Design-Build Contracts Predicted to Soar
Collaboration is the way of the future.
In construction, design-bid-build (D/B/B) used to be the name of the game. Slowly but surely, however, other, more collaborative, project delivery methods are taking its place. And that’s likely good news for productivity.
According to the recent Design-Build Utilization market study from FMI, design-build (D/B) is anticipated to represent up to 44 percent of construction spending in the assessed segments by 2021. (Assessed segments included commercial, office, lodging, healthcare and others.) Commercial construction will make up 13 percent of that spending, while the manufacturing, educational and highway/street segments will make up the largest chunks (16 percent, 15 percent and 14 percent respectively). The study predicts design-build construction spending will grow 18 percent between this year and then.
In design-build contracts, the owner hires out the design and construction of a project under one contract, creating (one might say forcing) a highly collaborative relationship.
The Design-Build Institute of America explains the benefits of D-B contracts. “Streamlining project delivery through a single contract between the owner and the design-build team transforms the relationship between designers and builders into an alliance that fosters collaboration and teamwork. United from the onset of the project, an integrated team readily works to successfully complete a project faster, more cost effectively, and with optimized project quality.”
The FMI survey identified opportunities to innovate and the ability to fast track a project as top benefits of D-B.
Not every project will necessarily benefit from design-build. The FMI study noted, “Overall, owners indicated receiving significant value from design-build when employed on larger and more complex projects. These projects allowed for greater opportunity to provide project innovations and subsequent cost savings.”
The growth in design-build is being driven in part by owners’ increasing awareness of the option and its advantages. According to the study, “Once owners get a full understanding of the process and benefits associated with design-build they are more likely to continue to employ it as a preferred delivery method.”
In the study, more than half of owners indicated using or said they anticipated using design-build in the next five years.
Other collaborative delivery methods gaining popularity include engineer-procure-construct (EPC), in which one entity handles design, procurement and construction for a new facility, often for a lump sum, and integrated project delivery (IPD), in which the owner contracts with an architect or a general contractor as the lead and everyone else contracts under the lead.
Marianne Wait is an editor and writer who creates content for Fortune 500 brands.