An alternative project delivery model that came to light at a time when owners, consultants, and contractors were facing cost and schedule fluctuations is Progressive Design Build. PDB arose as a response to several challenges and limitations of traditional project delivery methods such as Design-Bid-Build and Design-Build. It has been gaining in popularity in the construction industry as an alternative to help provide more realistic schedules and cost structures for projects and to keep the financial risk reasonable for all parties.
In this blog, we will explore the meaning of the PDB delivery method, how it works, its benefits and drawbacks, and in what ways the alternative project delivery system differs from traditional DB practices. Furthermore, discover the unique elements in the PDB contract and learn effective tips to implement the progressive design-build process successfully.
Progressive Design Build Definition
Since the foundation of the Design-Build Institute of America (DBIA), Progressive Design Build (PDB) has emerged as a version of the Design-Build project delivery method. In PDB, the owner hires the team through one step, qualifications-based selection (QBS), and then “progresses” towards a design and contract price with the team (thus the term “Progressive”). Meaning, that the design-builder’s project cost/price and schedule commitment are not considered part of the selection process. Instead, after the project design is 50 to 75% complete, the design-builder issues a Guaranteed Maximum Price (GMP). The team must work within budgetary restraints under a “cost-plus” contract.
How PDB Works
This increasingly popular delivery method is a hybrid between traditional Design-Bid-Build and Design-Build approaches. Under a single contract, the owner retains the design and construction team at the earliest stages of the project, in some cases, even before design development. This early partnership of single-point Design-Build promotes maximum collaboration between the owner, the designer, and the design-build contractor.
As the project progresses, the design firm develops solutions and the construction team provides input on the constructability and cost of the design, with the owner giving feedback throughout the process. Simultaneously working like this enables the team to identify and mitigate potential issues early in the process. It also allows the owner to make informed decisions about the PDB project scope, schedule, and budget.
Lisa B. Choplin, Deputy Executive Director of DBIA states, “Since the design-build team is working collaboratively with the owner in PDB, risks can be identified and mitigated earlier in the design development resulting in a GMP that reflects the actual cost to construct the entire project.”
The ultimate goal of Progressive Design Build is to foster a collaborative, streamlined, and cost-efficient project delivery approach, which results in a superior quality end product.
Progressive Design Build Process
Below is the step-by-step breakdown of the PDB Process:
Request for Qualifications (RFQ)
The owner selects the design-builder through a Request for Qualifications (RFQ). The primary driver of this process is not price competition on the overall Design-Build contract price, but instead, on the value the contractor can provide. Once the design-builder is finalized, the design-builder delivers the entire project in two distinct phases.
Request for Proposal (RFP)
Though a one-step process is ideal for QBS, a two-step process works more suitably for complex projects or best-value selection. Proposers spend more time and resources responding with detailed technical proposals and owners can thoroughly evaluate these proposals. The first step of the process focuses on shortlisting the three most qualified teams, primarily based on qualifications and past performance, key trade partners, and resumes of key personnel. The second step entails the submission of technical proposals, with the proposals helping the owner in awarding the contract to the right project team.
Phase 1 – Preconstruction Services
First is the Preconstruction Services stage, whereby the design-builder works with the owner and its consultants to create the project’s basis of design, and then develops it. Decisions are based on budget, schedule, operability, life cycle, and other factors, with the design-builder providing ongoing, transparent cost estimates to follow the owner’s budgetary requirements. When the design has been appropriately defined pertaining to the owner’s needs, the design-build contractor will offer a formal commercial proposal for Phase 2 services.
Phase 2 – Final Design and Construction Services
Phase 2 begins once the owner and design-build contractor negotiate commercial terms (including price and timeline). This is often referred to as the Final Design and Construction Services stage. This phase usually includes testing, commissioning, and any other related services that may have been negotiated in the agreement.
Off-Ramp
According to the Design Build Institute of America, if, for any reason, the parties cannot reach an agreement on Phase 2 commercial terms, then the owner may exercise the right to “off-ramp”, where it can take the design and move forward with the project through a design-bid-build procurement, with another design-builder, or any other method it deems appropriate.
Progressive Design Build Pros and Cons
PDB is increasingly gaining popularity and traction because of its collaborative benefits. However, it comes with certain disadvantages, too. Here are all the major pros and cons associated with PDB.
