Comparing Procurement Methods for Design-Build Projects

The design-build delivery method is increasingly used in the United States due to numerous advantages it can offer a project. An important issue associated with design-build delivery is the procurement method used to select the design-build team. It is a critical decision that involves several key project team members, including the owner, designer, and contractor organizations, and requires the owner to carefully choose the design-build procurement method that will be used to select the team that will deliver the project. This research quantitatively analyzed the correlation between the design-build procurement method and the performance of the design-build project with regard to cost, time, and quality metrics. The procurement methods studied were sole source, qualifications-based, best value, and low bid selection. Data were collected through surveys from 76 design-build projects in the United States. Based on the patterns and relationships identified from these data, a better understanding of the procurement process and how it influences project performance is achieved. The impact of project-specific factors and guidelines are presented to assist owners in selecting the design-build team procurement method that responds to their project goals.     

Analysis of Federal Design-Build Request for Proposal Evaluation Criteria

This study’s objective is to identify the benefits federal owners are seeking through the design-build process by analysis of research data gathered from 110 requests for proposal (RFP) evaluation plans issued for $1.5 billion of federal work by 11 different agencies. The output from this study was then compared to a 1996 study whose authors sought to analyze the reasons cited by owners to use design-build project delivery. That study included a survey of 108 owners of public and private projects, which represented over $12.5 billion of construction. The goal of comparing the 1996 survey with the results of the new research project is to discover correlations between owner attitudes and the selection criteria identified in government RFPs. The comparison produced some interesting results. First, although owners in 1996 cited schedule as the most significant reason for selecting design-build delivery, the federal RFP content analysis found it to carry a very low average weight. Another finding shows that federal RFPs give price a very heavy weight in the government selection processes, again differing significantly from the previous survey of owner attitudes. Finally, the current study found that the qualifications of the firms and individuals that formed the design-build team were significantly more important than the proposed technical design approach. Thus, this paper concludes that the typical federal agency was looking for a low price from a well-qualified design-build team.     

Procurement of Design-Build Services: Two-Phase Selection for Highway Projects

In the United States, public agencies are adopting the design-build (DB) delivery method for delivering highway projects after having used the traditional design-bid-build method for generations. In the 2002 design-build contracting final rule, the Federal Highway Administration (FHWA) strongly encourages the use of two-phase selection procedures for DB procurement. This paper takes a case study approach to investigating the use of a two-phase process for selecting providers of highway design-build services. Using two DB projects in central Texas as case studies, the writers have analyzed project documentation and performed interviews with 37 project participants involved in procurement, including owner representatives and legal consultants. For the first case, the writers selected the $1.3 billion SH-130 tolled expressway project in central Texas. Procurement of the SH-130 DB contract was performed before the FHWA rule on DB contracting was released. In addition, the writers examined procurement activities for the $154 million DB contract for the SH-45 SE tolled expressway, which was procured by the same owner in 2004 following procedures identified in the FHWA rule. As a result, a process was developed that included activities to be performed between the delivery method decision and the contract execution. This process model tracks the differences between the SH-130 and the SH-45 SE processes that are attributable to the latter’s adoption of the FHWA Rule.     

Optimizing Owner∕Contractor Core Competencies for Capital Programs

This paper proposes a process to help managers of capital project organizations, within owner companies, select key competencies for their capital programs and, where appropriate, leverage contractor personnel and expertise. The process involves evaluation of owner and contractor competencies and determination of the best possible sourcing strategy for each competency required in the owner's capital program. The sourcing strategy is defined in terms of work relationships that clearly identify primary and secondary roles and responsibilities. The resulting work structure helps owners and contractors avoid gaps and eliminate overlaps in their work relationships. The proposed process also provides an approach to evaluate alignment of work structures between owner's corporate objectives and their capital programs. Work structure and alignment indicators consider project delivery approaches, contract types, organizational relationships, and other relevant factors such as proprietary technology. Thus, this paper provides a decision process that can help managers optimize owner and contractor competencies for capital program success.     

