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Design-Build Contract Award Methods for

Transportation Projects

Article in Journal of Transportation Engineering · November 1999

DOI: 10.1061/(ASCE)0733-947X(1999)125:6(565)

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Gransberg, D.D., and S.P. Senadheera, “Design-Build Contract Award Methods for Transportation Projects,” Journal of
Transportation Engineering, ASCE, Vol. 125 (6), November, 1999, pp. 565-567

Design-Build Contract Award Methods for Transportation Projects

Douglas D. Gransberg, Ph.D., P.E. 1 and Sanjaya Senadheera 2

Abstract: A nation-wide survey of state Departments of Transportation (DOT’s) found that 15

states are using Design-Build (DB) to procure highway construction projects. Analysis of their

methods yielded three different systems to advertise and award DB highway projects. The

methods are Low-bid DB, Adjusted Score DB, and Best Value DB. This paper details the three

methods and compares their strengths and weaknesses. The paper concludes that each method is

a valid system for procuring highway construction projects and that each method can be matched

with certain project characteristics to optimize the project delivery method with respect to the

salient aspects of the project. While it is currently not legal to procure highway projects using

DB in Texas, the methods detailed in the paper could be easily adapted for private projects and

those few types of public projects that currently have special authorization to be delivered using

the DB method.

INTRODUCTION

In the twelve month period ending in December 1996, nearly $16 billion worth of

projects were procured using this method. Of these, about $10.2 billion were completed by

public agencies, and of that amount nearly 35 percent were transportation projects (DBIA, 1996).

1
Assistant Professor, Department of Engineering Technology, Texas Tech University, Box 43107, Lubbock, Texas
79409-3107, (806) 742-3538.
2
Research Assistant Professor, Department of Civil Engineering, Texas Tech University, Box 41023, Lubbock,
Texas 79409-1023, (806) 742-3523.

1
Transportation was the largest single public sector market for DB contracting. It is currently not

legally possible to undertake a highway construction project in Texas using DB contracting. The

Texas Department of Transportation (TxDOT) asked the researchers at Texas Tech University to

identify the best practices currently in use throughout the country and provide a basis of

information and knowledge from which future policy regarding this project delivery method

could be developed.

BEST PRACTICE SURVEY

Surveys were developed and sent to all State DOT’s and Federal agencies including the

Federal Highway Administration and the Corps of Engineers, who routinely procure design and

construction services using DB, to identify the “best practice” in use throughout the nation. A

preliminary survey designed to identify each state’s with DB was sent first. This permitted the

research team to home in on those DOT’s that had actual experience. Based on the response

from the initial survey, a detailed survey was prepared and sent directly to the designated state

point of contact. This survey was customized for each group and focused on identifying policies,

procedures, and contract language that has been successfully used on the types of projects the

Texas Department of Transportation (TxDOT) may attempt in the future. Specific emphasis was

placed on gaining knowledge on the evaluation of pavement design proposals, construction costs,

and the quantifying of life cycle costs based on statistical performance data. . Thirty-three out of

fifty states responded to the questionnaire. Of the thirty-three respondents, nine indicated that

they had used DB. These states were Alabama, Alaska, Arizona, Colorado, Connecticut, Florida,

Iowa, North Carolina, and Pennsylvania. Of those nine states, four stated the method was

beneficial to their construction projects. They were Alaska, Colorado, Florida, North Carolina,

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and Pennsylvania. Additionally, a copy of a nationwide survey on DB conducted by the Design-

Build Institute of America (DBIA) was obtained (DBIA, 1996). This study helps put the results

of the survey of DOT’s in perspective.

In 1996, DBIA surveyed the Offices of the Attorneys General of all 50 states and the

District of Columbia. The overall purpose of the study was to “benchmark the acceptance and

use of alternative and innovative contracting methods permitted by state governments” (DBIA,

1996). There were 27 states that reported that DB was a permissible procurement mechanism.

Only 9 states had laws that expressly forbade DB. Interestingly, Texas was not among those

nine. Of the states that did not permit DB, four reported that it was possible to use a DB

subcontractor, and surprisingly, Texas was one of those. 45 states reported that they are required

to select architect/engineer services on a qualifications-bases process, and 48 stated that they

were required to award construction contracts that do not include design by competitive bids.

Finally, 29 states reported that they employ contracting methods other than Design-Bid-Build

(DBB) to procure projects. Texas was not among that group. It is also interesting to note that

the information reported by the Texas Attorney General’s Office appears to conflict with that

found by the TxDOT General Counsel’s Office (Wright, 1996).