Pros –
1. Single Point of Accountability
There are multiple project risks associated with design, building permits, procurement of materials and equipment, schedule, cost, construction warranty, and professional liability. Since PDB creates a unified contract, the Design-Build contractor becomes the single point of accountability, leaving no chance for a “blame game” in a PDB project.
2. Increases Owner’s Control
Progressive Design Build (PDB) increases owner control by allowing early, value-based decision-making, and transparent selection of subcontractors through “open book accounting.” This also offers greater control over design and budget while transferring risk away from the owner.
3. Shortens Schedule
For a PDB model, design consultants do not waste time and money submitting a proposal that is 30% or more complete in the RFP response. Project owners save time by not having to prepare and evaluate submittals, which accelerates the procurement cycle.
4. Reduces Budget
In Progressive Design Build, the main contractor and designer participate early and recommend the most cost-effective systems, materials, and construction methods. Only when the design reaches 50-70% completion do the parties negotiate a GMP, minimizing the risks of change orders.
5. Flexibility and Collaboration in Design and Construction
PDB fosters a collaborative environment where everyone’s expertise and ideas can be integrated into the project. For example, if the construction team discovers that a certain design element is not feasible, they can provide feedback to the design team to adjust the design. This flexibility allows for a more responsive approach to project delivery, resulting in a more successful project that meets the owner’s needs.
6. Involvement of Design Consultants
The Progressive Design-Build model reduces upfront work from design consultants to submit extensive design proposals that won’t pass the RFP stage. They receive full payment upon being awarded the design and pre-construction services (PCS) contract. This allows consultants to better understand the project’s requirements and the client’s expectations, enabling them to create a tailored design.
7. High-Quality Services
Since PDB is characterized by a qualifications-based procurement process, contractors do not submit designs to win the contract, thereby increasing competition. The owner issues a Request for Qualifications (RFQ) and selects the Design-Build contractor based on their past projects instead of the bid price, ensuring high-quality services.
Cons –
1. No Bidding Process
PDB requires the owner to prioritize the qualifications of the design-builder over the price competition for the overall contract. However, some owners may find it politically impractical or inappropriate to award a construction contract without full-price competition and may feel uneasy negotiating the commercial terms of the arrangement.
2. Challenges in Subcontractor Procurement
Regulations often require competitive procurement for subcontractors. This can eliminate the collaborative advantages of the Progressive Design-build (PDB) model and limit the unique contributions of subcontractors during the design phase.
3. Hesitancy in Off-Ramping
In case the parties cannot reach a commercial agreement on the design-builder’s proposal, owners may be uncomfortable in exercising the “off-ramp”. If the owner has invested significant time and resources in the project and has developed a strong working relationship with the design-builder, they may be hesitant to exit the project. Off-ramping may also lead to financial and legal penalties.
3. Unfamiliar Project Delivery Method
The PDB model is relatively new than other tried and tested project delivery models. For this reason, there may be a lack of interest in changing approaches. Owners may still prefer the traditional, best-value DB process rather than taking risks with the unfamiliar PDB method.
Progressive Design Build vs Design Build
| Design Build | Progressive Design Build |
|---|---|
| Price-Based Selection | Qualifications-Based Selection |
| Introduces Design-Builder after developing basis of design | Introduces Design-Builder at early stage, works with owner to create design basis |
| Owner makes decisions based on documents and consultant input | Owner makes value-based decisions supported by builder’s cost and schedule models |
| Limited collaboration | Fosters Collaborative Environment early in the project |
| Owners are not involved in procurement and selection of subcontractors | Owners can choose to be actively involved in subcontractor procurement and selection |
| Lump-Sum Price Proposal | Open-Book Accounting |
| Easier Off-Ramping | Riskier Off-Ramping |
| Owner retains Spearin liability | Transfers risk from owner to Design-Builder |
| Susceptible to Change Orders | Guaranteed Maximum Price (GMP) ensures Cost Reliability |
Elements of a Progressive Design-Build Contract
Progressive design-build has separate contracts from the ones for traditional design-build project delivery.
Firstly, there are differences in the form of contract. Some owners may sign their PDB contract with the design-builder that specifically focuses on Phase 1 Services. This approach streamlines the process of engaging a design-builder, hence, owners go ahead to negotiate another contract for Phase 2 services.
Other owners prefer a single design-build contract covering both Phase 1 and Phase 2 Services from the beginning. A major benefit of this approach is that it simplifies the execution of early work packages, as procurement and construction terms are already defined in the contract.
