What do you think is the best delivery method for construction projects? The question is one that’s likely to spur plenty of debate, with an answer dependent upon a number of variables. And now it looks like the federal government is adding its own two cents to the conversation.
Recently, President Obama signed HR 2112 into law, a bill for the departments of Agriculture, Commerce, Justice and Science, and Transportation and Housing and Urban Development. And it includes one significant item of note—it encourages the use of design-build.
In a press release, the Design-Build Institute of America (DBIA) shared some insight it had on the issue:
“The USDA Rural Development (USDA-RD) program has a $155 billion portfolio of loans and will administer $20 billion in loans, loan guarantees, and grants through their programs in the current fiscal year. Until now, the USDA-RD’s preferred project delivery method has been design-bid-build, and the result has been a chilling effect on the use of design-build for local projects. Fear of being denied federal loans, loan guarantees, and grants if they opted to use design-build, many local governments use design-bid-build. Higher costs and project delays frequently resulted. In addition, design-build practitioners lost the opportunity to work on these projects.
“A year ago, local governments seeking to use integrated design-build delivery and practitioners interested in pursuing work with the USDA turned to DBIA for assistance. Throughout 2011, DBIA staff met with USDA-RD, members of the House of Representatives, and their counterparts in the Senate to discuss the situation and possible alternatives. DBIA drafted committee report language for Rep. Jack Kingston (R) Georgia, the chairman of the House Appropriations, Agriculture, Rural Development, Food and Drug Administration Subcommittee.
“The language encourages USDA to use design-build. It received bipartisan support in both the House subcommittee and full Appropriations Committee. Several meetings with committee members in the Senate paved the way for its passage in the conference committee and floor votes.”
I’m curious what our readers think about this. The DBIA states that, at least for rural development projects, design-bid-build resulted in higher costs and frequent delays. How does this translate to healthcare? Have you had the same experience, or is design-bid-build just as a reliable of a process? Is there a delivery method your firm prefers to both?
I encourage all to comment here to start the discussion.
Comments
Design Bid Build should go out of style!
A classic example for the failure of a DBB approach was earlier this year in a new skilled nursing facility, USDA funded in a rural setting in Illinois. Owner's budget of $4.9 million was largely determined by what USDA would guarantee a loan for.
Nine GC's submitted bids based on an architect's fully developed plans--that took 3 months to develop. Actual bids came in between $7.5 and $9.5 Million. Do the math and you see that bids were 50% to 100% over budget. Three months of "value engineering" with that low bidder delay the start of the project right smack into the cold weather months. During the VE stage, the architect is asking the owner, "Where do you want to compromise?" Is this archtiect really serving his customer?
Question: Who really knows what a building is going to cost?
Answer: The builder, not the architect, not the engineer, not the owner's rep, not the owner.
Design-Build and IPD are both superior to DBB, because the earlier you engage the GC, the more control you have over cost and schedule. Based on 5 drawings--a site plan, floorplan, topographical map, elevation, and intended use--a Design Build team can develop an accurate cost to build it and a schedule that you can take to the bank, or to USDA.
Design-Bid-Build current status in Latin America
In latin america D-B-B apprach has not been very successful. Agency CM has found a niche. Design-Build is still the preffered after General Contracting.
Contractors in Latin America understand that bidders under D-B-B approach are in a big disadvantage in front of the D-B-Bidder. They even think that these D-B-Bidders always have something under the sleeve that puts them in a better position to win.
I have even heard contractors say that the bidding proccess is a fake to get referencial prices.