Frequently Asked Questions
1. What is collaborative delivery?
The WCDA broadly defines collaborative delivery as a catch-all term to refer to project delivery methods involving a significant degree of interaction between the owner (including O&M staff), designer, and contractor. Today’s water sector defines five primary collaborative delivery methods:
- Construction management at-risk (CMAR)
- Progressive design-build (PDB)
- Fixed-price design-build (FPDB)
- Design-build-operate (DBO)
- Public-private partnerships (P3)
There are some subtleties and variations with each of these methods, but they all contrast with design-bid-build (DBB) delivery. (Note that we used to refer to many of these as “alternative delivery,” but acceptance of these methods has grown to the point that they are no longer just an alternative to DBB but represent mainstream options that can be in every owner’s toolbox.)
2. How do construction management at-risk and the various design-build methods differ from design-bid-build?
Unlike design-build (DB), the traditional design-bid-build (DBB) approach entails two prime agreements with an owner for the delivery of a capital project. The first agreement is with an architect/engineer for the design of the project. The second contract is usually secured through a public bidding process with the lowest responsible bidder normally awarded the construction contract. The design is completed first and then the project is bid out, in linear fashion.
For example, if an owner wants to build a new water treatment plant using DBB, the owner procures an engineering professional’s design services. The engineering firm then develops the project design and bidding documents. The owner then solicits bids from construction firms to build the project using the engineer’s design. A construction contract is awarded to the lowest responsible bidder who will then assume the responsibility to build the project according to the plans provided and commission it prior to turning over to the owner.
CMAR replaces the construction bidding process with a qualifications-based or best-value selection of a construction manager at-risk who then collaborates with the owner and its engineer to improve the constructability of the project and develop a cost estimate in parallel with the design effort. Once a cost is agreed to with the owner, often before the design is 100% complete, the CMAR can proceed with construction.
DB allows the owner to contract with a single entity (a design-builder) for both the design and construction of the project. DB also allows the owner to introduce performance-based requirements that, once agreed to, commit the design-builder to delivering the project that will function as defined in the DB contract.
3. What else is different for design-build?
Design-build (DB) is a contracting approach under which both project design and construction are sourced to an owner through a single entity that assumes responsibility for the design, construction, commissioning, and turnover of a capital project. With a single contractual entity that integrates design and construction, the owner can include performance-based requirements into the contract documents that define how the completed project must perform. The opportunity to include performance requirements results in some transfer of some risk to the design-builder—and it is this combination of performance requirements and risk transfer that fundamentally contrasts DB with DBB and CMAR.
DB also has a lot of flexibility in how it is implemented:
Progressive design-build (PDB) uses a qualifications or best-value selection process to engage a design-builder relatively early in the design evolution so that the owner can participate as the design and associated construction cost is developed progressively and collaboratively. Once the construction cost is agreed to, the design-builder can then build the project (often before the design is entirely completed, in a manner similar to CMAR).
For fixed-price design-build (FPDB), the owner asks for a full construction price as part of the procurement of the DB, most often in combination with a supporting design solution, the combination of which is referred to as a “best-value” selection. In this case, the design-builder can complete its design and begin construction right away. Design-build-operate (DBO) includes a long-term operational and life cycle performance component to the FPDB method.
4. Why has the use of collaborative delivery methods for public water and wastewater systems grown so rapidly?
The drivers for the need to upgrade and expand water and wastewater systems include population growth, economic development, aging systems that are beyond their useful life, and certain regulatory requirements for protecting water supplies and stream water quality.
Experience and research conducted by the WCDA has shown that collaborative delivery methods such as design-build (DB) and construction management at-risk (CMAR) are efficient and cost-competitive models for the delivery of new and upgrade of existing water and wastewater infrastructure. Moreover, collaborative delivery methods can result in substantial time savings when compared to design-bid-build (DBB) delivery. In addition, many owners have indicated that DB offers increased value based on equitable risk transfer and being able to integrate performance requirements into their projects.
5. What are good reasons for an owner to choose a collaborative delivery method over design-bid-build for a project?
Water Collaborative Delivery Association research has shown collaborative delivery methods offer many benefits to owners including better cost certainty, speed of delivery, capturing innovative solutions from design and construction professionals during the procurement and design process, and achieving optimum risk allocation among the owner, designer, and builder. Every owner and project are unique, so any combination of these drivers is good justification for selecting one delivery method over another. It is important for owners to align their key project challenges, priorities, and objectives with the benefits each project delivery method offers before choosing a delivery method.
