate the price to cover real or imagined risks.

On lump sum contracts owners tend to loose the competition effect, as contractors generally shy away from this type of contract.

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Respondents in the research study of Dozzi, Hartman, Tidsbury, and Astra& 1 (1996) added the following disadvantage:

• The contractor being on a fixed lump sum price is inclined to take "short-cuts" resulting in lack of quality and performance.

Fixed unit price bidding is the most commonly used compensation approach for civil engineering construction in the United Kingdom - (Seeley2° 1993). This is applicable for all procurement methods.

From a contractor's view it is a less risky method. A complete bill of quantities is usually supplied by the owner or the design consultancy on projects procured by the traditional method and the risk of making errors in quantity estimating is eliminated. Unit price compensation is also used on design-build contracts, but the author of this dissertation experiences that owners prefer the fixed lump sum or guaranteed maximum price methods on design-build projects.

With the unit price type of contract compensation, construction can usually commence earlier, as quantities and details need not be completely finalized at tender stage. However, insufficient details might lead to inflated unit rates, disputes and requests for revision of rates. C.R.Tumblin30(1980) highlighted the important secondary benefit derived from unit price bidding, namely, the relative ease of making preliminary estimates for future work.

A disadvantage of this compensation method for owners is the fact that the overall price of the project is not known at the outset. Quantities are very seldom accurately produced by the owner or his representative at tender stage, and are subject to re-measurement on completion. Mother disadvantage of this method, comparing with lump sum, is the amount of administrative work involved during the construction process, mainly in the form of quantity surveying. In some cases relations between the contractor and owner or his respresentative are soured due to disagreements in quantities and items that need classification. Classification of the type of excavation material in civil engineering projects often lead to disputes, mistrust and bad relations - (K.Grobler 27 1998).

2)Guaranteed maximum price

With this compensation method the contractor gets paid for all costs incurred as well as profit up to a pre-agreed maximum price - (C.Grobler 27 1998). Once the ceiling price is reached the contractor must complete the project at no extra cost to the owner. In some agreements there is a sharing of cost saving in the event that the project is completed below the ceiling price. This acts as an incentive to contractors to reduce unnecessary costs.

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As for fixed lump sum contracts, this method also requires skillful tendering to produce a realistic price, as the contractor does not get a second chance to re-measure quantities, etc., except for variations due to change in the scope of the work.

3)Cost plus

On a cost plus contract, the owner pays the contractor all the audited costs of the project plus an allowance for a fee. The fee is either fixed, or an incentive or award fee.

The fixed fee is normally determined prior to the start of the contract and is either tendered as a lump sum or it might be negotiated. Normally the fixed fee does not change unless there is change in the scope of the work. Clearly contractors can abuse the cost plus with a fixed fee system. They know they will be fully compensated for all costs and as the fee is fixed and known from the start, there is no incentive to reduce costs.

Pilcher29(1992) suggested the cost plus fluctuating fee contract, where the percentage fee is on a reducing sliding scale as the total prime cost increases. One can argue that this payment method will not necessarily encourage a contractor to reduce the level of his prime costs.

Pilcher29(1992) also outlined the target cost plus system, which he believes to be effective in economy of cost. A target for the prime cost of the work is agreed before any work is carried out. A basic fee is agreed, which is usually a percentage of the agreed target estimate. The fee ultimately payable to the contractor is then established by adjusting the agreed basic fee, in accordance with a previously agreed scale. Should the actual prime cost be less than the target cost, then the basic fee is increased, or decreased if the target cost is exceeded.

Griffis and Butler 31 (1988) stated that there are many reasons why owners fear cost plus compensation, but the one encountered most is probably the fact that the initial cost of the project is unknown. Another factor is that risks are basically carried by the owner, whilst they are normally carried by the contractor on fixed price contracts.

Some of the reasons why costs overrun on this method are listed below as highlighted by Griffis and Butler31 (1988):

• The contractor's fee is normally low and the possibility of increasing it is relatively low. The contractor is getting paid for all prime costs, so he is tempted to use his best crew and plant on other jobs that are paid on fixed price and where their efficiency means more profit for him.

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Contractors tend to drag jobs out on a cost plus contract.

Owners tend to make more changes than necessary on cost plus projects as they are paying the bill anyhow.

However, in a study on this topic in 1998, "The case for cost plus contracting", K. Grobler27(1998) came to the conclusion that this compensation method can have many advantages to owners and contractors:

Cost plus is a fairer system than the traditional fixed price system that favours the owner. With cost plus the risk factor is removed from the contractor, this should lead to lower prices as the owner only pays for the audited actual costs, and not for imagined risks. Contractors should experience less losses and bankruptcies. Well managed cost plus systems will have a far more stabilizing effect on prices in the upward and downward economic cycles.

Cost plus proved to be the best system on very large and complex projects where it is impossible to estimate the total cost and the provision necessary to cover the risk to the contractor.

It is also the superior system when time is of the essence, when planning, design and construction need to be done concurrently - for example, repair work to emergency structures damaged during floods or earthquakes. This is of course not possible in fixed price contracts, where construction tends to follow design in series.

The owner has much closer control over a cost plus contract than over a fixed price project. This is because the owner or his representative/consultant is part of the team.

This compensation method has a great deal of flexibility built into it. The scope of the works can be easily varied if necessary, as can the overall programme and duration of the project. The owner can for example accelerate economically the entire project or certain portions as he only pays the audited costs. On fixed price contracts, additional costs due to acceleration are usually quoted for as an extra, and one can argue that this can be exploited by greedy contractors.

Disputes and claims are usually much less on cost plus projects.

Cost plus can deliver a better quality end product. The contractor does not have to cut corners to save on workmanship as he is paid for all costs.

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The problem areas associated with cost plus can be eliminated or reduced sufficiently by sound team work. The control and input of experienced owner personnel or consultants can for example prevent a possible drag-out of the contract as mentioned earlier, and can assist the contractor in the procurement of materials and sub-contractors to keep costs down and to ensure optimum prices- (K.Grobler 27 1998).

K.Grobler32 highlighted in a research paper in 1998 "Improving the Reliability of Concrete Structures", the importance of sound teamwork between the parties, i.e. owner, designer and contractor. This ensures better interaction and feedback of identified problems to ensure that corrective action can be taken to avoid same mistakes from happening again. This leads to improvement of quality and hence reliability of structures. As cost plus involves much more teamwork (especially of owner and contractor or his representative/consultant), and one can argue that projects compensated on this method should produce end products with higher reliability.

In the traditional design-bid-build approach, design consultants are usually appointed in the building and civil engineering fields in South Africa. The South African Association of Consulting Engineers annually recommends a fee structure to Government to be legalized. A reducing sliding scale is normally used, the higher the project value, the lower the percentage. Construction work procured by the traditional method, is usually subjected to competitive bidding on fixed price, usually a bill of quantities with unit rates and lump sum prices for preliminary and general items. Lately, however, it is perceived by a section of the construction industry, that construction work is negotiated more often. On design-build projects, the perception is that most small and simple projects are negotiated on fixed price, whilst large and complex projects are usually subjected to competitive bidding on either fixed price or guaranteed maximum price and to a lesser extent on cost plus.

2.6.3 Forms of contract used on design -build projects

According to Marsh 14(1995), the most widely used conditions of contract in the United Kingdom are:

ICE conditions for civil engineering. (General conditions issued by the Institute of Civil Engineers, and the Federation of Civil Engineering Contractors).

JCT conditions for building work. (Issued by the Joint Contracts Tribunal).

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• NEC (New Engineering Contract) for use on either civil, building or plant contracts. (Published by the ICE in 1991). This contract provides maximum flexibility. It comprises the core clauses; the main option classes applicable to the procurement method chosen; and a variety of secondary options for use where necessary, to allow the employer to choose the version that he finds most appropriate.

In the international arena, the two standard forms most commonly used are those issued by the Federation Internationale des Ingenieurs Conseils (FIDIC): one for civil engineering work and one for electrical and mechanical works. Seeley 26(1993) confirmed that The Conditions of Contract (International) for Works of Civil Engineering Construction, known as the FIDIC contract, are recommended for use of works of civil engineering construction that are the subject of international tender. It has evolved from the ICE conditions of contract and are used in many countries throughout the world. There is a provision for the insertion of the ruling language. Some of the ICE clauses are amended or extended to suit local conditions and there is provision for the payment of bonus for early completion. C.K.Haswell and D.S. de Silva 33 (1982) confirmed that FIDIC was first published in August 1957 and that there has been several revisions since.

Seeley26(1993) mentioned a rather interesting point. The engineer under the ICE conditions on a civil engineering project, has much wider powers and duties than an architect under the JCT contract. The engineer for example, has the power to give instructions as to the method of carrying out the work.

The survey of Ndekugri and Turner 5 (1994) on design-build was aimed at the building industry in the United Kingdom. According to them, the 1981 edition of the JCT, called the JCT81, is intended for use when the entire design is to be carried out by the contractor. For situations where the contractor is to contribute only a part of the design, the JCT80 is used. The results of their survey into the extent of use of various standard forms are summarized in Table 2.11 - (Ndekugri and Turner 5 1994).

Table 2.11: Extent of use of various standard forms of contract in the United Kingdom on design-build projects (adapted from Ndekugri and Turner5 1994)

Standard form % of all respondents

ICT81 89 JCT80 5

Contractor's in-house standard form 2 Other 4

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Clearly the JCT81 is by far the most used form of contract in the United Kingdom for design-build contracts in the building industry.

In South Africa it seems as if the NEC (New Engineering Contract), is gaining in popularity. This research amongst other, also seeks to give insight into the usage of different contract forms for design-build contracts in South Africa.

2.7 Summary and Conclusions

2.7.1 Reasons why owners select the design-build method

Two recently undertaken, independent studies, by Songer and Molenaar 3 (1996) and Ndekugri and Turner 5(1994), indicated that the design-build method is experiencing fast growth in the United States of America, and the United Kingdom respectively.

Abovementioned two independent researches produced similar results to a large extent. According to these two studies, the reasons why the design-build procurement method is selected by owners, can be summarized as follows:

One of the main reasons given for the selection of design-build is that this procurement method leads to shorter project duration.

Some owners prefer design-build to secure a fixed project cost and fixed time schedule before the start of detailed design.

This method can reduce costs.

The design-build method involves less disputes and claims.

This method also frequently results in improved constructability of the design.

This approach has been used successfully on any size project, from very small and simple to large and complex.

The survey of Ndekugri and Tumer 5(1994) also stressed the advantage of single-point

responsibility, that the design-build concept offers.

Mother prominent factor leading to the popularity of this approach, is the flexibility built into the design-build system. The inherent flexibility of this approach makes it possible to take full advantage of the contractor's knowledge and preferred methods of construction right from the planning stages of design.

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This is of course usually not possible with the traditional design-bid-build method, as the design is normally complete by the time the contractor is appointed and it is too late to exert any significant influence.

The multi-million Pergau Hydroelectric Project constructed in Malaysia, is one example where the flexibility of the design-build concept assisted in several instances, to meet the tight project completion schedule - (McEwan, Luke, and Idiculla 7 1997).

2.7.2 Factors influencing the success of design - build projects

In 1997 Songer and Molenaar 9 produced a follow-up research on design-build. The results of this survey demonstrate that there are 15 primary project characteristics that affect public-sector design-build project success. Of the 15 project characteristics, the following 5, proved to be critical in all projects:

Well defined scope.




Established budget.

The remaining 10 project characteristics, listed in Table 2.7, influence success on a project-by-project basis.

Songer and Molenaar9(1997) stressed the point that "the definition and understanding of project scope" are the most important elements for the success of design-build projects.

2.7.3 Type of project and owner for which design -build is most suitable

For a long time there was a school of thought that considered design-build suitable only for small and simple structures. However, most respondents in the United Kingdom survey of Ndekugri and Tumer5(1994), disagreed completely with this perception, as they had constructed large and complex projects with the design-build procurement approach.

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Ndekugri and Turner 5(1994) confirmed that size and complexity of projects presented problems only when there were inadequacies in the owner's brief. They confirmed the importance of a well defined scope, which was considered by Songer and Moolenaar9(1997), as the most important factor for design-build project success.

Gordon2(1994) stressed the importance of owner's interaction on projects where the design needs to be highly creative or functional fitness for purpose is essential. He recommended the traditional method, or management contracting method, that has an independent designer, in these situations. He argued that the owner has much less control over the design in design-build projects, and saw this as a disadvantage.

Having much less control over the design, is the main reason one can argue why a well defined scope is such an important factor for owners in design-build projects.

2.7.4 Award, compensation methods, and forms of contract.

1)Award methods

Competitive bidding and negotiated price are the two award methods used on projects in general. It is commonly accepted that competitive bidding is the most economic way for an owner to award a project. According to Gordon 2(1994), negotiating a contract can produce a better relationship. He mentioned that with this method, the owner might get the contractor he wants, but might end-up paying too much for the project.

