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Design-build delivery has been steadily increasing in the U.S. public building sector for more than 10 years, but it is still termed experimental in transportation. To date, under Special Experimental Project 14 (SEP-14) the FHWA has approved the use of design-build in more than 150 projects, representing just over half of the States. The European countries visited have used design-build delivery for a longer time than the United States and provided the scan team with many valuable insights. The primary lessons learned on this scan tour relate to the types of projects utilizing design-build, the use of best-value selection, percentage of design in the solicitation, design and construction administration, third-party risks, the use of warranties, and the addition of maintenance and operation to design-build contracts.

Design-build is a project delivery method that encompasses both project design and construction under one contract. One firm, or team, is responsible for a project in its entirety. Design-build contracts can have many different forms, but the key element is a single source of responsibility for both design and construction under one contract. There are numerous reasons why owners choose to use design-build, but the primary reason is the potential for shortened project duration. Because of coordinated efforts between the designers and the builders, construction can begin prior to the completion of construction documents.

A design-build contract allows the public-sector owner to shift risks to the private sector that have traditionally been assumed by the public sector. The primary risk that is shifted is that of design errors and omissions. Because the design-builder owns the details of the design, it is responsible for all errors and omissions that occur after award of the project. Conversely, for accepting this risk, the design-builder also is entitled to value engineering savings that are traditionally shared with the owner. When design-build is used in conjunction with financing or operation, the risk shift is much more significant.

The transition from the traditional design-bid-build process to design-build can be difficult, and nowhere is this more apparent than in the U.S. highway sector. Perhaps the two biggest obstacles for design-build in the highway sector are: (1) the customary (statutory in most States) use of low-bid contracting in public highway construction; and (2) the concern on the part of the government agency that it should have full responsibility for design approval and construction administration.

U.S. highway projects have almost exclusively been awarded via unit price bids using 100 percent complete construction drawings. Low-bid selection is difficult in design-build because design-builders must be hired before design is complete to take full advantage of time and cost savings. Hiring the design-builder early in the process allows for fast-track construction and more constructible designs. The low-bid mentality is deeply entrenched into both the States' and contractors' business operations. The Europeans have fewer problems with the low-bid obstacle because best-value selection procedures are ingrained into their business culture.

In the United States, the responsibility for design traditionally rests on the States' DOT or a design consultant who is an extension of the DOT. When a DOT hires a design consultant, there has traditionally been a rigorous approval of design. The trend in design-build is that DOTs no longer approve the design, but rather stipulate a set of design standards. At various points, the DOTs may conduct a review of the design, but the final accountability lies with the design-builder. In some U.S. States, sovereign immunity for the design defects is tied to approval of the design by a public employee. This is apparently not an issue in Europe. Design approval and construction administration also are less of a problem in Europe, where they more readily utilize contractor-controlled QA/QC programs and tie maintenance and operation into the design-build contract. In those countries where the European agency takes a network operator role, design-build is prevalent, but where agencies take the role of "providing" engineering services, design-build is used less frequently.

This chapter discusses design-build techniques used in Europe. Specifically, types of projects utilizing design-build, design-builder selection, percentage of design in the solicitation, design and construction administration, third-party risks, use of warranties, and DBOM are presented. Where concessions and public-private partnerships (PPPs) were studied, design-build was inherent in the process. PPPs are discussed in Chapter 6: Alternative Financing, and concessions are discussed in Chapter 7: Concessions.


Evidence of design-build use was found on all types all projects, ranging from green-field construction to pure maintenance contracts of existing roads. Design-bid-build, however, is still a fundamental project delivery tool as well. In the United Kingdom, the Highways Agency's contracting method of choice is design-build, and it has almost completely replaced the design-bid-build method. In Sweden, design-bid-build is the primary delivery method, but design-build has been the standard for bridge design and construction for the past 10 years. Design-build is still in its early stages in the Netherlands. Most of the Netherlands' design-build contracts concern technical fields in which RWS has little experience, such as drilled tunnels and special electro/ mechanic devices. In both France and Portugal, concessions are the primary delivery method for major highway projects. Design-build is inherent in the concession process.