When this information is taken along with information collected by the FHWA, an

interesting picture emerges. Only fifteen out of fifty state DOT’s are currently using Design-

Build to procure highway and highway related projects, and the FWHA has approved DB

projects in the following twelve states: Alaska, Arizona, California, Colorado, Florida, Maine,

Michigan, Minnesota, New Jersey, North Carolina, Ohio, South Carolina, and Utah (FHWA,

3
1996). The geographic dispersion of the states that have adopted DB covers virtually the entire

country. No specific region seems to either espouse or reject DB. The experience of the Federal

government is also cogent to this discussion. The Department of the Navy reported a 15%

saving in DB project cost and a 12% reduction in facility delivery time over DBB projects. The

Department of Defense Nonappropriated Fund projects showed savings of 18% in costs and 14%

in time (DBIA, 1996). Obviously, some state DOT’s are seeking to accrue benefits similar to

those realized by federal engineering agencies.

BEST PRACTICES

One of the primary objectives of this study was to identify Design-build (DB) programs

in other state departments of transportation (DOT’s) and the Federal government and evaluate

their applicability to the Texas Department of Transportation. Surveying all the DOT’s and five

federal agencies accomplished this objective. On the federal level, the Department of Defense is

using DB extensively and believes that significant savings in both cost and time can be accrued

through its use. Currently, the Federal Highway Administration (FHWA) only permits the use of

DB on projects with federal funds contribution which are approved for inclusion in FWHA

Special Experimental Project No. 14 (FHWA, 1996). Functionally, it is very easy for states that

wish to utilize DB on federally funded projects to gain inclusion. However, it requires an

additional amount of paperwork and front-end administrative time.

An evaluation of the documentation that was obtained on the state and federal level DB

programs showed that the programs in use by Arizona (Arizona, 1996), Colorado (Colorado,

1996), Florida (Florida, 1997), Pennsylvania (Pennsylvania, 1995) and the U.S. Army Corps of

4
Engineers (USACE, 1994; FAR, 1997) were the most mature. Florida in particular has been

using DB since 1983 and as a result, has the most well developed set of guidelines and

procedures for implementing DB on transportation projects. The Corps of Engineers also has

more than a decade of DB experience, but most of the experience is with building projects.

Consequently, it was decided to use the Florida guidelines as a model for format and

organization and select the best and most logical portions from Arizona, Colorado, Florida,

Pennsylvania, and the Corps to develop the content of the guidelines.

LEGALITIES

The purpose of the study was to provide a foundation on which the dialog regarding the

eventual implementation of DB on TxDOT projects could be based. It must be remembered that

as of this writing it is legally impossible to fully implement DB in the state of Texas (Wright,

1997; Attorney, 1990). The Texas Engineering Practices Act forbids competitive selection of

design services on public projects, and construction services are required to be procured on a

competitively bid basis. There is an exception to this policy for public school districts.

Currently, it may be possible to experiment with a reduced version of DB. This version is

similar to the Low Bid Design-build procurement detailed in the recommendations. Under this

version, DB contractors would be short-listed based on qualifications, and the contract would be

awarded to the lowest priced, short-listed contractor. There may be some value to experimenting

with this method on a pilot project. However, the use of this method eliminates a best value

selection, which is DB’s greatest technical advantage over traditional Design-Bid-Build (DBB)

procurement.

5
SELECTION AND AWARD PROCESS

Three different processes found to select the contractor to perform DB services on DOT

projects (Arizona, 1996, Colorado, 1996, Florida, 1997, Pennsylvania, 1995, USACE, 1994).

The methods are Low-bid DB, Adjusted Score DB, and Best Value DB. As a general rule, the

low bid approach was preferred on projects where the scope is very tight, clearly defined and

innovation or alternatives are not being sought. This might include highway projects with a

specified type of pavement, geometric design, and minimal ancillary works. On the other hand,

the adjusted score approach seems to work well when overall outcomes can be clearly defined

and a number of alternatives may exist which could provide the outcomes desired. This could

include highway projects where alternative geometric designs and material types are acceptable.

Finally, the best value method should be selected when innovation and new technology are to be

encouraged or the requirement for specific types of experience is required to obtain the desired

outcome. Additionally, this approach should also be used when a fast track schedule is required

or when external factors such as traffic disruption or innovative environmental protection is

inherent to the successful execution of the project.

