1. ABA
March 26, 2013
Design-Build Gone Wrong
Lessons Learned
J. Mark Dungan
Delta Consulting Group
1

2. Design-Build vs. Design-Bid-Build
90.0%
Design-Build Projected
82.3%
Trend in 2004
80.0%
72.0%
70.0% 65.0%
60.0%
54.0%
50.0%
50.0%
45.3%
40.0%
40.5%
36.0%
30.0%
26.0%
20.0% 16.0%
10.0% 12.4% 12.0%
9.0% 10.0% 9.4% 9.5%
5.3%
0.0%
1985 1990 1995 2000 2005 2010
Traditional Design/Bid/Build Design/Build Construction Management @Risk
The Growth of D/B Method (DBIA 2004)
2

3. Design-Build vs. Design-Bid-Build
3

4. Design-Bid-Build vs. Design-Build
Design Risk in a Design-Bid-Build Contract
4

5. Design-Bid-Build vs. Design-Build
Design Risk in a Design-Build Contract
5

6. Comparison of Contractual Structure
Design-Bid-Build vs. Design-Build
Design-Bid-Build
Bid Based on
Owner Defined Scope
CONTRACT CONTRACT
Design
Professional
Contractor
Construction SUB
Documents CONTRACT
Sub
Contractors
6

7. Comparison of Contractual Structure
Design-Bid-Build vs. Design-Build
Design-Bid-Build Design-Build
Bid Based on
Performance
Criteria and
Bid Based on
Owner Owner General
Defined Scope
Specifications
CONTRACT Construction
CONTRACT CONTRACT
Documents
Design Contractor
Professional
Contractor
Designer Builder
SUB Construction SUB
CONTRACT Documents CONTRACT
Sub Sub
Contractors Contractors
7

8. Design-Build
Bid Based on
• Provides Performance Performance
Criteria Criteria and
Owner • Provides General General
Owner
Specifications
Specifications
CONTRACT
Contractor
• Provides Design Team
Designer Builder
• Detailed Construction
Contractor Documents Construction SUB
Documents CONTRACT
• Management of
Construction
Sub
Contractors
8

9. Design Build Concept
Design Builder Contractor
Owner and Owner
Owner Prepares Owner Builds
Design Builder Reviews
Specifies Detailed Approves According to
agree on Price Design for
Project Needs Design Design Agreed
and Contract Compliance
Documents Designs
9

10. Design-Build vs. Design-Bid-Build
Both Owners and the Design Builders
Occasionally Misapply the Design
Build Concept…
We will present examples of each.
10

11. Typical Problem Areas
Design Scope Construction
DB designs Unlike DBB, Scope is DB may provide
minimal to meet sometimes vague, a basic industry
performance, Ow change to the DB is a standards while
ner expected design evolution to the Owner expected
higher standard Owner greater standards
11

12. Example of Owner Misapplied Concept
Contractor
Owner and Design Builder Owner
Owner Owner Builds
Design Builder Prepares Burdens
Specifies Approves According to
Agree on Price Design Design
Project Needs Design Agreed
and Contract Documents Process
Designs
12

13. Typical Problem Areas
Design
Example:
Large Industrial Complex.
DB designs
minimal to meet
performance, Ow
ner expected
higher standard
13

14. DB’s Expected Drawing Development
A1 AFC or Rev 01
Rev 00
• Design • Incorporates • Incorporates
development Owners any minor
to point of Comments to comments or
Owner review. A1, Approved from
for unforeseen
Construction issues
14

15. Evolution of Drawing 101
101 – A1
101 – A2
101 - 00
101 Rev. 1
101 Rev. 2
101 Rev. 3
101 Rev. 4
………………….
101 Rev. 12
15

16. 2007 2008 2009
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
12/21/07
Work Started in July 2007. The
evolving design, due to owner
changes, delayed the initial
drawing submittals until
December.
E1
16

17. Evolution of Drawing 101
Owner Rejects Drawing:
• Comment #1: Owner prefers the two plans be
combined and produced at a larger scale.
• Comment #2: Owner directs preferred labeling
of Walls
17

18. 2007 2008 2009
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
Contractor adds changes
2/24/08 complying with Owner changes.
The two drawings were
combined into one as
requested.
E2
18

19. Evolution of Drawing 101
Owner Rejects Drawing:
• Comment #3: Owner states that the combined
drawing scale is now too small to describe the
details desired.
• Comment #4: Owner comments that the line
width used on the drawings was to narrow.
19

