The Advantages of Progressive Design-Build in K-12 Construction

THE ADVANTAGES OF PROGRESSIVE DESIGN-BUILD IN K-12 CONSTRUCTION

By Brian Aske, DBIA

Brian Aske, DBIA is the Past-President for the Design-Build Institute of America’s Northwest Region (serving WA, OR, ID, AK) and an Operations Director for Lease Crutcher Lewis—leading market sectors utilizing integrated delivery. He has worked in all major project delivery methods including significant design-build experience starting in 1996. He has been a designated design-build professional since 2005. He has a Bachelor’s in Construction Management from California State University, Chico and a Certificate in Commercial Real Estate from the University of Washington. Brian also served on the DBIANW legislative committee, which advocated in 2012 for the current Washington State legislation to allow Progressive Design-Build.

Prior DBIA Participation Brian has served on the DBIA Northwest Region Board for nine years as President, Vice President, Treasurer, Secretary, Membership Committee Chair, and is currently the Chair of the Resource Committee.

Experience Presenting the Topic Brian has over 26 years of experience on projects utilizing design-build. Over the last several years he has been working closely with the University of Washington on three progressive design-build projects totaling over $300M. The projects utilize the UW’s new “Integrated Design-Build” contract which integrates many IPD principles into a design-build contract and delivery, such as target value delivery, forming a risk-reward team, incentive programs, co-location and many other principles focused on squeezing out waste to create high performance, highvalue facilities.

By Brian Aske, DBIA

Progressive design-build has grown in utilization over the last decade and is an ideal delivery method for K-12 school districts looking to build a school tailored to the unique needs of their students, educators and community.

44%

Design-build projects make up 44% of all construction projects in the U.S. and are becoming more common and beneficial on projects of all sizes, according to a 2018 FMI study.1

design-build projects of all construction projects

Distribution of delivery method utilization 2

2013-2017

27% dbb

2018-2021

19% dbb

32% cm at risk

39% db (vertical 42%)

35% cm at risk

44%

CPIP: $2,779B CPIP: $2,729B

db (vertical 45%)

Other

DBB, or Design-Bid-Build, is the default capital delivery process for design and construction in the State of Washington, where a public owner hires an architect to do a complete design, bids the project and then awards the project to a General Contractor with the low bid for construction.

CM At-Risk is short for Construction Manager at Risk. In the state of Washington there is an alternative delivery option for capital projects that approximates this approach called “General Contractor/Construction Manager,” where a public agency can receive approval to use this process and utilize a Best Value

Selection process for the GC/CM only, then the GC/CM bids all scopes of the work to subcontractors, therefore pushing the public bidding process down one level.

DB is short for design-build. In the state of Washington, this is another Alternative Delivery option for capital projects, where the owner selects a single entity to be responsible for the required design and construction.

CPiP, or Construction Put in Place, is a method for accounting on an annual basis the amount of construction completed, especially for projects that span multiple years to complete.

Public Safety (1%)

Distribution of Design-Build Market: Segment Breakout 3

19% Manufacturing

18% Education

15%

15%

Commercial

Office

10% Transportation

8%

Healthcare

Religious (1%)

5% 4% 3% Lodging

Communication

Amusement & Recreation

1 2018. Design-Build Utilization Combined Market Study. FMI, pp.2-71

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2 FMI Analysis of multiple sources.

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3 CPiP spending, 2018-2021.

4

Advantages of Progressive Design-Build in K-12 Construction

Design-build is defined as a single contract that assigns sole responsibility to the Design-Builder for both the design and construction services of a project. When most people say “design-build,” they often refer to a design and price competition to select the design-build team.

Progressive design-build is a newer variation of the alternate delivery method that is starting to get much more traction in the industry. This approach has only been permitted for public agencies in the state of Washington since 2013, and specifically clarified in Washington State legislation in 2019.

Progressive design-build enables the Owner to select a design-build team based largely on qualifications, approach and a price factor (also known as mark-up), with these factors weighted per each owner’s priorities. The size and constitution of the team selected are also up to the owner. For example, only the builder and designer could be selected, or a larger team of consultants and trade partners.

