Progressive design-build

The acronym is PDB, not to be confused with PBR, the beer, or PBR, professional bull riding. Bone up on the latest method of project delivery.

By some statistics, design-build accounts for some 40 percent of all non-residential construction in the U.S. today. As of 2016, there is now enabling legislation in all but three states to permit public owners to use design-build in some form, and to a varying extent. Most public procurement laws in the state and federal sectors utilize a selection method that has come to be known as the “best value” selection method. This is often known as a “three-step” selection process. In step one, the public owner issues a request for qualifications to design-build teams. Based on qualifications alone (like the Brooks Act for architects and engineers), the public owner short-lists the most qualified teams of design and construction professionals to three to five, tops. Then, the owner issues a request for proposals in the next two steps.

Step one is a technical proposal, which often includes some level of design submission, together with a schedule for completion and other specified criteria. The technical proposals are opened publicly, and ranked in accordance with pre-established criteria and a rating system contained in the RFP documents. At this time, the third step is invoked in which the owner opens the sealed price proposals. Those proposals are ranked in some fashion from lowest price to highest. The selection committee then combines the scores from steps two and three (technical and price), to come up with a combined score for each short-listed team. The team with the top score, representing the “best value” to the public owner, is awarded the design-build contract. Price is often the dominant factor in these best value selections.

Under the best practices promoted by the Design-Build Institute of America, “Design-Build Done Right,” the top ranked team gets the contract, and the other short-listed teams receive a “stipend” or “honorarium” to help defray the cost of competition. Public procurement laws have been drafted around this best value model for many years. But some public owners are asking for an alternative method to hire design-builders, one that does not require a commitment to the design-build process all at once, and one that allows for more collaboration during the design development. Thus was born the process now being called “progressive design-build.”

The term was coined by the Water Design-Build Council, whose member firms began to offer an incremental buy-in option for public owners in the water/wastewater sectors. In a two-step progressive design-build selection, the project’s design, cost-estimating, construction schedule, and final GMP, or fixed price, are developed during the first phase, sometimes called the “preliminary services phase.” This phase takes design development to a roughly 40 to 60 percent completion, sufficient to price the work and establish a reliable schedule. If the owner and design-builder agree on the schedule and the fixed price during the first phase, the final design, construction, and commissioning are completed during the second phase, which is sometimes called the “final design and construction phase.”

In between the first and second step, the owner has an “off-ramp” in which it can decide that the cost or schedule are not acceptable, thus terminating the project; or: a) go forward with a design-build contract based on the phase one results; b) switch to design-bid-build; or c) solicit proposals from other design-build teams. The design-build team is compensated for its services in phase one regardless of whether the owner proceeds to phase two.

Proponents of PDB say that this method allows better collaboration between the owner and the design-build team, because a single team works closely with the owner during phase one to develop a design together, rather than in a separate silo (as in a best value competition). Even though the chosen design-build team in a best value selection can work with the owner post-selection to refine the design, many of the crucial design decisions have already been made and are “baked in” by the time the owner awards the contract. With a PDB selection, the design-build team is hired on qualifications before the design has been developed at all. Cost and schedule commitments are not part of the selection process until phase two, where the owner can opt out or opt to play. The owner can also participate in the selection of subcontractors and suppliers in PDB, before the teams are finally established.

Since many procurement laws are drafted around “best value” selection, it may be necessary to amend the state statute or public ordinance to permit PDB as an option. In November 2016, the DBIA board of directors approved a new Progressive Design-Build Agreement (DBIA Doc. No. 545, 2016). This was the result of a two-year collaboration between DBIA and the WDBC to come up with a user-friendly, standard form for PDB, the first industry publication of its kind. Although the document is labeled for use for “water and wastewater projects,” there is nothing in the form that limits its use to that sector. The form can be used for horizontal or vertical projects outside of the water space simply by altering the title page. For a deeper dive into the PDB world, the WDBC publishes a procurement guide, as well as forms for RFQ and RFP.

So don’t look puzzled when your client asks, “What’s the new method of project delivery called progressive design-build?” PDB is not to be confused with PBR (Pabst Blue Ribbon or professional bull riders). If you tell your client it’s a beer, you’ll be showing your ignorance of the latest trend, and that’s no bull!

G. William Quatman, Esq., is general counsel and senior vice president at Burns & McDonnell Engineering Co. He can be reached at bquatman@burnsmcd.com.

Posted in Articles | April 3rd, 2017 by