Design-Build:RISKSOR REWARDSfor the Consulting Engineer?
Presented at the FIDIC Annual ConferenceSeptember 7, 2005Gregs G
!homopulos, P", FAC"C#Many of the old rules for project delivery
that held sway in the industry no longer have the same potency as
they once didDesign-bid-build still has its many followers among
owners who believe that they can obtain the very best design and
the most cost-effective construction by holding both sides
separateAdvocates of design-build believe that the sole-source
method of procurement forces the team to iron out many of the
project wrinkles on their own because the entire team will be held
accountableStill others believe that construction management for
fee is the best way of ensuring that the owner gets the best of all
worlds because there is an agent inspecting measuring observing and
protecting the owner!s interest"ans of #M At-$isk believe that the
words %at risk! say it all and force the #M firm todeliver what it
promised on time and on budget or face the conse&uences'
("ng$neer$ng %e&s'(ecord, )ul* +,, 2000Design-Build is not a
new concept.Most of the worlds great structureswere built under a
Design-Build arrangement by master builders. Project Delivery
SystemsDesign-Bid-BuildConstruction Management (CM)CM At-RiskCM
Owners RepresentatieDesign-BuildOt!er
"ariationsBuild-Operate-#rans$er (BO#)Build-Own-Operate-#rans$er
(BOO#)%rogram Management OWNERDesign-Bid-Build Contractual
Relations!ipCE CONTRACTORSPROJECTSTARTSELECT CEDesign-Bid-Build
%ro&ect #ime 'ineContractual
Relations!ipCONSTRUCTIONDESIGNPROJECTCOMPLETIONBIDDING/AWARDOWNER
Construction Management At-RiskContractual Relations!ipCM / GC
CESELECT CEPROJECTSTARTSELECT CM/GC Construction Management
At-Risk%ro&ect #ime 'ineContractual Relations!ip
CONSTRUCTIONDESIGNPROJECTCOMPLETIONPRE-CONSTRUCTIONOWNER
Design-BuildContractual Relations!ipDESIGN-BUILDEROWNERS CEOR
IN-HOUSE CE Design-Build%ro&ect #ime 'ineContractual
Relations!ipOWNERS CEPROJECTSTARTOR IN-HOUSECONSTRUCTIONSELECT
DESIGN BUILDERPROJECTCOMPLETIONDESIGNPRE-CONSTRUCTIONWhy Owners
Prefer Design-Build (!orter %ro&ect (c!eduleBetter Cost)Budget
Management *$$icienc+ and ,nnoation (Contractors Means -
Met!ods)(ingle (ource Responsi.ilit+ (Aoids %ointing o$
/ingers)Risk (!aring (More Risks %assed Down to
Design-Builder)/ewer Claims and 'itigations/ewer Contract
Modi$icationsOpportunit+ to %ackage 'arger ContractsHow Owners
Procure Design-Build Services In the U.S.0egotiated %rocurement(ole
(ource (election ((trategic Alliance)1uali$ications Based (election
(1B()Best "alue (%rice and #ec!nical)Competitie %rocurement'ow Bid
('owest %rice #ec!nicall+ Accepta.le)Ad&usted 'ow Bid (Mi2 o$
%rice3 (c!edule3 etc4)/i2ed Budget)Best #ec!nical %roposalBest and
/inal O$$er5eig!ted Matri2 Organization of the Design-Build Team In
the U.S.,ntegrated /irm (Design and Construction Capa.ilit+ in (ame
/irm) Contractor As %rimeC* As %rime6oint "enture Between t!e
Contractor and C* )wners are willing to use alternate project
delivery methods but firms worry that clients don!t always
understand what they need'("ng$neer$ng %e&s'(ecord, )une +,,
2000 Design-Build Risks and Rewards Risks for the Consulting
Engineer %re-%roposal Design CostReduced /ee $or (!are o$
%ro$it*rrors and Omissions'i7uidated Damages or Conse7uential
Damages%er$ormance 8uarantee%articipation in 'oss 6oint and (eeral
'ia.ilit+Client Relations!ipsRewards for the Consulting Engineer
(uccess /ee Mark-9p on %rocurement:ig!er Margins on Design
(erices(!are in Oerall %ro$itDesign-BuildBest Practices for the CE
in the Unites States/or #!e C*3 (u.contracting #ier %re$erred ((ome
Are (ometimes t!e %rime)0o /ree %re-Bid *ngineering (erice(uccess
/ee on (uccess$ul BidsDesign /ees (!ould ,nclude Additional
MarginsDesign /ees Ma+ Be Reduced $or (!are in %ro$its0o ;(!aring
in 'oss< Arrangements%rocurement (erices $or Additional /ees
%ossi.le 6oint "enture 5it! Contractor Best Practices For The
Consulting Engineer in Design-BuildFuture Market Trends
#ransportation - More DO#s Are /ollowing 9ta! DO#s
'ead(ports)Recreation %ro&ects%ower 8eneration and
#ransmissionCommunications:otels)ResortsMedical):ealt!
CareCommercial Buildings -Design-Build:RISKSOR REWARDSfor the
Consulting Engineer? $isky *usiness +as ,ts $ewards-hank .ou