Once the most qualified team is selected and any additional members are brought on board, they work collaboratively to develop a design with that Owner to define the whole project value, or to develop a design that meets a fixed budget. In other words, Owners can choose whether the project will be scope-driven (with a team that will develop the most cost-effective approach for a fixed scope and level of quality), or whether the budget is predetermined (with a team that works to maximize the scope and quality obtainable at that cost) Having a full team available as design starts creates a project culture where the Owner, Builder, Architect and project stakeholders are unified and focused on the Owner’s goals and the overall success of the project, rather than their success. The objective is to get the right expertise involved and aligned with the project early, so they can help make decisions in the best interest of the overall project rather than based only on their own discipline or firm. “Binding the team to performance-based goals was a powerful unifying and uplifting force,” said Renee Cheng in a 2015 study of three integrated deliveries of federal facilities in Colorado, Oregon and Washington.1 Out of the three major project delivery approaches available to public owners, design-build is the best positioned to provide owners the most engagement and value, and the least risk, in their projects. The Owner is shielded from ‘rolling the dice’ with opening bids for the entire project, along with the associated need to redesign, reduce scope or find additional funding—all at the expense of the schedule. For many Owners, this cost certainty is one highly appealing aspect of progressive design-build.

As a result of continuous engagement, the Owner has many options on how to engage for a review and approval process. As a part of the team, the Owner always knows current progress and roadblocks—not just at major milestones. They are also able to work closely with the entire design-build team—not just the Architect and Engineer as the case typically is in design-bid-build (DBB)—to directly influence the project.

The success of this approach is facilitated by participation, engagement and—most importantly—transparency on behalf of the Owner team.2 According to researchers, “integrated teams are the most innovative when they fully understand the owner’s business case and resources.”2 The approach and attitude of each team member, empowered by their firms to work more collaboratively, is key to achieving better results.

Unlike Construction Manager at Risk (GC/CM) and Design-Bid-Build (DBB), the legislation backing progressive design-build allows District stakeholders to make decisions on team selection based almost entirely on team qualifications and team cohesion—giving the Owner the power to choose the right team to bring the best value, not just the lowest initial bid, and the opportunity to engage with that team right down to the trade partner to make detailed decisions.

A 2018 study from the Construction Institute studying the success of project delivery methods showed that the most successful examples were ones where project culture was emphasized. The study also found that unsuccessful projects were the result of a project team lacking experience with the delivery method, there was a communication gap that occurred between the Owner and team, and where the project team experienced understaffing or high turnover rates.3 A successful project delivers a building that is better designed to fit the needs of the end-users, can be completed on a shorter schedule, makes the most of the allotted budget and is designed and built with an integrated and high-functioning team.

School districts stand to benefit from utilizing progressive design-build because it: • Saves time, so students and teachers can start using their classrooms faster. This also translates to much better predictability of the final delivery date. Shorter schedules also lead directly to cost savings.

• Provides a stronger focus on strategic investing to meet the owner’s goals, so districts get the building they want and need within their budget.

• Yields a higher quality product, meaning the school can serve the community for years to come

1 Cheng, R., 2015. Integration at Its Finest: Success In High-Performance Building Design And Project Delivery In The Federal Sector. Office of Federal HighPerformance Green Buildings, U.S. General Services Administration, pp.2-83.

2 Allison, M., Pease, J., Klawans, S., Cheng, R., & Ashcraft, H. (n.d.). INTEGRATED PROJECT DELIVERY An Action Guide for Leaders (1093473383 828786425 L. Lee, 1093473384 828786425 L. Osburn, & 1093473385 828786425 R. Cheng, Eds.).

3 Messner, J., Leicht, R., Esmaeili, B. and Roberts, B., n.d. Revisiting Project Delivery Performance. Charles Pankow Foundation and Construction Industry Institute, pp.2-7.