20. 2007 2008 2009
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
4/4/08
Rev 00
The Owner requires what was a
single drawing now be broken out
into six new detail drawings
102 103
104 105
106 107
00
20

21. Drawing 101 Becomes 7 Separate Drawings
Effort x 1
101
Key Plan
102 103 104 105 106 107
Design Effort Increased x 6
21

22. 2007 2008 2009
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
Drawings Issued for
4/20/08 Construction on April 4th
Floor slab revised to
accommodate preferential
Owner decision to add
Storage and Bathrooms.
Change required on
3 separate drawings
01
22

23. Evolution of Drawing 101
Owner Rejects Drawing:
• Comment #5: Owner requires the removal of an
a reference to another drawing, wants detail on
each drawing.
• Comment #6: Owner requires that a note
describing a typical expansion joint be
specifically added at each joint location.
23

24. 2007 2008 2009
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
10/18/08
Walls moved to increase
size.
03
24

25. Evolution of Drawing 101
Owner Rejects Drawing:
• Comment #7: Owner now wants 20 more
expansion joints. Although all are the same, the
Owner requires that each has to be specifically
detailed.
25

26. 2007 2008 2009
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
10/31/08
All 7 Drawings reissued
specifically detailing 20
Expansion Joints.
04
26

27. Evolution of Drawing 101
Owner Rejects Drawing:
• Comment #8: Owner increases size of
equipment in the building, rejects drawing and
directs that it be changed to accommodate the
new equipment.
27

28. 101
102 103 104 105 106 107 108 Count of
Drawings
11/4/07 A1 A1 A1 A1 A1 A1 A1 7
11/18/07 00 00 00 00 00 00 00 7
12/12/07 01 01 01 01 01 01 6
2/7/08 01 02 02 02 02 02 02 7
2/14/08 03 03 2
3/21/08 04 04 2
10/10/08 02 05 02 03 05 03 03 7
5/22/09 04 1
5/29/09 03 04 2
8/19/09 06 06 2
28

29. Expected Drawing Development
A1 AFC or Rev 01
Rev 00
• Design • Incorporates • Incorporates
development Owners any minor
to point of Comments to comments or
Owner review. A1, Approved from
for unforeseen
Construction issues
29

30. Impacts Caused by Owner’s Design Process Involvement
A1 AFC Rev
1
A2
Rev 2 Rev3 Rev4
A3
A4 Rev 5 Rev 6 Rev12
>10,000 Additional Drawings
30

31. Impacts of Owner Misapplied Concept
Over 12,000 Drawing Over 30,000 Individual
Review documents Owner Comments
Issued by the Owner
Review Review Review Review Review
Sheet Sheet Sheet Sheet Sheet
Anticipated
Review Review Review Review Review
Sheet Sheet Sheet Sheet Sheet
Scope
Review Review Review Review Review
Sheet Sheet Sheet Sheet Sheet
Preferential
Review Review Review Review Review
Sheet Sheet Sheet Sheet Sheet
31

32. Impacts of Owner Misapplied Concept
• The Owner’s design involvement caused the
Contractor:
– Unplanned additional resources needed for
management, development, and production of
drawings
– More time required to progress job
– Contractor’s costs to complete the project increased
above what was bid
32

33. Example of Contractor
Misapplied Concept
Construction
Example:
Power Station
DB may provide
basic industry
standards while
Owner expected
greater standards
33

34. Example of Contractor Misapplied Concept
Contractor
Owner Owner and Design Builder Owner
Does Not
Builds
Specifies Design Builder Prepares Reviews
According to
Work With
Project Needs agree on Price Design Design for
Agreed
Owner
and Price and Contract Documents Compliance
Specification
Designs
34

35. Comparison of Contractual Structure
Design-Bid-Build vs. Design-Build
DBB DB
Owner Owner
CONTRACT CONTRACT CONTRACT
Design
Professional
Contractor Contractor
SUB SUB SUB
CONTRACT CONTRACT CONTRACT
Sub Design Sub
Contractors Professional Contractors
35

36. Design Build – Liabilities
DB
• Design Errors and
Omissions are
Owner
Under Contractor
Liability
CONTRACT
• Subcontractor
Time and Money
$ $
Claims are charged
Contractor
against Contractor
to correct design
SUB SUB
issues CONTRACT CONTRACT
• Possible LD’s to
Owner
Design Sub
Professional Contractors
36