Alliancing in Australia—No-Litigation Contracts: A Tautology?

A project alliance is a business strategy whereby client and commercial participants’ objectives are aligned. This paper takes an alliance project between public and private organizations in Queensland, Australia as a case study and reports the critical factors identified that influence the success of the alliance project. Alliancing is a system that provides a collaborative environment and a framework to adapt behavior to project objectives. It is about sharing resources and experiences, exposing the “hidden” risks. The case study suggests that leadership has a strong influence on the alliance climate. Commitment and action by the Project Alliance Board (and, so, parent organizations) have a strong impact on the team and alliance culture, indicating alliancing has a high chance of failure when there is inadequate support from top management. Like all relational contracting approaches, trust between alliance partners is important. This case study project takes a further step toward reinforcing the trust element by placing a No-Dispute clause in the alliance agreement. A review of the effects of the no-litigation clause upon the project team is presented. The writers conclude that without a positive approach to relationship management, a No-Dispute approach is impossible. Hence, they postulate that a “no-litigation” alliancing contract is essentially tautological, and go on to argue that a no-litigation contract cannot exist without the help of a clear relational vision, that leads to both soft and hard infrastructure to assist in decision making and relationship building.     

Owner’s Risks versus Control in Transit Projects

This paper studies the characteristics of different project delivery methods in public transit projects with respect to the owner’s project control and its share in project risks. The most appropriate project delivery method is selected early in the project life cycle based on a number of objectives and criteria set forth by the owner. The ability to manage risk effectively and owner’s control over the project are among the most important factors for selecting the delivery method. These two factors are highly interrelated. This paper discusses the interaction of risk and control in the context of the project delivery method. Results of several interviews with transit authorities are used to ensure the validity of findings. This paper shows that higher control over the project is achieved only if the owner is willing to accept more risks. In other words, there is no delivery method that allows the owner to enjoy high levels of control and minimum risk simultaneously.     

Partnering Process Model for Public-Sector Fast-Track Design-Build Projects in Korea

The use of design-build project delivery in the public sector has increased rapidly since the early 1990s due to its advantages over traditional delivery methods, particularly in terms of shortening the overall project duration. Fast-track approaches are being applied to design-build projects to achieve the optimum schedule durations. While both fast-track projects and design-build project have been researched separately in the past, there is little published research on how they are truly integrated. Likewise, the research has shown the merits of partnering in design-build and fast-track projects separately, but not in an integrated model. The purpose of this study is to develop a fast-track partnering process model (FTPPM) that combines the fast-track approach with the partnering concept. The model is based on the analysis of the factors that influence successful fast-track processes. Seven key success vehicles were discovered using the factor analysis method. The FTPPM is composed of the preparation stage, the fast-track workshop stage, and the detailed design and construction stage. The activities for each stage for fast-track implementation are developed in consideration with seven key success vehicles for fast-track projects.     

Selecting Appropriate Project Delivery System: Fuzzy Approach with Risk Analysis

The selection of an appropriate project delivery system that suits all project and owner needs is one of the key decisions to a successful project. Therefore, this decision should be made based on thorough analysis. In this paper, a fuzzy multiattribute decision-making (FMADM) model is developed. The model accounts for uncertainties and imprecision in the decision space as well as fuzziness in the nature of the decision attributes. The model utilizes fuzzy decision-making approach in order to evaluate the membership function corresponding to the utility of each project delivery alternative. Project delivery system alternatives are ranked using fuzzy technique for order preference by similarity to ideal solution (TOPSIS) method based on their utility membership functions and by evaluating the distance of each project delivery alternative from fuzzy ideal solutions. In the TOPSIS method, alternatives are ranked based on their closeness coefficient (CC). In addition, the risk attitude of the decision maker is considered in the model by using derived utility membership functions corresponding to the risk attitude of the decision maker. The model is applied to a petrochemical project as a case study. In the case study, the model outcome that ranked Turnkey system as the best system conforms to the lessons learned by the decision maker from several past projects. Moreover, sensitivity analysis is done in the case study. The results show the significant value of the FMADM model for selecting appropriate project delivery system for projects.     

