Using Design-Build To Streamline The Process Of Creating A New Quarry Processing Plant.
By Raymond Perr
The Infrastructure Investment and Job Act is providing unprecedented funding for construction projects across the county. This legislation includes around $550 billion in new federal investments for rebuilding America’s roads, bridges, water infrastructure, and more. Approximately $110 billion is specifically designated for repairing and rebuilding roads and bridges.
It includes the largest federal investment ever in public transit, the single largest dedicated bridge investment since the construction of the interstate highway system, and the largest federal investment in passenger rails since the creation of Amtrak.
While this is all very positive, it will result in aggregate producers being hit with historically high demand for materials, and a need to expand production, all with less internal engineering staff and technical resources during a crippling labor shortage.
The following discusses the advantages of using the design-build method of contracting as compared to the design-bid-build method to expand production and build new facilities and how to execute this strategy.
For examble, Industrial Resources is currently building an entire new quarry for a major U.S. aggregate producer using the design-build contracting method and has successfully used this method on a number of other projects over the past years.
The design-build process has proven to be the best contracting strategy to cost-effectively develop capital projects in the least time. How is this approach different from the more traditional design-bid-build process?
Design-bid-build includes using internal resources or hiring an outside engineering firm to develop a detailed engineering design. The owner then solicits bids from contractors to perform the construction work according to the design documents.
During this process, the designer and the contractor have no contractual relationship or obligation with each other. The contractor is hired to only manage the construction of the project and has no opportunity to participate with the owner in developing the design. The contractor’s knowledge and experiences are not taken advantage of or incorporated into the design. All the risks associated with the interface between the design and construction contracts are assumed by the owner.
With the design-build method, both the design and the construction are purchased in a single contract which allows a high degree of collaboration between the designers and the construction teams. It also eliminates the owner’s risk of potential problems that may develop during construction due to design issues. Other advantages of the design-build process include reduced costs and schedule, guaranteed performance, an enhanced design, and reduced need for an owner’s involvement in engineering and project management.
Here is a common problem that occurs and which can cost time and money when not using the design-build approach. A project, possibly a new quarry, is evaluated and approved based on a budgeted amount of dollars. An engineering firm is hired to develop the final design.
During this process, people within the company and engineers, are excited to make this the best quarry ever built and add numerous features that were not included in the approved project. Everyone assures each other that the additional scope will not exceed the approved budget so the engineering proceeds to completion.
The project is placed out for bid to several competent contractors and the bids come back 25% over the approved budget. The engineer defends himself and says that the contractors are charging too much and that his design should be within budget (although he may not have any idea).
The bottom line is the owner spent the engineering dollars on a design that has no value and will not be built. It is a very frustrating experience and a huge waste of money and time.
With the design-build process, the contractor has a much better understanding of costs and constructability issues than design-only firms, and can better offer value engineering alternatives before any detailed engineering has begun. This knowledge also can be incorporated into the final design assuring it is in alignment with approved budgets and schedules. The contractor is in the best position to collaborate with the owner on opportunities to save dollars through efficient designs.
Design-build streamlines the process, resulting in a reduced schedule and faster project delivery. Projects can be bid with conceptual designs and performance bid packages and without taking the time to complete a final set of design drawings and bid specifications. This alone can save months.
The advantage of not having to wait for the completion of the engineering for the entire project to start construction is also enormous. Often the construction can be started as soon as the foundation engineering has been completed.
While the foundations are being built, engineering can proceed with the remainder of the project in a staged approach with construction or fabrication following close behind. This advantage can often reduce the project schedule by 25% or 30% as compared with the design-bid-build method.
Savings are also realized by eliminating the additional time required by the owner to coordinate and resolve disputes between the engineer and contractor during the construction.
Using the contractor’s engineer for the final design eliminates many of the potential design issues that could materialize using a separate design firm. The contractor’s engineers understand that if there is a design issue, the phone call goes directly to them and any costs are to the contractor’s account.
What happens if after the project is completed, the conveyor that was supposed to have a capacity of 2,000 tph only can handle 1,900 tph? Performance Guarantees are a huge advantage of the design-build as compared with the design-bid-build method.
With the design-bid-build approach, the engineering firm provides the final design and material specification with an assurance that these documents are correct. The contractor builds the project based on the design and specification provided by the engineer guaranteeing workmanship and materials.
If the process works, production goals are achieved, and there are no other problems, everyone takes the credit. But if the system doesn’t perform as required the owner finds himself in the middle.
The engineering firm claims the project wasn’t built to the design and the contractor contentions the design was the problem. This can often result in a lot of finger-pointing and become a major headache for the owner.
In instances where the owner has elected to purchase major items of equipment directly, things can become even more complicated with three parties involved. Instead of offering assurances on the design, workmanship, or materials separately, the design-build contractor can guarantee the system will meet performance requirements, and if there are any problems there is only one company responsible. Pretty hard to point any fingers using this arrangement.
How much more coordination do design-bid-build projects require? Quite a bit because the owner has separate contracts with the engineering firm and the contractor. All communication between both companies has to flow through the owner.
In the past, many owners had internal engineering and project management staff that were available to provide the necessary coordination and communication between the two companies. All of this of course costs money, takes additional time and in general is just a less effective way to manage a project.
Because many firms in today’s environment do not have these types of individuals on staff with this type of experience a design-build project that doesn’t require this coordination becomes more desirable.
How is the design-build method best implemented? Bid documents are developed that include general arrangement drawings, process flow diagrams, and technical specifications on major items of equipment and materials. The importance of including both the operations and the technical groups within a company, as well as outside resources, as these documents are prepared can not be overstated.
Often these drawings and specifications are developed with internal staff in collaboration with a consultant. Selecting the design-build firms qualified to be invited to bid on the project certainly ranks toward the top of the list of important items to assure a successful project.
A firm’s experience with providing design-build services on similar projects is an essential criterion in this evaluation. In addition to looking at the firm, special attention should be paid to the experience of the key individuals that will responsible for the engineering as well as the construction.
Several design-build companies specialize in providing these services specifically to the aggregate industry. Proposals from design-build contractors should include detailed information on exactly what is included as part of the contract to minimize any misunderstanding in the future.
There is little question that the Infrastructure Investment and Job Act will require the aggregate industry to develop new capacity to meet the demand for building these new projects.
Utilizing the design-build contracting strategy can save dollars, and time, resulting in a more efficient design and assuring necessary performance is achieved as these projects are developed.
Raymond Perr, P.E., is marketing director of Industrial Resources Inc. The company.has been delivering processing and material-handling facilities to the mining industry for more than 70 years. Many of the projects were design-build in which performance was guaranteed. In addition to having an engineering group and a construction division, Industrial Resources has its own AISC-certified steel fabrication shop.