6. Is collaborative delivery right for every project?
No single delivery method is suitable for every project. Design-build (DB) is best suited for a project where basic performance and technical requirements can largely be agreed upon prior to design and construction of the project. The owner must be able to set such requirements and allow the service provider to fulfill them in the best possible way. If a project is not clearly defined at the outset or may need constant owner input at different steps in the process, then DB may not be appropriate. However, when speed of completion is a priority, then DB may be the most attractive option. Construction management at-risk (CMAR) is best suited for a project where an owner wants to maintain a traditional relationship with its design professionals yet receive valuable input and transparent cost estimates from a construction contractor during design development.
Selecting the best delivery method for a project can be a complex undertaking with many variables. WCDA training is available to help owners identify their project priorities and desired outcomes and then align those criteria with the many attributes of each delivery method.
7. What are the advantages of design-build for an owner?
Design-build gives the owner the ability to contract with a single entity who bears the full responsibility for the design, quality, construction, and commissioning of a project. The integration of the engineering and construction functions provides significant time savings and the potential for innovation resulting in overall cost savings to an owner.
Having engineers and construction function within one entity provides the owner with a single point of accountability, allows for construction-related input in every stage of the design, often reduces time, and enables the use of construction best practices. This fosters collaboration and trust in the work environment, with all parties sharing common objectives and working as a team to identify the best-value solutions for the owner.
8. What are the potential disadvantages of design-build for an owner?
Design-build (DB) requires discipline on the part of an owner to make decisions early and throughout the process to establish the framework for the delivery of a successful project. Owners who want to prescribe a detailed solution in advance and then have continuous ability to modify the detailed design throughout the construction phase will have difficulty adjusting to DB, or they will tend to use construction management at-risk or progressive design-build to maintain a higher level of engagement in the earlier design phases while still obtaining the benefits of potential risk transfer and performance requirements.
9. Will I save money with design-build and construction management at-risk?
Maybe. The potential benefits of design-build (DB) for an owner include a single point of responsibility for both design and construction, simplified contracting, and speed of project delivery; often these approaches can save money, but not on every project. DB also has the potential to reduce overall project costs by eliminating the potential for conflicts between the designer and the contractor.
Construction management at-risk (CMAR) has the potential to reduce overall project costs by obtaining valuable constructability and construction cost-saving input from the contractor during design development. High-performing DB and designer / CMAR teams have proven to reduce the potential for change orders and claims because of the collaboration between the owner and its DB or designer / CMAR teams.
However, WCDA research has shown the primary advantage of DB in this respect is increased value to owners. DB and CMAR provide earlier cost certainty and both methods can allow for cost transparency and owner prioritization of scope to achieve a design that meets a budget. These attributes may or may not result in lower cost, but many owners indicate that the ultimate project scope and cost is of better value than traditional delivery.
10. Design-build can save time, but will the quality of the product be as good as with design-bid-build?
Yes. If the technical and performance requirements are adhered to by the design-build team, the final project will be comparable to or better than a design-bid-build project, without the potential for designer-contractor conflicts that can cause delays, finger-pointing, and additional problems. To further ensure the quality of any project, formal quality assurance and quality control programs must be in place and used throughout the delivery of a project.
11. For design-build and construction management at-risk projects, who has the responsibility for overruns?
It depends. Cost overrun responsibilities are negotiated prior to execution of a project and fully defined in the contract. Overruns that result from owner-directed changes to the design or unforeseen conditions during the project delivery are usually borne by the owner. For DB, overruns that occur in the absence of any owner-directed changes in the scope of the contract are usually the responsibility of the design-builder. For CMAR, cost overruns are managed similarly to design-bid-build. Design-related changes (whether they are added scope or changes to the design) are typically the responsibility of the owner. However, the CMAR firm is responsible for constructing the scope of the project as negotiated in the guaranteed maximum price or lump-sum amount and is responsible for any construction-related overruns as defined in its CMAR contract.