By Brian Aske, DBIA

SMART USE OF SCHEDULE

Perhaps the most notable reason for design-build’s growing popularity is the time savings and assurance of completion schedule. Meeting schedule and duration milestones are important on every construction project but move to the forefront for education projects because students, teachers and school faculty need to have access to a complete and functional school on their first day of instruction. A District needs a predictable schedule with the ability to meet project occupancy milestones. Time saved during the project schedule ensures the District can meet those milestones. Since the District will need to fill occupancy based on school schedules, predictability and timeliness play a crucial role in the success of a K-12 project.

But this isn’t unique to school districts. According to a 2018 FMI study, a predictable delivery schedule was a primary factor when selecting a project delivery method.1

Delivery schedule was the most influencing factor for owners when selecting a project delivery method.

Project delivery method influencing characteristics: Weighted average of responses 2

The chart below shows the elements of a project that are most important when determining a delivery method. The points higher and further to the right have been determined to be the most influential, and include delivery schedule, achieving owner goals and objectives, selecting a contractor based on experience, project complexity and innovation—all of which are cornerstones of design-build.

1 2018. Design- Build Utilization Combined Market Study. FMI, pp.2-71.

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2 FMI Survey.

6

Advantages of Progressive Design-Build in K-12 Construction

A predictable and secure delivery schedule is the critical schedule element. When the design and construction teams are partners from the project’s inception, there is a single source of responsibility for meeting schedule milestones. Together, they can plan project development to meet stakeholder needs, so design and constructability happen in relation to one another, not separately.

construction speed and a 61% faster delivery speed than GC/CM methods. These schedule savings can be attributed to participation from the design-build team in goal setting, integration of design and construction tasks, earlier involvement of the general contractor and trade partners, elimination of unnecessary project complexity and a secure source of funding.1

This is particularly important on projects with occupied sites, to ensure work progresses to meet project milestones while avoiding the impact of ongoing education. According to a 2018 study from the Construction Institute, design-build projects saw 3.9% less schedule growth than traditional Construction Manager at Risk (GC/CM) methods. Researchers also found that design-build had a 13% faster

Similarly, the same report found that design-build saw 1.7% less schedule growth when compared to design-bid-build (DBB) methods, as well as 36% faster construction speed and a 102% faster delivery speed.1

Performance Measure

DB vs. CMR

CMR vs. DBB

DB vs. DBB

R2

Unit Cost

1.9% less

1.6% more

0.3% less

99

Cost Growth

2.4% less

1.4% less

3.8% less

22

Note: R2 is the percentage of the variance in each performance measure predicted by variables in the regression model. A higher R2, up to a maximum of 100%, provides greater certainty in the benchmark

Schedule Performance Comparison Schedule Growth

3.9% less

2.2% more

1.7% less

21

Construction Speed

13% faster

20% faster

36% faster

88

Delivery Speed

61% faster

25% faster

102% faster

89

Not only does design-build provide more schedule certainty, but shortening the schedule also provides better cost performance. The FMI study found that projects using design-build see nearly 2% less unit cost over Construction Manager at Risk (GC/CM) and 0.3% over design-bid-build (DBB). Similarly, design-build sees 2.4% and 3.8% less cost growth over Construction Manager at Risk (GC/CM) and design-bid-build (DBB), respectively.2 There are many reasons why design-build generates cost savings as compared to other delivery methods, including escalation, team chemistry, contracting terms, early team involvement and more, but the correlation between a shortened schedule and significant cost savings is clear.

1 Messner, J., Leicht, R., Esmaeili, B. and Roberts, B., n.d. Revisiting Project Delivery Performance. Charles Pankow Foundation and Construction Industry Institute, pp.2-7. | 2 2018. Design- Build Utilization Combined Market Study. FMI, pp.2-71.

