Design-Build &
Best Practices for the Estimator
Presentation material originally compiled by Greg Gidez - DBIA, AIA, Director of Design Services, Hensel Phelps
Presentation updated by Chris Vine - LEED®AP, DBIA– Project Superintendent, Hensel Phelps
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Topics of Discussion
Design-Build fundamentals
The role of the Estimator on the Design-Build team
The Art of Conceptual estimating
Design influences affecting project costs
Value Management
Design-Build Best Practices
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Owners Always Ask Two Questions
With any project:
How much is it going to cost?
How long is it going to take?
How do the answers differ in a:
Hard Bid Project?
Design Build Project?
3
The Changing World
How Owners buy buildings
Market drivers
How teams form
How teams design and construct buildings
Choose the Delivery Method for the Right Reason
Not all project delivery methods are
right for each project
Not all owners are capable of
managing a design build project
Not all teams are capable of
delivering a design build project
Team members must be educated in
alternate project delivery
methodologies and best practices
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Major Project Delivery Methods
Design-Bid-Build
CM@R
CM as Agent
Multi Prime
Design-Build (Single Party)
IPD (Multi Party)
Public-Private Partnership (P3’s)
Design-Build-Operate-Maintain (DBOM’s)
Primary Selection Methods
Best Value (BVS)
Qualification Based (QBS)
Low Bid
Low Price, Technically acceptable
Single Step (no Qual’s)
Two Step (Quals, proposal)
Comparison of Project Delivery Methods
(CII/Penn State Study)
Metric DB vs. CM@R vs. DB vs.
DBB DBB CM@R
Unit Cost 6.1% lower 1.6% lower 4.5% lower
Construction Speed 12% faster 5.8% faster 7% faster
Delivery Speed 33.5% faster 13.3% faster 23.5% faster
Cost Growth 5.2% less 7.8% more 12.6% less
Schedule Growth 11.4% less 9.2% less 2.2% less
Re: “Comparison of U.S. Project Delivery Systems,” Mark Konchar & Victor Sanvido, Journal of Construction Engineering and
Management, Vol. 124, No. 6 (1998), pp. 435-444.
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Comparison of Delivery Methods
CII/Penn State & Univ. of Reading
Research Study CII Penn State (US) Reading DB Forum (UK)
Parameter DB vs. DBB DB vs. DBB
Unit Cost 6% Less 13% Less
Construction Speed 12% Faster 12% Faster
Delivery Speed 33% Faster 30% Faster
Comparison of Delivery Methods
CII/Penn State & Univ. of Reading
D-B delivers equal or higher quality:
D-B out performed traditional D-B-B in every category
Startup
Call Backs
O&M
Exterior & Structure
Interior
Environmental
Equipment
Design Build
Fundamentals
Solicitation & Basis of Award
Design-Bid-Build
Prescriptive Quantitative Only
Plans & Specs
Issued Low
for Bid Bid
Design/Cost Relationship
Design-Bid-Build
Design is Fixed – Design dictates
cost (and performance becomes a
variable) Change
Orders
Costs
Design
Solicitation & Basis of Award
Design-Build
Quantitative
Team selection based
RFP on
BEST VALUE Qualitative
not low cost
Performance
Requirements
Design/Cost Relationship
Design-Build
Details of
the
Range of Design
Design
Cost (and performance are fixed) – We are designing to the cost
Design-Build Early Cost Determination
Re-design
Scope reduction
Design Bid Build Value Engineering
Substitutions
Program Design Bid Construction
Design Build
Program proposal
Design Construction
Value Management
Design to budget
Innovation
Information
QBS - Qualification Based Design Build
Progressive D-B
Prequalification of 3-5 teams
Teams selected on caliber of the proposed team
members and fees
May include RFP or may require development of
Program, budget and schedule
Scope developed with Owner and Design Builder
iGMP’s, Trending and development of Final GMP
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Qualification Based Source
Selection
Project Short
RFQ Interview Selection
Definition List
Program
IGMP GMP
Definition
Post Award Integration is a team sport lead by the
Owner
BVS - Best Value Design Build
Usually a Two Step Process
Prequalification of 3-5 teams
Competition based on satisfaction of RFP criteria
within budget
Cost Model (Fixed Price/ Best Value) can vary
stipulated Sum
Max Allowable Contract
Low Price, technically acceptable
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Two Step Source Selection (Best Value)
Program Short RFP
RFQ RFP
Definition List Input
STEP ONE
Proprietary
meetings
Proposal Interview Selection Contract
STEP TWO
Post Award Integration is a team sport lead by the
Owner
Understanding the Costs of Solicitation
Cost of pursuit
Designers
Contractor
Trades
Level of Design for selection
Level of Design for risk mitigation
Contracts, Fees
Technical review
Project management
Stipends
Compensation to losing
teams
Defers some of cost to
compete
Important in both hot and cold
markets
Shows commitment
.