2)Compensation methods

In practice, three types are mostly used on projects in general: fixed price, guaranteed maximum price, and cost plus.

Fixed price contracts are normally either tendered on a lump sum basis for the complete works, or on a bill of quantities based on unit prices for different activities, and lump sum prices for preliminary and general items.

From a contractor's perspective, lump sum contracting exposes him to all the risk. Any cost above the lump sum is for his account. According to Pilcher 29(1992), owners normally prefer this method, as the risk lies basically with the contractor, and the overall price for the work is known at the outset.

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More advantages and disadvantages of lump sum compensation are covered in detail in section 2.6.2 (1).

Fixed unit price bidding, is the most commonly used compensation method for civil engineering construction in the United Kingdom - (Seeley 26 1993). From a contractor's view it is a less risky method. A complete bill of quantities is usually supplied by the owner or the design consultancy on projects procured by the traditional method and the risk of making errors in quantity estimating is eliminated. Unit price compensation is also used on design-build contracts, but the author of this dissertation experiences that owners prefer the fixed lump sum or guaranteed maximum price methods on design-build projects.

With the guaranteed maximum price compensation method, the contractor gets aid for all costs incurred as well as profit upto a pre-agreed maximum price - (K.Groblet 2 / 1998).

On a cost plus contract, the owner pays the contractor all the audited costs of the project plus an allowance for a fee. The fee is either fixed, or an incentive or award fee. Griffis and Butler31 (1988) stated that there are many reasons why owners fear cost plus compensation, but the one encountered most is probably the fact that the initial cost of the project is unknown. Another factor is that risks are basically carried by the owner, whilst they are normally carried by the contractor on fixed price contracts.

However, in a study on this topic in 1998, "The case for cost plus contracting", K.Grobler27(1998) came to the conclusion that this compensation method can have many advantages to owners and contractors. One advantage that the author found of particular importance, is the fact that cost plus can deliver a better quality end product. The contractor does not have to cut corners to save on workmanship as he is paid for all costs. Other advantages are covered in full in section 2.6.2(3).

3)Forms of contract

According to Marsh 14(1995), the most widely used conditions of contract in the United Kingdom are:

ICE conditions for civil engineering. (General conditions issued by the Institute of Civil Engineers, and the Federation of Civil Engineering Contractors).

JCT conditions for building work. (Issued by the Joint Contracts Tribunal).

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NEC (New Engineering Contract) for use on either civil, building or plant contracts. (Published by the ICE in 1991) .

Abovementioned forms of contract are used on projects in general. According to the survey of Ndekugri and Turner 5(1994), the JCT81, is by far the most used standard form of contract, for design-build projects in the building industry in the United Kingdom.

2.7.5 Areas of concern about the design-build method

Listed below are some of the main areas of concern expressed by Ndekugri and Tumer5 (1994):

The survey of abovementioned authors confirmed that contractors still experience considerable resistance from the professions (architects and quantity surveyors). It is however important to note that the professions in that survey are mostly employed by the contractor. Their attitude might be completely different in the design-build alternative where they are the principal agent.

A more serious concern was about design liability and related insurance matters. It appeared that many design-build contractors failed to insure against design liability. According to the authors, the standard form of design-build contract used in the building industry in the United Kingdom, the (JCT81), does not require contractors to take out this insurance. One feels this is the heart of the problem.

In his article "From Egan to the 21st Century", Tietz 24(1999) highlighted the following concerns of the design-build approach:

Being the principal agent, and construction value over-shadowing design costs, the contractor's opinion tends to prevail if quality of design and construction savings come into conflict .

A more serious concern is when the supervisory part of the design team wishes to reject work which the contractor regards as adequate.

2.7.6 The future of design-build

Songer and Moolenaar3 (1 996) indicated in their research study that the design-build method experiences extraordinary growth in recent years.

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The authors confirmed that the United States Department of Commerce, predicted that 50% of all non-residential construction will be constructed by the design-build method by the year 2001.

Ndekugri and Turner 5(1994) confirmed that the design-build concept also experiences fast growth in the United Kingdom, and a bright future is foreseen for it.

In the Far East, countries like Malaysia and Hong Kong, are examples where the benefits of this procurement method have been experienced. The Hong Kong government is effectively using the design-build approach on projects where the innovative integration of design and construction is thought to be critical.

2.7.7 Concluding remarks

In conclusion one can say that the researches from abovementioned countries indicate that the design-build method has a bright future. This procurement method has the potential to integrate the separated groups of the traditional project team, which can lead to better co-operation and relations. This can result in less disputes and claims, better quality, time and cost savings, provided that the areas of concern are properly addressed, and the factors influencing the success of this procurement approach, are adhered to.

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Chapter 3: Survey Methodology and Data Collection

3.1 Introduction

A comprehensive literature review was done to identify the important issues relating to the design-build procurement method. The gathering of secondary information was covered in the previous chapter and provides the foundation from where the research can be launched.

Managing the process of primary data collection is of utmost importance to ensure that sufficient and reliable information is gathered to supply answers to research objectives that are representative and meaningful.

All elements of the secondary and primary data collection process, i.e. gathering of secondary information for the research review, development of the questionnaires, selecting the sample members, delivery of questionnaires, personal interviewing, and telephonic follow-up calls, were done by the author only. This ensured personal involvement, consistency and will hopefully give an element of integrity to the research.

3.2 Methodology

The methodology developed to research the objectives was:

The detailed literature review of the previous chapter made it possible to gather more information on the design-build procurement method, to identify the important issues, and appropriate selection factors, against which the attitudes of the role players in South Africa can be determined.

Self-administered questionnaires were developed to gather the primary data and are discussed in this chapter. For an adequate evaluation of the current position and future of design-build, it is necessary to obtain feedback from all the role players, i.e. owners, designers and contractors. Although the attitudes of owners are of primary importance as they normally select the method of project delivery, the input from designers and contractors are of no less importance, as they are the people actively involved in the process.

Personal interviewing of selected companies and organizations was done to provide validation and clarity to the survey results.

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3.3 Development of the questionnaires

Two questionnaires were developed by the author, one for owners, and one for designers and contractors.

Questions concentrated on the seven research objectives mentioned in Chapter 1:

What percentage of projects are delivered by the design-build concept in South Africa?

Which of the three design-build altefnatives is most often used?

To compare design-build with other procurement methods on important project selection criteria and to determine which procurement method is preferred by the role players.

To determine attitudes of the local role players on certain issues related specifically to design-build.

To assess which of the three design-build alternatives is most popular.

To evaluate the award and compensation methods, as well as the form of contract preferred on the design-build concept.

To assess the future of design-build in South Africa.

In addition the questionnaires also seeked to obtain the construction sector types of the respondents, and other general information which is mentioned in the next paragraph.

The so-called "flannel approach" as recommended by D.R.Cooper and C.W.Emory 10(1995) in their book, Business Research Methods, was followed. This approach emphasizes the importance of the question sequencing, by moving from general to more specific questions. MI parties were requested to complete the general questions, i.e. details of company; involvement in the different construction sectors; sector speciality of designers and contractors; involvement in the different procurement methods; experience of the design-build method; breakdown between public and private sector work. However, it was qualified that only parties with experience of the design-build method, should complete the rest of the questions, which involved comparing design-build with other procurement methods, and explore attitudes on certain issues related specifically to design-build. The argument being that parties without experience will most probably give a distorting effect to the results. It is better to eliminate this possibility.

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The complete questionnaire to designers and contractors is included in Appendix A. The questionnaire to owners was basically the same as the questionnaire developed for designers and contractors. The only differences were:

An additional question to designers and contractors to specify their company's speciality, i.e. design only, construction only, or design and construction. Refer Appendix A, section C.

To obtain the involvement in public and private sectors. For owners, the only question was to which sector they belonged. However, designers and contractors were asked to specify their involvement (in percentage) in the two sectors under each procurement method (traditional method, design-build, and other methods). Refer Appendix A, section D.

3.4 Questionnaires to selected parties

Nonprobability selection of sample members was deemed appropriate as the study concentrated on more well known companies and organizations in the building and civil engineering fields. Selection was therefore not random. It was argued that the selected sample members represent a wide cross section of the industry with a high level of expertise that should be in a good position to compare design-build with other procurement methods. Cooper and Emory 10(1995) defined this type of selection as "judgement sampling".

The majority of sample members are from Johannesburg, being the economic and industrial mecca of South Africa, and the head quarters of the majority of major design and construction companies.

A total of 90 questionnaires were delivered to selected parties. The majority via fax and a few by hand. The distribution was as follows:

30 to owners (15 public-sector, and 15 private-sector).

30 to designers.

30 to contractors.

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To improve the accuracy and validity of the survey, it was necessary to improve the response rate and reminders were faxed to parties that had not responded after a period of approximately two weeks. Upon receival of the reminders, about 10% of companies requested to have the questionnaire re-sent, as it had been misplaced.

3.5 Personal interviewing

The purpose of the interviews was to provide validation and clarity to survey results and to gain additional insight into matters relating to the procurement of projects. All interviews were done by the compiler to ensure personal involvement and consistency. Due to the time constraint with most interviews, only key notes were made, which were re-written in more detail as soon as possible afterwards.

Seven parties were interviewed, i.e. three owners, two designers and two contractors. Two respondents were interviewed whilst completing the questionnaires and the balance after receival of the questionnaires.

3.6 Telephonic follow-up calls

Follow-up telephone calls were made to sort out and clarify omissions, "don't knows" or uncertainties on the completed questionnaires. In general the forms were complete and clearly answered. Follow-up calls concentrated basically on clarifying the comments of the respondents on the last question, where they could note any areas of concern regarding the design-build approach. This was done as promptly as possible whilst information was still fresh in the memory of the respondents.

Telephonic follow-ups were very effective in sorting out uncertainties and supplied additional insight into the reasoning behind certain matters, such as:

Comparing procurement methods.

Preferred procurement method.

Attitudes of the role players on certain issues related specifically to design-build.

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3.7 Response

All responses were returned via fax, except the ones which were completed during interviews.

A total of 33 responses were recieved leading to a response rate of 36.7%. Only one invalid response was received, from an engineering division of a well known major civil contracting company, who did not complete the form, as they believed their work falls outside the scope of this research.

The response from the different sectors is listed in Table 3.1.

Table 3.1:Response from the different sectors

Respondents Public-sector own=

private-sector postmen (BY=

Contractors

Number of questionnaires sent out (Total = 90) 15 15 30 30

Number of valid responses received (Total = 32) 4 4 13 11

Valid response rate 26.70% 26.70% 43.30% 36.70%

The valid mean response rate (by weight) = 35.6%. This figure takes into account the response rate from each sector, the number of questionnaires sent out to each sector, and the total responses sent out.

The mean valid response rate is in line with similar surveys done by Ndekugri and A.Turner5(1994) in the United Kingdom, and Songer and Moolenaar 3 (1996) in the United States of America. Both had a valid response rate of 37%.

Cooper and Emory 10(1995) confirmed in their book "Business Research Methods", that a 30% response rate is considered satisfactory for this type of survey method. In this respect, the results can therefore be considered as valid and meaningful. Another observation is that the questionnaires were all completed by very senior management. This makes the views expressed more noteworthy and gives more credibility to the survey.

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3.8 Limitations

Although the valid mean response rate, as well as the valid response rates for the separate sectors, are satisfactory, it is important to mention that only two of the four public owner respondents have experience of the design-build method. This will not have any influence on the collection of general information, such as: involvement in the different construction sectors, sector speciality of designers and contractors, etc. It also has no real influence on the first and main objective of this research, i.e. the percentage of projects delivered by the design-build method.

However, on questions related specifically to design-build, only respondents with experience qualified to answer these questions, and abovementioned sector is unfortunately only represented by two responses. Their influence is included in all mean value figures of these specifically related questions, as these figures are calculated by weight. However, it will lead to distortion when comparing their input with other role players on a separate basis. This is a limitation. To counter this shortcoming, a combined figure for owners will be given, wherever necessary, in addition to the separate view of private owners. It is also the intention of the author to embark on more research on this topic and related issues in future, and the influence of this sector, amongst other, will be accounted for.

On the positive side it can be reported that respondents of the other three sectors, have adequate experience of design-build, as shown in Table 3.2, and they can be compared effectively and fairly on a separate basis.

Table 3.2: Number of respondents with experience of design-build

Sector Number of valid responses Nuntlxrsilvalislicspcims Fxperience in %

received (Total = 32) with experience of design-build flotalr241

Public-sector owners 4 2 50%

Private-sector owners 4 4 100%

Designers 13 9 69.2%

Contractors 11 9 81.8%

Mean value of experience (by weight) for all four sectors 77.5%

Mean value of experience (by weight) for Private owners, Designers and

Contractors 80.0%

3.9 Summary and Conclusions

Self-administered questionnaires and personal interviews were used to collect the primary data. Nonprobability selecting was deemed appropriate as the study concentrated on more well known companies and organizations in the building and civil engineering fields. A total of 90 questionnaires were delivered to selected parties representing a wide cross section of the industry that should be in a good position to evaluate design-build as a procurement method in South Africa.