Decision Support System for Residential Land Development Site Selection Process

An important phase within the overall residential land development process is preliminary project planning, which is a highly coordinated effort involving a number of decisions that are made by a variety of individuals. One critical decision faced by the project owner and the development team, during the preliminary planning phase, is the initial selection of the most appropriate site for a proposed conceptual development plan. The scope of this paper deals with (1) formulating a model for the preliminary planning phase of residential site selection; and (2) developing an associated decision support system that can assist the decision makers during this phase of the project. The analytical hierarchy process was the decision making theory used in the site selection decision support system. Analytical hierarchy process uses a hierarchical structure comprising both quantitative and qualitative factors that are based on factual data and the knowledge and experience of the decision makers.     

Analysis of Owner’s Design and Construction Quality Management Approaches in Design/Build Projects

This paper explores and classifies current approaches to evaluating quality in design/build (DB) proposals. It does so by a thorough content analysis of 78 requests for proposal (RFPs) for public DB projects with an aggregate contract value of over $3.0 billion advertised between 1997 and 2002. In most DB projects, the owner requires the DB contractor to establish a firm-fixed price on a project that has not yet been designed. Usually, the owner also fixes the project delivery period. In the traditional design/bid/build (DBB) system, quality is fixed through the plans and specifications. Thus, in DBB, with schedule and quality fixed, the cost of construction is the factor in which the owner seeks competition. Conversely, in DB, with cost and schedule fixed, the scope and hence the level of quality is the main element of competition. This paper identifies the six owner approaches to articulating DB quality requirements in their RFPs. The six approaches are quality by qualifications, evaluated program, specified program, performance criteria, specification, and warranty. These are important for DB contractors to understand so that they can craft their proposal in a manner that is both responsive to the owners’ requirements and consistent with the owner’s system to make the best value contract award decision.     

Selection Model for Delivery Methods for Multifamily-Housing Construction Projects

Selecting an appropriate delivery method that will achieve a project’s objectives and characteristics is one of the most critical factors for the project’s success. A selection model for this study was developed by using actual construction case data in quantitative data analysis methods such as logistic regression, factor analysis, and correlation analysis. The model was developed on the basis of the design-build and design-bid-build methods from various project delivery methods. To validate the developed model, comparative tests were conducted on the selection of the delivery method for multifamily-housing construction projects, which showed that the model resulted in 95.0% accuracy. It is expected that the developed selection model will enable owners to select delivery methods that accurately meet their needs characteristics, project characteristics, and external environments.     

Evaluation of Risk Factors Leading to Cost Overrun in Delivery of Highway Construction Projects

Accurate owner budget estimates are critical to the initial decision-to-build process for highway construction projects. However, transportation projects have historically experienced significant construction cost overruns from the time the decision to build has been taken by the owner. This paper addresses the problem of why highway projects overrun their predicted costs. It identifies the owner risk variables that contribute to significant cost overrun and then uses factor analysis, expert elicitation, and the nominal group technique to establish groups of importance ranked owner risks. Stepwise multivariate regression analysis is also used to investigate any correlation of the percentage of cost overrun with risks, together with attributes such as highway project type, indexed cost, geographic location, and project delivery method. The research results indicate a correlation between the reciprocal of project budget size and percentage cost overrun. This can be useful for owners in determining more realistic decision-to-build highway budget estimates by taking into account the economies of scale associated with larger projects.     