Common Design Build Team Configurations
Designer-Led Joint Venture
13% 5%
Integrated
Design-Builder
28%
Contractor Led
54%+
Source: Zweig-White
Essential Concepts of Design-Build
Contractor & A/E have a direct
contractual relationship
Solicitation & basis of award
Design process
Design-cost relationship
Plans & spec warranty
DB teaming
Value proposition
Single Point of Responsibility
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Design-Build Responsibility
• Design–Build relies on a single point of responsibility contract and is used by the project owner to:
minimize risks
find innovative solutions
manage cost
reduce the schedule
Owner Owner
Designer Builder
Architect General Design-Builder
Engineer Contractor
Design-Bid-Build Design-Build
Dual Singular
Responsibility Responsibility
How Design-Build is Different
Compressed schedule with
concurrent interdependent design,
procurement & construction
activities
More interfaces within the project
team
Cost/schedule risk analysis as
design details develop
Continuous new information that
must be integrated into the
solution
Merged cultures, attitudes,
preferences, prejudices, agendas
– & learning curves
Single Most Important Distinction in a Design Build Project
The Right Team
The ability to operate & perform
effectively on an Integrated Team
is NOT automatic … and not for
everyone
Not every Architect, Contractor,
Engineer, or Owner has what it
takes
Effective Design-Build project
participants possess Unique “Just because you can read music doesn’t
Talents mean you can play jazz.”
The Right Driver, & the Right People, in the Right Seats
Off the Bus On the Bus
Judgmental – Criticizes Accepting – Critiques
Reactive & Automatic Responsive & Reflective
Know-it Already Values not Knowing
EITHER / OR Thinking BOTH / AND Thinking
Inflexible & Rigid Flexible & Adaptive
Own Point of View Only Multiple Perspectives
Intolerant of Self & Others Accepting of Self & Others
Fears Differences Values Differences
Defends Assumptions Questions Assumptions
Primary Mood – Protective Primary Mood - Curious
Defensive
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The Difference in Cultures
Design is Solution-driven
Construction is Schedule-driven
Understanding this basic concept
is key to managing the process
Design-build facilitates the solution
through a collaborative process in order to maintain the
schedule & maximize the value
The Difference in Cultures
Training and Education
Business Drivers
Motivators
Risk
Legacy relationships
Contract structure
Understanding the differences in cultures and motivators
informs and supports the process of Estimating
Cultural Differences and Motivators
Designers Builders Owners
Safety, health and welfare Safety oriented Safety, health and welfare
Start with a blank sheet Solution with a plan Satisfy the business needs
Solution oriented Schedule driven Prescriptive or performance
Problem solvers Problem solvers Seasoned or rookie
Action and tangible results Aesthetics
Spatial relationships
Linear processes Schedule oriented
Aesthetics
High degree of expertise Cost conscious
Intangibles
Cost conscious Risk adverse
Technologists Conflict adverse
Logistical problem solvers
Integrators Quality control Level of experience
Quality assurance Professionals Level of integration
Professionals ROI
O&M
Understanding………
Who is willing to guess how many?
For fun?
For $1000?
