Selection Factors and Success Criteria for Design-Build in the U.S. and U.K.

Anthony D. Songer , Keith R. Molenaar , and Graham D. Robinson

Abstract: Today's owners of constructed facilities are increasingly investigating a variety of alternative procurement methods. These methods include design-build, turnkey, and construction management. A tremendous growth in design-build and limited existence of documented research on owner's attitudes toward design-build necessitates a focus on this particular delivery strategy. To address the area of selecting design-build procurement strategies, a comprehensive research study was conducted on U.S. and U.K. owners for constructed facilities. This paper discusses results from a survey of 137 owners to determine expectations of success and quantify reasons for selecting design-build. Success criteria identified and analyzed include; On Budget, On Schedule, and Conforms to Users Expectations. Selection factors identified and analyzed include: Establish Cost, Reduce Cost, Establish Schedule, Shorten Duration, Reduce Claims, Large Project Size/Complexity, and Constructability/Innovation. It is the conclusion of this study that owner's most frequently select design-build to shorten duration. Owners expect that the single point of responsibility and the ability to fast-track design and construction inherent in the design-build process will shorten the delivery process. It is also the conclusion of this study that owners judge project success by budget variation, schedule variation and conformity to expectations.. Although the main motivation for choosing design-build as an alternative delivery method is to shorten duration over other procurement methods, the criteria for judging its success are the same.

Keywords

Design-Build, Procurement, Alternative Delivery Methods, Project Selection, Project Success

Introduction

Design-build is defined in this study as a project procurement method where one entity or consortium is contractually responsible for both design and construction. Design-build is not a new concept. In centuries past, it was the only procurement method available (Design-Build Institute of America, 1994). Its roots originate in the ancient "Master Builder" concept where responsibility for both design and construction resided with one person (Branca 1988; Twomey 1989). However, during the 1900s project procurement systems have primarily utilized the process of design-bid-build (American Institute of Architects 1975; Ndekugri and Turner 1994).

Current project delivery markets are experiencing a resurgence in the use of design-build procurement (McManamy 1994; Rosenbaum 1995; Yates 1995; Ndekugri and Turner 1994). The effect of this rapid growth is twofold. First, there is an increased entry into the market by both contractors and architect-engineers (AEs) possessing little or no design-build experience. This is evident from the increase in volume of design-build contracts. The U.S. Department of commerce predicts that design-build will account for half of all nonresidential construction in the U.S. by 2001, a 10-15% increase from one decade ago (Rosenbaum 1995). Second, such growth suggests an increase in owners selecting design-build for the first time (Denning 1992).Sustainable implementation of design-build as a successful procurement method requires documentation and dissemination of fundamental design-build knowledge to these new participants. To enhance owner selection of appropriate projects and to provide appropriate design-build serv

Design-Build in the U.K. requires an improved understanding of owner attitudes for slightly different reasons. Design-build in the U.K. as a delivery mechanism has matured more rapidly than in the U.S. As a result, for continued growth in the market place, design-build must focus on owner needs (Bennett, Pothecary, and Robinson, 1996).

This paper documents results of research conducted to gain insight into owner design-build selection attitudes. Specifically, it defines owner expectations of project success and identifies the primary selection factors available to owners in both U.S. and U.K. construction markets.

It should be noted that the scope of this study does not exam the two commonly accepted design-build hybrids of novation and bridging. Novation is a practice used in the U.K. in which owners employ their own designers during the initial stages of design and later transfer this design and designer to a design-builder who completes construction (Swindall 1993). Bridging is a practice used in the U.S. in which owners employ a designer to complete the initial design development (30% - 50% of the design work) and then selects a separate design-builder to complete the design and construction (American Institute of Architects/Associated General Contractors 1994). A direct analysis of the effects of novation and bridging is being conducted by the authors.

Research Goals

To assess owner attitudes toward design-build, two research goals were established. These goals were: 1) identify owner expectations for design-build project success, and 2) gain insight into owner design-build selection factors.

Since the early 1970s , there has been extensive research concerning the criteria on which a construction projects success is judged (Sanvido et. al. 1992; Ashley et. al. 1987; Pinto and Slevin 1988; American Society of Civil Engineers 1988; de Wit 1986). However, there has been no research to date which focuses specifically on design-build project success. Since owners select design-build as an alternative to other delivery methods, it is appropriate to determine if the criteria for success are different than the other methods. Therefore, the first goal of this study is to determine if design-build project success criteria are similar or different from the general success criteria identified in previous research. This information will provide the necessary framework to study selection criteria.

