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Breaking Down the Cost Structure Difference Between Design-Build And Design-Bid-Build

By / April 19, 2022

Design-Build continues to become the preferred project delivery method for many projects in the construction industry. Often, we get the question of what the difference is in price between Design-Build and Design-Bid-Build, and specifically is Design-Build more expensive? The answer is not always black and white and greatly depends on the type of project you have. There are several benefits to Design-Build that many times saves our clients money in the end.

To better convey the experiences of our clients, I sat down with our in-house Design-Build expert, Ben Menaker, PE, DBIA, to learn more about the differentiating factors between the two delivery methods. Ben recently completed the Design-Build Institute of America’s comprehensive education and certification testing program to achieve the design-build industry’s highest designation as a nationally certified Design-Build Professional®.

When you think of Design-Build, what is the difference between this method and the typical Design-Bid-Build method?

With the Design-Build approach, the construction professional is involved from the very beginning during the design phase rather than waiting until the design is nearly or fully completed. With the Design-Bid-Build approach, the contractor receives completed design documents, and will only bid on what is explicitly stated in the plans and specifications. Involving an experienced construction professional earlier in the project life cycle can help to identify any issues, opportunities for alternate materials, means or methods, as well as allow for flexibility in the overall design. The enhanced team collaboration throughout the process also results in a more reliable construction budget. Furthermore, the Design-Build approach, when facilitated correctly, yields true collaboration, teamwork, and innovation in comparison to the Design-Bid-Build approach that traditionally can create more of an adversarial relationship between the different entities hired separately by the Owner and working together under more of a “forced marriage”.

When is it best for a client to go with the Design-Bid-Build vs. Design-Build method for their project?

When projects are less technically complex, the Design-Bid-Build delivery method can be a more advantageous delivery method as the need to obtain contractor constructability analysis, schedule input, value engineering alternatives, material availability input, etc. is less important. But for more technically complex projects, it is imperative that the input of the construction professionals take place during the design phase rather than waiting until the project is fully designed or there will almost always be additional time and money spent addressing RFIs, constructability issues, and potential gaps in design.

Can you explain the budget process that we provide for our clients under a Design-Build method?

On Design-Build projects, cost estimates/budgets are provided at various milestones throughout the project life cycle. First, a very high-level overall feasibility estimate should be provided at the very onset of the project once the general scope is determined. The intention of this initial estimate helps to establish a rough order of magnitude (ROM) cost to aid the Owner in determining the overall feasibility and justification for the project to move forward.

For most projects, another cost estimate will be completed at approximately 30% design completion which would have a higher level of cost fidelity, say plus/minus 25%. Subsequently, another update at closer to 60% design completion, and then a final cost estimate at the end of the design phase.

The specifics of each project may dictate if the budget updates are completed more or less frequently, based upon different descriptors of design completion (e.g. schematic, conceptual) but the key point here is that multiple different budget updates should be completed throughout the design phase of the project to ensure proper cost control as the design develops.

If you are bringing the construction professional on earlier compared to a Design-Bid-Build method, how does this affect the construction costs of the project?

While there is a cost associated with involving the construction professional in the design phase of the project (preconstruction phase), when the Owner gets the right professional to the table early their field experience and insight allows the design team to develop a better construction approach and end-product in a shorter amount of time.

A key study performed by the Construction Industry Institute and Penn State University, using 360 public and private sector facilities evenly divided among delivery systems, found the following study results. Results were consistent showing Design-Build is best on schedule and overall cost, with no diminution of quality.

Under the Design-Bid-Build delivery method, contractors are almost always vetted solely by their ability to provide the lowest cost, which leads to an adversarial relationship between the Owner and the contractor, or the contractor and the design team, when changes that increase cost or schedule need to be addressed.

Under the Design-Build approach, the construction professionals are brought in early to be partners for the entire project life cycle with a collaborative team approach and shared goal of delivering the best possible project to the client.

 

Interested in Learning More?

If you are interested in learning more about how the Design-Build project delivery method could be applied to your new project, feel free reach out to our Design-Build expert, Ben Menaker, ben.menaker@jpcullen.com, (608) 509-5425.