For $100,000?
For $1,000,000?
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What Factors Did You Have to Consider?
Amount of risk
Amount of information available
Quality of the information
The return on investment
What are the What are the
consequences consequences
if you are wrong? if you are right?
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Who owns the Design RISK?
The Spearin Doctrine ….
There is an implied warranty
“If the contractor is bound to build according to plans and
specifications prepared by the owner, the contractor will not
be responsible for the consequences of defects in the plans
and specifications” (change orders, schedule
extensions etc.)
In Design Build, the design risk shifts to the design builder –
except where the Owners provide prescriptive specifications.
Those best able to manage the risk should be assigned the risk
Plans/Specs Warranty
In Design-Bid-Build
Courts find Owner warrants the sufficiency of
the plans and specs to the Contractor
Owner owns the details of design
Owner is liable for any “gaps” between
the plans and specs and the Owner’s
requirements for performance
Any short falls-Owner pays
In short,
The Owner bears the risk of the design
Plans/Specs Warranty
Under Design-Build:
The Design-Builder warrants the sufficiency of the plans
and specs to the Owner
Design-Builder owns the details of design
Design-Builder liable for any “gaps” between plans
& specs and Owner’s requirements for
performance
Any short falls-the Design Builder pays
In short,
The Design Builder bears the risk
What Influences DB’s Decision to Propose?
Type of project
Size of project - rough estimate of budget
Location of the project
Quality of the drawings and specifications
Reputation of the owners, inspectors,
architects, engineers, etc.
Long-term relationships
Specialized work or equipment requirements
Anticipated construction problems
Security and access restrictions
Safety considerations
Current and future workload
Bonding capacity
Time to prepare estimate and proposal/bid
Factors Influencing Building Costs
Geographical and site Time factors
factors
Qualitative factors
Location of site
Legal and administrative
Condition of site factors
Dependable site information Market and external economic
conditions
Soil conditions
Owner personality factors
Accessibility
Design factors
Environmental issues
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Design Factors –
Are you inside the head of your designers?
Building Size
Building Height
Story Height
Space Utilization and Efficiency
Finish Selection
Aesthetics
Functionality
Performance or Prescriptive
Perception
Social
Professional recognition
Market position
Schedule
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Fundamentally Two Types of Estimates
Detailed Estimates
Conceptual Estimates
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Purpose Determines Type of Estimate
Definitive Pricing – Need Detailed Estimates
– Typically 100% docs are available
– Used in design-bid-build
Budgeting and Feasibility Estimates - Need
Conceptual Estimates
– Design is less than 100% - sometimes none
– Used extensively in design-build
– Many different methods and levels
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Detailed Estimates
Used to determine actual cost of project
for bidding purposes or change orders
Utilizes detailed company cost data for
labor and equipment expected to be used
Actual construction methods to be used
are determined up front
Actual materials, suppliers,
subcontractors, and labor to be used are
determined throughout the estimate
development
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Relationship Between Specifications and
Estimates
Prescriptive specifications
focus on the means to an end
– Dictate exactly how to do what needs
to be done and what materials to use
– Easy to count the specific parts and
pieces
– Design must be complete to use
Correlate nicely with detailed
estimating
Works well with design-bid-build
projects
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Conceptual Estimates
Used to determine expected cost for
budgetary and planning purposes -
sometimes for firm fixed price!