Although reasons why owners select design-build as a delivery strategy of choice abound, there has been no substantive research conducted which specifically addresses the issue (Booth 1995; Branca 1988; Cushman and Taub 1992; American Society of Civil Engineers 1992; Federal Construction Council, 1993; Twomey 1989). In fact, a current perception in the U.S. industry is that there is no one reason why owners select design-build (Federal Construction Council, 1993). However, previous research by the authors suggests existence of primary factors for selecting design-build (Molenaar 1995; Songer et. al. 1994). Therefore, the second research goal included identifying primary selection criteria specific to design-build and surveying owners to quantify any priority among the criteria. To pursue these research goals an owner survey questionnaire was developed and administered.

Data Collection

A survey questionnaire was developed and distributed to over 400 owner organizations in the U.S. and U.K. Owners with experience in at least one design-build project were qualified to respond. There were a total of 239 responses. Of the 239 responses, 65 did not have the proper experience to respond and 37 responded incorrectly by ranking more than one factor the same. A final total of 137 responses qualified for analysis.

Of the 137 responses analyzed, 51% were owners from the U.S. and 49% were U.K. as displayed in Figure 1a. As displayed in Figure 1b, 88% of the survey represent Building construction, 8% represents Industrial, 2% Heavy and Highway, and 2% other.

Figure 1

The cumulative construction experience of the owner's responding to the questionnaire was 1,048 projects totaling over $7.37 billion (U.S.) of construction. The survey creates a comprehensive statistical basis for the discussion of design-build success criteria and selection factors.

Research Findings

The primary research findings of this study are the identification and ranking of design-build success criteria and selection factors. The next section discusses success criteria findings and indicates there are 3 primary criteria used for success. These criteria are ranked equivalently in the U.S. and U.K. and are consistent with overall industry criteria. Although ranked equivalently in the U.S. and U.K., subtle statistical differences are explained.

Selection factor findings discussed in the following section indicate there is one primary reason for selecting design-build both in the U.S. and U.K. While selection factor ranks are generally equivalent among U.S. and U.K. owners, there is one significant difference in ranking and two in weighting of specific selection factors. These subtle differences are discussed in the statistical analysis which follows.

Design-Build Success Criteria

An initial step in this study consolidated previous research results and eliminated redundancies to generate a list of 6 success criteria for further study. Using the list of success criteria shown in Table 1, owners were asked to assign the most important criteria a "1" and the least important a "6". Therefore, a lower mean score indicates greater importance.


Table 1. Success Criteria Definitions

Success Criteria(1) Definition(2)
On BudgetThe project is completed at or under the contracted cost.
On ScheduleThe project is completed on or before the contracted finish date.
Meets SpecificationsThe completed project meets or exceeds all technical performance specifications provided by the owner.
Conforms to User's ExpectationsThe completed project meets or exceeds the userís envisioned functional goals (fitness for purpose).
High Quality of WorkmanshipThe completed project meets or exceeds the accepted standards of workmanship in all areas.
Minimizes Construction AggravationThe construction process does not unduly burden the owner's project management staff.

The individual rankings of the six success criteria yield a mean score which can be used to achieve an overall ranking. Table 2 below illustrates owner organizations' rank order of success criteria for design-build. The success criteria are sorted by mean score. Criteria, ranked in order of importance, are: On Budget, On Schedule, Conforms to Expectations, Meets Specifications, Quality Workmanship, and Minimizes Aggravation. Although individual rankings between the U.S. and U.K. indicate a reversal of two criteria, On Schedule and Conforms to User's Expectations owners, there is no statistically significant difference between the mean values of these to criteria (see Table 3). Therefore, it can be concluded that the rank order of success criteria among U.S. and U.K. owners is equivalent.


Table 2. Success Criteria Results

Success Criteria(1) Combined US UK
Mean(2) Rank(3) Mean(4) Rank(5) Mean(6) Rank(7)
On Budget 1.95 1 2.25 1 1.66 1
On Schedule 2.76 2 3.03 3 2.49 2
Conforms to Expectations 2.87 3 2.65 2 3.09 3
Meets Specs 3.55 4 3.69 4 3.42 4
Quality Workmanship 4.64 5 4.29 5 4.98 5
Minimizes Aggravation 5.23 6 5.11 6 5.35 6


Table 3. Success Criteria Statistical Comparison of U.S. and U.K.

Success Criteria(1) Mean Ranking(2) T-Value(3) P-Value
On Budget 3.05 0.0014
On Schedule 2.17 0.0319
Conforms to User's Expectations -1.90 0.0591
Meets Specifications 1.28 0.0216
Quality Workmanship -3.72 0.0003
Minimizes Construction Aggravation -0.98 0.3314

Figure 2 below illustrates that On Budget, On Schedule, and Conforms to Owners Expectations are the top three criteria owners consider for design-build success. They are rated 1, 2, or 3 more frequently than the bottom three criteria. The frequency of these rankings is displayed on the vertical axis of the graph through the cumulative frequency. A larger cumulative frequency coincides to a greater number of corresponding rankings. On Budget has the greatest number of 1, 2 and 3 rankings. Additionally, the concavity downward in the cumulative frequency of the top three criteria displays a dominance over the bottom three which are concave upward.