The projects that were found to be best suited for design-build involved an opportunity for innovation. Innovation can include technical innovations or time-saving innovations. Conversely, in the Netherlands, design-build contracts were not considered to be appropriate in most roadway projects because of constraints on innovation because of the process for approving the alignment, which allows only ~1-1/2 meters of leeway on either side. Design-build is considered a good delivery method for specific structures and unusual projects in which innovation is desired or a combination of government and private sector know-how is essential.

In both Europe and the United States, finding projects with physical characteristics that lend themselves to design-build is important, but perhaps the most important characteristic determining design-build use was found within the owner organization. Owners who take the traditional role of providing design with their own staff may be less likely to see benefits from design-build. Design-build requires a release of control for design details and quality control. For those owners who desire a higher involvement in design details and design preferences, design-build creates a difficult relationship. Likewise, those agencies that are comfortable with quality control through quality audits seem to be more likely to use, and benefit from, design-build.


Design-build contracts can use many procurement methods, as shown in the figure below. While traditional design-bid-build delivery almost exclusively utilizes low-bid procurement, low-bid procurement is not well suited for most design-build projects. Design-build contracts are typically awarded with less than 30 percent complete designs. Awarding a project prior to final design speeds the overall delivery process and promotes construction innovation during design, but it is not conducive to low-bid award because the scope is not fully defined. Although the private sector can turn to sole-source selection and negotiate with the preferred design-builder, the public sector typically does not have that luxury. Most European agencies discussed some type of best-value award in conjunction with design-builder selection.

Design-build procurement continuum - click here for description

Design-build procurement continuum.

Best-value award procedures combine price selection with qualitative or technical factors in the final selection. It should be noted that most design-build projects discussed during the scan trip utilized a two-step process of prequalification followed by best-value selection. The first step serves to minimize the cost and effort of preparing a design-build proposal by the private sector and ensure that only the most competitive proposers move to the next step. In the Netherlands, as in all EU countries, the most important principle is and has always been free competition among all bidders fit for the job. Government tendering procedures also should be open, transparent, and objective. Depending on risks, RWS uses preselection and final contract allowance criteria. First-phase criteria are only tools to determine the fitness of a bidder in an objective way. In the Netherlands, these criteria can be:

The second step of the best-value selection involves the combination of price with other technical and managerial factors. This step typically is done in a linearly additive combination. For example, price bids are converted to points and added to the qualitative and technical points. The design-builder with the highest number of points is awarded the project—not necessarily the contractor with the lowest price. In U.K. design-build projects, the first contracts were awarded based on 20 percent quality, 80 percent price. Currently, weighting of 60 percent quality and 40 percent price is more standard; sometimes, quality is given even higher weight. Sweden utilizes varying cost and technical combinations, but the hosts estimated that the spread is typically 70 percent cost and 30 percent technical factors.

The final method of design-build selection witnessed on the scan was through the use of strategic partnering. Some countries are moving toward supply chain management type contracts. These contracts require long-term partnerships with selected design-builders and vendors. These selections are based almost exclusively on qualifications and past performance, as the scope of work is too nebulous to price accurately. The key to supply chain management is the creation of long-term relationships where the owners and suppliers can align their cultures and develop strategies to take advantage of efficiencies in the market. Strategic partnerships are not sole-source awards, but rather longer-term agreements with indefinite quantities attached to the deliverables. Strategic partnering is closely analogous to ID/IQ contracts being used by some U.S. public-sector agencies.

