Design-build can shorten the schedule and reduce project cost, while still allowing an owner to specify equipment, materials and aesthetics for the project.
Water & Wastes Digest recently interviewed Bruce Allender, North America director of business development for the water and wastewater industry for Black & Veatch, about the growing interest, overall benefits and effectiveness of the design-build approach and its effect on water and wastewater projects.
WWD: Why do you think a design-build approach is becoming more prevalent in the water and wastewater industry?
Bruce Allender: Owners like the design-build approach because it is more efficient in terms of cost and schedule than the traditional design-bid-build approach for project delivery. It provides the owner with a single point of responsibility and a better quality of project due to the integration of the design and construction into one contract. The design-build delivery mechanism allows certain activities to be performed in parallel, which shortens the schedule and reduces project cost. The owner can still specify equipment, materials and aesthetics for the project; thus, there can be a high level of control by the owner in design-build projects.
WWD: Can you please explain the differences between design-bid-build and design-build deliveries?
Allender: The major differences are as follows:
- For the owner there is only one contract with the design-build entity, whereas there are two contracts for design-bid- build delivery; thus, design-build projects have a lower administrative cost for the owner.
- Due to the overlapping of design and construction in design-build, the project is usually delivered with lower costs and a shorter schedule.
- Design-build delivery inherently allows for constructability reviews throughout the design and construction. In most cases, these reviews lower the cost and optimize the schedule of the project.
- Design-build projects typically have care- fully planned startup and commissioning phases due to the contractual obligation to meet performance and process guarantees.
- The design-build approach provides more immediate feedback on the final cost of the project, as well as earlier establishment of the cost and schedule for the owner than the traditional design- bid-build approach. This helps owners plan rate structures and secure financing for projects.
WWD: What are the major significant-risk issues associated with design- build contracts in the water and wastewater industry?
Allender: The major risk in any design-build project is poor risk allocation between the owner and the design-builder. We believe that the risk should be allocated to the entity that best can assume that risk. This allocation is different for each project and changes over time. We recommend that owners solicit feedback from the industry about what level of risk the design-build community is willing to accept and then structure their projects around those conditions.
WWD: What do you think makes a utility a good candidate for a design-build project? And conversely, what are the benefits of a utility choosing to design-build?
Allender: A good candidate would be any utility that has a need to deliver a project for a lower cost on a certain schedule. Design-build can be used effectively for projects such as pipelines, pump stations, Greenfield treatment plants and retrofits of existing treatment facilities. Owners should see design-build as a delivery mechanism that helps optimize the budget and delivery schedule of their capital improvement projects.
The benefits for a utility are less administration for an alternative delivery project; savings in cost and schedule with an improved quality of project; a way to optimize its CIP program in terms of cost and schedule; an earlier indication of project cost, which may help the owner set future rate structures and secure financing for the project; and greater cost transparency for the owner, if the appropriate design-build procurement mechanism is used.
WWD: Would a private owner in the water and wastewater industry benefit more from the design-build process than a public utility and why?
Allender: In terms of project cost and schedule, private industry benefits in the same ways as public entities. The only small difference is that, in some cases, the private industry can sole source a design-builder, whereas a public utility, in most cases, needs to have a competitive method of selecting a design-builder.
The main benefit of sole sourcing for the owner is that it can shorten the overall project schedule. Concerns about cost in a sole-source environment can be alleviated by having a transparent and competitive procurement process. For private utilities working for a regulated public organization, transparent and competitive procurement is generally required.