Project Delivery System Selection under Uncertainty: Multicriteria Multilevel Decision Aid Model

Selecting an optimal project delivery system is a critical task that owners should do to ensure project success. This selection is a complex decision-making process. The complexity arises from the uncertain or not well-defined parameters and/or the multiple criteria structure of such decisions. In this study, a decision aid model using the analytical hierarchy process (AHP) coupled with rough approximation concepts is developed to assist the owners. The selection criteria are determined by studying a number of benchmarks. The model ranks the alternative delivery systems by considering both benchmark results and owner’s opinion. In interval AHP, an optimization procedure is performed via obtaining the upper and the lower linear programming models to determine the interval priorities for alternative project delivery systems. In cases having incomparable alternatives, which is the most likely case in uncertain decision making, the model uses rough set-based measures to reduce the number of decision criteria to a subset, which is able to fully rank the alternatives. To illustrate the applicability and usefulness of this methodology, a real world case study will be demonstrated.     

Design-Builder Selection for Small Highway Projects

This paper offers six case studies of design-builder selection for small publicly funded highway projects across the United States. Arizona, Colorado, Indiana, New Jersey, South Carolina, and Washington State Departments of Transportation participated in this study. This study compares critical components of design-builder solicitation and selection. Design-builder selection methods are modeled and categorized into fixed-price, one-step, and two-step procedures. The states developed different procedures due to state procurement statutes, level of design at the request for proposal stage, project complexity, familiarity with the design-build process, and agency culture. Although four of the states used fixed-price or one-step methods to select design-builders on the cases studied, three have since adopted, or are seeking, legislation to adopt two step-methods due to their experiences on the cases presented. The use of design-build dictates a major cultural shift for all stakeholders in the delivery process. This paper offers guidance for other state transportation authorities, highway engineers, and contractors embarking on design-build.     

Fuzzy Preference Relations Consensus Approach to Reduce Conflicts on Shared Responsibilities in the Owner Managing Contractor Delivery System

This paper proposes a fuzzy preference relations consensus (FPRC) approach that helps owners and contractors reach consensus on their responsibilities and reduce conflicts in shared tasks. A fuzzy similarity consensus (FSC) model was developed to aggregate experts’ opinions on roles and responsibilities in the owner managing contractor (OMC) project delivery system. The FSC model categorized 324 generic OMC tasks into three responsibility task lists: owner, contractor, and shared. In a consensus-reaching process, the FPRC approach is applied to shared tasks, where expert opinions on responsibility conflict are expressed, to achieve an aggregated responsibility decision for each task. Experts compare the three responsibility alternatives in pairs by using linguistic preferences, defined on a fuzzy preference scale, to select a preferred responsibility alternative for each of the conflicting tasks. A computed linguistic consensus degree guides the experts on their level of consensus in every round of the process. The quality of experts is defined with a fuzzy expert system–determined importance weight factor for each expert. The FPRC approach is relevant to the construction industry, as it incorporates consistency in decision making by allowing experts to measure and reach an adequate level of consensus linguistically when deciding on responsibilities. The proposed approach provides a method of reducing conflicts in the assignment of task responsibility between the owner and its contractors as early as the project initiation phase; thus, the project teams can concentrate on the work to be done rather than deal with responsibility conflicts during project execution.     

Effects of Delivery Systems on Change Order Size and Frequency in Mechanical Construction

Change orders represent one of the largest sources of cost growth on building construction projects. Field generated, or “unforeseen” change orders can also be highly disruptive to field productivity. Design-build delivery methods can potentially help minimize change orders on construction projects. This study was performed to closely examine the effects of delivery methods on the frequency and magnitude of change orders in mechanical construction, and how design-build business practices can be used to minimize the frequency of field generated chance orders. In a study of 598 change orders occurring on 120 construction projects performed by the same contractor, the total number of change orders was found to be close to the same on design-build and design-bid-build projects, however an 87% decrease in the average number of unforeseen change orders was observed on design-build projects versus design-bid-build projects. In addition, the average size of unforeseen change orders was 86% smaller on design-build projects. A detailed and qualified presentation of the research methodology and resulting data is provided. Key attributes and business practices leading to the results are discussed and practical applications of this research for owners and contractors are provided.     

