A major new review of design-build contracting on major highway projects throughout the country shows clear advantages over traditional design-bid-build in terms of schedule, cost, and quality.
The report, conducted by Tom Warne and Associates for Associated General Contractors (AGC) of California and a number of leading contractors and engineering firms, focused on the performance characteristics of 21 completed highway projects ranging from $83 million to $1.3 billion. The projects reviewed were taken from a list published in the February, 2004 issue of Public Works Financing and represent a cross-section of major design-build highway projects from coast to coast. While the success of design-build is widely recognized in the industry, this is among the first systematic studies to review how design-build is performing on highway infrastructure construction.
“Providing transportation infrastructure to the public has never been more challenging for public agencies and their industry counterparts,” the Warne review concluded. “Demands for faster construction, greater management of budgets and fewer impacts during construction are important expectations of the public and elected officials alike. Larger and larger projects with budgets in the hundreds of millions of dollars, and some exceeding a billion dollars, are being planned, designed or built all over the country. Transportation leaders are looking for different and innovative ways to deliver these projects and meet these critical expectations. One tool that the transportation industry is using with great success is design-build. Proven in the private sector for many years, design-build offers public owners an effective means for addressing schedule, quality and cost issues on projects of all sizes.”
The Warne study utilized interviews with public agencies, as well as public records and reports, to determine how each of the 21 projects performed. Among the key results:
- 76 percent of the projects were completed ahead of the schedule established by the owner.
- 100 percent of the projects were completed faster than if design-bid- build were utilized.
- The cost growth attributes of the projects in the study reflect an aggregate growth rate of less than four percent, as opposed to an average of five to 10 percent characteristic of design-bid-build projects.
- Many of the projects show a zero percent cost growth, since contracts were awarded on a lump sum basis requiring the contractor to deliver the project at a fixed price.
- As projects finish ahead of schedule, in many cases measured in years, there is enormous savings in construction costs due to inflation and other factors.
- With design-build, the benefits of projects accrue to the community and state sooner, which has a significant positive economic impact.
- Without exception, all of the projects were deemed to be of equal or better quality than would have been the case with design-bid-build.
- In every case, project owners were pleased with the design-build experience and intended to use the process on other projects.
“Schedule, public expectations, budgets, and price predictability — put it all together and the environment for delivering transportation infrastructure projects demands that new and different methods be adopted to achieve the expectations of the public and elected officials alike,” Warne said, as he noted that design-build has become a “mainstream” project delivery method across the country.
“While design-build has been used with evident success on a number of projects in California, there is currently no authorization for either regional transportation agencies or CalTrans to use design-build for new projects on the State Highway system,” noted Thomas T. Holsman, CEO of AGC of California, in releasing the Warne report. “It is evident that design-build is a powerful tool for the right projects in expediting project delivery, controlling costs, and enhancing quality. We hope that lawmakers and other officials will find this study useful in evaluating a number of design-build measures that are now working their way through the legislative process.”