Personal interviewing was done with seven parties and provided additional insight into this procurement method and procurement of projects in general. Telephonic follow-up calls were made as questionnaires were received to sort out and clarify omissions, uncertainties, etc. It was also another opportunity to clarify the reasoning of respondents behind certain matters.

A valid mean response rate (by weight) of 35.6% was achieved, which is in line with similar studies done recently in the United States of America and the United Kingdom. According to Cooper and Emory l °(1995) a response rate of 30% is satisfactory for this type of survey.

All respondents completed the general questions and also made it possible to find an answer to the main objective of this research, i.e. what percentage of projects are completed by the design-build method. However, on questions related specifically to design-build, only respondents with experience of design-build qualified to answer these questions. As explained in the previous section, due to the small number of public owners with experience, it will not be compared with the other sectors on a separate basis, as it will lead to distorted conclusions. To counter this shortcoming, a combined figure for owners will be given, wherever necessary, in addition to the separate view of private owners. However, the influence of public owners will be included in all mean value figures as these are calculated by weight.

On the positive side it can be recorded that all the other three sectors have adequate experience of this procurement approach, i.e. private owners 100%, designers 69.2%, and contractors 81.8%. The mean value of experience (by weight) of design-build for the three sectors is 80% - (Table 3.2). Clearly the respondents of these three sectors have adequate experience of this procurement approach and they can be compared effectively and fairly on a separate basis.

It is also encouraging to know that the mean value of experience (by weight) of design-build for all four sectors combined is 77.5%. The sample of respondents is in a favourable position to represent the views of the industry as a whole on the design-build concept.

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Chapter 4: Research Results and Analysis

4.1 Introduction

This chapter presents the results of the South African survey conducted by the author on the extent of use of the design-build concept.

Editing and data entry in table format proceeded on a continuous basis as the questionnaires were returned via fax. As mentioned in the previous chapter, follow-up telephone calls were made to sort out and clarify omissions, "don't knows" or uncertainties. This was done as promptly as possible whilst information was still fresh in the memory of the respondents.

All editing, data entry and follow-up calls were done by the author only, to ensure consistency, personal involvement at all times, and integrity, especially as far as the technical side is concerned.

4.2 Results and Analysis

4.2.1 Construction sectors

Listed below in Table 4.1 is the involvement (in percentage) of the 32 valid responses in the different construction sectors of the building and civil engineering fields.

Table 4.1: Breakdown of Construction sectors

Public-sector private-sector Designers Contractors Mean

ow= owners (by weight)

No of valid responses received (total = 32)

4 4 13 11

a)Building 2% 92.5 35% 66% 48.7%

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Table 4.1: Breakdown of Construction sectors (continued)

WeivilEnginceling

Township roads and

Public-sector Private-sector

MMUS =NIS

Desigacm Contractors Mean (by weight)

internal services 12% 2.5% 17% 9% 11.8%

Water and sewerage schemes 61% 2.5% 9% 19% 18.1%

Roads, bridges and stormwater 0% 2.5% 18% 2% 8.3%

Railways, harbours and airports 0% 0% 3% 0% 1.2%

Dams and tunnels 0% 0% 5% 1% 2.4%

Power stations and mining 25% 0% 13% 3% 9.5%

Total 100% 100% 100% 100% 100%

Analysis

By analysing the mean values it can be seen that the sample is well balanced, building representing approximately 50% and civils the remaining 50% percent. The different civil sectors are also well represented. Although there are no comparative figures readily available, the overall breakdown should reflect a realistic distribution of the sectors in the industry.

4.2.2 Designers' and contractors' speciality

Listed below in Table 4.2 is the breakdown of the field of speciality of designers and contractors.

Table 4.2: Field of speciality

Description Designers Contractors

Design only 85% 0%

Construction only 0% 45%

Design & construction

Total

15% 55%

100% 100%

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Analysis

As expected more construction companies specialize in design and construction than design consultancies.

4.2.3 Experience of respondents of the design-build method

Respondents were asked to indicate the number of projects delivered by the design-build method, and their experience (in years) of this method. Results are listed in Table 4.3.

Table 4.3: Respondents' experience (in years) of design-build and number of design-build projects completed

public-seciorPrivate-cector MINIS miners

DeSigneLi Contractors

4 4 13 11

2 4 9 9

25 17 163 297

12.5 4.25 18.1 33.0

No of valid responses received (total = 32)

Respondents with experience of design-build (total = 24)

Cumulative number of design-build projects completed

Average number of design-build projects completed per respondent

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Table 4.3: Respondents' experience (in years) of design-build and number of design-build projects completed (continued)

Public-sector Private-sector Designers Contractors MMUS MMUS

Cumulative experience in years of design-build

43 22 100 179

Average experience in years of design-build per respondent

21.5 5.5

11.1 19.9

Mean values (by weight)

Number of design-build projects completed per respondent = 20.9

Experience in years of design-build per r spondent = 14.3 years

Analysis

From survey data presented in Table 4.3, one can assume that design-build is used in the industry in South Africa, since the mid 1980's, which coincides with the introductory remarks of this dissertation: "The inflationary 1970's and the litigious 1980's encouraged owners to reconsider the traditional procurement method. The desire for time and cost efficiency paved the way for other methods such as design-build, management contracting, and construction management, as viable alternatives".

The mean values suggest further that the sample of respondents has sufficient experience of the design-build method to make informed judgements regarding this method and to compare it with other procurement methods.

4.2.4 Involvement of designers and contractors in the public and private sectors

Listed in Table 4.4 is the involvement of designers and contractors in the two sectors for the different procurement methods.

Table 4.4: Involvement in the public and private sectors

Description

l)Traditional method

Designers Contractors

Public-sector 46% 37% Private-sector 54% 63%

2)Design-build method

Public-sector 14% 25% Private-sector 86% 75%

3)Other methods.

Public-sector 0% 0%

Private-sector 100% 100%

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Analysis

It is useful to note that designers and contractors are more involved with the private sector than with the public sector. This is evident in all the procurement methods, especially in the design-build method and "other" procurement methods. However, this does not mean necessarily that the private sector spent more money on building and civil engineering projects, than the public sector. It was beyond the scope of this research to determine which sector spends more money on building and civil engineering projects.

4.2.5 Percentage of projects delivered by the design-build concept

Determining the percentage of projects delivered by the design-build method in South Africa, was the principal objective of this research. Listed in Table 4.5 is the involvement of owners, designers and contractors (in percentage) in the different procurement methods.

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Table 4.5: Involvement in the different procurement methods Public-sectorPrivate -sector Designers owners owners

No of valid responses

Contractors Mean (by weight)

received (total = 32) 4 4 13 11

1)Traditional "design-bid-build" method

54% 30% 77% 59% 62.0

2)Design-build method

a)Design company is principal agent. Contractor sub-contracting to design company.

0% 1% 10%

b)Contractor is principal agent. Designer subcontracting to contractor.

3% 26% 8%

c)Design and construction by one company or consortium, also

called "super design-build" 8% 15% 3%

11%

16%

12%

8.0%

12.4%

8.2%

3)0ther methods

Owner's in-house design using an outside contractor .

35% 23% 1.0% 1.0% 8.0%

Management contracting method 0% 5% 1.0% 1.0% 1.4%

Total 100% 100% 100% 100% 100%

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Analysis

1)Explanation of percentage calculations

Respondents were requested to indicate their involvement in percentage for the different procurement methods. It is therefore possible to calculate for each sector the involvement in percentage for each of the different procurement methods.

Example: Consider the "Traditional method": A total of 4 responses were received from private-sector owners. The cumulative percentage involvement for this sector for the traditional method was 120% out of a total of 400%, which gives a 30% involvement for this method, as indicated in Table 4.5.

The mean value (by weight) for each procurement method, represents the combined figure for all 4 sectors. It takes into account the percentage involvement of each sector, the number of responses received from each sector, and the total responses received from all the sectors, whereby a weighted value is achieved.

2)Summary of involvement in the different procurement methods in South Africa:

Mean values (by weight)

Traditional method 62.0%

Design-build a)Designer is principal agent b)Contractor is principal agent c)Super design-build

8.0% 12.4% note

78 6%

Other methods Owner's in-house design using outside contractor Management contracting

8.0% 1.4%

Total 100%

3)Percentage of projects delivered by the design-build concept

The cumulative mean value of the three design-build methods adds to 28.6%, implying that approximately 29% of the building and civil engineering projects surveyed in South

Africa are completed by this procurement method.

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It was mentioned earlier in this dissertation that according to a research survey in the United Kingdom by Ndekugri and Turner 5 (published June 1994), that the design and build share of the United Kingdom building industry, was in 1989, between 15% and 25%. B.Cooke and P.Willams 34, state in their book, "Construction Planning Programming and Control", (published in 1998), that 28% of building projects in the United Kingdom is procured by design-build. Assuming a figure of 28% at this stage for the United Kingdom, one comes to the conclusion that, percentage-wise, approximately the same amount of projects are delivered by the design-build method in South Africa than in the United Kingdom.

It was also mentioned earlier that the United States Department of Commerce predicted that 50% of all non-residential construction will be constructed by the design-build method by the year 2001. The United States of America might be ahead of South Africa, but in general it appears that design-build is well established in South Africa. The perception / hypothesis expressed in the beginning of this dissertation, that design-build is not as well established in South Africa as in developed countries, such as the United Kingdom and United States of America, was therefore a skew perception. In fact, the results listed in Table 4.5 indicate that design-build is well established in South Africa.

Figures from the owners are of course of particular importance, as they normally select the procurement method. Unfortunately there were only eight owner responses, four from each sector. Having said that, it is nevertheless interesting to compare figures of the two sectors. From the received responses it appears that private owners use the design-build method much more than the public-sector, i.e. 42% versus 11%. The traditional method is used 30% of the time by private owners and 54% by public owners. Other methods involve 28% for private owners and 35% for public-sector owners.

It is further useful to note that the traditional method is also used in South Africa to very much the same extent as in the United Kingdom. Cooke and Willams 34(1 998) mentions a figure of 56% for the United Kingdom, comparing to the 62% for South Africa.

Other methods cumulate to 16% in the United Kingdom, comparing to 9.4% for South Africa, according to this survey.

4)The design -build alternative most often used

The second goal of this research was to determine which design-build alternative is most often used. The figures from Table 4.5 show clearly that the alternative where the contractor is the principal agent, with the designer sub-contracting to him/her, is used much more than the other two approaches. With 12.4% of the total procurement make-up, it is approximately 50% higher than the other two alternatives. It appears that private owners use this method rather frequently (26% of the time).

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4.2.6 Comparing design-build with other procurement methods on project selection criteria

Comparing design-build with other procurement methods on project selection criteria and to determine which procurement method is preferred by the role players, was the third objective of this research.

As requested, only respondents with experience of the design-build approach completed questions on this section, and the rest of the questions (covered in sections to follow). The reason was to avoid skew perceptions from inexperienced respondents.

Respondents were asked to select a procurement method for each of the following criteria, by either choosing T for Traditional "Design-bid-build", or D for "Design-build" or 0 for "Other" method. The results (in percentages) are listed in Table 4.6.

Table 4.6: Compare procurement methods on project selection criteria Public-sectorPrivate-sector Designers. contractors

owners 41YIIets

Respondents with experience of design-build that qualified to complete

Mean (by weight)

these questions (total = 24) 2 4 9 9

Oran best establish cost (can best secure a project cost before the start of detailed design)

T 25% 13% 33% 11% 20.8%

D 0% 62% 67% 83% 66.6%

0 75% 25% 0% 6% 12.6%

2)fan best establish schedule (can best secure a project schedule before the start of detailed design)

T 25% 0% 39% 11% 20.8%

D 0% 75% 61% 83% 66.5%

0 75% 25% 0% 6% 12.7%

3)1 Pads to shorter prqject duration

T 0% 0% 17% 6% 8.6%

D 50% 50% 83% 89% 77%

0 50% 50% 0% 5% 14.4%

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Table 4.6: Compare procurement methods on project selection criteria (continued) Public:sectorPrivate-sector Designers Contractors Mean

(by weight)

9 9

owners MUM

Respondents with experience of design-build that qualified to complete these questions (total = 24) 2 4

4)Ls more cost effective / better value for money

T 0% , 0% 61% 6% 25.1%

D 50% 50% 39% 89% 60.5%

0 50% 50% 0% 5% 14.4%

5a)ls suited bailor large or complex projects

T 0% 50% 67% 33% 45.8%

D 50% 0% 33% 67% 41.7%

0 50% 50%

b) 1 ki 1- 1 11. I 111 ' 1 P tot

0% 0% 12.5%

T 0% 0% 11% 33% 16.5%

D 0% 75% 89% 56% 66.9%

0 100% 25% 0% 11% 16.6%

6)Is more flexible

a)Callir-SUCCDM11104ateSelhQdQtrtQUItalaiQn

T 0% 0% 11% 0% 4.1%

D 100% 88% 89% 94% 91.6%

0 0% 12% 0% 6% 4.3%

6b)Is more flexible regarding changes to scope of the work

T 0% 12% 44% 22% 26.7%

D 50% 50% 56% . 72% 60.5%

0 50% 38% 0% 6% 12.8%

7)leads to better cnnstructability. (Takes best advantage of contractor's knowledge in the design)

T 0% 0% 0% 0% 0%

D 100% 75% 89% 100% 91.7%

0 0% 25% 11% 0% 8.3%

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Table 4.6: Compare procurement methods on project selection criteria (continued) Public-cectorPrivate-sector Designers Contractors Mean OM= QM= (by weight)

Respondents with experience of design-build that qualified to complete these questions (total = 24) 2 4 9 9

8 I 0.• - it% II II I • I 0: 11. I I •

T 0% 0% 39% 0% 14.6%

D 50% 63% 61% 89% 70.9%

0 50% 37% 0% 11% 14.5%

9)J Pads to better relations between the role playerS.