U.S. Parallel – Pentagon Renovation

The Pentagon renovation project is employing new techniques that could change the face of government construction procurement. The process is being pioneered by Walker Lee Evey, the Pentagon renovation's top manager. Mr. Evey is a former official of the National Aeronautics and Space Administration (NASA) and was responsible for space station procurement projects. The renovation is the first major rehabilitation of the 58-year-old building, and is expected to last through 2011. There is no bidding on the project. Design-builders are hired through a best-value selection. Oral presentations are being emphasized, and written materials are being kept to a minimum. At least 50 percent of the evaluation is based on the offeror's oral presentation. A great deal of emphasis is being placed on the offeror's past performance. Hensel-Phelps won a best-value, fixed-price, design-build contract for a new building in conjunction with the renovation. The contract carries a "zero target profit." The offerors priced the project at no profit, but are incentivized through a combination of award fees and incentive fees. The award fee sets aside an established pool of money, typically 8 to 10 percent of the contract cost. The fee is paid at various intervals during the contract if the design-build meets certain criteria. The incentive fee is based on a 50:50 split between the contractor and the owner for cost savings and overruns.


The amount of design contained in a design-build solicitation can vary greatly. As shown in the figure below, design provided by the owner can vary from –10 to 100 percent. A design may be considered –;10 percent if it is driven by a developer and brought to the owner as an unsolicited proposal, or it may be 100 percent complete if the risk for errors and omissions are "novated" to the design-builder through the contract terms. Most design-build highway construction projects in Europe had design content in the solicitation documents that ranged from 10 to 50 percent.

Percentage of design in design-build solicitation - click here for description
Percentage of design in design-build solicitation.

The level of design contained in design-build solicitations was found to vary with the complexity and duration of the project. Relatively simple projects that could be completed in short periods of time contained more design in the solicitation, whereas complex projects or those with long-term operation and maintenance components contained less design. Those projects containing less design utilized outcome, or performance, specifications in lieu of higher levels of design.

In the United Kingdom, simple design-build projects contain relatively high levels of design (30 to 80 percent). The high level of design results from the requirements and length of the project-approval process. To obtain approvals, design must be taken to a very high level. All of the projects are developed to a point where the right-of-way and environmental clearance for the overall project are obtained before contract award. This fact has inhibited the use of design-build on small projects.

However, the British Highways Agency has discovered that it may be overdesigning the plans if it wishes to truly benefit from the design-build process. It is attempting to involve design-builders earlier in the process and provide less in-house design prior to tendering. One such contract has been awarded to date under a strategic partnering arrangement. Payment during the initial phase will be made on a time and materials basis subject to budget limitations. The initial proposal included a lump sum price for final design and construction that will be adjusted for changes in design during the initial phase.

After analyzing the first eight DBFO projects, the British Highways Agency has discovered that the benefits of design-build will be better realized through earlier contractor involvement. The following finding is stated in its report, DBFO – Value in Roads: A Case Study of the First Eight DBFO Road Contracts and Their Development:

The full potential of efficiencies, innovation and whole-life cost analysis inherent in the Private Finance Initiative is likely to be fully unlocked only when the private sector is involved in the outline design of the road scheme, which they are then obliged to construct, operate and maintain under a DBFO contract. This requires the private sector to assume some planning risk. Some of the DBFO projects announced introduce the concept of planning risk and will test the proposition that this will deliver better value for money.

The Dutch are much more conservative with the level of design in their design-build solicitations. In the past 10 years, the choice of design-build was in some cases motivated by the unusual nature of the project, in which as much as possible innovative power of the private sector was desired. Often, however, RWS had doubts about the design, resulting in disputes in which more and more responsibility for the design came back on RWS's shoulders. In extreme situations, this led to two separate tasks, as if a normal design and a normal construction contract were stuck together. This might still have the advantage that there is synergy between the designer and the producer, but it does not meet expectations connected with the design-build concept.

France and Portugal conduct design-build through the use of long-term concessions. Design-build is inherent in the concessionaire structure. Since the concessionaire is responsible for the long-term operation and maintenance of the facility, the government works almost exclusively on an outcome or performance basis. The design content in the solicitation is minimal because the whole lifecycle risk is being given to the concessionaire. With the risk, the owner transfers the responsibility of design to the concessionaire.


