Managing Risks in Design-Build Delivery

 

Findings in the research study of “Lessons Learned from Owners Using Design-Build Project Delivery” emphasizes that the key to successful design-build projects is an active and continuous collaboration between and owner and the selected project team.

Owners also believe that when there are differences in the between groups as to how risk must be allocated, the collaborative process in design-build delivery offers greater opportunities to address these topics early in the work; thus avoiding unexpected project challenges including cost and schedule overruns, scope creep and failure to meet the intent of the owner for its particular project.

It also needs to be pointed out that in the overall design-build industry, there are significant differences in the delivery of vertical facility projects versus those of water and wastewater projects. This is why the collaborative process is resulting in a greater use in the water sector than from other project delivery models.

This is also a reason that the discussion of risks in these projects can be effectively balanced with all project team members. Recent industry data in the water sector suggests that this process has become a major factor in design-build delivery  is achieving a wide acceptance and  increasing at a rate of 15 percent per year.

For nearly two decades, the commercial arrangements between design-build teams and public owners (within the water sector) have evolved from one of full risk transfer to a balanced model that has the party best suited to bear the risk.

Unlike the vertical facility market, the water sector does not require all design and performance risk to be entirely borne by the project team. Current convention in the water sector has such requirements embedded in owner’s utilization of industry standard agreements.

To further this discussion, WDBC has also observed the increase in the use of project-specific professional liability policies that cover all team members whether they be designers, construction firms, or integrated design-build firms.

Similarly, such policies are being used more actively regardless of the team structure. The WDBC views design-build as an acceptable and efficient way to successfully deliver all forms of capital projects, with the ability to engage in a productive discussion to allocate risk collaboratively.

Again we reinforce that it is important for owners to understand that in different industry sectors that the application of design-build delivery will have certain characteristics as regards risk allocation, team structure, and the availability of professional liability coverage.

 

About Mark E. Alpert, PE, DBIA, WDBC Executive Director

WDBC Executive Director Mark Alpert is a former CH2M senior vice president for design-build (Denver, CO), WDBC founding member, and past president. For more than 35 years, Mark has been a pioneer in the development of integrated project delivery for water and wastewater projects. Even before the term “design-build” was commonly recognized, Mark was focusing on cost-effective design and construction, which led to the formalization of design-build and other collaborative project delivery methods.
Topics: Design-Build, Risk Allocation, WDBC Admin.

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