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 in 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, 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. The early and frequent collaboration between estimating, engineering, procurement, and construction teams is a key defining factor for this 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 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. At this point, the general contractor, subcontractors, and material vendors carry out the build per the design specifications.
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:
Benefits of Design-Build:
- Potentially faster timeline due to avoidance of the bidding process and the ability to overlap project phases
- Risk transference from project owner to design-build contractor
- Generally reliable budget and high certainty of maintaining ROI
- Streamlined communication
- Reduced management efforts
Benefits of Design-Bid-Build:
- Competitive bids at each phase
- Distinct roles and responsibilities for design and construction
- A linear process that is easy for project owners to understand
- Scheduling is straightforward, as project phases are sequential
- Higher level of active owner involvement and participation (if this is preferred by the project owner)
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.
- 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.
- No observed 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 controls capabilities, and a history of successful project execution.
Your Capital Project, Your Way
At H+M Industrial EPC, we have more than 30 years of experience providing leading capital project management services to the energy, chemical, and 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.