Decision Tool for Selecting the Optimal Techniques for Cost and Schedule Reduction in Capital Projects

Projects must meet budget, schedule, safety, and quality goals to be regarded as a success. Many factors come into play, and many decisions are made that influence a project’s outcome. Today, owners are often faced with deciding between an execution strategy that emphasizes either project cost or project schedule. Such a decision may be made not once, but throughout the life of the project. Project teams, when required by the owner to make a cost-schedule trade-off, generate common sense ideas, best practices, and other means of achieving the desired trade-off through brainstorming sessions. This paper offers a tool for systematically identifying the techniques which are most effective in achieving the trade-off goal. Project teams can then use these techniques in a timely fashion to increase the likelihood of project success.     

Educational Needs Assessment for Design/Build Project Delivery

With the rapid increase in the utilization of design/build project delivery, there arises a need for continuing education of the professionals in this industry. This paper describes research conducted through a national survey of owners, designers, and builders to determine the best course of action to address the continuing education needs of this industry. By modeling the design/build life cycle into six main phases of project initiation, risk allocation, performance specification, project planning, construction administration, and project closeout, the most critical educational areas are identified. The conclusion from this research is that the areas needing special attention are (1) benefits and cautions of delivery systems; (2) budget and contingencies; (3) owner’s objectives and needs; (4) cost estimating; (5) project timeline; and (6) cost and schedule control. A principal component analysis of the results discovered the following seven groupings of educational topics or “learning modules”: (1) the delivery decision; (2) estimating and scheduling during design; (3) proposal preparation and response; (4) contract fundamentals; (5) construction administration; (6) facilities commissioning; and (7) insurance and financing.     

Relative Effectiveness of Project Delivery and Contract Strategies

Project delivery systems define the roles and responsibilities of the parties involved in a project. They also establish an execution framework in terms of sequencing of design, procurement, and construction. The decision made in the selection of a project delivery system for a project impacts all phases of execution of the project and greatly impacts the efficiency of project execution. Such decisions should be facilitated by thorough analysis. Structured, quantitative decision analysis processes have been shown to have several benefits over the simplistic, holistic, and informal processes that typically characterize subjective evaluations. However, a dearth of quantitative values of project delivery systems established and validated through research has invariably left project managers with no alternative than to make project delivery selection decisions on the basis of subjective evaluations. Development of the needed quantitative values for application in a decision analysis process would greatly enhance the quality of the decision-making process and provide a defensible rationale for selection of project delivery systems for capital projects. This paper presents research findings that provide the needed quantitative values in this area. Based on the quantitative values defined here, interested parties can develop and implement quantitative evaluation of project delivery alternatives to identify the optimal solution for a given project. Multicriteria decision analysis was found to be the suitable approach for a quantitative, analytical evaluation of project delivery systems. Consequently, the quantitative values presented in this paper were developed in accordance with the requirements of the multicriteria decision analysis technique known as simple multiattribute rating technique with swing weights (SMARTS). Utilizing the quantitative values presented here and applying the analysis technique of SMARTS, a decision support tool has been developed and validated for the Construction Industry Institute. The decision support tool is presently being utilized by member companies of the Construction Industry Institute that were privy to its development. With the presentation of the quantitative values in this paper, other parties interested in developing similar tools would benefit from the research results presented here.     

Strategies for Design-Build in Korea Using System Dynamics Modeling

Increasingly adopted by both public and private organizations, design-build (DB) has become a favored construction project delivery system, outperforming other systems in terms of cost, schedule, and quality. However, DB has been especially criticized by the public sector for practicing subjective evaluation, for requiring excessive resources, and for providing only limited accessibility to small and medium-sized contractors. In Korea, similar critiques have been raised, as these qualities have prevented public owners from benefiting from the potential advantages of DB. In order to address these challenging issues, the present research systematically analyzes the characteristics of the DB delivery system in Korea. Based on industry surveys and an extensive literature review, a qualitative system dynamics model is developed and used to propose and test hypothetical DB policy alternatives which are expected to enhance DB performance. Furthermore, after the appropriate customization processes, these research findings can also be applied to the industry settings of different countries.