The future for the use of design-build delivery methods for the water and wastewater infrastructure is a positive one – and one that will continue to grow through the years – likely at a minimum of 10%. The core factors driving the increased use of design-build are cost, risk, and schedule, resulting in increasing numbers and volume of design-build water and wastewater projects in utilities’ capital programs.
WDBC’s research shows that these factors will become even more critical over the next decade and beyond as U.S. utilities confront increasing regulatory requirements, service demands of growing populations, and replacement of aging infrastructure that has been deferred over the past decade. Evidence of this use is shown in Figure 1, with the full report available on the WDBC website.
The water design-build industry has reached a pivotal point. During the past decade, the increased use of design-build delivery for water and wastewater projects by utilities and agencies has been dramatically increasing. While the water industry is generally aware of this increase, the market volume and growth trends have never been carefully evaluated by independent research.
The Water Design-Build Council (WDBC) took on this challenge with its latest research project. Determining the size and complexion of the U.S. municipal water market for completion of capital projects using the design-build project delivery method was the primary goal. Data collected and analyzed for the 2014–2021 timeframe evaluated both historical and prospective trends for design-build contracting by geographic region and project type, including water and wastewater treatment, wastewater collection, water conveyance, and stormwater management.
The research documented that the use of design-build project delivery in the water space grew steadily between 2013 and 2016, with 2016 being the most active with several projects of significant size and cost. Two of those are the $922 million Carlsbad Desalination Project in California and the $2 billion Houston, TX, project. At the same time, both water and wastewater utilities of various sizes tended to rely on design-build delivery for projects with new technologies or complex combinations of multiple technologies. Utilities also turned to the use of design-build delivery when they were under regulatory or service demand pressures to complete water or wastewater projects quickly. Utilities’ budgets and project costs are continually a factor as well, resulting in the need to obtain the best value for the cost of services.
A notable trend revealed that between 2013 and 2016 design-build was used to deliver nearly twice the number of wastewater projects than water projects. Wastewater projects also lead in cumulative spending. These trends are evident as advanced treatment captures the largest share of design-build project volume, followed by repair and rehabilitation of conveyance networks. Another fact that emerged from the study is that WDBC member companies participated in approximately 70% of the annual design-build spend for water infrastructure projects within North America (2011–2016).
What does the future hold for the use of design-build delivery? Currently, U.S. water and wastewater utilities spend $40-$50 billion a year to upgrade, rehabilitate, replace, and expand their water and wastewater infrastructure. By the end of the next decade, the research predicts that figure will exceed $60 billion. Local and state governments still finance more than 90% of these capital expenditures, with the federal government accounting for the remainder. Also gaining more attention is consideration of public-private partnerships as an alternative funding source for projects with complicated risk and regulatory issues.
Discover more key insights on the future of the water design-build industry by downloading your copy of our landmark research report, 2017 State of the Demand for Design-Build Delivery in the Water/Wastewater Sector.