T 0% 0% 39% 11% 18.8%

D 50% 75% 61% 78% 68.8%

0 50% 25% 0% 11% 12.4%

10)13as less responsibility grey areas

T 0% 0% 33% 11% 16.5%

D 50% 100% 67% 78% 75.2%

0 50% 0% 0% 11% 8.3%

1 01-1,88 less liability and insurance related problems.

T 0% 0% 44% 33% 28.9%

D 50% 75% 56% 56% 58.7%

0 50% 25% 0% 11% 12.4%

12)flas less disputes and claims

T 0% 0% 22% 0% 8.3%

D 50% 75% 78% 89% 79.3%

0 50% 25% 0% 11% 12.4%

13)Do you prefer

T 0% 0% 33% 0% 12.4%

D 50% 75% 67% 83% 72.9%

0 50% 25% 0% 17% 14.7%

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Analysis

Although the results contained in Table 4.6 are self-explanatory, it is necessary to highlight some interesting aspects:

The results of public owners are only based on two respondents who have experience of design-build, and qualified to answer questions on this section. This sector's results is tabled as it is required to produce the mean values (by weight), and because it makes for useful reading, especially as both respondents are from very large organizations. However, as mentioned in the previous chapter, due to the small number of experienced respondents, the public owner sector is not compared with the other sectors on a separate basis, as it will lead to distortion. To counter this shortcoming, a combined figure for owners will be given, wherever necessary, in addition to the separate view of private owners.

By analysing the mean values (by weight), it is interesting to note that the design-build method was overwhelmingly preferred, for all the criteria, except for one criterium i.e. is suited best for large or complex projects. For this criterium, the traditional method scored a mean value (by weight) of 45.8% against 41.7% for design-build, and 12.5 % for other methods.

It is useful to compare the results of the role players separately on abovementioned criterium. Designers preferred the traditional method with a score of 67%, and 33% for design-build. Contractors scored the reverse of designers, 67% for design-build and 33% for the traditional method. Private owners scored 50/50 between the traditional method and other methods, and 0% for design-build. The combined figures (by weight) for owners are: 50% for other methods, 33% for traditional, and 17% for design-build. (Other methods concentrated on owner's in-house design using an outside contractor, and management contracting).

Although design-build is close on mean values (by weight) to the traditional method on large and complex projects, one cannot forget the "garden shed image" perception, that design-build is only suitable for small and simple structures - Ndekugri and A.TurneP(1994). However, as can be remembered, most United Kingdom respondents strongly disagreed and confirmed that they have constructed large and complex projects through this procurement method. According to the results in Table 4.6, the local South African Contractors agreed with the United Kingdom survey on this issue, as 67% felt that the design-build method is suited best for large or complex projects.

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During the interviews, both public and private owners stressed the importance of a well defined scope of the work and design criteria on projects delivered by design-build, especially on large and complex projects. They confirmed one of the important findings of the United Kingdom survey of Ndekugri and A.Tumer 5 , i.e. that size and complexity of projects presented problems only when there were inadequacies in the owner's brief. One also remembers that respondents in the survey of Songer and Molenaar3 (1996) ranked large project size/complexity of least importance of seven selection criteria why owners select design-build as procurement method - Table 2.2.

For small or simple projects, mean values (by weight) are: design-build 66.9%, traditional method 16.5% and 16.6% for other methods - Table 4.6.

In the research review, surveys of Songer and Moolenaar 3(1996), Ndekugri and A.Turner5(1994), and others, came to the conclusion that shorter project duration, establish cost and time schedules, less disputes and claims, improved constructability, and cost saving, are the main reasons why design-build is selected in many cases as project procurement method, and why it is growing so fast in these countries.

This South African survey confirms above, as design-build was preferred in all above criteria, with high mean values (by weight) as follows:

Leads to shorter project duration 77% Can best establish cost 66.6% Can best establish time 66.5% Has less disputes and claims 79.3% Leads to better constructability 91.7% Is more cost effective 60.5%

Comparing the results of private owners, designers, and contractors, separately, on above six important selection criteria, it is interesting to note that all three sectors scored overwhelmingly in favour of design-build for all the criteria, with one exception, i.e. is more cost effective. On this criterium, designers scored 61% for the traditional method, contractors preferred design-build with a score of 89%, whilst private owners voted 50/50 between design-build and other methods. The combined figures (by weight) for public and private owners are 50% for design-build and 50% for other methods.

Another very important project characteristic is flexibility regarding changes to scope of the work. The mean value (by weight) is 60.5% for the design-build method. For this method, the private owners' score is 50%, with 56% for designers, and 72% for contractors.

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It was mentioned in the objectives of this research, that it is necessary to determine the view of local role players towards factors that were of concern in other studies. Design liability and insurance related problems was mentioned by Ndekugri and A.Tumer5, as an area of concern for the design-build method. However, in this survey, all sectors preferred the design-build method, on the selection of which method, has less liability and insurance related problems. This is evident in the figures, in Table 4.6, criterium 11. The decision was similarly on the related issue of which method has less responsibilty grey areas - criterium 10.

In conclusion, it is worthwhile to place emphasis on the final question of this section, i.e. which procurement method do you prefer. Mean values (by weight) are as follows:

Traditional method 12.4% Design-build 72.9% Other methods 14 7%

1000/2

Separate figures are here important, with particular emphasis on the choice of owners, as they normally decide on the procurement method. All three sectors preferred the design-build method -contractors by 83%, designers by 67%, and private owners 75%. The combined figure (by weight) for owners is 67% for design-build.

4.2.7 Attitudes of the role players on certain issues related specifically to

design-build

The fourth goal of this research survey was to determine attitudes of the role players on certain issues related specifically to the design-build approach.

1)Relations between designers and contractors

The purpose of this question was to determine the relations between the staff of the design and contracting teams in the three design-build alternatives. Respondents were asked to rank the three alternatives: best, second and third for the given criterium.

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The Legend used in Table 4.7 is as follows:

A: Designer is principal agent, contractor sub-contracting to designer. B: Contractor is principal agent, designer sub-contracting to contractor. C: Design and construction by one company or consortium (super design-build).

Voting (*)of the respondents are shown in Table 4.7, where (* ) means a positive vote. By allocating a point system, 3 for best, 2 for second and 1 for third, and taking number of votes ( 5) into account, the alternatives can be compared on total points, for the given criterium.

Table 4.7: Relations between designers and contractors for the three design-build alternatives

Public-sector Private-sector mien mom


Designers Coat=


Best relations B*C* Cm* Ann

Po" C" B" Can

Second A* B* A" B" Am* Ann

B"* C" B" C***

Third A* C5 A" B" A* B* 5 * A" B*** Cm.* Cm*

Score 46 45 53

Analysis

From the scores in Table 4.7 it is clear that alternative C, design and construction by one company or consortium, is considered to have the best relations between the staff of the design and contracting teams.

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In spite of the fact that alternative C scored the highest points, it is clear that there is no skewness in the ranking, i.e. that one alternative out-scores the others by far, or that two alternatives are close and one very low. On the contrary, the scores are rather close, indicating that no one alternative is preferred out of hand, as far as relations between the staff of the two teams is concerned.

Nevertheless one might argue that all things being equal, the staff of the designer and contractor in alternative C, should work more as a team as they belong to one company. In one company, design and construction are more integrated which should lead to better co-operation, better relations, and less disputes. Both functions have the same goals as far as the three most important performance criteria are concerned, i.e. time, cost and quality.

It is however very encouraging to notice that respondents felt there is no real difference in relations between alternatives A and B. Thus, whether the designer or contractor is the principal agent, is not that important, as far as the relations between the staff of the two teams are concerned.

2)Resistance from professionals

One re-calls that "resistance from the professionals", was one of the areas of concern towards the design-build method mentioned by Ndekugri and A.Turner 5(1994) in their United Kingdom survey. It was therefore felt appropriate to determine resistance from the professionals towards the other party in the South African context.

Respondents were asked to indicate how they perceive resistance from the professional staff of the sub-contracting party towards the principal agent in the following two design-build alternatives:

Resistance from contractor's professional staff- designer is principal agent.

Resistance from designer's professional staff - contractor is principal agent.

Results are listed in Table 4.8.

Table 4.8: Resistance from the professional staff of the sub-contracting party towards the principal agent in two design-build alternatives

Public-sector Private-sector Designers Contractors Mean owners. Owners. (by weight)

Respondents with experience of design-build that qualified to complete these questions (total = 24) 2 4 9

9

a)Resistance from contractor's professional staff - designer is principal agent

Very strong 50% 0% 22% 0% 12.4%

Strong 0% 25% 33% 22% 24.8%

None 50% 75% 45% 78% 62.8%

b)Resistance from designer's professional staff - contractor is principal agent

Very strong 0% 0% 22% 11% 12.4%

Strong 0% 75% I I% 11% 20.7%

None 100% 25% 67% 78% 66.9%

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Analysis

The mean values (by weight) for both cases are very similar. After studying the results of the previous section, this could have been expected. There the results proved that whether the designer or contractor is the principal agent is not that important, as far as the relations between the staff of the two teams is concerned.

It is very encouraging to see that in both cases, over 60% (by weight) experienced no resistance from the professional staff of the sub-contracting party towards the principal agent. One remembers that the United Kingdom survey of Ndekugri and A.Tumer 5(1994)

reported a strong resistance from the professionals towards design-build, where the contractor is mostly the principal agent - refer Table 2.10 (very high percentage voted for strong resistance).

It might be more useful to analyse this issue from the perception of the owners. Local private owners perceived a strong resistance (75%) from the professional staff of the designer towards the contractor.

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The strong resistance towards the contractor conforms with the United Kingdom survey. The comparable combined figure (by weight) for public and private owners is 50% for strong resistance and 50% for no resistance. For the other alternative, private owners perceived 75% no resistance from the professional staff of the contractor towards the designer. The comparable combined figures (by weight) for public and private owners are 66% no resistance, 17% strong, and 17% very strong resistance.

4.2.8 The preferred design -build alternative

Determining the preferred design-build alternative, was the fifth goal of this study. Respondents were asked to rank the three design-build approaches according to their preference, i.e. highest ranking, second and lowest.

The Legend used in Table 4.9 is as follows:

A: Designer is principal agent, contractor sub-contracting to designer. B: Contractor is principal agent, designer sub-contracting to contractor. C: Design and construction by one company or consortium (super design-build).

Voting (*)of the respondents are shown in Table 4.9, where (* ) means a positive vote. By allocating a point system, 3 for best, 2 for second and 1 for third, and taking number of votes (*) into account, the alternatives can be compared on total points, for the given criterium.

Table 4.9: Ranking of the three design-build alternatives

Public-sector Private-sector Designers. Contractors insamrs mums


Highest ranking B*C* At C*" Am* 135**

C**

As B*** cams

Second A*B* A*B*** Ann 13*** A B**

C** C**

Lowest As C5 Ass 13* A* B*** A5* B****

C* C***** C***

Score A: 46; B: 47; C: 51

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Analysis

From the results in Table 4.9 it is clear that alternative C, design and construction by one company or consortium (super design-build) is ranked highest with a score of 51, and is therefore preferred by the industry.

The scores for alternative A (Designer is principal agent), and B (Contractor is principal agent) are very close, 46 and 47 respectively.

As for the ranking of the relations for the three design-build alternatives, there is no skewness in the ranking in this instance, as the scores are again very close, indicating that no one alternative is preferred out of hand. However, alternative C scored the highest points and one can therefore say that it is preferred by the industry as a whole.

