Water Design-Build Council Blog

Covering the Risks in Design-Build: WDBC’s Response to ENR's Editorial

Posted by Admin on Tue, Apr 28, 2015 @ 03:28 PM

15501001_sIn Engineering News-Record's March 30 Editorial on “Covering Risks in Design-Build” delivery, a representative of the Association of General Contractors posted the question as to whether “design-build projects were introducing industry contractors to risks for which they are unprepared?” While AGC’s statements are directed to those in the mechanical, electrical, and plumbing industries – they can seriously misconstrue and/or misinterpret the successful achievements of allocating risks in water design-build projects contracts. 

Collaboration is Key

In responding to the ENR editorial/article, Mark Alpert, WDBC’s Executive Director points out that the water industry views the active and continuous collaboration among project team members and the project owner as the key to successful use of design-build project deliver. Moreover, Alpert states that when differences among project team members arise as to how risk should be allocated, the results can seriously increase the chance of cost and schedule overruns, scope creep, and most importantly, failure to meet the owner’s objectives.

Distinctive Differences

WDBC recognizes that there are distinctive differences in the delivery application of vertical facility projects versus those of water and wastewater projects. Moreover, team arrangements in the vertical facility space are established differently than those in the water industry. We further agree with the statement that, “design-build delivery methods will continue to claim a greater market share as compared to other project delivery systems.”  

For nearly twenty years, the commercial arrangements between design-build teams and public owners   within the water industry evolved from one of full risk transfer to one of an equitable and balanced model. We further believe that risk should be allocated to the party best able to manage, mitigate, or eliminate the issue. Unlike the vertical facility market, the water industry expects design and performance risk to be accommodated within the project team.

Redefining Risk Allocation

Current convention in our industry embeds an appropriate allocation of risk via owners’ use of standard contractual agreements, most notably the DBIA documents. To further this discussion, the WDBC has seen an increase in the use of project-specific professional liability policies that cover all team members – designers, construction companies, operators, or integrated design-build firms. Similarly, such approaches are actively used and applicable across a wide variety of team structures and project types.

Design-build delivery in the water industry has proven to be a key tool in creating successful, efficient, and quality projects for water and wastewater utilities. And, a large measure of this demonstrated success has been the broad acceptance of a fully developed risk-allocation model within our industry. In WDBC’s view, design-build offers an opportunity for architects, engineers, contractors, and owners in every infrastructure market to redefine risk allocation to the public’s benefit.

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Topics: risk allocation