Exact contractor resources and costs are not
known
Actual material and subcontractor labor rates
are not utilized
Probable construction methods are presumed
Requires lots of assumptions
Contingencies should always be utilized
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Relationship Between Specifications and
Estimates
Performance specifications
focus on the end result
– They do not dictate means of how to
get there
– Known parts and pieces are not
necessary
– Design does not need to be finished
Correlates nicely with conceptual
estimating
Works well for design-build
projects
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Many Different Types of Conceptual Estimates
Rough Order of Magnitude
Square Foot or Cubic Foot
Assemblies or Systems
Parameter or Model Estimates
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Two Basic Estimate Formats
UNIFORMAT II
– Commonly used to present cost estimates (i.e., conceptual estimates)
during the schematic design phase
– Arrangement of construction information based on physical parts of a
facility called systems and assemblies
– Systems and assemblies are characterized by their function without
identifying the products that compose them
MasterFormat® (CSI)
– Used primarily for detailed estimating
– 50 divisions (1995 version had 16 divisions )
– A breakdown of building materials, products, and activities
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UNIFORMAT Characteristics
– 22 Major Building Elements
– Accepted by designers
– Functional/elemental oriented
– Excellent for performance specifications
– Good for conceptual estimates
– Can be used for detailed estimating
– Challenge for contractor to assemble subcontractor quotes
– Excellent for design phase cost control
– Limited use for construction phase cost control
– Excellent to use to compare competing designs
– Excellent for use in assembling/maintaining historical project
information
– Easier to use with BIM
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Why Use UNIFORMAT?
Provides an “Industry Standard” language for communicating with the
project team
Addresses scope and cost in interchangeable systems
Allows for use of a database or catalog of unit prices to speed up the
estimating process
Provides a realistic distribution of costs for assigning Design-to-Cost
targets
Consistency of estimates from one estimator to another
Allows quick analysis of alternatives early in design phases while
maintaining a complete audit trail
Provides a standardized method of collecting, analyzing and utilizing
historical data in an easily applied format
Allows the estimate to be assembled in the same order that actual
construction would progress
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The Conceptual Estimators Skillset
Understanding of Estimating
principles
Understanding of the design
process
Ability to read between the lines
Ability to communicate cost to
those not fluent in the language
Collaborative, team player,
balanced in approach
Ability to build and maintain
TRUST
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The Fundamental Question of Conceptual
Estimating
How can you estimate a project
when you don’t have final
drawings or all the details
worked out?
54
Types of Documents Needed
For Conceptual Estimating
– Sketches on paper napkins
– Project description and use
– Performance requirements
– Major pieces of equipment
– System Narratives
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Contingency
An amount of $$$ added to the estimate to cover
risks associated with the unknown
Types of Contingency:
– Contractor’s Contingency
– Owner’s Contingency
– Design Contingency
Contractors normally have contingency in 100% designed jobs,
why wouldn’t they in design-build jobs when the design is less
developed and has much greater risk?
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Contingency
What contingency is included in the
estimate?
– Does percentage of the contingency make
sense compared to the level of
documentation?
– Where is contingency built into the budget?
– Did the major subcontractors include
contingency?
Who will control the contingency ?
– Owner or Design Builder?
– How can it be used and by who?
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Profit
Is this something you are
embarrassed to earn or pay?
Should be the reward for
taking the risk and delivering
value
Is not guaranteed – even on
cost reimbursable contracts
What is the right amount of
profit?
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Concept of Cost as a “Function” of Design
Conceptual estimating is a key “tool” to develop and
manage design
Documentation in conceptual estimating is critical
Must “operationalize” the numbers – they are
dependent on the assumed means and methods
Must know what the numbers represent (what’s
included and what’s not)
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Must maintain balance between design and cost
throughout the design-build process
Design $Cost$
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Typical D-B Estimate Timeline
Concept Program Schematic DD's CD's
Construction
(varies)%CD Estimate - GMP
Intermediate
100% DD Estimate (Could be GMP)
50% DD Estimate
100% Schematic Estimate
Preliminary
50% Schematic Estimate
Program Estimate or Cost Model
Feasibility Estimate
Trend estimating occurs at intervals
between formal milestone estimates
Estimating Success Requires …
Knowledge of
construction
– methods
– materials and their usage
– equipment productivity
– crews and capabilities
Knowledge of estimating
methods and procedures
and how to use them
Thinking outside the box
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Estimating Success Requires …
Thorough
understanding of project
scope
Excellent
communication skills
Appropriate behavioral
skills
Interdisciplinary fluency
TRUST in your design
partners
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Role of the Estimator in Design-Build
Powerful position - Key player in a
Design-Build firm
Estimator often sets the parameters for
the design
Design is flexible but the design process
must be managed by the cost model
Must be able to operate reliably in the
arena of great uncertainty and unknowns
Must be able to manage large amounts of
historic price data
Must be able to manage personalities and
balance wants/desires
64
Critical Relationship in Design-Build
Designer Estimator
Conceptual Cost Estimating for Design-Build ©2008 by DBIA
Do Designers Understand The Cost of Work?
