Missouri’s Design-Build Legislation
Construction isn’t known for being quiet. But over the last 25 years, a force has quietly swept the industry: design-build.
In 1993, only three states allowed design-build, a construction method in which one team is tasked with both designing and constructing a project. Design-build presents an alternative to design-bid-build, in which one team designs a project and another separate team brings it to fruition.
In contrast to 1993, today all but three states allow design-build, Missouri the latest to be swayed.
Until August 2016, Missouri’s political subdivisions—local governments and special districts such as school or water districts—were banned from using design-build. After a 12-year battle, a coalition of design-build advocates convinced Missouri’s state legislature to approve the construction method.
That opens the door to plenty of business for design and engineering firms, though advocates and opponents remind that it’s no silver bullet, just another tool.
Another tool in the box
According to the Construction Industry Institute, design-build costs at least 4.5 percent less than traditional methods, and design-build projects are less likely to balloon in unpredicted costs compared to design-bid-build. Speed is another factor, with design-build offering at least 23 percent faster delivery speeds.
“It’s probably fair to say not every project is appropriate for design-build, but it’s also fair to say that there are some projects that design-build is really the only way to get them delivered on time and on schedule and on budget,” says John Mitchell, director of alternative water delivery for Burns & McDonnell, a Kansas City, Missouri-based full-service engineering, architecture, construction and consulting firm.
Burns & McDonnell was one of the many players in a grassroots push that led to Missouri’s design-build legislation; its general counsel helped write the legislation. In the firm’s eyes, “This is just another arrow in the quiver to be able to effectively deliver capital projects,” Mitchell says.
Shortly after Missouri House Bill 2376 passed, allowing the state’s political subdivisions to use design-build, a wastewater tank in Harrisonville, Missouri, failed. The City of Harrisonville needed an emergency repair.
The city enlisted the help of Burns McDonnell and opted for the design-build approach, thus becoming the first municipality to use design-build under the new legislation—though others had used design-build with special exception. Thanks to the approach, Burns McDonnell was able to make the repair in just four months of design and construction, and five months of negotiations, saving an estimated four to six months in build time and $50,000, compared to estimates for design-bid-build.
“If time is of the essence, design-build really is the only delivery method folks are going to be looking at because it’s significantly faster,” says Richard Thomas, director of state/local legislative affairs for the Design-Build Institute of America (DBIA).
No hidden costs
Design-build can offer cost protections, too.
Often, design-bid-build projects are low-bid, meaning firms that offer the lowest price are selected. But all too often, additional costs arise during construction, and the owner is left bearing the brunt of those costs.
“The low bid often times really isn’t the low bid because you don’t really know what the cost is until the project is done,” Thomas says.
The Missouri design-bid legislation requires that the design-build team be selected through qualification-based selection, not low bid. In addition, an initial budget is agreed upon, and if the project exceeds the budget, additional costs are transferred to the design-build team, not the project owner. Because the builder is involved in the design process, costs would tend to be more stable in the first place.
“[Builders] bring a tremendous amount of experience in constructability and construction logistics and [are] able to bring real market pricing to the estimating part of the equation, so the design team can always understand the cost impact of each incremental decision that they’re making,” Mitchell says. “That gives owners a much clearer picture of what costs are going to be.”
Design-build proponents also argue that the method is especially well-suited for complex projects, including water and wastewater treatment facilities, like the one in Harrisonville; as well as airports and industrial facilities, where the cheapest option isn’t always the best.
Loosening a stronghold
So, given all the benefits, why did it take so long for Missouri to pass legislation permitting design-build?
For starters, Thomas says, “The previous speaker of the house was not real keen on design-build, so it was hard for us to get a hearing.”
But there was also opposition from some of the building community—architects and to a lesser degree small contractors—who feared design-build would put them at a competitive disadvantage.
Thomas says it comes down to turf protection.
“They have a business model that is dependent on design-bid-build,” he explains. “ … they’ve kind of cornered the market and opening it up to delivery systems brings in more competition, which for the taxpayers is a good thing but for defenders of the status quo that’s not a good thing.”
Ultimately, the American Institute of Architects (AIA) proved to be the largest roadblock.
“Prior to 2014, AIA opposed the design-build legislation,” says Kathi Harness, a government relations consultant who has a longstanding relationship with AIA Missouri. “It was filed in various forms for probably 10 years, and we would always testify against it because we did not think it served the best public interest for political subdivisions.”
AIA’s main concerns were, and to an extent still are, that contractors might take advantage of small political subdivisions that do not have architects or engineers in-house to advocate in the owners’ and taxpayers’ best interest.
“If they do not have an architect on staff … and they have absolutely no expertise in building and construction, they could be sold something that wasn’t what they really wanted and they wouldn’t know,” Harness says. “We feel like that could be an abuse of public dollars.”
AIA feared the legislation would erode the relationship between project owners and architects, too.
“We feel like it removes our relationship with the owner,” Harness says. “We then work for the contractor.”
Compromise and optimism
Regardless, when the St. Louis County Family Court wanted to use design-build, AIA Missouri filed an injunction. The then Speaker of the House John Diehl, who was from St. Louis County, called AIA Missouri into his office. The state would pass design-build legislation in its proposed form unless AIA Missouri dropped its opposition, Harness recalls Diehl saying.
The latter approach gave AIA Missouri a chance to, at least, make amendments it saw necessary to the legislation. So, after a decade of opposition, AIA compromised.
AIA demanded that the legislation sunset in 10 years, so that its effectiveness and success can be reassessed. It required that if design-build be permitted, what’s called “construction management at risk”—another construction methodology—also be permitted. And among other changes to the legislation, AIA required some minimum project-cost thresholds.
Only time will tell whether AIA was well-founded in its concerns, or if design-build will benefit political subdivisions. Those who supported the legislation are optimistic, though.
“Now, in Missouri, a half-dozen cities are looking at design-build as an option on projects coming up,” Thomas says. “You’re going to see that increase exponentially every year, because once you have a successful project, the neighboring city or county is going to be considering [design-build.]”
And as Missouri gets the hang of design-build, DBIA and other design-build proponents are shifting their focus to the three holdout states: Iowa, North Dakota and Wisconsin.
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