Alternative Project Delivery - Texas Water Development Board

Section 2
Key Contractual Issues
A DB contract is primarily based on delivering an asset that was defined by the
Owner’s Project Criteria for a lump sum fixed price or guaranteed maximum price.
A DB contract generally provides that design activities and certain construction
activities can be performed concurrently. Consequently, a DB contract is structured to
consider the schedule and project cost implications of all permits that will be required
to commence construction. The requirements and obligations of the Owner and the
DB Contractor concerning the development, review, submission, and approval of
project permits are usually explicitly addressed as part of a DB contract.
The Owner may utilize an Owner's Representative or Construction Manager to
ensure that the DB Contractor constructs the project consistent with the requirements
of the DB contract. The Design Consultant of the DB Contractor is the Designer of
record for the project. Upon completion of construction and the meeting of
commercial operational requirements, final payment is authorized to the DB
Contractor by the Owner. The facility is turned over to the Owner and commences
operation with the Owner’s operator.
Benefits
There are a set of benefits that may result from the close cooperation and teaming of
the Design Consultant and the Construction Contractor as part of a DB contract.
The single-point accountability reduces the potential for disputes between the Design
Engineer and the Construction Contractor. A concurrent cooperative effort
between the DB team’s Design Consultant and the Construction Contractor can
benefit the project by shortening the project’s schedule and/or reducing the capital
costs. Examples of this may occur when the Construction Contractor works with
the Design Consultant to identify lower cost construction alternatives than what the
Design Consultant selected. The shared DB team’s incentive to produce a project
that meets the Owner's requirements while being cost competitive, often leads to
design innovations. Even without significant changes to the project’s installed
material and equipment, the concurrent implementation of the design and permitting
activities with the pre-construction work (i.e., site preparation, temporary utilities,
access road construction) can shorten the project’s overall schedule. A shortened
project schedule may result in lower project cost.
In DB project delivery, the contracted price to design and build the project is
established at an earlier point in the project than with a traditional DBB approach. In a
DBB, the design is completed and the project permitted before the construction bid is
generally available.
Areas of Concern
The primary area of concern for DB, and other alternative delivery approaches, is that
current laws regulating public sector design and construction were promulgated
without consideration of DB or DBO-type approaches. Consequently, the legal basis
for the use of these methods of project delivery is frequently unclear, limited or even
precluded. Specifically, selecting Design Engineers and Construction Contractors
jointly based on costs and qualifications is perceived as both controversial and
2-8 Texas Water Development Board B1381-Sect2