Survey Results Show Design/Build Is No Panacea
Firms need to realize that design/build hasn't turned into the panacea it was believed it would become for the design and construction industries. It has its place in the industry, but we can all stop waiting for the time when every job will be completed using design/build, because it's not coming," said Mark Zweig, president and CEO of the firm.
A look at the results of the survey shows that Zweig's comments reflect what more firms are learning about the future of design/build. In the 1997 edition of the survey, firms projected a median 80% increase in the percentage of gross revenue they would derive from design/build projects in the following three years. The 2000 edition, however, reports that firms see a more moderate 25% increase in the percentage of gross revenue they expect to derive from design/build work in the next three years.
The survey attributes these results to design/build's sluggish expansion into public sector work, an area that many companies consider to be the source of future growth for design/build. Laws banning public projects from being performed using design/build still abound on the federal, state and municipal levels, contributing to the slow expansion. The percentage of firms that say procurement laws in their state effectively shut them out of acquiring public sector design/build work has increased from 35% in 1998 to 41% in the current survey, and the percentage of design/build work firms perform in the public sector dropped this time to 40%.
Regardless, firms continue to be optimistic about design/build's future in the public sector. Whether this optimism is founded or not, 85% of firms still report they expect an increase in the use of design/build in the public sector within the next five years. Confidence remains that the benefits of design/build to the public are tangible and will lead to change.
Another factor that may explain why more firms aren't getting their feet wet with design/build is the higher level of risk involved with this project delivery method. Risk-averse design firms simply don't find design/build work worth pursuing because of the unfamiliar risks involved. Among other factors, significant front-end marketing costs during the procurement process add a high level of risk to design/build work. The percentage of firms that say their marketing fee was at risk in a design/build competition has steadily declined from 92% in 1998 to 83% in the current survey, but this figure is still high. Firms know going in that the investment they make trying to win design/build work may be lost if their firm doesn't get the job. Only 10% of firms have ever been reimbursed for a percentage of their marketing costs when they didn't get the job they were pursuing. Of those firms, three-quarters were reimbursed 50% or less.
The Design/Build Survey can be obtained by contacting Zweig White & Associates at (508) 651-1559 or online at www.zweigwhite.com/store/svdes.