Design-Build – does this method work well in the public sector?
By Eric A.D.MacDonald, M.Sc., P.Eng. Chairman and CEO MacViro Consultants Inc.
For the past decade and on a selective basis, the public
sector has employed the design/build (D/B)
method of project delivery in lieu of the conventional
method. The main difference between the two
delivery modes is that the contractor is ‘given’ the works at
the beginning of the design phase rather than with the conventional
approach, whereby the contractor comes on board
at the end of the design phase. This difference is highly significant
to the success of the project, because the public sector
and the D/B contractor have different objectives, i.e. the
public sector client wants a project that has low life-cycle
costs while the D/B contractor wants a project that has low
capital costs.
Why then would the public sector client select the D/B
approach for their project? The answer is that the public sector
believes that the D/B project delivery model gives an
accelerated schedule, known up-front costs, no extras and
reduced overall costs.
The misconceptions and realities of these beliefs, which
have been realized, are:
while schedule accelerations may or may not be achieved,
the fixed costs belief has proved a misconception;
while the capital cost may be lower, the quality of the product
has led to much-reduced life spans and, consequently, relatively
high operation and maintenance costs;
the contractor (D/B entity) is frequently not sensitized to
political, public, environmental and agency issues/concerns;
the quality of the end-product is frequently and visibly inferior
to the conventionally delivered project.
The conclusions that are now emerging are that the D/B
method of project delivery is on a down-cycle for the following
reasons:
It is perhaps fair to conclude that although the D/B project
delivery mode may apply to projects for the private sector, it
does not work well for the public sector.
The public needs are best addressed through the conventional
approach, where the design consultant is much more
sensitive to the ‘soft’ but critical considerations of a project.
If a D/B project delivery mode is to be selected, it must
include up-front comprehensive data so that the D/B contractor
can fairly price the works and thereby obviate future
claims.
A ‘partnering’ concept is critical, considering the initial
data transfer is rarely complete. Accordingly, the working
relationship with the contractor must be one of close co-operation
rather than one of antagonism.
The Expression of Interest must fully define the subsequent
Request for Proposal requirements, including a comprehensive
risk-sharing matrix.
In summary, and with the D/B project delivery mode in
decline, what is now increasingly appearing on the project
delivery scene is perhaps the 3Ps, i.e. public-private partnerships,
a model that depends on co-operation and equitable risk
sharing. Accordingly, it appears that there continues to be a
need for the private sector to be involved with public sector
works.
Some ten to fifteen years since the ‘arrival’ of privatization,
it is quite reasonable to assume that the PPP project
delivery model may be the next preferred approach.