By Brian Aske, DBIA

Designbidbuild traditional method

Conceptual planning select Architect

schematic design

permits

design Construction development documents

bid rebid

Mobilize

Construction

contractor award

Construction Manager at Risk GCCM method

design construction development documents

Conceptual Planning

schematic design

Select Architect

select general contractor

cost estimate

bid packaging

Construction

permits macc

progressive Designbuild method

Conceptual planning

preliminary design

final design

design to fixed value

construction

permits

cost estimate/ select design-builder target value delivery

design fixed scope, then set value

project duration

time saved

When total contract value can be set: Set Construction Value

Fixed Budget/Variable Quantity-Quality: Team designs to budget

Under a design-bid-build (DBB) contract, the Architect pushes the design from concept through final design with the Owner and attempts to detail the project to provide explicit directions to the contractor and defend their documents. General Contractors then provide the lowest defendable bids based on those documents and look to recover costs during construction where documents are unclear, setting up an adversarial relationship that is unbeneficial to the Owner. If the lowest bid exceeds the owner’s budget, the design team must make design revisions and value engineer the design to fit the budget, which can delay the start of construction. This lengthy process can require costly rework and lead to reductions of important design elements or even functional aspects of the facility. Any revisions to the original bid documents lead to a change order, often for added cost and time.

On Construction Manager at Risk (GC/CM) projects, the general contractor should be hired during preliminary design, to begin working with the design team once an initial concept is established.

Fixed Quantity-Quality/Variable Budget: Team designs to need, then sets final value

The General Contractor provides progressive cost estimates, value engineering and constructability recommendations, before eventually bidding out all of the work in packages and presenting a Maximum Allowable Construction Cost (MACC). While some amount of fasttracking is now possible, taking less time than DBB, the team is still not integrated, and the contract value is not set until after the results of the subcontractor bids are tallied based on construction documents and specifications of at least 90% completion.

However, when working under a design-build contract, the designer and the builder are working as a single team and design and construction are integrated from the start. Together, the team creates design concepts based on Owner needs, considering available budget and time. While construction usually requires a similar schedule duration, the entire design and preconstruction process is integrated and overlapped, significantly shortening the schedule and eliminating costly rework and hand offs.

From the start of design to turnover, design-build is estimated to save an average of six months from GC/CM and one year from DBB, giving students, teachers and district employees access to a learning environment specifically designed to help them teach or learn nearly a full school year faster than other methods.

8

Advantages of Progressive Design-Build in K-12 Construction

STRATEGICALLY PLANNING FOR THE LONG-TERM

Each school district has unique needs to match the unique students, teachers and faculty members that fill its schools. Since school construction is funded largely through bonds, it is important that the District can use the funding as efficiently as possible while ensuring the building can continue to serve the community for years to come. An effective design and construction team is key to helping deliver a building that does just that.

The design-build team has several opportunities to help school districts make strategic investments:

Mitigating Risk An effective tactic is to place the responsibility for mitigating risk with the team members best positioned to mitigate it. As an integrated team, design and construction professionals can work together and manage most design and construction risks. As risk is mitigated, contingency funds can be freed up for investment into the project, or savings set aside for future projects or needs.

Re-investing Contingency When construction progresses, and the team successfully mitigates the risk, the level of uncertainty decreases and the contingency funds can be freed up to reinvest in other scopes of work.

2019

2017

2015

2013

2011

2009

2007

2005

2003

2001

1999

1997

1995

1993

1991

1989

1987

1985

1983

1981

1979

1977

1975

1973

Long range escalation tracking (over the last 50 years)

1971

rlb cost index

Managing Escalation Over the last 50 years on the west coast, escalation has risen at an average of 4.5% each year. When talking about construction schedules and budget, that means more time does mean more money. If the design-build team can reduce the overall schedule time, they increase the Owner’s buying power—allowing the project to better meet budget goals and create the opportunity to invest further into the project. For example, over the last 50 years, reducing the overall project delivery period by one year for a $100M project would have increased the project’s purchasing power by around $4M for building increased quantity or a higher quality of the facility.

