Design-Build Best at Controlling Costs

Posted on November 8, 2010

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I recently completed Barry LePatner’s book, Broken Buildings, Busted Budgets (BBBB), and if I were a copy editor with a hook to write it would be: ‘LePatner Book Endorses Design-Build’. Considering BBBB is a book focused on why buildings cost so much and how to solve that, I would say the above headline as a thesis is news.

No, design-build itself is not new; however, in some circles it is still looked at skeptically as a better mouse trap. I cite the four most influential instances in the book where LePatner sells me. Since he is an attorney, I recognize them as evidence on exhibit.

Exhibit One. When introducing the three major project delivery methods—design-bid-build (DBB), construction manager (CM) at risk, design-build (DB)—LePatner clearly identifies design-build as a method that offers shortened schedules, which offers “potential savings”. Given the economics of construction with general conditions and all, it would be the , if not impossible, project that takes longer and saves the owner more money than a shorter one. He also notes that conflict is minimized which offers less a chance of change orders. However, this method of project delivery is best for projects with a high degree of certainty:  clear design, program, systems, finishes and owners who prefer to let the team do their thing. It is not for everyone.

Exhibit Two. The author pretty much describes a vertically-integrated design-builder when discussing efficiency:

“The fewer parties involved, the lower the chance disputes and miscommunication will arise. The larger and better capitalized the parties are, the more likely they are to increase their productivity and profitability and weather the cash flow crunches and disputes that inevitably occur in projects.”

Earlier in this section LePatner expounded on the fragmentation in the market due to lack of true competition for good contractors. Regardless whether you agree or not with the last statement, design-build consolidates the teams involved and especially integrated design-build capitalizes on rolling it all into one, big value bundle for the owner.

Exhibit Three. As an architect, this nugget was the most convincing piece of evidence for design-build; let me present a quote on page 151 from Frank Gehry stating it was his “fantasy to try and find a way to become the responsible part of the team with the client and become a partner with the construction company instead of an adversary.” Interestingly, this was nestled in LePatner’s discussion of contracts. If the godfather of high design, Architecture with a big “A”, AIA Gold Medalist and Pritzker Prize winner Frank Gehry secretly wants to team with construction, I think design-build could be in his future—even if he has enough sway to get most anyone to bend to his way on projects he touches.

Exhibit Four. In his conclusion, LePatner flat out states: “Perhaps the most direct method for controlling costs with a fixed price contract is for an owner to use a design-build agreement.” This evidence is included with his handful of other ideas for cost control, though weak contracts are a definite hot button of his and target for industry improvement.

Obviously design-build is not the only way to solve project budget problems. Yet, LePatner’s message is clear: design-build offers the most benefit of what is out there at this time. As was mentioned in his contracts discussion, the “goal is to avoid problems, not ‘get the other guy’”. Design-build, and particularly integrated design-build, makes this argument irrelevant.

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