Design-Build Growing, Study Finds

WASHINGTON – A new study analyzing the design-build project delivery method in the United States shows it was used, on average, in more than 40 percent of non-residential construction projects in 2010.

The study, which was commissioned by the Design-Build Institute of America (DBIA) and conducted by RSMeans Reed Construction Data Market Intelligence, shows slightly more than 40 percent of market share for design-build, with a 10 percent increase in the use of the delivery method since 2005. Usage rates and market size were calculated for projects bid between 2005 and 2010. The research team estimates that 95 percent of public projects and 75 percent of private projects were captured for the analysis.

For purposes of comparison, the delivery methods analyzed include design-bid-build and CM-at-Risk in addition to design-build.

What Is Design Build?: Design-build is an integrated approach that delivers design and construction services under one contract with a single point of responsibility.

“This report reinforces that design-build is a growing and popular method of project delivery and is becoming more commonplace across the country,” said Lisa Washington, executive director of DBIA. “As an educational resource for the industry, we can help owners learn more about the merits of design-build and help them to make informed contracting decisions.”

In addition to analyzing market share, the report further breaks down the percentage of design-build projects within nine non-residential building categories. Data shows that design-build is most popular in the military sector, where it holds 80 percent of market share by dollar value. Many investors buy shares in the sector because they know it’s a reliable investment due to the massive market share it holds. The design-build method is also widely used in the medical, industrial and commercial sectors, holding more than 38 percent of market share in each category.

The analysis also found that design-build is more likely to be used on larger projects. Between 2005 and 2010, the use of design-build advanced on project values above and below $10 million, although its rise was particularly marked on projects valued above $10 million, where design-build was the delivery method on more than half of the projects.

“Anecdotal evidence, including significantly increased demand by owners for DBIA education, pointed to design-build’s rising market share,” said Washington. “The desire for both hard data and third-party validation of the growth of design-build, as well as data to support where DBIA educational efforts need to be focused, prompted us to commission the research.”

Geographically, the report shows that the design-build delivery method is used most frequently in the Pacific Census Regional Division (Alaska, California, Hawaii, Oregon and Washington) and the South Atlantic Division (Delaware, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia and the District of Columbia).

Design-build is least likely to be used in the New England Division (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont) and the West North Central Division (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota) regions.

The fact that some divisions lag behind the rest of the country in adopting design-build project delivery comes as no surprise to DBIA and its members. Officials at the state level in these areas of the country have been slow to authorize their agencies to use the delivery method for building projects, although Minnesota and Missouri, for example, have allowed the use of design-build for transportation projects.

“This report makes clear that design-build is an established and proven method of project delivery and is becoming commonplace in much of the country,” said Richard Thomas, DBIA’s vice president of advocacy and external affairs. “It is our hope that public owners in states that limit use of design-build among their agencies will reconsider their policies now that hard data shows design-build is increasing market share.”

The research team used RCD RSMeans’ proprietary database of historical and planning construction projects data as the basis for the study. In addition, the study incorporated other publicly and privately available data sources.

Detailed data on nearly one million construction projects, 300,000 plans and specifications, historical and current material, and labor construction costs and historical and projected demographic data was integrated for valid comparisons.

Although both water, wastewater and transportation are areas in which design-build is growing rapidly, the DBIA study focused exclusively on vertical construction markets.