Figure 2

Figure 2

These individual design-build criteria rankings are consistent with similar findings concerning success criteria (Ashley 1987). Ashley's research analyzed successful construction projects but did not specifically look at the procurement method used. Although the wording is slightly different, the top three success criteria in Ashely's study agree (On Budget, On Schedule and Conforms to Owners Expectations versus Budget Performance, Schedule Performance and Client Satisfaction). Thus, this research confirms that the same criteria are important to the design-build population as to the larger construction population.

Although rank order of success criteria are equivalent among U.S. and U.K. owners, there are 2 criteria in which research results indicate a statistically significant difference. These criteria are On Budget and High Quality of Workmanship.

The statistic, Students t-distribution, was used for determining the significance between differences in the two samples. The specification of the rejection region was chosen to be (a) < 0.05. In other words, there is a 95% certainty that the result is not due to chance or the finding is significant at the 0.05 level. However, since multiple t-tests were performed, this alpha value was adjusted. The multiple t-tests create joint or simultaneous confidence intervals. The Bonferroni Inequality implies that for k t-tests one should not use the a point (i.e. a=0.05) of the t-test but the a/k point. The adjustment yields a=0.008.

Therefore, results with probabilities less than 0.008 identify a significant difference in the means. Probabilities are calculated using the Students t-distribution test with + -2 (135) degrees of freedom. Results of the t-tests for the individual success criteria along with their corresponding probabilities are displayed in Table 3.

The significant difference between On Budget (P-Value = .0014) can be explained by external economic differences in the Construction Markets of the U.S. and U.K. The very strong On Budget weighting (1.66) by U.K. owners is indicative of the economic pressures on owners in an slow market. The significant difference in High Quality of Workmanship (P-Value = .0003) is explained by the differences identified in the selection factors portion of the study. This is discussed in the next section.

---------------------------------------------------------------------- Insert Table 3 Here

These findings provide a contextual understanding of success criteria for public sector design-build and a framework for investigating appropriate design-build selection factors.

Design-Build Selection Factors An exhaustive literature search produced 7 design-build selection factors for consideration. These factors are identified and defined in Table 4. The main references used to develop these factors are given in Table 5.

Table 4: Selection Factor Definitions

Selection Factor(1) Definition(2)
Establish CostSecure a project cost before the start of detailed design.
Reduce CostDecrease the overall project cost as compared to other procurement methods (design-bid-build, construction management, etc.).
Establish ScheduleSecure a project schedule before the start of detailed design.
Shorten DurationDecrease the overall project completion time as compared to other procurement methods (design-bid-build, construction management, etc.).
Reduce ClaimsDecrease litigation due to separate design and construction entities.
Large Project Size/ComplexityThe projectís shear magnitude is too complex to be managed through multiple contracts.
Constructability/InnovationIntroduce construction knowledge into design early in the process.


Table 5: Selection Factor References

Reference(1)
American Institute of Architects/Associated General Contractors (1994). AIA/AGC Recommended Guidelines for Procurement of Design-Build Projects in the Public Sector, American Institute of Architects/Associated General Contractors.
American Society of Civil Engineers (1992). Design-Build in the Federal Sector, a Report of the Task Committee on Design Build, American Society of Civil Engineers.
Army Corps of Engineers (1994). Design-Build Instructions (DBI) for Military Construction, Headquarters U.S. Army Corps of Engineers, Directorate of Military Programs.
Branca, A. J. (1988). Cost Effective Design-Build Construction, McGraw-Hill, New York, N.Y.
Cushman, R. F., and Taub, K. S. (1992). Design-build contracting handbook, John Wiley and Sons, Inc., New York, N. Y.
Federal Construction Council, (1993). Experiences of Federal Agencies with the Design-Build Approach to Construction, Federal Construction Council, Consulting Committee on Cost Accounting, Technical Report #122, National Academy Press, Washington, D. C.
Gordon, Christopher M. (1992). "Choosing Appropriate Construction Contracting Method," Journal of Construction Engineering and Management, (120)1.
Myers, James J. (1994). Final Report on Design/Build as an Alternative Construction Delivery Method for Public Owners, Building Futures Council, Management and Contracting Alternatives Committee.
Ndekugri, I. and Turner, A. (1994). "Building Procurement by the Design and Build Approach," J. of Const. Engrg. and Mgmt., (120)2, 243-256.
Twomey, T. R. (1989). Understanding the Legal Aspects of Design-Build, R. S. Means Co., Kingston, Ma.

Notably missing from the list is the concept that owners select design-build because it establishes a single source of responsibility. This is the definition of design-build and encompasses all of the selection factors. It was determined early not to use single source as a reason for selecting design-build because it is too general and would not offer insight into the true motivation for choosing design-build.

