Whitepaper: 08.06.2012

Design-Build Takes Off

Texas owners are considering design-build delivery in greater numbers than ever before. Does it make sense for your project?

Design-build delivery is not new. In fact, it’s been around for decades, although owners in Texas have been hesitant to adopt this delivery method in lieu of more commonly accepted approaches such as design-bid-build and construction manager-at-risk. Lack of familiarity with the process, concern over loss of control, and legislative limitations have all contributed to its slow adoption. However, over the past several years, design-build has been quickly gaining momentum in the state.

Last fall, three bills were passed by the Texas legislature that dramatically expanded design-build authority in Texas and propelled the delivery method into popularity with owners across the state. Uncertainty and unfamiliarity still exist among owners who are now looking to implement their first design-build project. Some owners are trying to “test-drive” design-build on smaller projects before implementing it on larger, more complex projects. However, it is often those larger, more complex projects that are potentially better suited to reap the cost and schedule benefits of the delivery method.

Fortunately for Texas owners who are new to design-build, McCarthy’s depth of design-build understanding stretches across the country on more than 200 projects, totaling nearly $5 billion. McCarthy has long embraced the collaborative process that design-build promotes, and our success can be directly linked to our ability to work hand-in-hand with owners and design partners to deliver the most complex projects under strict budget and schedule constraints. 

For example, in 2011 McCarthy was awarded the national AGC/Aon Build America Award in the design-build renovation category for our work on The University of Texas MD Anderson Cancer Center Albert B. and Margaret M. Alkek Hospital Expansion in Houston. On that project, McCarthy and design partner HKS worked seamlessly to develop solutions to address a myriad of design and construction challenges, doubling the height of the existing 12-story facility by constructing an additional 650,000 square feet on top of the operating hospital, all while minimizing disruption to patients. 

Although design-build is relatively new to public agencies in Texas, federal agencies – especially the U.S. Army Corps of Engineers (USACE) and Naval Facilities Engineering Command (NAVFAC) – have been using it widely for years. As the largest buyer of construction services in the country, year after year, the federal government has found value in the design-build process on a wide range of diverse projects. More important, these agencies have developed a thorough understanding of the process and established a structured, consistent procurement method that clearly defines expectations, risk transfer and project goals. This consistency provides a level of comfort between the owner and design-builder and an understanding of what is expected from one another during the proposal and throughout the design-build process. The government’s success with design-build delivery illustrates the benefits of using this method and how it can apply to projects in all market sectors.

Benefits of Design-Build
Proper implementation of design-build delivery can have positive benefits for both contracting parties. Project benefits for owners can include faster delivery, cost savings, better quality construction, singular point of contractual responsibility, decreased administrative burden, reduced risk, and typically fewer claims.

McCarthy currently has three design-build federal projects underway in Texas totaling nearly $600 million in contract value and varying widely across product types – from healthcare to renewable energy to maritime facilities. In each of these cases, McCarthy worked with our design partners to advance a design and submit a fixed price or GMP proposal very early in design. The delivery method has also allowed us to develop phased work packages to advance certain parts of projects into construction early, while other packages continue being designed. We have found that this overlap creates efficiencies that reduce the overall project schedule.

One project in particular is the design-build delivery of a new marine facility for the Maritime Administration (MARAD), a division of the U.S. Department of Transportation. The $35 million project includes permitting, design and construction of a complete marine facility to provide long-term safe layberthing facilities for eight large medium-speed roll-on/roll-off (LMSR) vessels in the Neches River, near Beaumont, Texas. The project’s scope requires dredging to 32 feet, construction of two concrete T-piers and approaches, breasting structures, mooring dolphins for the ships to tie to, utility and electrical services, an access road, parking, lighting, and security.

This project yields some important “firsts” for McCarthy, as it is both our first design-build marine project and our first contract with MARAD. Similar to other transportation projects, this civil works project requires a substantial amount of self-performance and an ability to price the job at a very early stage. In fact, during the proposal period, McCarthy and design partner HDR worked collaboratively to develop several alternative design concepts that could meet MARAD’s performance specifications and budget. There were no preliminary engineering or bridging documents, no geotechnical information and no permitting or environmental clearances yet achieved. McCarthy’s design-build team addressed all of these risks and developed a plan to mitigate them within the constraints of a fixed price competition. Throughout the proposal process, our team’s ability to address key project issues and present solutions gave MARAD confidence in McCarthy’s design-build capability.

Although still in the early stages of the MARAD project, the design-build method has already helped move this project along more quickly than if the owner had chosen a more traditional delivery method. Additionally, our design-build team was able to provide and price several options that have given MARAD the flexibility to incorporate additional scope elements as desired within their budget.

To an owner who is contemplating the use of design-build delivery on their next project, there are many factors to consider. It is important to understand the nuances of the design-build procurement and how to structure the RFP to ensure that design-builders are able to provide the best solutions for the project. In general, the more information made available with the solicitation, the better. Clearly defining risk transfer, encouraging and rewarding creativity, and active participation in one-on-one meetings are all tools that owners can use to achieve desired cost-effective design-build proposal outcomes.

As more owners begin to experiment with design-build delivery, there continue to be learning curves and inconsistencies in design-build procurement from one owner to the next. Owners who are new to design-build are encouraged to consult with firms experienced with the delivery method to best understand how to effectively procure and implement design-build for their specific project. 

The success of the design-build delivery method in federal projects has demonstrated the benefits of this method and has contributed to its growth in popularity. McCarthy is excited about the future of design-build in Texas and is well positioned to help our owners as they continue to trend toward more frequent use of this delivery method. 

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