In Europe, as in the United States, some highways agencies are turning to design-build because of staffing shortages. Combining design and construction in one contract has the allure of decreasing the owner's staffing needs. Although design-build does allow for less owner staff, the profile of the staff also must change. The highways agencies no longer take the role of designer and inspector, but take the new role of definer of performance criteria and auditor of quality. As in the United States, European design and construction administration on design-build projects varies greatly from the traditional design-bid-build process.

As discussed in the previous section, the design-build contract is awarded with a varying level of design and differing levels of performance specifications. The countries that have been most successful with design administration after award of the design-build contract have taken the role of "reviewing" design rather than "approving" design. Because of the rigid approval process that RWS applied to the design-build process, disputes occurred over design development, leading to more and more responsibility for the design coming back to RWS. Design administration on design-build projects runs more smoothly when the highways agency allows the designer to take control of the details of the design. It is the owner's role to ensure compliance to the design-build solicitation and protect public safety. However, the owner must be willing to trust the design-builder with the details of the final product.

The United Kingdom also takes an approval role, but its system seems to have moved along more smoothly than that of the Netherlands. In the United Kingdom, the owner approves the design as the project progresses. The owner commits at 80 percent of the design development, but before construction documents are begun. There is a certification process, which will ensure that what is committed to is actually built. The government ensures that standards are satisfied. Owner change directives are directed and paid for by the owner. There is a procedure for creating, processing, and executing changes. Either the owner or the contractor can promote change. There is difficulty in pricing because the contract has already been awarded. Both parties must act in good faith.

The design-build process requires fewer differences in construction administration than it does in design administration. Once the project is under construction, a design-build project functions much like a design-bid-build project, with two significant differences: (1) payment methods and (2) QA/QC.

Design-build contracts typically do not allow for traditional unit pricing techniques because the design is often not defined enough to generate accurate quantities or even final unit price line item descriptions. The Europeans are utilizing both milestone payments and payments by percentage complete on design-build projects. These are not standard systems in U.S. highway construction and they will take time to develop. However, there are examples of these methods being used currently in the U.S. highway sector and they are standard practice in the U.S. building sector.

Design-build contracts typically utilize more contractor-controlled quality control processes because the design-builder owns the details of design. With contractor-controlled quality control, the highway agency takes on the role of quality assurance and quality auditor. This does not mean, however, that the owner totally gives up quality control. In the United Kingdom, the Highways Agency has the right to stop work if the contractor's quality plan is not being met or if the owner sees construction work is not proceeding as the owner requires. In the Netherlands, the contractor makes a quality plan, right after signing the contract. The contractor must be able to prove that it can ensure quality on three levels: product, production process, and quality system. The contractor is required to show certain documents from its quality assurance plan to the road owner. The road owner has the right to do checks/audits on all three levels. In Portugal, on the other hand, the owner does not have the right to stop work, but rather relies on long-term maintenance agreements with the design-builder/concessionaire to ensure quality.

A general trend was witnessed in Europe for the issue of quality in design-build contracts. Quality is being ensured through tying the design-build contract to finance, maintenance, and/or operation. Giving the design-builder responsibility for the entire lifecycle ensures quality in the constructed product. The use of alternative financing, operation, and maintenance, in conjunction with design-build contracts, minimizes the need for owners to perform time-consuming and redundant quality assurance roles. The difficulty lies in writing and enforcing appropriate performance criteria. The lessons learned relating to performance contracting are detailed in Chapter 5: Performance Contracting.


Design-build contracts allow the owner to give more control to the contractor for third-party risks associated with utilities, environmental permitting, and right-of-way acquisition. The allocation of these risks varied greatly from country to country and even from project to project within each country. Each project has unique third-party risks and should be dealt with in an individual manner.

