One Company's Experience with Design/Build: Labor Cost Risk and Profit Potential

Ernzen, James; Schexnayder, Cliff

doi:10.1061/(asce)0733-9364(2000)126:1(10)

Cited by 42 publications

(16 citation statements)

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“…This is due to the perception that transferring design job to DB contractors enables project owners to lower project risk (H11) and to lower overhead cost (H10). This confirms the findings of Ernzen and Schexnayder, that DB projects are riskier for contractors, and the average profit margin for them was only 3.5% greater than that for non-DB work [17].…”

Section: Resultssupporting

confidence: 90%

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Design and Build: Perception of Project Owners and Contractors on Cost in Java, Indonesia

Djojopranoto

Benhart

2017

ced

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Design-build (DB) is a project delivery that has already been used widely in USA, UK, Singapore and in other countries. However, it is not widely used in Indonesia and there are limited studies available on DB. The purpose of this paper is to quantify project owners' and contractors' opinions about the perceived benefits of DB in terms of cost in Java, Indonesia. The quantitative research design using survey study was conducted to evaluate stakeholders' opinion on the impact of DB on cost. Survey forms with questionnaires were sent to ten project owners and ten contractors. Inferential statistics using t-test was used to compare the perception between them. The result shows that project owners and contractors agree that DB project delivery has some benefits on cost. However, implementation has to be improved in order for DB to be a preferable project delivery option.

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Section: Resultssupporting

confidence: 90%

“…In USA, Ernzen and Schexnayder published a paper about analysis of the company"s labor cost risk based on a case study of DB and DBB projects [17]. They found that DB projects are riskier, and the average profit margin was only 3.5% bigger than that for non-DB work.…”

Section: Impact Of Db Project Delivery On Costmentioning

confidence: 99%

Design and Build: Perception of Project Owners and Contractors on Cost in Java, Indonesia

Djojopranoto

Benhart

2017

ced

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“…Some studies focus on special industries such as transportation projects [25,[38][39][40][41] and water/wastewater projects [42][43][44], which make the comparison between different industries be possible, thus helping us to know more about the differences. e studies mentioned above are from the perspective of a macroscopic view.…”

Section: Performance Comparison Of Pdmsmentioning

confidence: 99%

Framework for Designing Project Delivery and Contract Strategy in Chinese Construction Industry Based on Value‐Added Analysis

Ding

Wang

2018

Advances in Civil Engineering

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A project delivery method (PDM) and project contract strategy (PCS) are two critical factors for project success in construction industry. Currently, there are several options available for them in the construction industry, with several innovative PDMs and PCSs emerging along with the development of the industry. is paper maintains that the PDM should be designed in combination with the PCS given their close relationship. is paper focuses on the design of project delivery and contract strategy (PDCS), with the aim of developing a conceptual framework for the PDCS design. e design process is divided into two stages: preliminary design and detailed design, taking engineering design as a frame of reference. In the design process, the value-added analysis of project objectives is adopted as a tool to make decisions at different stages. e framework proposed in this paper is intended to provide a more distinct and direct path to improving PDCS selection or design, as well as enhancing the reliability of decision-making.

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“…Konchar and Sanvido (1998) studied 351 U.S. projects and observed about 6% cost savings for DB compared to DBB, with high statistical significance. Ernzen and Schexnayder (2000) compared two highway projects: one delivered using DB and the other delivered using DBB. The DB project saved 2%, while the DBB project cost 1.2% more than the initial budget.…”

Section: Total Cost or Unit Costmentioning

confidence: 99%

A Meta-analysis of Literature Comparing Project Performance between Design-Build (DB) and Design-Bid-Build (DBB) Delivery Systems

Goftar

Asmar

Bingham

2014

Construction Research Congress 2014

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The design-build (DB) delivery system has been gaining popularity in the Architecture, Engineering, and Construction (AEC) industry, in part due to the performance benefits it can offer to project stakeholders. Studies have been conducted to quantify these performance benefits, in terms of commonly used metrics that include unit cost, cost growth, delivery speed, schedule growth, and project quality. This paper summarizes and organizes the construction literature that quantifies the differences in performance between DB and the more traditional design-bid-build (DBB) delivery system, in terms of project cost, schedule and quality. The paper discusses these findings in a meta-analysis format, to uncover patterns, trends, or possible differences in the results. Interestingly, the study reveals that despite several research efforts, few present statistically significant comparative results for all key performance metrics. The paper contributes to the body of knowledge by summarizing two decades of DB performance research and identifying the range of project performance values that can be achieved using DB, which allows for an improved understanding of DB performance. INTRODUCTIONOver the last couple of decades, new delivery methods have emerged allowing for flexibility in the way projects are designed, bid, and ultimately built. Mostly due to the existing legislature requiring the selection of the lowest bidder in public projects, many construction projects were still limited to the design-bid-build (DBB) method of project delivery. Over time, legislative changes have allowed for a shift in project delivery systems and procurement processes, specifically allowing for the design-build (DB) method to be used in several jurisdictions. Figure 1 presents a visual representation of the two delivery methods discussed in this paper: DBB and DB. In the top portion of the figure, solid black lines represent contractual relationships whereas gray lines represent communication or coordination relationships. The main changes in the way projects are delivered using the alternative delivery methods relate to the types of relationships between the project stakeholders, and their timing of engagement in the project (El Asmar et al. 2013). In

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One Company's Experience with Design/Build: Labor Cost Risk and Profit Potential

Cited by 42 publications

References 0 publications

Design and Build: Perception of Project Owners and Contractors on Cost in Java, Indonesia

Design and Build: Perception of Project Owners and Contractors on Cost in Java, Indonesia

Framework for Designing Project Delivery and Contract Strategy in Chinese Construction Industry Based on Value‐Added Analysis

A Meta-analysis of Literature Comparing Project Performance between Design-Build (DB) and Design-Bid-Build (DBB) Delivery Systems

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