What goes into the cost?
Designers typically rely on “salespeople” to
determine early cost for systems
– Why might this be a bad idea?
66
Potential Pricing Problems
“Why wasn’t there enough in the estimate?”
Did you understand…
– The designer’s typical details?
– The level and quality of finishes expected?
– Applicable design standards and local permitting
requirements (i.e. architectural review boards,
code requirements, deed restrictions, impact fees,
school district fees, gross receipts taxes, etc.)?
– Productivity constraints
– Labor, permits, inefficiencies, unions, etc…….
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Value Engineering
It’s neither – there is no
value and there is
certainly no engineering
-Jim Bradburn – Architect
Fentress Bradburn Architects
It’s scope reduction at the end of the design
because the value was not managed during
the design phase
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Value Management Defined
An organized effort directed at analyzing the
functions of systems, equipment, facilities, services,
and supplies for the purpose of achieving the
essential function at the lowest life cycle cost
consistent with the required performance, reliability,
quality, and safety. It occurs throughout the design
phase
What you get
Value =
What you paid
69
Design-Build Process Changes
Design is an iterative process
Design process must be flexible to stay within bid
price or GMP and maintain schedule
Budget trade-offs are required
Focus on value enhancement
70
Managing Cost Through the Process
Design changes during early stages of
design-build process
Design changes late in the game
Can an Owner change their mind during the
development of the design?
71
Managing Cost Through the Process (Cont.)
During Later Stages
– Changes due to unforeseen conditions
– Changes due to design omissions
– Change may be at owner’s discretion
• Adjust quality standards higher or lower
• New equipment preferences
• In response to outside influences
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Managing Cost Through the Process
Trend Management Program
– Tool used to identify, evaluate, manage, &
resolve changes during design, procurement,
and construction
– Encourages a proactive approach with the
owner to resolve any changes
– Mitigates any disputes before they become
bigger problems
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Trend Management
Trend Log
– Similar to Change Estimate Log
– Should be reviewed in periodic design team meetings
– Classify proposed revisions as Approved, Rejected or Pending
Trend Estimate Report
– Similar to a Change Estimate
– Provides an audit trail for tracking all cost impacts
Trends provide a tool to maintain control of the budget
and design process between major estimate phases
Trends are not always additive and compatible; beware
of the “Domino Effect”
74
Internal Trends External Trends
Design development changes Client-driven scope changes
Missed items that were in the Client driven quality changes
scope but left out of the proposal
Changes in site conditions
Work quantity adjustments
Permitting process requirements
Price escalation of materials, labor,
or equipment Force majeure events
Labor and equipment productivity Industry standards changes or
Transportation and storage costs owner specified items
Financial, tax, or legal issues
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Value of Tracking Changes and Cost Trends
Improves risk management for
team and owner
Encourages open discussions
Initiates corrective actions
Supports negotiation over
changes
Provides cross-check for cost
and schedule forecasting
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Design Build Best Practices for Estimators
Educated on Design Build project delivery
Knowledge of Contract and Project requirements
Ability to work in a conceptual environment with
designers
Knowledge of strategies to effectively execute a
Design Build estimate
Understanding of business, cultural, behavioral and
ethical concerns of your partners
Ability to build and maintain TRUST
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Take-Aways
Conceptual estimating is a key component of the
design-build process
Guaranteeing a firm price with little or no design creates
a unique challenge
Good historic price data, knowledge, and practice with
estimating methods mitigates risk
High communication between estimators and designers
is critical
And don’t forget to think outside the box…
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You have eternity to think inside the box
Thanks!
