A project delivery system is at the core of a construction project and is often utilized to reduce the risks of delayed schedules and cost overruns while maintaining consistent quality across every stage of the project. Selecting the best project delivery method defines the overall project execution framework as well as the roles and responsibilities of project owners and contractors to ensure a successful outcome of the project.
The suitability of a project delivery method for a capital project depends on several factors, such as the size, schedule, and cost of the project, along with risk allocation and project design.
Further, the selection of a project delivery method can be greatly influenced not only by a project owner’s experience, control, and involvement but also by the available infrastructure in terms of construction management or engineering support.
Below, we discuss the two most widely used approaches to project delivery, design-bid-build (DBB) and design-build (DB), and the suitability of these approaches for different projects.
Design-Bid-Build vs. Design-Build
While selecting the best project delivery method, it is important to consider that each model has benefits depending upon the situation. Let’s take a look at some of the key aspects of design-bid-build and design-build methods and how they influence a project’s performance. Regardless of the method selected, the project must be fully defined before the execution of engineering. This is typically done in a front-end planning process.
The design-bid-build method is a conventional and popular approach to project delivery, in particular for small capital projects. This method relies on the project owner to outline the scope of the project before accepting proposals for the IFC (Issued for Construction). An IFC package typically consists of project plans, drawings, and specifications in which a well-defined scope is imperative to its accuracy. The traditional method of awarding DBB work is low bid, with the selected contractor, subcontractors, vendors, and material suppliers carrying out the build as per the specified design.
By nature, this bidding for separate design and construction teams lends itself to a longer negotiation and contracting process, as one phase must be complete before moving on to the next. Depending on the drivers of the project, this additional time may not be an issue for the project owners and will allow them to control other project factors. The design-bid-build method is well-suited for a capital project that is not necessarily schedule-driven, and the project owner has the expertise, infrastructure, and manpower to oversee the project. The DBB approach can be applied to standard, repetitive, low-complexity, and small-scale projects.
In the design-build, or EPC (engineering, procurement, construction), approach, the project owner delegates all responsibilities of design and construction and the associated risks to a single EPC contractor. As a single entity is involved in carrying out the project responsibilities in the DB method, the selection of a contractor with the required expertise and in-house designing and construction capabilities is critical to the success of the project. The design-build contract sets the terms of the agreement between the project owner and the contractor, including the budget, timeline, and project deliverables.
The DB method allows a project owner to work with the selected contractor to clearly define the scope early in the project cycle. A clear, detailed, and complete definition of a project scope offers price certainty while significantly reducing risks such as schedule delays and cost overruns. Because the DB method works with one contractor across the entire project, the procurement, design, and construction stages can often be overlapped, thus ensuring faster project delivery and potential cost savings. As a result, the DB method is ideal for accomplishing complex projects with tight timelines. The flexibility of contractor selection and the bidding process in the private sector contributes to the greater effectiveness of the DB approach for large-scale, private-sector capital projects. According to the Construction Industry Institute, the project performance score for the DB method is higher than the DBB method due to a decreased cost and schedule growth.
No two capital projects are the same, and the best project delivery method depends upon the specific timeline and budget of a project. For a project owner, it’s essential to select the right contractor who has expertise in different project delivery systems.
Implementing the Best Project Delivery Method Through the Right Contractor
H+M Industrial EPC has decades of experience working in the energy, chemical, and terminal and logistics industries and ensuring successful project outcomes through the best project delivery systems. Our in-house engineering and construction capabilities, along with our integrated EPC approach, help keep project life cycles intact while minimizing the risks of cost and schedule overruns.