These 7 factors were used as the list of possible reasons to select design-build in the survey questionnaire. The selection factor portion of the survey invited owners to rank the seven design-build selection factors. Table 6 summarizes the results of the survey which identify priority rankings of the 7 selection criteria. The individual rankings of the seven selection factors yield a mean score which can be used to achieve an overall ranking. The factors, ranked in order of importance are; Shorten Duration, Establish Cost, Reduce Cost, Reduce Claims, Establish Schedule, Constructability/Innovation, and Large Project Size/Complexity.


Table 6: Selection Factor Results

Selection Factors(1) Combined US UK
Mean(2) Rank(3) Mean(4) Rank(5) Mean(6) Rank(7)
Shorten Duration 2.29 1 2.46 1 2.11 1
Establish Cost 3.16 2 3.50 2 2.77 2
Reduce Cost 3.63 3 3.72 3 3.52 3
Reduce Claims 4.13 4 4.01 5 4.26 5
Establish Schedule 4.24 5 4.31 6 4.16 4
Construction/Innovation 4.55 6 3.88 4 5.30 6
Large Project Size 6.00 7 6.12 7 5.87 7

Research results indicate there is one primary reason why U.S. and U.K. owners select design-build, Shorten Duration. Owners do not feel strongly inclined to choose design-build due to having Large Project Size/Complexity. The dominance of the Shorten Duration displays over other factors is clearly illustrated by the cumulative frequency chart illustrated in Figure 3. Also shown in the graph is the strong negative feelings owners have about and Large Project Size/Complexity. This figure displays the dominance of Shorten Duration in the strong positive skew (or concavity downward) and displays the negative feelings about Large Project Size/Complexity in the negative skew (or concavity upward). The middle five selection factors display an almost uniform distribution.

Figure 3

Figure 3

It should be noted that although the owners only feel strongly about two of the seven factors, all factors scored at least one number one ranking. This illustrates for any particular project, any one factor can be a significant reason for choosing design-build. Therefore, in general owners select design-build to shorten duration but for specific projects the motivation for choosing it may be to establish cost, reduce claims or any of the others.

On balance, the ranking of selection factors between U.S. and U.K is equivalent. The one exception illustrated in Table 6 is that U.S. owners rank Constructability/Innovation as the 4th most critical selection factor while the U.K. owners rank it 6th. There is a statistically significant difference in mean values for this selection factor with a = .007 (see Table 7). This difference explains in part why U.S. owners are more concerned with High Quality of Workmanship as a success criteria. Allowing increased innovation transfers much of the risk for quality to the design-build entity. To balance this risk transfer, owners emphasize quality as an important consideration of success.

The low ranking of Constructability/Innovation among U.K. owners may also be partially explained by the slight variance in delivering design-build between the U.S. and U.K. Although not specifically studied in this report, novation may contribute to this difference. Novation in design-build is commonly practiced in the U.K. It can have the effect of reducing the design-build entities ability to innovate. Novation can occur even after the design is 100% complete. This would virtually eliminate innovation introduced by the design-builder.

Table 7

Table 7

Table 7 illustrates one additional significant difference among factors. The selection factor of Establish Cost is significantly different between the U.S. and U.K. (P-Value = .0093). This difference is accounted for in the economic pressures described previously for On Budget success criteria.

Conclusions

This research investigated owners' attitudes towards success criteria and selection of design-build procurement. The methodology employed was a sequential approach of comprehensive literature review and owner survey.

Results document that the primary success criteria for U.S. and U.K owner organizations are: On Budget, On Schedule, and Conforms to User's Expectations. These criteria are consistent with general construction industry success criteria. The primary reason both U.S. and U.K. owners select design-build is to take advantage of the time savings inherent in the process. For any specific project, additional factors which may dictate the use of design-build include Establish Cost, Reduce Cost, Constructability/Innovation, Establish Schedule, and Reduce Claims.

Contrary to the inherent differences in U.S. and U.K. design-build procurement procedures, design-build success criteria and selection attitudes can generally be treated as equivalent. These findings should be encouraging for design-builders seeking work in the global marketplace. Motivations for choosing a design-build procurement process as well as the criteria for judging the projects success appear to be similar.

These documented results provide core knowledge of the design-build process for both design-build contractors and owners entering the U.S. design-build market and sustaining continued growth in the U.K.. Considering the rationale for selecting design-build during marketing and implementation promises to enhance the success of this method of project procurement.

Acknowledgments

The authors express their appreciation to each U.S. and U.K. owner organization responding to the survey. This material is also based upon work supported by the National Science Foundation under Grant No. CMS-9410683 and by the Centre for Strategic Studies in Construction, University of Reading, U.K.



Appendix I. References


© University of Colorado, 1997
All Rights Reserved.