In this instance the views of owners are of particular importance as they normally select the procurement alternative. Unfortunately, as explained previously, public owners are excluded from separate comparisons. (Nevertheless, it is interesting to mention that they preferred alternative B). Private owners preferred alternative C (design and construction by one company or consortium). Owners combined preferred Alternatice C. Designers preferred alternative A, where they are the principal agent, whilst contractors on the other hand do not prefer the alternative where they are the principal agent. As with private owners, they also preferred alternative C.

During the interviews most of the role players stressed the point that the design-build method, and in particular alternative C, takes best advantage of the contractor's knowledge in the design.

To this one must add that this alternative offers maximum integration of the design and construction functions. It should have the best chance of breaking down the different cultures of designers and contractors which for hundreds of years have been embedded by the traditional method which separates the two functions. From this point of view, it is welcomed that at least the contractors did not vote along culture lines.

It is also useful to compare this result on which design-build alternative is preferred, with the result on which of the alternatives is most often used - refer Table 4.5. For comparison purposes both results are listed again:

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Design-build alternative most often used - Table 4.5

Contractor is principal agent 12.4% of all projects Design and construction by one company 8.2% Designer is principal agent 8%

Design-build alternative preferred by the industry as a whole - Table 4.9

Design and construction by one company

51 points Contractor is principal agent

47 points

A: Designer is principal agent

46 points

In theory one can argue that the alternative that is mostly used would normally be the preferred one. Implying that alternative B (contractor is principal agent, with designer sub-contracting to him/her), should also be the preferred alternative. This survey shows however that alternative C is preferred by the industry.

One possible explanation for this is that there are many more contracting companies (alternative B) also doing design-build, than there are super design-build companies (alternative C). Meaning the chance of using alternative B on projects, is simply greater than that of C, despite the fact that C is preferred by the industry.

4.2.9 Evaluation of the form of contract, award and compensation methods on design-build projects

The sixth goal of this research was to evaluate the form of contract, award and compensation methods, used on building and civil engineering design-build projects in South Africa.

1)Form of contract

a)Involvement of the role players in the various forms of contract on design-build

projects

Responents were asked to indicate (in percentage), their organization's involvement in the various forms of contract listed in Table 4.10.

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Table 4.10: Involvement in the various forms of contract on design-build projects

Public-sector Private-sector Dtsigans on Mean owners mimen. (by weight)


New Engineering Contract 0% 0% 18% 18% 13.5% (NEC)

Owner's in-house standard fonn of contract 100%' 92% 17% 31% 41.7%

Principal agent's in-house standard form of contract 0% 8% 53% 32% 33.2%

Other 0% 0% 12% 19% 11.6%

Total 100% 100% 100% 100% 100%

Analysis

The owner's in-house standard form of contract is mostly used with a mean value (by weight) of 41.7%, followed by the principal agent's in-house with 33.2%, NEC with 13.5% and other forms of contract with 11.6%. The FIDIC and JBCC 2000 contracts were most prominent of the other forms of contract.

Comparing the forms of contract for the different sectors separately, gives more insight. All sectors use their own in-house form of contract most of the time, however, the degree differs substantially. The private owner sector overwhelmingly uses their own in-house form of contract (92%), designers 53%, and contractors 32%. The usage of contracts by contractors however, show a more even distribution, i.e. 32% of the time they use their in-house contract, 31% the owner's in-house, followed by 18% NEC, and 19% other contracts.

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b)Which form of contract is preferred on design -build projects?

Results of this question is listed in Table 4.11.

Table 4.11: Popularity of the different forms of contract Public-sector Private-sector Designers cAntractors mean owners owners (by weight)


New Engineering Contract (NEC) 50% • 0% 22% 33% 24.8%

Owner's in-house standard form of contract 50% 100% 0% 11% 24.9%

Principal agent's in-house standard form of contract 0% 0% 44% 45% 33.4%

Other 0% 0% 34% 11% 16.9%

Total 100% 100% 100% 100% 100%

Analysis

The choice of owners is of particular importance as they normally decide on the form of contract to be used. Private owners preferred by 100% their in-house form of contract. The combined figures (by weight) for owners are: 83% for owner's in-house form of contract, and 17% for the New Engineering Contract. Although designers and contractors also preferred their own in-house contracts, one expected higher preferences. Other contracts (FIDIC and the JBCC 2000) are only popular amongst designers, they have a cumulative total of 34% for other forms of contract.

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2)Award methods

Two methods are normally used, i.e. competitive bidding and negotiated price.

a)Involvement in the two award methods

Respondents were asked to indicate their organization's involvement (in percentage) in competitive bidding and negotiated price for building and civil engineering projects in South Africa, delivered by the design-build concept. Results are listed in Table 4.12.

Table 4.12: Involvement in award methods on design-build projects Public-sector Private-sector Designers CialInCton Mean

owners 1113310:1 (by weight)


Competitive bidding 99% 38% 71% 57% 62.6%

Negotiated price 1% 62% 29% 43% 37.4%

Total 100% 100% 100% 100% 100%

Analysis

Mean values (by weight) show clearly that competitive bidding is used in approximately two-thirds of design-build projects.

On a separate basis, designers and contractors are both more involved with competitive bidding, but it is useful to note that private owners use negotiated price 62% of the time.

b)Which award method is preferred?

Respondents were asked to indicate which of the two methods they prefer on design-build projects, by either choosing C for competitive bidding or N for negotiated price. The results are shown in Table 4.13.

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Table 4.13: Popularity of the two award methods on design -build projects Public-sector Private-sector Designers Contractors Mean MOMS Dwners

(by weight)


Competitive bidding 100% 37% 22% 11% 26.9%

Negotiated price 0% 63% 78% 89% 73.1%

Total 100% 100% 100% 100% 100%

Analysis

Although competitive bidding is used approximately two-thirds of the time as shown in Table 4.12, negotiated price is preferred by a large mean value (by weight) of 73.1%.

Separate figures indicate that contractors, designers, and private owners preferred by large percentages negotiated price. Both the public owner respondents however preferred competitive bidding. Combined figures (by weight) for owners are: 58% for competitive bidding and 42% for negotiated price.


agnvolvement in the different compensation methods on design-build projects

Respondents were asked to indicate their organization's involvement (in percentage) on design-build projects, in the following three methods, i.e. fixed price, guaranteed maximum price, and cost plus. Results are listed in Table 4.14.

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Table 4.14: Involvement in compensation methods on design-build projects

Public-sector Private-sector pcsinnors Contractors Mean o« nets owners

(by weight)

Respondents with experience of design-build that qualified to complete these questions (total = 24)

Fixed price

2

100%

4

57%

9

71%

9

82% 75.2%

Guaranteed maximum price 0% 15% 25% 16% 17.9%

Cost plus 0% 28% 4% 2% 6.9%

Total 100% 100% 100% 100% 100%

Analysis

Clearly, fixed price is used overwhelmingly by all the sectors on design-build projects. It is therefore obvious that its mean value by weight, is the highest by far of the three methods.

b)Which compensation method is preferred?

Respondents were asked to indicate which of the three compensation methods they prefer on design-build projects, by either choosing F for fixed price, or G for guaranteed maximum price, or C for cost plus. The results are shown in Table 4.15 .

Table 4.15: Popularity of the three compensation methods on design-build projects

Public-sector Private-sector Design= owners owners


Contractors Mean (by weight)


Fixed price 100% 75% 33% 33% 45.5%

Guaranteed maximum price 0% 25% 56% 44% 41.7%

Cost plus 0% 0% I I% 23% 12.8%

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Analysis

On mean values (by weight) the fixed price method with 45.5% is slightly preferred over the guaranteed maximum price (41.7%).

Comparing the preferences of the sectors on a separate basis give more insight. Both designers and contractors preferred guaranteed maximum price. It came out clear during the personal interviews with these sectors, that the guaranteed maximum price method usually gives them a slight price edge over the fixed price method. In plain language, chances are better to make a profit than with fixed price, especially if the contract is negotiated. It was further pointed out that on complex projects or where the risks are high, costilus is a more fair method. They echoed the findings of a research study by K.Groblern(1998) on "The case for cost plus contracting". The risk factor is removed from the contractor, this should lead to lower prices as the owner only pays for the audited actual costs, and not for imagined risks. Contractors on the other hand should experience less losses and bankruptcies.

Private owners preferred fixed price (75%). Both public respondents also preferred this method. The combined figure (by weight) for owners is 83% for fixed price. This result came as no surprise to the author, as owners generally prefer fixed price whatever the procurement method. They know right from the start what the final price will be. In the interviews, both sectors were shying away from the cost plus method. The main reason being that the project price is unknown at the outset.

4.2.10 Future of design - build

The seventh and last goal of this research study, was to determine the future of design-build and areas of concern.

1)Areas of concern

Respondents were asked to specify any areas of concern regarding the design-build method of project procurement. In this section the concerns of the different sectors are listed separately. Wherever possible concerns are quoted although quotation marks are excluded.

a)Public-sector owners

The concerns of the two respondents that qualified to answer this question, are as follows:

• Design criteria must be in detail and well described.

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The design-build method is not always cost-effective. This was the view of one of the major public owners, who was interviewed. It came out clear that the owner's in-house design with an outside contractor is usually more cost effective. However, the other public owner, also a major organization, felt that the design-build method is more cost effective than other procurement methods - (Table 4.6 point 4).

b)Private-sector owners

The concerns of the four respondents that qualified to answer this question, are listed below:

Project scope, definition, and understanding of the scope of the work need to be good and sufficient time is to be allowed to attain a well-defined scope. Trust between organizations is extremely important. These were the remarks of one of the respondents who confirms the concern of one of the public owners, and also the important findings of the Songer and Moolenaar 9 (1997) survey, who ranked well-defined scope and shared understanding of the scope as the two top priorities influencing the success of design-build projects.

Half of the respondents felt that design-build is less cost effective than owner's in-house design using an outside contractor for the construction. They both specified however that this is more the case on smaller projects.

One of the respondents who was interviewed felt that design-build can lead to shorter long-term life of the project, if there is lack of professional integrity. He is in fact confirming the necessity of trust between the design-build entity and the owner of the project.

c)Designers

The concerns of the nine respondents that qualified to answer this question, are as follows:

One respondent highlighted the lack of an appropriate standard form of contract and owners' resistance to the principal agent's form of contract.

The majority of the respondents were concerned about the high cost for the bidding party. One respondent felt even that the integrity and independence of the design function is under threat of cost consideration. Another respondent argued that some owners request design-build prices before they are serious.

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They argued that design-build entities should be compensated for design costs encountered during the bidding process.

One of the designers who was interviewed stressed that design-build entities should be selected on experience, and entities that qualify should then be compensated for the bidding process. He further stressed that the intellectual property of the design team should be protected.

One respondent argued that design-build lacks flexibility as contractors tend to attemp the design around their company's commitments and resources.

During the interview with the second design company, it was pointed out that design-build is a fantastic method as long as co-operative attitudes are encouraged within all parties.

One designer felt strongly that design-build bids are difficult to compare as all the designs are different. He further stressed that some contractors tend to cut corners where they are the principal agent.

In conclusion it is worthwhile to mention that one designer had no concerns.

d)Contractors

The concerns of the nine respondents that qualified to answer this question, are listed below:

One contractor agreed with the concern mentioned by a designer that there is a lack of standard form of contract.

Mother respondent argued that owners go for the cheapest bid, but not necessarily the best, and see it as savings.

It was also argued that some owners use design-build entities to do informal feasibility studies under the guise of tenders. This basically confirms the argument of one design respondent that some owners request design-build prices before they are serious.

Two respondents confirmed that the bidding process is too costly.

It was argued by one respondent that a disadvantage of this method is the resistance experienced from some designers towards the concept where the contractor is the principal agent. It came out during the interview that their company works only with specific design consultants.

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• Finally it is necessary to report that three respondents, of which one was interviewed, had no concerns.

2)The future of design -build

Respondents were requested to indicate how they perceive the future of design-build by choosing one of the following possibilities. very good, good or not good. The results (in percentages) are listed in Table 4.16.

Table 4.16: The future of design-build in South Africa Public-sector Private-sector Designers Contractors Mean owners DEners. (by weight)


Very good 100% 50% 44.5% 55.6% 54.2%

Good 0% 50% 44.5% 44.4% 41.7%

Not good 0% 0% 11% 0% 4.1%

Total 100% 100% 100% 100% 100%

Analysis

The combined figures (mean values by weight) indicate clearly that design-build has a very good future (54.2%). The mean value (by weight), for not good future, is only 4.1% -only one respondent, a designer, of all the role players (twenty four) who qualified to answer this question, expressed this opinion. .