37. Example of Contractor Misapplied Concept
Completion Work Status
At Termination:
• Plant was nearly operational
• Over half of systems turned over
• ~500 well defined punch list items
37

38. Opposing Views of Project
Contractor’s Story Owner’s Story
• Project will Perform • Project Not Built as
as Contracted Contracted
• Essentially • Auxiliary Systems not
Operational Built Per Design
• Owner Being • Contractor Failed to
Unreasonable Perform
38

39. Example of Contractor
Misapplied Concept
Upon Investigating the Work-in-Place,
– Design did not Conform to Owner’s
Criteria,
– Work in Place did not Conform to Detail
Construction Design
39

40. Design Build – Liabilities
DB
Design Professional’s
Contract was essentially a Owner
Typical Subcontract
Agreement. CONTRACT
When General Contractor
was Terminated, Design
Professional took the
$ Contractor
position they had no SUB SUB
CONTRACT CONTRACT
further contractual
obligation.
Design Sub
Professional Contractors
40

41. Example of Contractor Misapplied Concept
EXAMPLE of DESIGN ISSUES
Unit Drain System
Punchlist Item:
“Drain funnels are spraying fuel oil on the ground”
41

42. EXAMPLE of DESIGN ISSUES
Unit Drain System
Problem Encountered:
Fuel Oil Is Spilling
Owner Equipment
• Unexpected Result
• Environmental Issue
42

43. EXAMPLE of DESIGN ISSUES
What Was SPECIFIED:
Funnel Connection was Specified by Manufacturer
of this Owner Supplied Equipment
Vendor Required Funnel
Connection Owner Equipment
1”
2”
43

44. EXAMPLE of DESIGN ISSUES
Conflict in Specifications and Design Drawings.
• Design-Build contractor Changed the Owner’s
Requirement for a funnel connection without
the Owner’s Review of Approval.
44

45. EXAMPLE of DESIGN ISSUES
What was DESIGNED:
Contractor’s Design Drawings showed the 1” pipe being
connected to a 1” underground pipe by a Flange Joint
Owner Equipment
1”
1”
45

46. EXAMPLE of DESIGN ISSUES
Conflict in Engineering Design Drawings and
Actual Construction.
• Owner Refused to Accept Flanged
Connection, they were supposed to have a
Funnel Connection.
• Design-Build Contractor, Cut Off the Flange
and Welded on a Funnel Connection.
46

47. EXAMPLE of DESIGN ISSUES
Field Change:
Contractor makes field change for a funnel connection
without the Owner’s Review or Approval
Owner Equipment
47

48. EXAMPLE of DESIGN ISSUES
Contractor’s Resolution:
A 1” pipe with funnel connection runs
underground to a tank
Owner Equipment
1”
1”
48

49. EXAMPLE of DESIGN ISSUES
New Design
Owner Equipment
1”
2”
49

50. EXAMPLE of DESIGN CORRECTIONS
Steps to Resolve
Remove Work-in-Place and Install New Work
Owner Equipment
• Stop System
• Hand excavate and
Remove 1” Pipe
• Install 2” Pipe and
Appropriate Funnel
• Backfill
50

51. Example of Contractor Misapplied Concept
• Unapproved and non-conforming design had to be
corrected by the replacement engineer
• Significant portions of work-in-place had to be
removed and re-constructed in accordance with
corrected design
• As more systems were inspected and design was
corrected, the Punch list grew to over 2,000 items
51

52. Lessons Learned
Design Scope Construction
Owner strive to Define Scope matrices Define Standards
specify its desires that specifically pre-contract,
pre-contract and identify items and evaluate
then limit review to responsible party experience of
compliance Design Builder
52

53. Thank You for this Opportunity
The End
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54. Delta Consulting Group is an international consulting firm of multi-
disciplined professionals in engineering, accounting, construction,
project management and litigation support. Our key services
include: Dispute Avoidance/Resolution, Expert Witness Testimony,
Project Management, Financial Advisory, as well as Troubled
Project and Surety Consulting.
Delta Consulting Group, Inc.
4330 Prince William Pkwy., Suite 301
Woodbridge, VA 22192
703.580.8801 (p) | 703.580.8802 (f)
www.DELTA-CGI.com
J. Mark Dungan: Co-Founding Partner
Email: mdungan@delta-cgi.com
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