In the construction industry, the design-build is an often-used project delivery method. Also known as EPC (engineering, procurement, construction), the design-build approach lets a single team complete the project from scope development to construction, thereby ensuring improved project delivery performance in terms of cost, schedule, and quality.
However, to realize the benefits, project owners and contractors need to understand when to use the design-build method and its suitability for schedule-driven projects. Below, we describe project scenarios where a design-build approach might be preferred and the benefits of choosing the right EPC contractor to execute a capital project.
When to Use the Design-Build Method
Through a design-build contract, a project owner delegates all design and construction responsibilities to a single team to minimize the risks of cost and schedule overruns while ensuring consistent quality through all stages of the project. By hiring an EPC contractor early in the process, the design-build approach greatly reduces change management challenges that are otherwise inevitable in traditional project delivery methods due to the lack of alignment between the separate design and construction companies involved.
Let’s look at some of the key aspects of an industrial project that helps project owners and contractors determine when to use the design-build method.
Though projects of all sizes can benefit from the design-build method, larger projects are typically most suited for applying the approach due to their complexity and schedule-driven challenges.
For any type of project, it is important to develop the project scope in as much detail as possible to get it to a basis on which it can be bid for design-build. Because design-build projects supply a price for detailed design through construction, front-end development must be performed to allow for a reasonable cost estimate.
Unlike conventional project delivery methods in which the project is executed in a specific sequence (detailed design → procurement → construction), requiring bidding between phases, the design-build approach notifies the project owner of the total costs of a project upfront and the overall costs across all stages, thereby making it easier to calculate the ROI. As a result, design and construction cost growth are often lower while using the design-build method, making it a highly beneficial project delivery system for capital projects. Typically, in design-bid-build, the cost of the project will not be certain until the detailed design is complete and the package is bid out for construction costs.
It’s important to note that because project costs are estimated before design completion, contingency is added to cover unknown quantity effects that may occur during the detailed design process.
The design-build method is pushed heavily when the project is schedule-driven. Taking advantage of the overlapping project phases in the design-build approach, a contractor can lay out the project more easily to fit the schedule. According to the Construction Industry Institute (CII), compared to the design-build approach, the design-bid-build method has increased design and construction schedule growth and has the potential for increased risk for projects with tighter timelines.
For project owners who do not have a lot of construction management or engineering support, managing multiple contractors is a challenge that often leads to frequent change orders, resulting in cost and schedule overruns. Among all project delivery methods, the design-build approach has the highest design and construction speed, owing to the single source of accountability that lets the design-build contractor fix issues without having to rely on other contractors. The faster construction speed translates to a lower-cost impact for project owners.
Scope of Changes and Rework
In traditional project delivery approaches with siloed engineering and construction teams, changes and rework often require construction to be stalled so a Request for Information (RFI) can be submitted and solutions can be considered. In a design-build approach, because there is a single source of accountability throughout all of the project stages, the risk for change orders is reduced because all of the teams work together to define the project scope, schedule, and costs in as much detail as possible.
If a project isn’t necessarily schedule-driven and the project owner has the necessary manpower, the design-bid-build approach is a great option for project execution, particularly for smaller projects. However, in a design-build approach, project stages can often be overlapped, creating more schedule and execution flexibility. Contractors with in-house procurement, design, and construction teams can begin installation at the job site while other parts and equipment are still being fabricated. This can significantly reduce the project timeline and help mitigate any financial risks.
Consistent quality through all stages of a capital project is critical for a successful outcome. Because the design-build method utilizes a single source of accountability, quality standards are set across the design, engineering, and construction teams. This ensures the contractor can meet and maintain the performance and quality requirements of a project throughout its life cycle.
Implementing the Design-Build Method with the Right Contractor
The success of a project using the design-build method is largely dependent on the contractor. A design-build company with in-house construction capabilities can ensure consistency between the design and construction teams while reducing the risk of cost and schedule overruns.
At H+M Industrial EPC, we have been providing outstanding capital project management services to various industries, including energy, chemical, and terminal and logistics, through a proven EPC approach for more than three decades. Our in-house engineering, procurement, and construction teams collaborate with you to provide certainty to your project supply chain and keep your project life cycle intact, within budget, and on schedule.