Irrespective of the contract approach, parties must focus on preliminary services as they form the core of the PDB process.
A progressive design-build contract generally addresses the following elements:
The PDB contract specifies the design-builder’s scope of work for Phase 1, including detailed cost estimating and modeling.
- Discusses how the design-builder will handle pre-existing owner information, such as geotechnical reports, to make informed decisions about validating studies and integrating findings.
- Outlines procedures for developing early work packages that include subcontractor procurement and evaluating the design-builder’s self-performance, and the implications if the owner uses the “off-ramp.”
- Details the process and timing for procuring subcontractors and vendors during Phase 1 and their roles in the following phases.
- Specifies the structure and content of the commercial proposal that the design-builder must submit.
- Clarifies the conditions under which the owner can use the “off-ramp” option and utilize Phase One information for future procurements.
- Discusses the timing for obtaining performance and payment bonds from the design-builder, with a focus on requirements that may vary by owner, including the potential need for early bonding.
- Recommends consulting with legal and bonding experts to navigate the complexities of bonding and contract terms effectively.
8 Effective Tips to Implement Progressive Design-Build
Similar to traditional design-build, a commercial owner must strategize how to make the progressive design-build process effective. Here are some tips to implement the PDB process successfully.
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Evaluate Project’s Suitability
Before implementing progressive design-build (PDB), it’s crucial for owners to understand this method thoroughly. Conduct a thorough analysis to determine if PDB is the best project delivery method based on your project’s unique characteristics.
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Consider Procurement Limitations
PDB procurement process may have legal constraints; for example, specific statutes govern how subcontractors must be procured in many public sector projects. Hence, owners must determine whether they should consider quality-based selection (QBS) or competitive pricing in their source-selection process.
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Hire a Skilled Cost Estimator
The expertise of a skilled cost estimator is important for accurate budgeting and determining the feasibility of proposed designs. Hire a talented cost estimator for your design-build team with a proven track record in conceptual cost estimating.
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Create a Strategy to Procure Subcontractors
Decide early on your strategy to procure subcontractors and the extent of design-builder self-performance. This decision impacts both the attractiveness of your commercial project to potential bidders and design innovation, as subcontractors often bring unique expertise.
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Ensure Team Collaboration
The success of a progressive design-build depends on team collaboration, flexibility, and trust. As a leader, ensure your project team fosters a sense of collaboration throughout the performance of the PDB process.
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Set Clear Project Parameters
Establish a well-defined budget and have a clear understanding of project requirements, risks, and goals. According to that, tailor your procurement strategies to select the most suitable team that will help achieve all project parameters.
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Invest in Personnel Training
Proper training in traditional design-build and specific progressive design-build processes is essential for project managers and decision-makers. This ensures the project management personnel understands the collaborative demands of PDB and how to approve budgets for both the initial contract value as well as the final contract price.
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Employ Owner Advisors
Consider hiring experienced consultants for PDB projects. Experienced owner advisors help in various aspects of commercial construction projects including risk assessment, contract drafting, fostering collaboration, and managing procurement, construction, and close-out phases.
Conclusion
In comparison to traditional fixed-price DB delivery, Progressive Design Build offers owners valuable advantages in handling construction risk and often results in greater cost and time savings. Considering the solutions it provides in current market conditions, it’s no surprise that PDB is gaining popularity.
Like any project delivery method, there are preferred circumstances where PDB is appropriate. However, this single-point method has a unique ability to drive enhanced collaboration between all parties involved. If you and your project team are looking for a way to lower risk, work collaboratively, and fasten the procurement and early design process, Progressive Design Build might be the solution for you.
Contact us today and let Constructive Solutions, Inc. share the responsibility of managing your next building project.
FAQs
How is PDB different from Design-Bid-Build (DBB)?
In DBB, the owner selects an architect to complete the design, and then a design-build contractor is selected through a competitive bidding process. While in PDB, the design-builder is selected before the design is complete.
Who is responsible for the design in PDB?
Although the design-builder is responsible for the design, the owner reviews and approves it.
What types of projects are suitable for PDB?
PDB is suitable for complex or large-scale projects and projects with tight schedules. It is also suitable for projects where collaboration is critical and the owner wants a high level of control.
Relevant Resources:
- The Benefits of Construction Manager/General Contractor Services (CMGC) versus Design-Build Project Delivery
- Here are 10 Important Lessons Learned from Challenging Design-Build Projects
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