The United Kingdom is trying to transfer more third-party risks, where appropriate, through its PFI. New framework contract documents spell out the risk allocation between the owner and contractor. The scope of the "classic owner risks" that is allocated to the contractor depends on the point in the lifecycle of the project in which they negotiate the contract. Utility risks can remain with the owner or be transferred to the design-builder in appropriate situations. The owner retains the risk for land acquisition, as the owner must give the land as a precommencement condition to the contractor. Environmental risks are very constrained. The owner retains the risk for the environmental impact study, and all environmental risks associated with the construction processes are borne by the contractor.

The Netherlands is not as aggressive in transferring third-party risks as is the United Kingdom. The road owner generally takes third-party risks. If the utilities are undersized or mislocated, it is the responsibility of the design-builder. Responsibility for the time delays resulting from undersized or mislocated utilities, however, is uncertain. The general policy is that the party best able to manage the risk should handle it.

In Portugal and France, the concessionaires have a very large stake in third-party risks. Since the contract terms are so lengthy, and financial ownership of the asset is being transferred to the concessionaire, the majority of the third-party risks also are transferred. Portugal has even had to transfer some of the environmental permitting process to the concessionaire to meet its aggressive construction plans. However, Portugal would choose to retain this risk for financial reasons whenever possible.


Several U.S. agencies have sought to ensure design-build quality through long-term warranties. The use of longer-term warranties on traditional projects was prevalent in Europe in the early 1990s, as was found throughout the CATQUEST scan tour. Since that time, long-term warranties have been replaced with long-term maintenance agreements. The scan team was not given details of the warranty terms between the design-builders or concessionaires and their subcontractors from the European highways agencies, but 5- to 10-year warranties are common on certain items. Again, the use of warranties is not required with long-term maintenance contracts because the contract itself is essentially a means of warranting the work.

In the Netherlands, RWS detailed two kinds of warranties: (1) in-contract warranty for bankruptcy and (2) post-contract for nonsatisfaction. In traditional contracts the latter kind of warranty—usually for 3 years—was not very effective. RWS is therefore hesitant about the use of warranty in design-build contracts. In its view, one essential item is missing in the warranty question: quality assurance. RWS believes that the quality assurance must be specified correctly through performance outcomes, and then there is no need for long-term warranties. For further discussion of warranties, see Chapter 5: Performance Contracting.


The design-build contract in Europe is evolving from a transfer of responsibility for design and construction to a transfer of the whole lifecycle through the addition of operation and maintenance to design-build contracts. The British Highways Agency probably has the most experience with design-build of all the countries that this scan team visited. Design-build is the delivery method of choice for the Highways Agency. Its program has grown from one of simple design-build to DBFO. In its report, DBFO – Value in Roads: A Case Study of the First Eight DBFO Road Contracts and Their Development, a number of objectives are listed for utilizing DBFO:

The primary lessons learned on the first eight DBFO projects completed in the United Kingdom are listed in the report as follows:

The addition of operation and maintenance to the design-build contract solves the problems of design administration, construction administration, quality control, and use of warranties. However, the drafting and enforcing of operation and maintenance performance criteria creates new issues that are not commonly dealt with in most highways agencies in both Europe and the United States. Performance contracting is discussed in Chapter 5: Performance Contracting. The combination of financing with DBOM contracts is discussed in Chapter 7: Concessions.


The European countries visited on the scan tour have used design-build delivery on a much more extensive scale than has the United States and provided the scan team with many valuable insights. Direct design-build contracts are employed between highways agencies and design-builders. Additionally, design-build contracts are inherent in PPPs and concession contracts. The primary lessons learned on this scan tour relate to the types of projects utilizing design-build, the use of best-value selection, the percentage of design in solicitation, design and construction administration, third-party risks, the use of warranties, and the addition of maintenance and operation to design-build contracts. U.S. highway agencies can apply these findings to many of their existing design-build contracting methods. The scan team recommends that the following concepts be explored in the United States as a means to speed the delivery of our infrastructure and increase the quality of construction and maintenance:

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Page last modified on November 7, 2014
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