Recent Market Study Shows that Design Build is Utilized in 40% of Projects

By: Sean T. Devenney

On May 31, 2011, Reed Construction Data/RSMeans Market Intelligence issued a report commissioned by the Design Build Institute of America showing that the design-build project delivery method has a 40% share of the vertical non-residential construction market as of 2010.  Interestingly, more than half of the large projects with values over $10 Million in 2010 were utilizing the design-build project delivery method.   The data also show that the use of design-build is becoming increasingly popular.  From 2005 until 2010 the use of the design-build delivery method has increased 10%.   A summary of the RCD/RSMeans report can be found at http://www.dbia.org/pubs/research/rsmeans110606.htm.

The RCD/RSMeans report can be somewhat juxtaposed against a June 1, 2011 ENR article entitled “The Top 100 Project Delivery Firms:  Design-Builders and Domestic CM-at-Risk Firms Face Continued Revenue Declines in 2010.”   ENR reports a “distinct falloff” in revenue in both 2009 and 2010 for the ENR Top 100 Design-Build Firms and the ENR Top 100 CM-at-Risk firms.  While the general downward trend in revenue should come as no surprise given the recession, it is of note that the author states that some owners are actually gravitating back towards traditional design-bid-build.  These owners believe that the traditional delivery system provides the owner with the best opportunity to capitalize on competition, obtain the best pricing, and overall squeeze what many perceive to be a “frantic industry.”

Of course, the ENR article adroitly points out that while the design-bid-build method might provide the lowest opening price – project disputes, change orders, and other inefficiencies typically encountered in the traditional delivery method should still make design-build a more attractive option for owners in the future.  The article ends with the conclusion that more collaboration among industry participants is the future of the industry- which is also consistent with the design-build delivery method.

Design-build’s increased market share in vertical commercial construction (even if it was a bigger piece of an overall smaller market in 2009-10) remains a significant sign, together with the rise of other trends such as BIM or IPD concepts, of the increased importance and role of collaboration in project delivery.  However, the fact some owners continue to gravitate towards traditional delivery methods in order to find desperate or hungry contractors that may take jobs at slim to negative margins, still signals the long and slow recovery of our industry.

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Daniel M. Drewry

Daniel M. Drewry

Daniel M. Drewry

About This Blog

The DSV Construction Law Blog is hosted by Daniel M. Drewry. Dan is a Partner with the law firm Drewry Simmons Vornehm, LLP and concentrates his practice in the areas of Construction Law and Litigation, and Labor & Employment Law.

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