12. Do design-build or construction management at-risk projects preclude participation of small firms?
Not at all. In many cases, smaller firms can partner with other firms to complete a project. For example, in design-build (DB) when a small design firm does not have construction capabilities, it may find a construction partner and propose on a project together as one entity. Similarly, a construction firm that needs a design partner may form a team to compete for a DB project. Either of these arrangements can provide benefits like those found by a single integrated DB firm. Lastly, small firms can participate as specialty engineering or construction subcontractors to the DB team. For large construction management at-risk (CMAR) projects, smaller design firms may team with larger design firms to compete for design services for an owner. Likewise, smaller construction firms or specialty trade subcontractors may compete for or team with larger construction firms on CMAR projects.
13. When is it a good idea for an owner to use an owner advisor to assist with the development of a collaborative delivery project, and what do owner advisors do?
Owners with limited collaborative delivery experience, limited internal resources, or limited procurement and technical expertise to evaluate and substantiate the use of a collaborative delivery method can find the services of an owner advisor (OA) beneficial. The OA can augment existing owner resources and expertise from project planning through implementation. Early in the project development the scope for an OA can follow a wide range of responsibilities including development of conceptual designs and preliminary project specifications, planning services including preliminary site investigations, permit planning and development of initial cost estimates, and assistance with the collaborative delivery procurement process. During project execution the OA can continue to assist the owner with design, construction, and transition to operations and maintenance oversight.
14. What are the best sources of information water and wastewater owners new to collaborative delivery can use to educate their staff and enhance their procurement process?
The Water Collaborative Delivery Association (WCDA) is an excellent source of information for educating staff and enhancing their collaborative delivery procurement sources. The WCDA Water and Wastewater Collaborative Delivery Handbook (Sixth Edition) provides a complete guide from deciding to implement a collaborative delivery project through getting to project completion and transition to operations and maintenance. The WCDA also offers online and in-person education programs for water and wastewater facility staff.
The Design-Build Institute of America (DBIA) also publishes Design-Build Done Right ® documents that include useful information for owners and practitioners of design-build.
15. What is the difference between progressive design-build and fixed-price design-build?
Progressive design-build (PDB) utilizes a two-phase design-build process where an owner works with the design-builder to develop the design to approximately 60% to 90% completion concurrently with the development of open-book cost estimates and preconstruction planning (referred to as Phase 1 design and preconstruction). At the conclusion of Phase 1, the progressive design-builder prepares a contract price proposal to complete the design and construct the project. If the owner accepts the price proposal, it authorizes the progressive design-builder to complete design, construction, commissioning, startup, and acceptance testing for the project (Phase 2, construction). The contract price can be implemented in Phase 2 either as a guaranteed maximum price or lump sum.
Unlike PDB, fixed-price design-build utilizes a single fixed price obtained before the design-builder is selected encompassing the entire design, construction, commissioning, startup, and acceptance testing design-builder scope of services for the project.
16. What factors should an owner consider when deciding on a one-step versus a two-step collaborative delivery procurement process?
There are several factors owners should consider when deciding to utilize a one-step or two-step collaborative delivery selection process, including:
- State/local regulations
- Time and level of investment expected for owners and proposers
- Potential number of proposers
- Qualifications-only versus best-value or price-driven selection
- Level of expected design effort expected with proposals
A one-step or two-step procurement process may be dictated by state or local statutes. Some jurisdictions that allow for a one-step process require the project to be awarded based on qualifications only, and some jurisdictions require a two-step process for projects that are awarded on a best-value basis.
A one-step procurement, which can save an owner time during the procurement process, is typically used for qualifications-only selection. It can, however, also be used for best-value selection, requiring pricing as part of submittal requirements. Where price is considered, the appropriate procurement nomenclature is “RFP” and “proposal.” Where only qualifications are considered, the appropriate procurement nomenclature is “RFQ” and “statement of qualifications (SOQ).”
Regardless of approach, when price is considered, and subject to state or local statute, collaborative delivery firms are typically selected based on best-value, based on limited price and fee information included in their proposals. Each owner needs to decide at the outset, on a project-by-project basis, which procurement approach best fits its needs and preferences.