7,000 financial crisis

6,000 5,000

Average western region cpi percent change over the period from 1971 to 2018 is 4.15% per year

4,000 3,000

dot com bust

Early 1980’s recession

Defense spending cuts & real estate slumps

2,000 1,000

rcw 19.27a - 14% energy efficiency increase per code cycle

Average rlb construction cost index percent change over the period from 1971 to 2017 is 4.5% per year

RLB Construction Cost Index

CPI - Western Region

Linear (RLB Construction Cost Index

Linear (CPI - Western Region)

By Brian Aske, DBIA

$140/SF $120/SF

cws

electrical

fire sprinklers

Providing real-time target value updates allows the team to stay on target and provides the Owner the opportunity for investing unneeded contingency funds on opportunities to add value instead of cure cost overruns.

plumbing

vertical trans.

interior constr.

roofing/ wp

exterior wall

structure

site

demolition

general conditions

$160/SF

Design

By bringing the construction team, trade partners and consultants together early in the design process, they can work to select systems, products and installation methods that fall within the

appropriate target value budgets, performance requirements and quality aspects. This also helps to ensure there is clarity on the trade partner’s scope—minimizing the need for change orders. This process can continue into construction. The trade partners and specialty consultants work with the design-build team to develop the most effective solution for design details.

hvac

An excellent opportunity for removing waste on design-build projects is utilizing target-value delivery (TVD), in which budgets are established for each building system or assembly and together lead to the total budget. This also allows the Owner to decide where to prioritize investments into specific systems, such as mechanical or building enclosure. When the design-build team understands the correct target values to design and construct the major building systems based on, they can be successful in meeting budgets, schedules and contingency savings.

An example of benchmarking and Target Value setting for major system and cost categories (provided by Lease Crutcher Lewis)

$100/SF $80/SF $60/SF $40/SF $20/SF

Range of Construction Costs

$0/SF

Additionally, design-build allows the Owner and design-build team to reinvest contingency as the team mitigates risk and the project progresses. The goal is to deliver a building that best serves its’ endusers while utilizing every dollar allotted to the project.

As scopes with high potential for unforeseen conditions complete, any unused construction contingency can be reinvested into future scopes, like the exterior envelope, interior finishes and site work or landscaping.

According to a 2015 research report, teams that have established a collaborative and trusting process can utilize transparent contingencies to help increase that team mindset. In the study, several examples showed how reaching a collective agreement on the use of contingency increased alignment and shared goals.1 By maintaining transparency on budget and decision-making throughout the project, the design-build team can effectively invest the unused contingency into later phases of the project and maintain a positive project culture, which leads to more innovation and better-quality work.

Target Budget

Culture Shift in the Industry: Many owners in the Pacific Northwest Region have cited their reason for switching to Progressive Design-Build is to change the culture of their project delivery and teams, to be focused toward high collaboration and meeting the Owner’s project goals.

new approaches

past practices over-budget bids lots of change orders schedule overruns slow, linear processes low technology 2-D shop drawing quality concerns siloed teams contract compliance

budget schedule technology quality culture

best value selection target value delivery time savings pull plan design + construction early adoption single, shared bim ownership of quality integrated teams goals and objectives

1 Cheng, R., 2015. Integration at Its Finest: Success In High-Performance Building Design And Project Delivery In The Federal Sector. Office of Federal High-Performance Green Buildings, U.S. General Services Administration, pp.2-83.

10

Advantages of Progressive Design-Build in K-12 Construction

A PRODUCT THAT STANDS THE TEST OF TIME All buildings are intended to serve their inhabitants for decades, but as needs change and systems become more and more sophisticated, it can be difficult to design and construct a school that will effectively serve students, faculty and the facilities team for the long haul.

Building longevity starts with precise construction, with challenges that have been thoughtfully and collectively solved before work being put in place and with well-thought-out access and system selections that simplify facility maintenance throughout the life of the building.

When challenges are addressed early, better solutions result, meaning end-users see more functionality.

Additionally, at building turnover, the facilities team needs to know the building inside and out and access all the systems that will keep the building working for years to come. This takes clear communication and organization from the get-go. Virtual design and construction (VDC) is crucial for success in this endeavor and is facilitated particularly well on design-build projects because the architect and contractor are already deeply integrated under one contract.

