The result of this survey raises issues about the motivation or decision making process behind developers’, owners’ and contractors’ decisions in choosing and participating in various procurement methods.
Will these percentages change as new or innovative procurement strategies are introduced or will decision makers continue to prefer the tried and true design-bid-build method? |
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The traditional Design-Bid-Build Method has been around the longest and therefore, it is perhaps the most familiar. Are changes on the horizon?
At the December 2006 Construction Super Conference, Allen Matkins surveyed approximately 100 attendees about their opinions and perceptions about certain construction issues including those listed below. We were interested in whether the type of procurement method tied into risks on construction projects.
Which project procurement method do you prefer?
| 51% | Design-Bid-Build. The traditional Design-Bid-Build procurement method was the most popular response. |
| 24% | Design Build. A method that often shortens the time to complete, reduces change orders and shifts risks to the Design-Builder |
| 23% | Best and Final Offer (BAFO). A method derived from procurement – giving the contractor an opportunity to clarify and modify its initial proposal and help the owner achieve the “best value.” |
| 1% | Design Sequence. A more novel and untested method that has been recently authorized by the California Legislature as a pilot program. This method enables the sequencing of design activities to permit each phase of construction to commence when design for that phase is complete rather than requiring complete design for the entire project to be completed before construction. |
Which type of project tends to have the highest probability of significant claims or litigation?
In an industry where litigation continues to be on the rise, alternative procurement options may gain a foothold as owners try to shift risks. 
| 64% | Design-Bid-Build. Most of the surveyed believe traditional Design-Bid-Build projects yield the most claims or litigation. |
| 15% | Design Build. By shifting risks to the Design-Builder, owners enjoy reduced claims exposure. |
| 10% | Best and Final Offer (BAFO). Often associated with Design-Build, the BAFO process even further reduces claims through up front clarifications. |
| 11% | Design Sequence. The jury is still out on this new approach, but we have seen some significant claims on Caltrans projects using this method. |
Traditional Design-Bid-Build method: the devil you know
Although the Traditional Design-Bid-Build method was chosen most frequently (51%) as the preferred procurement method, respondents also thought it had the highest probability (64%) of significant litigation. One conclusion might be that since the majority of projects still use the traditional method, there will be a natural correlation to it experiencing the greatest threat of claims and litigation.
Trends in procurement methods
As a result of the 2006 Proposition election results in California, we anticipate a significant influx of public funds to build infrastructure and other public agency projects. Will these new monies cause owners or contractors to re-examine their procurement methods? With the increased pressure to spend these monies and move projects along quickly, will Design/Build, Design Sequence or other novel procurement methods be on the rise? Do such alternative procurement methods adequately protect the goals of competitive bidding? Stay tuned.