Use of the design-build project delivery method has increased significantly in the United States over the last decade. According to research findings released last year by the Design-Build Institute of America, more than half of all US non-residential construction projects above $10 million are now being completed using design-build. These findings are no surprise given the relative scarcity of construction funding during the latest recession and the proven advantages that design-build has over more traditional delivery methods.

Owners from both the private and public sectors are drawn to design-build because it streamlines project delivery through a single contract with a design-build team that assumes singular responsibility for completing the project, typically for a fixed price. Combining design and construction under one contract allows owners to start working on earlier construction packages (e.g., civil site work and foundations) before detailed design is completed for later construction packages. Among other advantages, this “fast tracking” provides for a compressed construction schedule, which reduces a project’s overall administrative and financing costs.   Combining the design and construction disciplines also allows for innovation in solving common cross-disciplinary problems. On large projects, the potential savings from these advantages can be significant.      

In contrast, owners using the traditional design-bid-build delivery method assume the broadest role in all project disciplines. Under this traditional approach, the owner typically engages a consultant to provide complete plans and specifications for a project, obtains competitive bids from the contractors based on those plans and specifications, and then awards the construction contract to the low bidder. Although design-bid-build is a tried-and-true approach, it is not always the most efficient or the most cost-effective way to deliver a project. Design-bid-build is most suitable for owners with the resources to effectively manage the development, construction and operations of projects of similar size and complexity.

Use of design-build by the US public and private sectors is unbalanced. Prior to the 1990s, design-build was used almost exclusively by the private sector, while the public sector primarily used design-bid-build to deliver public works projects. Most practitioners agree that the best method for procuring a design-build contract is through a competitive negotiation or best value selection process. Both processes, however, conflict with conventional public contracting laws that generally require public agencies to use a qualifications-based selection process to award a design contract and a separate low-bid selection process to award a construction contract.

During the 1990s, a number of public agencies – wishing to shorten project delivery schedules, control costs and claims, and address other issues commonly associated with the traditional design-bid-build approach – obtained legislative authority to use design-build. According to a study published by the Federal Highway Administration (FHWA), between 1990 and 2002, close to 300 projects representing $14 billion were proposed for design-build contracting under FHWA’s SEP-14 program by transportation agencies in 32 states. Of this total, 140 projects representing $5.5 billion were completed by the end of 2002. On average, the managers of these projects estimated that design-build project delivery reduced the overall duration of their projects by 14 percent, reduced the total cost of the projects by 3 percent, and maintained the same level of quality as compared to design-bid-build project delivery.

Based, in part, on success stories like these, US lawmakers over that past decade have made significant strides in providing design-build authority to public agencies. This authority, however, has not always been applied evenly across all project types, and certain agencies are still precluded from using a best value or competitive negotiation procurement methodology.   Certain state legislatures have passed disparate design-build statutes that include a number of limitations which have proved problematic in practice, and in a number of cases have used different language across these statutes, which has created various inconsistencies and inefficiencies that impact the effective use of design-build.

With the enactment of Senate Bill 785, which went into effect on January 1, 2015, the California State Legislature took a major step forward in addressing these types of issues. The new statute streamlines California’s design-build laws and provides more clarity and expanded opportunities for certain, identified state and local agencies wishing to use design-build. Senate Bill 785, however, is no panacea for the staunchest supporters of design-build. The statute expressly excludes certain projects on the state highway system and “other infrastructure,” including streets and highways, public rail transit, or water resource facilities and infrastructure.

Across the country and around the world, private owners have used design-build successfully to deliver all types of projects, including office buildings, schools, sports stadiums, water infrastructure and transportation projects. Despite superior results, however, public agencies in the United States still face an uphill battle if they wish to use design-build across the full range of public works projects. To reap the full benefits of design-build, lawmakers would be well-advised to adopt permanent, general legislation that allows public agencies to use design-build on a wider range of projects, leaving the details of the procurement to be determined by the agencies as appropriate for their needs.

Isidro A. Jiménez is an associate at Nossaman, LLP, a law firm dedicated to solving many of the complex challenges public agencies and companies doing business in California face today.