17. Should an owner issue a project budget or cost estimate with its procurement documents?
It is not mandatory, but it is advisable for owners to publish a project budget or cost estimate with their procurement documents. Typically, a project budget (if known) is published with the request for qualifications (RFQ) to provide interested collaborative delivery firms the rough order of magnitude size of the project. For short-listed collaborative delivery firms who will receive a request for proposals (RFP), it is common practice for owners to provide a more detailed cost estimate or budget document with the RFP and ask proposers to provide comments on the project cost estimate or budget. The proposer’s comments on the project estimate are typically not scored in the evaluation process.
18. Should an owner ask for pricing/fee from proposers during progressive design-build and construction management at-risk procurements? If so, what type of pricing can be requested?
Progressive design-build (PDB) and construction management at-risk (CMAR) procurements can be made without pricing/fee factors, which is then termed as a qualifications-based selection (QBS). State and local regulations may dictate if pricing/fee factors are or are not allowed. If an owner decides to utilize pricing/fee factors for PDB or CMAR procurements, the pricing/fee factors are blended with non-pricing factors to create what is termed a best-value selection. Pricing/fee elements that can be requested in PDB RFPs could include Phase I design and preconstruction services fee and labor rates or a full price for Phase 1 services on a not-to-exceed or lump-sum basis, plus, for Phase 2, a fee on cost of work, often expressed as a percentage added to the actual construction cost that is inclusive of overhead and profit. Sometimes, general conditions percentage is also requested for Phase 2. Pricing/fee elements that can be requested in CMAR RFPs could include Phase 1 preconstruction services price with labor rates, plus a fee on cost of work for Phase 2, and sometimes general conditions percentage as noted for PDB.
It is important to note that a full price for the entire project for PDB and CMAR procurements is not a reasonable request as the design for the project has not been developed in sufficient detail to be priced appropriately. If an owner requires a total price for a project to be submitted with proposals, then the owner should utilize a fixed-price design-build delivery method.
19. What is the difference between a guaranteed maximum price and a lump-sum implementation for construction management at-risk or progressive design-build?
In either case, construction costs are developed on a transparent, open-book basis to establish a contract price. At that point an owner may decide to implement Phase 2 construction as either a guaranteed maximum price (GMP) or a lump sum.
For a GMP implementation, the books stay open and all actual construction costs are documented by the CMAR or design-builder and verified by the owner. Any underrun when the project is completed (in aggregate) belongs to the owner unless there is some form of shared savings agreed to in advance. All overruns accrue to the CMAR or design-builder.
For a lump-sum implementation, the books are “closed” after agreement to the contract price and construction cost documentation is not required (except for what may be part of funding agreements). Any overrun or underrun accrues to the CMAR or design-builder at the end of the project.
20. What is an “exit ramp” or “off-ramp,” sometimes used on progressive design-build and construction management at-risk contracts, and what steps can an owner take to avoid them?
An “off-ramp” or “exit ramp” is a contractually defined option for the owner to use with construction management at-risk (CMAR) and progressive design-build (PDB) projects that terminates a project agreement prior to the notice to proceed for Phase 2 construction. The off-ramp may be taken for any reason at the owner’s discretion, but it’s typically because the owner and collaborative delivery firm are unable to agree on the cost to construct the project.
Successful PDB and CMAR projects have the following three common characteristics to avoid off-ramps:
- Establishment of a team structure for effective collaborative delivery
- Development of a collaborative working environment
- Implementation of an effective project management plan
21. Can an owner eliminate change orders and claims by using collaborative delivery methods?
Not entirely. Collaborative delivery methods cannot eliminate change orders and claims, but they can significantly reduce the amount and magnitude of change orders and claims. Certain risks must be retained by owners in any collaborative delivery contract such as acquiring land/easements, some existing site conditions, some environmental approvals and permits, and design risk (for CMAR project delivery). However, collaborative delivery methods provide opportunities for owners to transfer risks to a design-builder. For example, design risk and plant performance and acceptance testing risk can be transferred to the design-builder on progressive design-build (PDB) and fixed-price design-build (FPDB) delivery methods. Also, PDB, FPDB, and CMAR delivery methods are implemented in an inherent collaborative work environment where the owner, designer, and builder develop the design and associated construction cost that results in a higher level of mutual understanding and agreement before the project is constructed, therefore reducing the risk of change orders and claims.