As always, the separate figures give more insight. The perception of the owners are again of great importance, as they select the procurement method. Although we normally exclude the input of the public-sector owners from separate comparisons, it is worthwhile to note that both public owners (100%) felt that this approach has a very good future. Private owners voted 50% for very good and 50% for good. The combined figures (by weight) for owners are: 67% for very good, and 33% for good. The views of contractors and designers are on similar lines, i.e. 55.6% and 44.5% for very good; 44.4% and 44.5% for good respectively. Only one designer, 11%, felt design-build has not got a good future.

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4.3 Summary of Research Results and Conclusions

The results of the South African survey, conducted by the author on the design-build approach of project procurement, can be summarized as follows:

4.3.1 Construction sectors

A well balanced sample of responses were received as approximately half of respondents are involved in the building sector and the other half in the civil engineering sector in South Africa - (Table 4.1).

4.3.2 Designers' and Contractors' speciality

As expected more construction companies specialize in design and construction than design consultancies. A total of 55% contractors specialize in design and construction, comparing to 15% designers - (Table 4.2)

4.3.3 Experience of respondents of the design -build approach

The number of design-build projects completed per respondent is 20.9 and the experience in years of this procurement concept is 14.3 years - (Table 4.3).

These figures suggest that the sample of respondents has sufficient experience of design-build to make informed judgements and evaluations regarding this procurement method.

4.3.4 Involvement of designers and contractors in the public and private sector

The results in Table 4.4 show that designers and contractors are more involved with the private sector than with the public sector. This is evident in all the procurement methods, especially in the design-build method and "other" procurement methods.

4.3.5 Percentage of projects delivered by the design -build approach

This survey shows that 28.6% of building and civil engineering projects in South Africa are delivered by the design-build method - (Table 4.5).

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4.3.6 The design-build alternative most often used

The design-build alternative where the contractor is the principal agent with the designer sub-contracting to the contractor, is used much more than the other two alternatives. Results in Table 4.5 indicate that 12.4% of all projects in South Africa are procured by this alternative.

4.3.7 Comparing design-build with other procurement methods on project selection criteria

Results in Table 4.6 indicate that the design-build method was overwhelmingly preferred, for all selection criteria, except for one criterium, i.e. "is suited best for large or complex projects". For this criterium, design-build scored a mean value (by weight) of 41.7%, against 45.8% for the traditional method, and 12.5% for other methods.

4.3.8 The preferred procurement method

The mean values (by weight) as reflected in Table 4.6 for the different procurement methods were as follows:


Design-build

72.9%

Other methods

14.7%

On a separate basis it is important to note that private owners, designers, and contractors scored overwhelmingly in favour of the design-build method. The combined figure (by weight) for public and private owners is 67% in favour of design-build.

4.3.9 Attitudes of the South African role players on specific design-build issues

1)Relations between designers and contractors

Results in Table 4.7 show that the design-build alternative "design and construction by one company or consortium" produces the best relations between the staff of the design and contracting teams.

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2)Resistance from professionals

The mean values (by weight) of the respondents in Table 4.8 indicate that over 60% of South African respondents experienced no resistance from the professional staff of the sub-contracting party towards the principal agent.

It might be more useful to analyse this issue from the perception of the owners. Local private owners perceived a strong resistance (75%) from the professional staff of the designer towards the contractor. The strong resistance towards the contractor conforms with the United Kingdom survey. The comparable combined figure (by weight) for public and private owners is 50% for strong resistance and 50% for no resistance. For the other alternative, the private owners scored 75% for no resistance from the professional staff of the contractor towards the designer. The comparable combined figures (by weight) for public and private owners are 66% no resistance, 17% strong, and 17% very strong resistance.

4.3.10 The preferred design-build alternative

The results in Table 4.9 indicate that the alternative, "design and construction by one company or consortium" (super design-build), is ranked highest by the industry.

The preference of owners is of great importance, as they ultimately choose the procurement method. Private owners and owners combined, preferred the abovementioned alternative.

4.3.11 Form of contract, award and compensation methods, used on design-build projects

1)Form of contract

The owner's in-house form of contract is mostly used - (Table 4.10). The choice of owners is of particular importance as they normally decide on the form of contract to be used. Private owners preferred by 100% their in-house form of contract. The combined figures (by weight) for owners are: 83% for owner's in-house form of contract, and 17% for the New Engineering Contract (Table 4.11).

2)Award methods

Results from Table 4.12, based on mean values (by weight), indicate that competitive bidding is used in approximately two-thirds of design-build projects.

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Separate comparisons show that designers and contractors are more involved with competitive bidding, but it is useful to note that private owners use negotiated price more often. Although competitive bidding is used approximately two-thirds of the time, negotiated price is preferred overwhelmingly by private owners, designers, and contractors - (Table 4.13). Combined figures (by weight) for owners are: 58% for competitive bidding and 42% for negotiated price.


Fixed price is used overwhelmingly by all the sectors on design-build projects - (Table 4.14) .

On mean values (by weight), the fixed price method with 45.5%, is slightly preferred over the 41.7% of the guaranteed maximum price. Cost plus was only preferred by 12.8% of the respondents - (Table 4.15).

Private owners preferred fixed price by 75% and the combined figure (by weight) for owners for this compensation method is 83%. In the interviews, both private and public owners were shying away from the cost plus method. The main reason being that the project price is unknown at the outset.

4.3.12 The future of design-build and areas of concern

1)Areas of concern

Concerns are covered in detail in section 4.2.10 (1).

2)The future of design-build

Results from Table 4.16, based on mean values (by weight), indicate the following future for this procurement method:

Very good: 54.2% Good: 41.7% Not good: 4.1%

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4.3.13 Concluding remarks

After analysing the results in detail, the author comes to the conclusion that design-build is well established in the building and civil engineering sectors in South Africa. Although the traditional method is still mostly used, approximately 29% of projects are already procured by the design-build concept, and the majority of respondents preferred this method to deliver projects. Despite the concerns highlighted about this concept, the overwhelming majority of respondents felt that this method has a bright future in South Africa.

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Chapter 5: Conclusions and Recommendations

5.1 Introduction

Every chapter, including the previous chapter, which covered the research results and analysis, has a final section .with a comprehensive summary and conclusion. It is nevertheless useful to, once again, highlight the essential findings and conclusions of this research. Finally some recommendations are made which will hopefully be of value for interested parties in the building and civil engineering sectors in South Africa.

5.2 Summary of essential research findings and conclusions

5.2.1 Findings from the Research Review

1)Reasons why owners select design-build

Respondents in the United States of America (survey of Songer and Moolenaar 3 1996) and in the United Kingdom (survey of Ndekugri and Tuner 5 1994) highlighted the following reasons why owners select this procurement approach:

It leads to shorter project duration.

To secure a fixed project cost and time schedule before the start of the detailed design.

To reduce cost.

It involves less disputes and claims.

It frequently results in improved constructability of the design.

It can be used successfully on any size project.

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2)Other specific benefits of design-build

The advantage of single-point responsibility. Respondents in the survey of Ndekugri and Turner 5 (1994) indicated that there are less grey areas of responsibilty with this concept, as the owner deals only with one entity. The majority of owners argued however that the extent to which they reaped the benefits depended on the soundness and concise nature of their brief

The flexibility built into the design-build approach. The inherent flexibility of this approach makes it possible to take Rill advantage of the contractor's knowledge and preferred methods of construction right from the planning stages of design - (McEwan, Luke, and Idiculla 7 1997).

3)Factors influencing the success of design-build projects

Songer and Moolenaar9(1997) listed the following five project characteristics, ranked in order of priority, that are critical for the success of design-build projects:

Well defined scope.




Established budget.

4)Type of project and owner for which design-build is most suitable

Respondents in the United Kingdom survey of Ndekugri and Turner 5 (1994) indicated that size and complexity of projects presented problems only when there were inadequacies in the owner's scope of the work. Contractors had completed small and large projects with this procurement approach.

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5)Areas of concern about the design -build concept

Listed below are some of the main concerns:

Resistance from the professions towards contractors - (Ndekugri and Turner 5 1994).

Design liability and related insurance matters - (Ndekugri and Turner 5 1994).

Quality of design and construction savings can come into conflict - (Tietz 24 1999).

Disagreement between designer and contractor about quality of work - (Tietz 24 1999).

6)Future of design -build in other parts of the world

Songer and Moolenaar 3 (1996) claimed that this procurement method experiences extraordinary growth in the United States of America, and confirmed that the United States Department of Commerce predicted that 50% of all non-residential construction will be constructed by the design-build method by the year 2001.

The design-build method also experiences fast growth in the United Kingdom -(Ndekugri and Turner 5 1994)

In the Far East countries such as Malaysia and Hong Kong are examples where the benefits of this method have been experienced. The Hong Kong government is using design-build effectively on projects where the integration of design and construction is thought to be critical.

5.2.2 Summary of essential findings and conclusions of this South African Research Survey

Prior to listing all the essential findings, it is necessary to discuss briefly how the primary data was collected.

1)Collection of primary data

Self-administered questionnaires and personal interviews were used to collect the primary data. Nonprobability selecting was deemed appropriate as the study concentrated on more well known companies and organizations in the building and civil engineering fields.

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A total of 90 questionnaires were delivered to selected parties representing a wide cross section of the industry. All four sectors of the industry, i.e. public-sector owners, private-sector owners, designers, and contractors were surveyed.

A valid mean response rate (by weight) of 35.6% was achieved, which is in line with similar studies done recently in the United States of America and the United Kingdom, and is higher than the 30% response rate which Cooper and Emory M(1995) considered as satisfactory for this type of survey method.

Unfortunately only two of the four public owner respondents have experience of design-build. Their influence is included in the overall results, but it was decided not to compare their results with the other three sectors on a separate basis, as it might lead to distorted conclusions. On the positive side it can be recorded that all the other three sectors have adequate experience of the design-build procurement approach, i.e. private owners 100%, designers 69.2%, and contractors 81.8%, and they can be compared effectively and fairly on a separate basis - (Table 3.2).

It is also encouraging to know that the mean value of experience (by weight) of design-build for all four sectors combined is 77.5% - (Table 3.2). Another observation is that the questionnaires were all completed by very senior management. This makes the views expressed more noteworthy and gives more credibility to the survey. The sample of respondents is in a favourable position to represent the views of the industry as a whole on the design-build concept.

2)Construction sectors

A well balanced sample of responses were received as approximately half of respondents are involved in the the building sector and the other half in the civil engineering sector in South Africa - (Table 4.1).

3)Percentage of projects delivered in South Africa by the design -build approach

This was the first and main objective of this research.

This survey shows that 28.6% of building and civil engineering projects in South Africa are delivered by design-build, 62% by the traditional method, and 9.4% by other methods - (Table 4.5).

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Cooke and Williams34(1998) produced the following figures for the United Kingdom: 28% design-build, 56% traditional method, and 16% for other methods.

Taking above comparable design-build figures into account, and the fact that Ndekugri and Tunier5(1994) argued that design-build is well established and experiences fast growth in the United Kingdom, one can safely come to the conclusion that design-build is also well established in South Africa.

4)The design -build alternative most often used

This was the second objective of this research.

The design-build alternative where the contractor is the principal agent, with the designer sub-contracting to the contractor, is used much more than the other two alternatives. Private owners use this alternative rather frequently (26% of all their projects).

The results in Table 4.5 indicate that 12.4% of all building and civil engineering projects in South Africa are procured by this alternative, whilst 8.0% are delivered by the alternative where the designer is the principal agent, and 8.2% by the alternative where design and construction are by one company or consortium (super design-build).

5)Comparing design-build with other procurement methods on project selection criteria

This was the third goal of this research.

From the results in Table 4.6 it can be concluded that there is a great possibilty that more and more projects will be procured by the design-build approach, as this approach was preferred overwhelmingly on mean value (by weight) for all four sectors combined, on the following criteria:

Can best establish cost. Can best establish schedule. Leads to shorter project duration. Is more cost effective. Is suited best for small or simple projects. Can best accommodate contractor's preferred method of construction. Is more flexible regarding changes to scope of the work. Leads to better constructability.

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Leads to better communications between the role players. Leads to better relations between the role players .

Has less responsibility grey areas. Has less liability and insurance related problems. Has less disputes and claims.

In fact, design-build was preferred on all the criteria, except for one criterium, i.e. "is suited best for large and complex projects". For this criterium, design-build scored a mean value (by weight) of 41.7%, against 45.8% for the traditional method, and 12.5% for other methods.

During the interviews, both private and public owners stressed the importance of "a well defined scope of the work and design criteria", on design-build projects, and especially on large and complex projects. Thex confirmed the views expressed bry respondents in the surveys of Songer and Moolenaar'(1 996), and Ndekugri and Turner (1994).

