An early and vital decision that has to be made for any capital project is the owner’s selection of a project delivery system that will be utilized to execute the project. This decision ultimately influences the language of the contract, the timing of its signing, and the overall framework for work execution.
Two of the most commonly used delivery systems are design-build and design-bid-build. Below, we detail everything you need to know about design-build vs. design-bid-build, including key differences, the benefits of each delivery system, and how to choose between the two.
Design-Build vs. Design-Bid-Build: Key Differences
Design-build—also known as EPC (engineering, procurement, and construction)—is a delivery method in which a single design-build company works under a single contract with a project owner, providing all design and construction services. This entity will assume full responsibility for the project’s design and construction aspects. The early and frequent collaboration between estimating, engineering, procurement, and construction teams is a key defining factor for this method.
This collaborative structure established from the project’s outset plays a pivotal role in its success. Adjustments can be made more easily through ongoing interactions between teams, reducing the likelihood of project disruptions.
Design-Bid-Build: The Traditional Delivery Method
Design-bid-build is a traditional delivery method that is particularly popular for small capital projects. Typically, in this approach, the owner outlines the scope of the project, which serves as a foundational reference point for subsequent phases before bidding detail engineering and design. The result of detail engineering and design is an Issued for Construction (IFC) package that is used to bid construction.
Once the construction bid is awarded, the general contractor, subcontractors, and material vendors carry out the build per the design specifications. While this approach provides a traditional delineation between design and construction phases, it can lead to extended project timelines due to the sequential nature of its execution.
Further, the design-bid-build approach places a greater level of design-related risk on the owner, who must navigate potential discrepancies and make adjustments within the framework of their design specifications. Accommodating design modifications during construction phases can introduce unexpected complexities that increase costs and schedule disruptions.
Understanding the Benefits of Each Delivery System
Each project delivery system has unique benefits for project owners. However, it is important to understand that both approaches can be highly successful with proper pre-project planning, scope definition, and execution strategy.
Here are some of the top benefits for each delivery system:
Choosing Between Design-Build vs. Design-Bid-Build
To provide a bit of context around the use of these two delivery systems for capital projects in practice, let’s take a quick look at findings from a Construction Industry Institute (CII) study assessing the performance of owner- and contractor-submitted capital projects that used either design-build or design-bid-build:
- In terms of cost, design-build projects were approximately four times larger than design-bid-build projects on average.
Owner-Submitted Data
- Cost performance was better for DB projects than it was for DBB projects.
- Projects using DB consistently demonstrated better schedule performance.
- For changes, rework, and practice use, DB projects clearly had the advantage over DBB projects.
Contractor-Submitted Data
- No difference in cost performance was observed between DB and DBB projects.
- Projects using DBB achieved better schedule performance than projects using DB.
- For changes, rework, and practice use, DB projects usually outperformed DBB projects.
As previously mentioned, both design-build and design-bid-build delivery systems have benefits—deciding between the two depends on owner preference, project size, and inherent driving factors such as schedule and budget. Below, we have provided a few examples of situations in which design-build and design-bid-build may benefit project owners.
Situations Well-Suited for Design-Build
- Schedule-driven capital projects with tight timelines
- Large-scale, high in complexity, private-sector capital projects
Situations Well-Suited for Design-Bid-Build
- Capital projects that are not driven by tight timelines
- Capital projects in which the owner has the expertise, infrastructure, and manpower to oversee the project
- Small-scale capital projects that are standards, repetitive, and low in complexity
- When there is a strong desire for competitive bids at each phase
Every capital project is unique and has varying levels of complexity, different driving factors, and different owner preferences. While these above situations can serve as general guidelines for choosing between design-build vs. design-bid-build, both approaches can result in successful capital projects if the right contractor(s) and industry best practices are utilized.
Look for contractors with strong industry-specific expertise, experience with the area and type of work being performed, robust project management and project control capabilities, and a history of successful project execution.
Your Capital Project, Your Way
At H+M Industrial EPC, we have more than 35 years of experience providing leading capital project management services to the energy, chemical, terminal, and logistics industries. Whether your project requires a design-build approach or a design-bid-build approach, we will work closely with you to drive your project to success—on budget and on time.