....... All methods separate the evaluation and the award process. The process is designed and

controlled by an engineer in the Agency who is responsible for the project. Because this

person’s position can logically be found in a number of places within a typical DOT’s

organization, this person will hereafter be referred to as the Project Administrator (PA). The

evaluation is typically done by a Technical Review Committee (TRC) made up of engineers

possessing the necessary technical backgrounds to properly evaluate the qualifications of the DB

contractors and the proposed design approach. For example, if a highway project includes a

6
bridge, a structural engineer would be included on the TRC along with traffic and pavement

specialists. The prime objective of the TRC is to provide a fair an equitable evaluation of each

proposal as well as to ensure that the design solution proposed by the winning DB contractor will

conform to Agency requirements.

....... In essence, the evaluation process is comprised of three parts. First, the qualifications of

the DB contractor team must be checked to ensure that the proposed engineer-of-record

possesses both the requisite registrations and the necessary past experience to develop a design

which will meet project technical requirements. Additionally, the DB process permits something

that is not common in the heavy highway construction industry: a qualifications check on the

construction contractor. The second part of the evaluation is a technical review of the DB

contractor’s proposed design solution. This mainly consists of a check to ensure that it is fully

responsive to the requirements outlined in the Request for Proposal and that it fully satisfies the

project’s functional requirements. The strength of this portion of the evaluation is that it permits

competing technical solutions such as rigid versus flexible pavement to be compared. Evaluating

the proposed project price for realism and reasonableness.

....... Once the evaluation is complete, contract award can be made. The following sections

detail the three methods for advertising, evaluating, and awarding DB highway contracts. These

three methods seem to represent the best practice in this area based on the previously described

survey. The authors of this paper have made an attempt to generalize the processes. Therefore,

readers familiar with specific DB practices in other state DOT’s may find slight variations to the

process they expect.

7
Low Bid Design-build (LBDB)

Under the Low Bid Design-build process, the Agency publicly opens the price proposals on

the day, time, and location noted in the announcement, and sends the TRC the technical

proposals. Proposed price is evaluated first, and then the TRC reviews the design concepts and

preliminary designs proposed by the lowest bidder in order to assess the responsiveness of the

lowest bidder’s technical proposal compared to the scope of services package. In the event the

lowest bidder’s technical proposal is found to be non-responsive, the TRC will then review the

next lowest bidder’s technical proposal to determine its responsiveness. A Bid Proposal is

considered non-responsive if it does not contain all the information and level of detail requested

in the RFP. It may be appropriate for the Agency to contact the non-responsive contractor to

discuss/clarify its concerns prior to moving on to the next lowest bidder. The process will

continue until the lowest bidder having a responsive proposal is found. The TRC then will notify

the Agency of the lowest bidder having a responsive technical proposal. Unless all proposals are

rejected, the Agency will award the project to the contractor with the lowest responsive bid and

enter into a contract for the price proposed. The Agency normally reserves the right to reject all

proposals if none can be found which meet both technical and price criteria.

Adjusted Score Design-build (ASDB)

Under the Adjusted Score Design Build process, the Agency will send the technical

proposals to the TRC and hold the sealed price proposals until after the technical proposal scores

are provided by the TRC. Each contractor’s technical proposal shall be evaluated based on the

8
rating criteria provided in the scope of services. The rating or technical evaluation process is

extremely important and should be accomplished using one of two methods:

Method 1: Each TRC member is responsible for scoring the contractor’s proposals in the

areas of their expertise only. In other words, a roadway design engineer would not

develop scores for those evaluation criteria related to bridge design, but rather only score

items, such as approach roadways, traffic control, and environmental impacts appropriate

to their level of expertise. A minimum of three scores are required for each evaluation

criteria prior to averaging the scores for the development of a final technical proposal

score.

Method 2: Each TRC member is responsible for obtaining a score for each evaluation

criteria by selecting other persons to assist them in those areas where they do not possess

and appropriate level of expertise. As an example, a bridge designer may call upon a

roadway designer for assistance in scoring each contractor’s roadway approach details,

and a permitting or environmental person for input on environmental mitigation details.

..................

The TRC will then submit a final technical proposal score for each contractor to the

Agency. The Agency shall notify all short-listed contractors of the date, time, and location of the

public opening of the sealed bids. The Agency will then publicly open the sealed price proposals

and divide each contractor’s price by the score given by the TRC to obtain an adjusted score.

The contractor selected will be that contractor whose adjusted score is lowest. An example of

how the selection formula would work is shown in Table 1 below. Unless all proposals are

9
rejected, the Agency will approve an award to the contractor with the lowest adjusted score and

enter into a contract for the price proposed. In the advertisement and pertinent bid documents,

the Agency generally reserves the right to reject all proposals and waive minor proposal

irregularities.

