`Design-Build' Contracts Can Save Time, Money in Construction Jobs

By Cleary, Mike | The Washington Times (Washington, DC), June 8, 1998 | Go to article overview

`Design-Build' Contracts Can Save Time, Money in Construction Jobs


Cleary, Mike, The Washington Times (Washington, DC)


Building owners traditionally have signed separate contracts with architects to design their buildings and contractors to build them. But disagreements and delays that often plague this "design-bid-build" process have led owners to migrate to a more centralized and cooperative method called "design-build."

In design-build, the owner uses a single source for design and contracting work. The key is that it centralizes decision making, although either design or construction work may be subcontracted.

"They wanted a change. They wanted a single point of responsibility rather than a three-cornered argument" that often arises under the traditional system, said William Fisher, a construction law attorney with Wickwire Gavin PC in Vienna.

Long used in major industrial projects, owners have been using design-build in all kinds of projects, such as federal courthouses, sports stadiums, military facilities, office buildings and retail, hotels and transportation projects. It has slowly become more popular over the last two decades, but only in the past year or so has it really taken off, Mr. Fisher said.

The $675 million expansion of Chicago's McCormick Place Convention Center to 2.9 million square feet is a good example of how a design-build project can work, said Gene Lunger, executive vice president of Clark Construction Group of Bethesda.

The project, which Clark worked on, was finished two months ahead of schedule and $35 million under budget and earned several awards, Mr. Lunger said.

Because the process makes decisions easier, it helped projects like the $144 million MCI Center and Jack Kent Cooke Stadium open on time.

"It was the worst spring in the world to start [Jack Kent Cooke Stadium in 1996]. Nevertheless, we opened five minutes before kickoff," Mr. Lunger said. "It was nip and tuck all the way."

Design-build generally saves 20 percent of the time needed by the traditional method, by eliminating some of the indecision, removing the bidding process and allowing an early start on some work, he said.

But project owners should stay involved in design-build projects to avoid problems, both Mr. Fisher and Mr. Lunger said.

Engaged owners can prevent architects from overdesigning, which can be a serious problem. "You really don't have time" to fix such problems later because delaying work schedules can send costs skyrocketing, Mr. Lunger said. The construction risks have shifted in design-build. Contractors take the lead role more often, but this has made them more vulnerable to liability if there are design flaws, Mr. Fisher said.

As a contractor, Clark has set up limited liability corporations for its design-build projects to protect itself from lawsuits. The setup takes more legal groundwork but it protects Clark from becoming liable for design problems, Mr. Lunger said.

Clark typically uses partnerships for its regular construction projects because they're easy to set up, but partners are liable for each others' mistakes. The limited liability corporation acts as a shield, taking the lawsuit but protecting the contractor, Mr. Fisher said.

Another advantage of design-build is that it forces owners to put performance guarantees into contracts - something not found in traditional construction, which has some tolerance for flaws and improvisation. But that also adds risk for the contractor and architects if they don't live up to the contract. …

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