Public construction projects, like any construction project, often face two challenges: a limited budget and a tight schedule. In the typical Design-Bid-Build sequence of things, there is not a lot the owner can do to control the budget or reduce the schedule. But the private sector has come up with what is potentially a quicker, cheaper process of accomplishing the same goal: Design-Build construction.

This streamlined process saves time in the schedule by omitting the separate bidding step and permitting construction to start before final design decisions are made. It helps to control the budget by determining the cost at an early stage and assuring that the designer and contractor work together as a team to assure constructability of the design. Not the best solution for every project, though, Design-Build is so far the exception rather than the rule for public improvements. As will be explained in this article, some (but not most) political subdivisions have or should have authority to use Design-Build construction.

What Is Design-Build?

Legally, Design-Build is described as a “delivery system” that contrasts with the traditional Design-Bid- Build delivery system for construction projects. Everyone knows how Design-Bid-Build works: A design professional under contract with the owner turns the owner’s basic concept into a set of plans and specifications spelling out in detail what the finished project will look like, right down to the doorknobs. Then the owner puts the plans and specs out for bids, and contractors bid on them, offering to construct that particular project for X amount of dollars. The owner selects from among the bidders, usually selecting some version of “lowest responsible” or “lowest and best,” if the project is a public one. Finally, the owner enters into a second contract, this time with the successful bidder, and construction is at last underway.

On some projects, there is minimal communication between the design professional and the contractor, and there is virtually no communication between them in the early stages of the design process, when value engineering might do the most good.

By contrast, Design-Build works this way: The owner requests interested teams (designers and contractors working together) to submit statements of their qualifications to perform the project, based on “conceptual documents” that convey in general what the owner has in mind. Interested teams respond, and the owner evaluates the responses to prepare a “short list” of qualified candidates. Then the short-listed candidates prepare more detailed proposals showing the design and construction techniques they would use to achieve the performance level the owner has requested and what their proposed cost would be. Again, the owner evaluates the proposals, this time to select the winning design-builder, the team that will work together to complete the design, assure its constructability, and get it built on time and on budget.

As one Ohio court explained, “The design-build process provide[s] end specifications to the bidding contractors, but transfer[s] the determination of how to get there to the contractors.” See Greater Cincinnati Plumbing Contractors’ Association v. The City of Blue Ash, 106 Ohio App.3d 608, 611 (Ohio Ct. App. 1st Dist. Hamilton Cty. 1995). (While not a decision of the Supreme Court of Ohio, this Court of Appeals decision did approve Design-Build as a proper exercise of homerule power for charter cities. The opinion provides a roadmap for other charter cities to use on their Design- Build projects.)

Who Can Use Design-Build?

Obviously, any private owner so inclined can try Design-Build. But public owners have the competitive bidding process mandated for them by Ohio law, which requires public owners to solicit bids and enter into contracts with at least four separate prime contractors. How can such a strict system allow an owner to contract with a Design-Build team?

The answer is it can’t, unless an exception applies. The General Assembly enacted a recent exception for county engineers just last year. Under the exemption, “a county engineer may combine the design and construction elements of a bridge, highway, or safety project into a single contract, but only if the cost of the project as bid does not exceed one million five hundred thousand dollars.” The statute also clarifies that in lieu of the plans usually required in public bidding, “the county engineer shall prepare and distribute a scope of work document upon which bidders shall base their bids.”

Another exception - that for charter cities - has been around longer. Under Article XVIII of the Ohio Constitution, any municipality can be a charter city if it adopts a charter to govern itself. The charter enables the city “to exercise all powers of local selfgovernment.” The only restriction is that any local police, sanitary and other similar regulations adopted must not be in conflict with general laws.

Would this constitutional provision, known as “Home Rule,” permit a city to authorize its own use of Design- Build construction in its charter? That was the question facing the Hamilton County Court of Appeals in the Blue Ash case cited above. The City of Blue Ash wanted to renovate its recreation center, but it wanted the bidders to “examine the current facility and the proposed addition, and . . . come up with imaginative and operationally feasible approaches to addressing [the] mechanical, plumbing and other requirements.” So Design-Build seemed the way to go to everyone - everyone but a plumbing contractor, a mechanical contractor, a Blue Ash taxpayer, and three trade associations (plumbing contractors, mechanical contractors, and electrical contractors). This diverse group filed suit, charging that the City was violating the competitive bidding law by using Design-Build.