Best Value Design-build (BVDB)

............BVDB is different from ASDB in that the technical proposal and the price proposal are

scored together with the project price being one category in the evaluation. Each evaluation

category is assigned a weight consist with the objectives of the project, and the score for each

evaluation category is multiplied by its weight. The sum of the weighted scores in each category

is the final score for each proposal. Upon completion of final score determination, the scores are

arranged from lowest price to highest price, and the TRC must conduct a cost-technical trade-off

analysis. In essence, the TRC must justify the selection of a proposal whose price is higher than

the lowest proposed price by determining that the added increment of cost is offset by an added

increment in value as measured by the evaluation plan. For example, if the difference between

the low and second low proposals is 3%, the difference in the weighted scores should be greater

than 3% to justify expending the additional increment of cost. The below example is merely a

simplified version to illustrate BVDB and not intended to totally describe the total process. Each

project is different and the PA should strive to develop a set of evaluation criteria that best

describes the evaluation requirements for each project. In the example, the PA has determined

that five evaluation categories are appropriate: Professional Qualifications, Price, Schedule,

Traffic Control Plan, and Previous Experience. Each category can achieve a score in the range

of 0 to 5 depending on its quality. Proposing the minimum acceptable quality would receive a

10
score of 3. The weights, TRC scores, and weighted scores are shown in Table 2. The

cost/technical trade-off analysis is shown in Table 3 using the prices from in Table 1.

............Therefore, from this analysis the TRC would recommend the award of the contract to

Firm B because the additional 3% of added cost are offset by 11% in added value as measured by

the evaluation plan developed by the PA.

COMPARISON OF METHODS

............Each method brings strengths and weaknesses to the DB contract award process. LBDB

is by far the simplest and technically the closest to existing DBB/low-bid award process. As

such, it is probably the easiest to implement by a DOT that has no previous DB experience. It is

also the method that will probably face the least political opposition for two reasons. First the

concept of short-listing design firms on a qualifications basis is well accepted and secondly,

awarding to the lowest priced proposal from the pre-qualified firms is not very different from the

typical public agency low bid paradigm. In fact, it seems to straddle the fence for those states

like Texas which require both qualifications-based selection of designers and low bid award for

construction. The greatest weakness of LBDB is its focus on qualifications and price. By doing

this, it eliminates one of DB’s greatest benefits: the ability to compete different design solutions

to the same problem. Therefore, it can be concluded that LBDB is probably more appropriate for

projects where no great degree of technical innovation is expected.

............ASDB on the other hand allows competition between varying design solutions if

appropriate for the project. This increases its potential benefit from innovative approaches by

industry while preserving the ability to rate the qualifications of both designers and builders. By

11
adjusting the technical score by dividing it by the proposed contract price, it has the potential to

weed out more expensive initial cost solutions who may be very inexpensive on a life cycle cost

basis. For example, on a highway rehabilitation project, a less qualified DB contractor who

proposes a thinner pavement section than a better qualified competitor may have the lowest

adjusted score if expected life cycle costs are not included in the technical evaluation. This

danger must be analyzed and the covered in the technical review plan. ASDB seems to be most

appropriate for projects where innovation is encouraged but where a high degree of price

competition is desired.

............Finally, BVDB is the most flexible of the three DB methods. It preserves the benefit of

being able to tailor the evaluation plan to the specific needs of each project, and rate the

qualifications of both designer and builder. It provides a method for including price as only one

of several evaluation areas, and permits the Agency to adjusted the weights of each rated

category as required to meets the needs of the particular project. Its greatest drawback is the

complexity of the evaluation planning itself. To properly implement BVDB, a great deal of up-

front investment in time and human resources must be made during the development of the RFP.

Additionally, because BVDB is the most subjective of the three methods, it is also probably most

exposed to the risk of bid protest by unsuccessful offerors.

............The selection of a method boils down to determining which of the three possibilities is

the most appropriate for the project in question. The goal of DB contract award is to devise a

system which maximizes the probability of selecting a DB contractor who will successfully

complete the project. One must remember that every project is different, and that each of the

12
above described methods are merely individual tools in the public agency’s procurement tool

box. Thus, it must also be remembered that the tried and true DBB method may in fact be the

most appropriate method for a particular project. Therefore, a careful analysis of the project

must be made before deciding on a project delivery methodology, and all possible methods

should be considered before deciding to select one the DB systems.