6)The preferred procurement method

The mean values (by weight), for all four sectors combined, as reflected in Table 4.6, for the different methods were as follows:


Design-build 72.9%

Other Methods 14.7%

This result confirmed the conclusion made in the previous section, that there is a great possibility that more and more projects will be procured by design-build in future. The views of owners are of particular importance as they normally select the procurement method. Private owners preferred design-build by 75%. Unfortunately, as mentioned previously, the views of public owners are not used when the attitudes of sectors are compared on a separate basis, due to the fact that only two responses with experiences of design-build were received. It is however noteworthy to mention that one respondent preferred design-build, and the other preference was for other methods. The combined figure (by weight) for owners is 67% for design-build.

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7)Attitudes of role players on specific design -build issues

This was the fourth goal of this research

a)Relations between designers and contractors

Results in Table 4.7 show that the design-build alternative "design and construction by one company or consortium" (super design-build), produces the best relations between the staff of the design and contracting teams. The scores were however rather close, indicating that no one alternative is preferred out of hand, as far as relations between the staff of the two teams is concerned.

Nevertheless one might argue that all things being equal, the staff of the designer and contractor in abovementioned alternative, (super design-build), should work more as a team as they belong to one company. In one company, design and construction are more integrated which should lead to better co-operation, better relations, and less disputes. Both functions, design and construction, have the same goals as far as the three most important performance criteria are concerned, i.e. time, cost and quality.

b)Resistance from professionals

The mean values (by weight) of the respondents in Table 4.8 indicate that over 60% of South African respondents experienced no resistance from the professional staff of the sub-contracting party towards the principal agent.

It might be more useful to analyse this issue from the perception of the owners. Local private owners perceived a strong resistance (75%) from the professional staff of the designer towards the contractor. The strong resistance towards the contractor conforms with the United Kingdom survey of Ndekugri and Turner 5 (1994). The comparable combined figure (by weight) for public and private owners is 50% for strong resistance and 50% for no resistance. For the other alternative, the private owners scored 75% for no resistance from the professional staff of the contractor towards the designer. The comparable combined figures (by weight) for owners are 66% no resistance, 17% strong, and 17% very strong resistance.

8)The preferred design -build alternative

Determining the preferred design-build alternative, was the fifth goal of this study.

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The results in Table 4.9 indicate that the alternative, "design and construction by one company or consortium" (super design-build), is ranked highest by the industry. However, there is no skewness in the ranking, as the scores are very close, indicating that no one alternative is preferred out of hand.

The preference of owners is of great importance, as they ultimately choose the procurement method. Private owners, and owners combined, preferred abovementioned alternative (super design-build). During the interviews most of the role players stressed the point that the design-build method, and in particular the super design-build alternative, takes best advantage of the contractor's knowledge in the design.

To this one must add that this alternative offers maximum integration of the design and construction functions. It should have the best chance of breaking down the different cultures of designers and contractors which for hundreds of years have been embedded by the traditional method which separates the two functions.

It was noted in point (4) that the design-build alternative where the contractor is the principal agent, is used more than the other two design-build alternatives. One can rightfully ask why the preferred alternative (super design-build), is not the one used mostly? One possible explanation for this is that there are many more contracting companies also doing design-build, than there are super design-build companies. Meaning the chance of using the alternative where the contractor is the principal agent on projects, is simply greater than that of the super design-build alternative.

9)Form of contract, award and compensation methods, used on design-build projects

This was the sixth goal of this research survey.

a)Form of contract

The owner's in-house form of contract is mostly used - (Table 4.10).

Results from Table 4.11 indicate how each sector preferred it's own-in house form of contract.

b)Award methods

Results from Table 4.12, based on mean values (by weight), indicate that competitive bidding is used in approximately two-thirds of design-build projects.

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Separate comparisons show that designers and contractors are both more involved with competitive bidding, but it is useful to note that private owners use negotiated price more often.

Although competitive bidding is used approximately two-thirds of the time, negotiated price is preferred overwhelmingly by private owners, designers, and contractors - (Table 4.13). Both the public owner respondents preferred however competitive bidding. Combined figures (by weight) for owners are: 58% for competitive bidding and 42% for negotiated price.

These results came as no surprise to the author, basically the results confirmed the general perceptions:

Private owners are more inclined to negotiate a project, as they normally prefer to work with specific designers and contractors, whilst the public sector usually calls for competitive tenders, available to all interested parties.

Most designers and contractors prefer negotiating a price, as they are normally in a better position to secure the work this way, than by competitive bidding. Secondly, chances are great that a higher price can be negotiated than achieved by competitive bidding against stiff competition in the open market.

c)Compensation methods

Fixed price is used overwhelmingly by all the sectors on design-build projects - (Table 4.14).

Table 4.15 indicates that on mean values (by weight), the fixed price method with 45.5% is slightly preferred over the 41.7% of the guaranteed maximum price. Cost plus was only preferred by 12.8% of the respondents.

Comparing the sectors on a separate basis gives additional insight. Both designers and contractors preferred guaranteed maximum price. It came out clear during the personal interviews with these sectors, that with this method chances are better to make a profit than with fixed price, especially if the contract is negotiated. Contractors pointed out that on complex projects, or where the risks are high, cost plus is a more fair method. They echoed the findings of a research study by K.Grobler 27(1998) on "The case for cost plus contracting". The risk factor is removed from the contractor, this should lead to lower prices as the owner only pays for the audited actual costs, and not for imagined risks. Contractors on the other hand should experience less losses and bankruptcies.

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As expected, the private owner sector preferred fixed price (75%). On fixed lump sum projects they know right from the start what the final price will be. However, on many projects, unit rates are used, and the final price is a function of the variation in quantities. Again, the views of the two public owners can lead to distorted conclusions, but it is still useful to note that both respondents preferred fixed price. The combined figure (by weight) for owners is 83% for fixed price.

In the interviews, both sectors were shying away from the cost plus method. The main reason being that the project price is unknown at the outset.

10)The future of design -build and areas of concern

The was the seventh and last goal of this research study.

a)Areas of concern

The main concerns of the different sectors are summarized as follows:

Public and private owners

Project scope, design criteria, and the understanding thereof, need to be good, to ensure success on projects procured by the design-build method. They confirmed in fact the important findings of the Songer and Moolenaar 9(1997) survey, who ranked well-defined scope and shared understanding of scope, as the two top priorities influencing the success of design-build projects - (Table 2.7).

Trust between organizations is extremely important. One respondent argued that design-build can lead to shorter long-term life of the project, if there is lack of professional integrity.

Designers

There is lack of an appropriate form of contract.

The majority of respondents were concerned about the high cost for the bidding party. It was argued that the integrity and independence of the design function is under threat of cost considerations.

Some owners request prices before they are serious.

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One respondent argued that design-build bids are difficult to compare as all designs are different.

Abovementioned respondent also noted that some contractors tend to cut corners where they are the principal agent.

Contractors

The lack of a standard form of contract was noted - confirming a concern mentioned by a design respondent.

Some respondents agreed with the designers that the bidding process is too costly. It was also argued that some owners use design-build entities to do informal feasibilty studies under the guise of tenders, confirming the argument of designers that some owners request prices before they are serious. One respondent felt that owners go for the cheapest bid, but not necessarily the best, and see it as savings.

One respondent considered the resistance experienced from some designers towards the concept where the contractor is the principal agent, as a disadvantage. It came out clear during the interview that their company work only with specific design consultancies.

b)The future of design -build

Results from Table 4.16, based on mean values (by weight), indicate the following future for this procurement method:

Very good: 54.2% Good: 41.7% Not good: 4.1%

Only 1 respondent (a designer) out of the total of 24 respondents, who have experience of design-build, and qualified to answer this question, felt that the future of this procurement approach is not good.

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5.3 Concluding Remarks and Recommendations

5.3.1 Concluding Remarks

After analysing the results in detail, the author comes to the conclusion that design-build is well established in the building and civil engineering sectors in South Africa. To capture approximately 29% of the procurement market, since it's re-appearance in the 1970's / 1980's, and the fact that the traditional method is in use since the Renaissance period, is sufficient proof that design-build is well established.

The overwhelming majority of respondents preferred this procurement concept, and perceived a bright future for this approach, despite the concerns highlighted against it.

Design-build has the potential to integrate the functionally separate groups of the traditional project team, which can lead to better co-operation and relations. This can ultimately result in an improvement in the three critical project performance criteria, i.e. time, cost and quality.

The results from this research confirmed some of the main findings highlighted in the research review, of which the important elements are listed below:

Design-build can lead to shorter project duration, and reduce cost, as compared to other procurement methods.

Design-build can establish cost and time schedule before the start of the detailed design.

Design-build reduces disputes and claims.

Design-build leads to enhanced constructability of the design.

Design-build is suited for any size project.

Design-build offers the advantage of single-point responsibility.

The flexibility built into the design-build approach is a great advantage.

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5.3.2 Recommendations

The author has the following recommendations to ensure the success of design-build projects:

Address the areas of concern mentioned in this dissertation. This can be done by:

Owners must provide a well defined scope of the work, and make sure that design-build entities understand it completely. These were the two top ranked characteristics influencing the success of design-build projects according to the survey by Songer and Moolenaar 9(1997), and their importance was stressed by respondents in this South African survey.

The industry must provide a standard form of contract for design-build contracts.

Design-build entities must be compensated for costs incurred during the bidding process to ensure the integrity of the design function, to protect the intellectual property of the design team, and to avoid owners from doing informal feasibilty studies under the guise of tenders. (First selection of design-build entities could be done on experience - this should be at no cost to owners / clients).

The owner should wherever possible appoint an independent quality control agency, or have trained in-house personnel to supervise quality. This is to cater for the concern mentioned by Tietz24(1999), i.e. that there is sometimes disagreement between the designer and contractor in the design-build concept, about quality of the work.

Use the cost plus compensation method on very large or complex projects where it is practically impossible to estimate the total cost and provision necessary to cover the risk to the contractor-(K.Grobler 27 1998). This can lead to a better quality end product as there is no need to cut corners to save on workmanship, as the contractor is paid for all costs. This finding was applicable on all procurement methods, but one can argue that projects procured by design-build and compensated by cost plus, should in practice have the best relations and teamwork between owner, designer, and contractor, of the available procurement concepts and compensation methods. The enhanced teamwork encountered can lead to more effective interaction and feedback of identified problems to enable corrective action to be taken, which can ultimately result in increased reliability of buildings and civil engineering projects.

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List of References

1)J.B.Shah: Innovative Design-Build Approach-Ambassador Bridge Project; Journal of Management in Engineering, Vol.12, No.4, July/August 1996.

2)C.M.Gordon: Choosing Appropriate Construction Contracting Method; Journal of Construction Engineering and Management, Vol.120, No.1, March 1994.

3)A.D.Songer and K.R.Molenaar: Selecting Design-Build: Public and Private Sector Owner Attitudes; Journal of Management in Engineering, Vol.12, No.6, November/December 1996.

4)D.Kaminetzky: Design and Construction Failures; ISBN 0-07-033565-6, McGraw-Hill Inc., 1991.

5)I.Ndekugri and A.Turner: Building Procurement by Design and Build Approach; Journal of Construction Engineering and Management, Vol.120, No.2, June 1994.

6)J.B.Miller: Engineering Systems Integration For Civil Infrastructure Projects; Journal of Management in Engineering, Vol.13, No.5, September/October 1997.

7)E.McEwan, I.W.Luke, and J.Idiculla: The Pergau Hydroelectric Project Part 1: Project Management; Proc. Instn Civ. Engrs Wat., Marit. & Energy, Paper 11162, September 1997.

8)Microsoft Encarta Encyclopedia, 96.

9)A.D.Songer and K.R.Molenaar: Project Characteristics For Successful Public-Sector Design-build; Journal of Construction Engineering and Management, Vol.123, No.1, March 1997,

10)D.R.Cooper and C.W.Emory: Business Research Methods; ISBN 0-256-13777-3, Richard D. Irwin Inc., Fifth edition, 1995.

11)P.Dozzi, F.Hartman, N.Tidsbury, and R.Ashrafi: More-Stable Owner-Contractor Relationships; Journal of Construction Engineering and Management, Vol.122, No.1, March 1996.

12)J.F.Evans and D.J.Hodgkins: Barking Reach Power Station Cooling Water System; Proc. Instn Civ. Engrs Wat., Marit. & Energy, Paper 10948, February 1997.

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List of References (continued)

13)M.S.Puddicombe: Designers and Contractors: Impediments To Integration; Journal of Construction Engineering and Management, Vol.123, No.3, September 1997.

14)P.D.V.Marsh: Contracting for Engineering and Construction Projects; ISBN 0-566-07628-4, Biddies Ltd Guildford, Fourth edition, 1995.

15)J.Pain and J.Bennett: JCT with contractor's design form of contract - a case study; J.Constr. Mgmt. and Economics, 6(4), 1988.

16)A.Griffith: Design-Build procurement and buildability; Technical Information Service of the Chartered Institute of Building, London, England, Paper No.112, 1989.

17)J.Nahapiet and H.Nahapiet: The Vexed Question of Project Performance; The Management of Construction Projects, Chartered Inst. of Building, Berkshire England, 1985.

