Design-Build and “Best Value” – What Does It Really Mean?

The term “best value,” typically applied when procuring a fixed-price design-build project, is a process for owners to obtain services from design-build firms and contractors, where price is not the only criteria for selection.

Best Value Factors

In a fixed-price design-build procurement, owners can use a variety of factors to define the selection process based on their organizational goals and project drivers. These varying factors are weighted based on their relative importance to the project being procured.

These factors could be any combination of the following: past performance, schedule, safety, price, technical approach, experience of management personnel, financial capacity, etc. As an example, if past performance becomes the primary driving factor, then it is possible that it could outweigh the other criteria used for evaluation.

When using “best value” in the procurement process, selection of a design-build firm can be made using a scoring methodology based on weighted factors. (See the Water and Wastewater Design-Build Handbook.)

Example Benefits of “Best Value Procurement”

Risk transfer is frequently an important driver identified by owners when procuring projects based on “Best Value.” When using collaborative delivery methods and moving away from a design-bid-build delivery, an owner has the option to transfer numerous risk elements to the design-builder as one single entity.

Depending upon the delivery method, some of these risks that can be transferred include design, performance, schedule and permitting.

Early collaboration and involvement of all parties from the inception of the project – including members of the operations and maintenance team – is crucial to achieving best value for a project. This benefit is further achieved by having the integrated engineering firm, contractor, and vendor team working together through the early phases of the project. These key steps enhance the constructability of a project and lead to the best application of technology with the result being a very cost-effective solution. 

Schedule is also a frequent driver for design-build procurement. At the very least, the time it takes to send a project out to bid with design-bid-build procurement is saved when procuring a project with a CMAR or DB method. If the project allows, construction can start well before the design is complete, accelerating the project to an earlier completion. 

What If Best Value Doesn’t Fit My Budget?

As practitioners in the industry, we often hear from owners new to collaborative delivery methods the statement, “Best value doesn’t fit within my budget.” These discussions reveal that owners want best value for their project, but perceive that collaborative delivery is too expensive and will not fit within their budget.

Regardless of delivery or procurement method, a budget is a budget! If the owner chooses to use the “best value” approach when procuring a project, it is the collaboration and trust established within the procurement process that facilitates the contractor, designer, or vendor being able to design and construct to the budget. 

Our advice? Seek out the best of the best. Work collaboratively with industry partners to obtain the utmost “best value” for the dollars you plan to spend on your project!

A Statement from the Forthcoming WDBC Fixed-Price Design-Build Guide

“Best value” selection is most commonly used in the procurement process for a fixed-price design-build project. In this instance, owners may be governed by specific procurement rules and policies that affect the use of “best value” methodology in selecting a design-build firm. In most cases, owners deploy a scoring methodology with customized weighting and scoring of a particular proposal. The weighting for price varies from as little as 20% and up to 50% of the scoring vs consideration of the team makeup, its qualifications, and its project approach, including technical solution and schedule.

It should be noted that some owners consider price as the exclusive criteria for the basis of using FPDB after a short list is established. The WDBC does not view price selection as a best practice; hence our recommendation that “best value” be considered as the baseline approach when selecting a team using FPDB.

For all FPDB procurements, the proposer (design-builder) must include a price based on conforming to the RFP requirements and aligned with the scope of work it offers with its proposal. The fixed-price is finalized after selection and negotiation of the final scope of work as may be adjusted by the owner during such discussions and set within the final executed project agreement.

 

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About Ryan Adler, Assoc. DBIA, Project Manager, Crossland Heavy Contractors

Topics: Crossland Heavy Contractors, Design-Build.

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