CONCLUSIONS AND RECOMMENDATIONS

............Several conclusions can be reached from the foregoing discussion. First, DB can be

successfully used as an acquisition method for highway and other transportation projects. Its

current use in 15 states indicates that it is both effective and efficient. Secondly, there are a

number of methods which can be selected to award DB projects. Each project is unique and each

project will need to be carefully analyzed to determine which method is the most appropriate for

its requirements. Finally, DB permits a means of steering away from the classical DBB/award to

the low bidder approach. The presence of an evaluation of the qualifications of not only the

designer but also the builder will potentially enhance to probability that the project will be

completely successful by eliminating the possibility that the project will be awarded to an

unqualified contractor based only on the submission of a low bid.

............With regard to DB’s future use in Texas highway projects, the results of the literature

survey show it promises to reduce both the cost and the time required to complete most highway

construction projects. Therefore, it is in the best interests of the State to make this contracting

mechanism available for future projects. If it can be made legal through implementing

legislation, a program which gives the widest latitude of procurement methods, including the

13
three detailed above, should be sought. The DB program needs to ensure that the engineer-of-

record is given sufficient authority to both design and inspect the resulting construction

regardless of the contractual linkage between the designer and the builder. The $3.7 billion worth

of DB transportation projects which were completed by public agencies in 1996 (DBIA, 1996)

shows that it must be working and is worthy of serious consideration for implementation in

Texas.

APPENDIX. REFERENCES

Attorney General of Texas. (1990) Re: Authority of a commissioners court to award

“design/build” contracts for construction of public buildings on the basis of competitive bids
and related questions. Texas: TPO.

Commonwealth of Pennsylvania, Department of Transportation, (1995). “The Consolidated

Modified Turnkey Project Procedure,” Attachment to Letter dated October 11, 1995, Subject:
Total Turnkey and Modified Turnkey Projects.

Design-Build Institute of America, (1997). Survey of State Engineering and Architecture Boards
on Design-Build (Combined Design and Construction Contracting), Design-Build Institute of
America, Washington, D.C., pp.6-35.

Federal Acquisition Regulation, (1996). U.S. Government Printing Office, Washington, D.C.

Federal Acquisition Regulation, (1997). “Two Phase Design Build Selection,” Federal Register,
Vol. 62, No. 1, 62 FR 271.

Federal Highway Administration, (1996) “Design-Build: FWHA’s Role in the Design-Build

Program Under Special Experimental Projects No. 14 (SEP-14).” U.S. Department of
Transportation, Washington, D.C.

State of Arizona, (1997). “Request for Design-build Proposals: Phoenix-Tucson Highway

(Interstate 10), (Cortaro Road Interchange),” RFP 010 PM 246 H415601C, NH-10-4(160), dated
March 3, 1997, Intermodal Transportation Division, Contracts and Specifications Section,
Phoenix, Arizona.

State of Colorado, (1997). “Colorado Department of Transportation Design-Build Guidelines,”

Draft issued February 1, 1997 for Review and Comment.

14
 State of Florida Department of Transportation Executive Committee Agenda Request. (1996).
Design Build Procurement and Administration. State of Florida: Procedure Number 625-020-
010-a.

U.S. Army Corps of Engineers, (1994). Engineer Regulation 1180-1-173, Design-build

Instructions (DBI) for Military Construction, Washington, D.C., 1994.

Wright, J. (1997). “Texas Department of Transportation Design/Build Contracting.” Legal Brief,

Texas Department of Transportation, Office of General Counsel, Austin, Texas.

Table 1: Adjusted Score Design-build Example

FIRM TECHNICAL PRICE ADJUSTED SCORE
SCORE
A 90 $6.7 Million 74,444
B 80 $6.5 Million 81,250
C 70 $6.3 Million 90,000

Table 2: Best Value Design-Build Example

Category Weight Firm Firm A Firm Firm B Firm Firm C
A Weighted B Weighted C Weighted
Score Score Score Score Score Score
Prof. 20 3 60 4 80 3 60
Qual
Price 25 3 75 3 75 4 100
Schedule 10 5 50 2 20 4 40
Traffic 25 3 75 3 75 3 75
Control
Experien 20 3 60 5 100 2 40
ce
Total 100 320 350 315

Table 3: Cost Technical Trade-Off Analysis for BVDB Example

Ranking Price Weighted Score Price Score Increment
Increment
C $6.3 Million 315 -- --
B $6.5 Million 350 3% 11%
A $6.7 Million 320 3% - 9%

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