Owners are turning to “progressive” design-build for project procurement, a variant of design-build. On a traditional design-build project, a final project price is typically established at the time the design-builder is selected. This often means that the design-builder uses bridging documents and performance requirements the owner has developed independently so that the design-builder can establish the project price and schedule. Once the owner and design-builder sign the agreement, the design-builder is obligated to deliver the project.
While traditional design-build projects provide cost certainty to the owner, there are some challenges. Due to contractual obligations, the design-builder is locked into the bridging documents and performance requirements, which can stifle innovative solutions. If there are any problems with the documents used to develop the design-builder’s proposal, the owner is responsible for those change orders.
A different approach is to have the owner retain the design-builder early in the life of the project, before the design solution has been developed at all. In this arrangement, the design-builder is selected primarily on qualifications. The final project cost and schedule are not finalized during initial selection.
The owner has some uncertainty about final cost initially; however, the owner is not relying solely on bridging documents to establish initial costs. Instead, the owner and design-builder can truly collaborate on design solutions because the design-builder is not locked into a fixed price. Instead, a progressive design-build project has two stages.
During the preliminary stage, typical project study and design related activities like permitting, conceptual design, property acquisition, geotechnical investigations, detailed design, and construction planning are undertaken. At the owner’s discretion, material and equipment procurement may also begin. Typically, the preliminary stage work consists of professional services and the design-builder is compensated using standard hourly rates or direct labor times a specific factor.
At the conclusion of the preliminary stage, a design solution has been achieved with an appropriate level of definition that aligns with the owner’s needs, allowing the design-builder to provide a formal proposal that includes price and schedule commitments. The owner knows exactly what they are getting since they have been involved in exploring design solutions. The owner then has the option of finalizing an agreement with the design-builder to move on to the next stage. If an agreement is not reached, the owner can take an “off-ramp” to move forward with the project with another entity.
If the owner finalizes an agreement with the design-builder, they can now move to the completion stage. The completion stage includes design completion as well as construction activities to take the project to final completion and acceptance by the owner.
On a progressive design-build project, construction estimating can start very early in design, allowing comparison of specific technical solutions. Progressive estimates keep the owner informed and support scope adjustment decisions. Owners can also use third parties to verify costs. The collaborative, open-book pricing allows parties to reduce contingencies because of more realistic pricing assumptions.
Design firms working on a progressive design-build project are subconsultants to the design-builder. Since owners are involved in making design decisions, design firms have more direct involvement with owners and are not treated as “lower-tier” professionals as they often are on traditional design-build projects. Design firms can also learn how design-builders resolve construction challenges and see how design-builders “think,” which will serve design firms well as design solution consultants.
To see how an agreement for a progressive design-build project is structured, check out EJCDC D-512, Agreement Between Owner and Design-Builder for Progressive Design-Build.
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