18)G.J.Thuesen and W.J.Fabrycky: Engineering Economy; ISBN 0-13-138462-7, Prentice-Hall International Inc., Eight edition, 1993.

19)B.Curtis: Observations from interviews with senior management in client, professional and contracting organizations; Sci. and Engrg. Res. Council (SERC) funded research program on "Roles, responsibilities and risk in management contracts", GR/E 48343, 1989.

20)S.C.Ward, B.Curtis, and C.B.Chapman: Advantages of Management Contracting-Critical Analysis; Journal of Construction Engineering and Management, Vol.117, No.2, June 1991.

21)J.B.Winter: New roles in contracting: . Construction contract policy-Improved procedures and practice; J.Uff and P.Capper, eds.,Ctr. of Constr. Law and Mgmt., King's College, London, England, pg 159-178, 1989.

22)J.H.Rutgers and H.D.Haley: Project Risks and Risk Allocation; Cost Engineering, Vol.38, No.9, September 1996.

23)J.R.Meredith and S.J.Mantel: Project Managent - A managerial Approach; ISBN 0-471-01626-8, John Wiley & Sons Inc., Third edition, 1995.

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List of References (continued)

24)S.Tietz: From Egan to the 21st Century - commenting on the Egan report, Rethinking Construction (July 1998); The Structural Engineer - Journal of the Institution of Structural Engineers, Vol.77, No.7, April 1999.

25)S.G.Naoum and D.Langford: Management Contracting-The Client's View; Journal of Construction Engineering and Management, Vol.113, No.3, September 1987.

26)I.H.Seeley: Civil Engineering Contract Administration and Control; ISBN 0-333-59743-5, The MacMillan Press Ltd, Great Britain, Second edition, 1993.

27)K.Grobler: Case For Cost-Plus Contracting; Technical paper compiled for the post-graduate course: Advanced Engineering Economics, RAU, First cemester 1998.

28)R.D.Gilbreath: Managing Construction Contracts; ISBN 0-471-87635-6, John Wiley & Sons Inc., USA, 1983.

29)R.Pilcher: Principles of Construction Management; ISBN 0-07-707236-7, McGraw-Hill International Limited, Third edition, 1992.

30)C.R.Tumblin: Construction Cost Estimates; ISBN 0-471-05699-5, John Wiley & Sons Inc., New York, 1980.

31)F.H.Griffis and F.M.Butler: Case for Cost-plus Contracting; Journal of Construction Engineering and Management, ISSN 0733-9364/88/0001-0083, March 1988.

32)K.Grobler: Improving The Reliability of Concrete Structures; Technical paper compiled for the post-graduate course: Reliability Management, RAU, second cemester 1998.

33)C.K.Haswell and D.S. de Silva: Civil Engineering Contracts-Practice and Procedure; ISBN 0-408-00526-2, Butterworthh & Co (Publishers) Ltd, First edition, 1982.

34)B.Cooke and P.Williams: Construction Planning, Programming and Control; ISBN 0-333-67758-7, MACMILLAN Press Ltd, 1998.

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List of Figures and Tables

Figures page

Fig 2.1: Frequency histograms for the 1st ranked (Well defined scope) and 9th ranked (Owner's risk aversion) characteristics

(adapted from Songer and Moolenaar 9 1997) 31

Tables

Table 2.1: Design-build selection factors and definitions (adapted from Songer and Moolenaar3 1996) 13

Table 2.2: Ranking of design-build selection factors (adapted from Songer and Moolenaar3 1996) 14

Table 2.3: Comparison of public and private sector responses (adapted from Songer and Moolenaar 3 1996) 15

Table 2.4: Perceptions of value of single-point responsibility (adapted from Ndekugri and Turner 5 1994) 17

Table 2.5: Perceptions of cost savings from constructability (adapted from Ndekugri and Turner 5 1994) 18

Table 2.6: Perceptions of owners' satisfaction towards design-build (adapted from Ndekugri and Turner 5 1994) 21

Table 2.7: Appropriate project characteristics for successful design-build projects (adapted from Songer and Moolenaar 9 1997) 29

Table 2.8: Ranking of project success criteria (adapted from Puddicombe 13 1997) 35

Table 2.9: Ranking of goal criteria (adapted from Puddicombe 13 1997) 36

Table 2.10: Respondents' perceptions of resistance from the professions (adapted from Ndekugri and Turner 5 1994) 40

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List of Tables (continued)

Table 2.11: Extent of use of various standard forms of contract

page

in the U. K. (adapted from Ndekugri and Turner 5 1994) 51

• Table 3.1: Responses from the different sectors 62

• Table 3.2: Number of respondents with experience of design-build 63

• Table 4.1: Breakdown of Construction sectors 65

• Table 4.2: Field of speciality 67

• Table 4.3: Respondents' experience (in years) of design-build and number of design-build projects completed 67

• Table 4.4: Involvement in the public and private sectors 69

• Table 4.5: Involvement in the different procurement methods 70

• Table 4.6: Compare procurement methods on project selection criteria 73

• Table 4.7: Relations between designers and contractors for the three design-build alternatives 79

• Table 4.8: Resistance from the professional staff of the sub-contracting party towards the principal agent in two design-build alternatives 81

• Table 4.9: Ranking of the three design-build alternatives 82

• Table 4.10: Involvement in the various forms of contract on design-build projects in South Africa 85

• Table 4.11: Popularity of the different forms of contract 86

• Table 4.12: Involvement in award methods on design-build projects 87

• Table 4.13: Popularity of the two award methods on design-build 88 projects

117

List of Tables (continued) page

Table 4.14: Involvement in compensation methods on design-build projects 89

Table 4.15: Popularity of the three compensation methods on design-build projects 89

Table 4.16: The future of design-build in South Africa 93

118

APPENDIX A

Cover letter and copy of questionnaire to designers and contractors of building and civil engineering projects in South Africa.

119 (pagel)

P.O.Box 1384

17/4/1999 Fontainebleau Randburg 2032 Tel & Fax 011-793 3096

This fax contains 8 pages, including this page

Name of Company Address

Attention . The General Manager

Dear Sir

Re . Questionnaire smi:lesign:huilsrmethcaof project

I have approximately 22 years experience in the building/civil engineering field and am currently busy with post-graduate studies at the Rand Afrikaans University on a part time basis. I am doing a research study on "An evaluation of Design-build as procurement method for building and civil engineering projects in South Africa".

Similar studies have been conducted in other countries, for example, the United States of America and the United Kingdom. Role players in South Africa can benefit enormously by studying the pros and cons of these studies. However, conditions are different and applicability changes from country to country. An in depth study into this procurement method in the South African context can be of great value to all the local role players.

The objectives of this research are:

1)To determine what percentage of projects are delivered by the design-build approach.

2)To assess which of the three design-build alternatives is most often used.

a)Design company is principal agent. Contractor sub-contracting to design company.

b)Contractor is principal agent. Designer sub-contracting to contractor.

c)Design and construction by one company housing both activities. It can be described as the "super design-build"

Note: In all three cases the owner deals only with one entity and signs only one contract

120 (page 2)

3)To compare design-build with other procurement methods and to determine attitudes of the role players towards design-build on certain matters.

4)To determine differences in public and private owner attitudes towards the design-build method of project delivery.

5)To evaluate the award and compensation methods, as well as the form of contract preferred on the design-build concept.

I am using questionnaires to collect the primary data. Your help with the questions on the attached pages will make a real contribution to the accuracy and success of this study. Your reply will be treated in strict confidence. Any publication will only reflect statistical totals.

Your assistance will be greatly appreciated.

Sincerely

Kobus Grobler Pr Eng Chartered Eng BSc Eng Civil MSAICE AlStructE

Important noted:

1)Please fax the completed questionnaire (6 pages) to 011-793-3096 (ask for fax) before the end of April 99.

2)If your organization hasn't completed a design-build project yet, please complete only sections A, B, C & D of the questionnaire.

121 (page 3)

Questionnaire to Designers and Contractors of Building and Civil Engineering Projects in_South Africa

This survey determines attitudes of Designers and Contractors towards the "Design-build"method offloject procurement

Important Note: If your company hasn't completed a "design-build" project yet, please complete only sections A, B, C & D.

A)Details of Company

1)Name of company

2)kinine_andpositinaliddinsOmpnny

Name:

Position:

3)ScaOts

Please indicate the company's involvement (in percentage) for the different sectors

a)Building

b)Civil Engineering

Township roads & internal services

Water & sewerage chemes

Roads, bridges & stormwater

Railways, harbours & airports

Dams & tunnels

Power stations

Total 100%

122

(page 4)

B) I II I I I I I •II • ( 1"I I I . I I I '

project procurement methods

Note . For clarity, please read through section B before completing the percentages

1)Traditinnal "Design-bid-build" method

Designer and contractor are separate entities. Owner signs two separate contracts

21"Design-build" method

Design and construction under one umbrella, although it can be two separate companies i.e. design consultancy and contracting company. Owner signs contract only with one entity (the principal agent).

Three "design-build" methods_are considered'

a)Design company is principal agent. Contractor sub-contracting to design company. Owner deals with one entity.

b)Contractor is principal agent. Designer sub-contracting to contractor. Owner deals with one entity.

c)Design and construction by one company housing both activities. (Super design-build). Owner deals with one entity.

3)Other methods

a)

b)

Total 100%

Note: Project financed by the owner/client

Total number of projects the company has completed under the "design-build" method approx.

Experience of the company (in years) of the "design-build" method

123 (page 5)

C)Please indicate the company's speciality

Please mark with (X) Design only

Construction only

Design and construction

D)Public and Private sectors

Please indicate the company's involvement (in percentage) in the Public and Private sector

Traditional "Design-bid-build" Design-build" Other methods

Public sector Public sector Public sector

Private sector Private sector Private sector

Total 100% Total 100% Total 100%

E) Indicate according to your experience which procurement method

(choose either T for Traditional "Design-bid-build" or D for "Design-build" or 0 for Other methods

1)Can best establish cost: (can best secure a project cost before the start of detailed design)

2)Can best establish schedule: (can best secure a project schedule before the start of detailed design)

3)Leads to shorter project duration

4)Is more cost effective / better value for money

Says suited best for large or complex projects

b)Is suited best for small or simple projects

6)Is more flexible

a)can best accommodate contractor's preferred method of construction

b)regarding changes to scope of the work

124 (page 6)

7)Leads to better constructability. (Takes best advantage of contractor's knowledge in the design)

8)Leads to better communication between the role players

9)Leads to better relations between the role players

10)Has less responsibility grey areas

11)Has less liability and insurance related problems

12)Has less disputes and claims

13)Do you prefer

F)Specific questions on the "design -build" procurement method

tWorms of contract

1.1)Please indicate your company's involvement (in percentage) in the various forms of contract for "design-build " (under S A lawl

i)NEC (New Engineering Contract)

ii)Owner's in-house standard contract form

iii)Principal agent's in-house standard contract form

iv)Other (

Total 100%

1.2)Please indicate which form of contract do you prefer (choose i ii in or iv)

2)A3vard methods

2.1)Please indicate your company's involvement (in percentage) in the following award methods on "design-build" projects

Competitive bidding (C )

Negotiated price (N)

Total 100%

125 (page 7)

2 2) Which award method do you prefer (Choose C or N1


3 1)

- IS • 0 _ 0111.1 1 1 "11'1 1 I - :1 .." I I" I I 411. 11114'1.. 1 1 II" Ill

on "design-build" projects

Fixed price (F)

Guaranteed maximum price (G)

Cost plus (C)

Total 100%

3.2)Which compensation method do you prefer (choose F, G or C )

•

4)Relations

".$8"11 • 1 . $1 0"r -- 1 V 1•1 , I" I' !II •is Inn i• o-

three "design-build" methods

$ I • I Po" II " I 1_1 ISA:. 1.15

best relations

second

third

5)Resistanre from professionals

Please indicate how you perceive resistance from the professional staff of the sub-contracting party towards the .rincipal agent in the following two design-build methods

please mark with ( X1 Resistance

Vg rung

a)Resistance from contractor's professional staff, designer is principal agent

b)Resistance from designer's professional staff. contractor is principal agent

126

(page 8)

ti( tbs' LII 1 "' 11 111 1 1 1 1 1 111 . 11 . 1

(refer page 2 for the three methods: choose a b and c)

highest ranking

second

lowest

7)Please indicate how you perceive the future of "design-build" in South africa

please mark with ( X )

Very good

Good

Not good

8)

11 'II i.0I' I II 1 I. l • 1 LAI 1 1 I LI IV I/ III

Thank you for your time and participation.

Please fax this questionnaire to 011-7933096

Kobus Grobler Pr.Eng. P.O.Box 1384 Fontainebleau 2032 Tel & Fax 011 -7933096 Cell 082-5570678

Documents

An evaluation of design-build as procurement method for