Both the trial court and the Court of Appeals disagreed, even though the City Charter did not specifically mention Design-Build. The rights granted in the Charter were broad enough to encompass Design-Build. Also, there was no requirement that the bidding not conflict with general Ohio law because the Design-Build bidding process was not an exercise of municipal police law. It was merely “an exercise of the city’s local selfgovernment.”

The appellate court saw the Design-Build process as just another version of competitive bidding:

Contractors under the design-build bidding process compete with each other in terms of price and design. Factors such as quality, service, performance and record are also part of the competitive process. The city’s discretion in awarding a contract to the best design and cost is similar to the discretion provided under general state law to accept the “lowest and best bidder.”

Under the decision in Blue Ash, a charter city with the proper charter provisions and an enabling ordinance would be able to use Design-Build construction.

What Are the Advantages and Disadvantages of Design-Build Construction?

There are at least five advantages to the streamlined Design-Build delivery system:

1. The owner has a single point of responsibility to deal with, the Design-Builder.

2. The project can usually be completed faster, with one selection process instead of two (designprofessional followed by competitive bidding by contractors).

3. The cost can be determined early on, when the Design-Build team is chosen and before the design is complete.

4. Constructability issues should be minimized, as the designer and contractor will be working together from the beginning.

5. Errors and omissions claims should be eliminated, i.e., no finger-pointing between the contractor and the design professional with the owner caught in the middle.

Of all of these, the schedule is probably the primary reason for choosing Design-Build. At least that was the conclusion of a recent survey of public owners conducted by the University of Colorado at Boulder. By far the most important reason they chose Design-Build was to shorten the duration of the project.

As for the disadvantages, any new process is likely to have kinks that need to be worked out, and Design- Build is no exception. Here are a few to consider:

1. The single point of responsibility means there are fewer checks and balances than in the traditional system.

2. Because the “conceptual documents” on which the Design-Build teams base their proposals lack details, the owner gives up a certain amount of control.

3. Short-listed teams put a great deal of effort into their proposals, and those who don’t get the contract may need the offer of an honorarium as an incentive to proceed. But Owners should realize that the honorarium is never more than a very small percentage of a team’s actual proposal costs.

4. Keeping to the streamlined schedule requires the owner to make decisions quickly and completely while design and construction are occurring simultaneously.

5. Procurement techniques are different from the ordinary and may not be fully understood.

6. Agencies that issue permits may be resistant to approving plans that are less than 100% complete.

What Makes a Project a Good Match for Design-Build?

Some projects will thrive under the Design-Build system while others will not. The same University of Colorado study cited above looked at the characteristics of a public construction project that are critical for success as a Design-Build project. The scope of the project was a clear winner, as “well defined scope” came out number one, while “shared understanding of scope” came out number two. Without a clear scope, the conceptual documents could be just so much pablum, inviting such diverse proposals that they would not even be comparable.

Next most important were characteristics of the owner - specifically, the owner’s sophistication when it comes to construction, and the adequacy of the owner’s staffing. The survey respondents did not see Design-Build as a wise choice for an understaffed, inexperienced owner. However, should such an owner still want to do Design-Build, it can contract with a construction professional to assist it in preparing the necessary Request for Qualifications and Request for Proposals and otherwise guide it through the process.

Somewhat surprisingly, having an established budget and an established completion date came out numbers five and six, respectively, on the list of factors leading to success. Although public owners might have the schedule uppermost in their minds when they chose Design-Build, it was less important than scope and owner’s characteristics as a factor of success.

So a public owner who wants to get its feet wet on a Design-Build project should first get some construction experience with the traditional Design-Bid-Build system and then be sure it can devote adequate staff to the project from the beginning. It should select a project with a clearly defined and understood scope, so Design-Build teams will know what is expected of the finished project. There should be no misunderstandings about the performance specifications that will replace the more usual plans and detailed specifications. Finally, both the budget and the completion date should be clear and known from the start, even before the Design-Build team begins its work.

To assist owners in evaluating whether their project is appropriate for Design-Build construction, the University of Colorado has developed the Design-Build Selector. The Design-Build Selector is a series of questions and answers that permits owners to evaluate the appropriateness of their projects for Design-Build construction.

Reprinted from Finley’s Ohio Municipal Service, with the permission of the publisher and copyright owner, West Group.