The model starts under the management of the design-build team but will eventually transition to the trade contractor to help bring a higher level of detail beyond typical design documentation for clear fabrication and installation. To maintain integration and collaboration, best practices are for all design-build team VDC models to live in a single place and be accessible by the entire team. The Single Living Information Model (SLIM) allows all project partners to co-author and update information throughout all project phases.

Since we can virtually see every element of the building, the team can explore options for quality control and prefabrication and find innovative, real-time solutions.

INCREASING THE DIVERSITY OF BUSINESSES CONTRIBUTING AND PARTICIPATING IN THE DESIGN AND CONSTRUCTION PROCESS As more Owners have turned to design-build in Washington State, they have greatly increased the diversity of businesses participating in their projects at all tiers.

Design-build allows for much greater flexibility in composing best value selection criteria tailored to the needs and goals of the project and owner. It also allows for flexibility in contracting terms to meet the varied needs of small and disadvantaged businesses, facilitating better, more successful relationships and support capabilities throughout the project’s design and construction process.

Conclusion Design-build’s continued growth in the Pacific Northwest underscores the opportunity available to school districts for implementation on their projects. Not only does progressive design-build delivery allow the District to select their ideal team based largely on qualifications, but it also gives them a higher value project for their tax or levy dollars and reduces their exposure to cost and schedule overruns.

Unlike design-bid-build (DBB) and Construction Manager at Risk (GC/CM), design-build allows the District to select the best possible team based on experience, approach, team cohesion and any other metrics they want. The design-build team works under a single contract and breaks down the traditional silos for a more collaborative and integrated process. Together, the architect, contractor and select trade partners can partner to design, budget and provide constructability from the start, eliminating rework and driving more innovative solutions to meet client goals. Since the entire team is integrated, the use of VDC becomes more valuable than ever because a single living model gives clarity to all trades and disciplines, while providing a tool to stakeholders like Facilities and Maintenance teams. The result is a building that can open its’ doors to students six months to a year earlier on a reliable schedule, that provides more opportunities and services for students and faculty with the same budget and that is designed and constructed specifically for the unique needs of the stakeholders.

By Brian Aske, DBIA

OUR CONTRIBUTORS: Steve Tatge is an architect and the Executive Director of the Major Projects Group in Capital Planning and Development at the University of Washington. He recently led the Population Health Facility project and is currently leading the Health Sciences Education Building, both of which use an innovativeintegrated design-build agreement. Steve attended the UW Masters of Architecture program and has a Bachelor’s in Psychology from Knox College. He has spoken at conferences organized by Tradeline, I2SL, SCUP, LCI, COAA, CMAA, AGC of Washington, DBIA Northwest, and AIA Seattle, and he is the current Past President of the Western Washington Chapter of the Design-Build Institute of America Northwest Region.

Morris Aldridge stands at the front of the replacement and renovation projects for one of the largest school districts in Washington State as Executive Director of Planning and Construction for Tacoma Public Schools. Morris has spent the last four years piloting new projects and implementing innovative school design ideas for TPS. He just finished Washington State’s first K-12 public school progressive design-build project and has five more in progress. Morris holds a Master of Education from Sul Ross State University and a Bachelor’s in Teaching from Sam Houston State University. Morris Aldridge is the President of DBIA Northwest Western Washington Chapter and is a valued speaker in facilities planning, capital projects and construction bond projects.

Garett Buckingham is the Director of Design and Construction for EvergreenHealth Medical System. Garett attended the University of Washington and graduated from the dual degree program with a Bachelor’s in Architectural Studies and a B.S. in Construction Management.

He is the current Vice President of the Western Washington Chapter of the Design-Build Institute of America of the Western Washington Chapter in the Northwest Region.

SPECIAL THANKS TO: Design Build Institute of America, DBIA.org, for providing invaluable research, studies, education, and recommendations for Best Practices in design-build.

The Northwest Region of the Design-Build Institute of America, DBIANW.org, for providing local leadership, resources, education, and the forum for discussion on creating the right formula for design-build success in WA, OR, ID, and AK. Lease Crutcher Lewis, lewisbuilds.com, for donating countless hours of graphics creation and content editing for the drafting of this paper.