What is Progressive Design-Build?

In its most recent Delivery Models Overview document, Infrastructure Ontario defines Progressive Design-Build as “a collaborative approach between the owner and its contracting partner during the early work of projects such as project requirements and design work. Unlike Progressive P3s, a Progressive Design-Build model employs a target-price similar to a traditional Design-Build model, rather than the fixed price enabled under a P3 model.”

Progressive Design-Build emerged as a project delivery model in Canada in 2020 and quickly gained traction – particularly in complex, high-risk transportation projects. The model came to light at a time when many owners, consultants and contractors were looking for relief from cost and schedule risks resulting from the COVID-19 pandemic.

Organizations such as Infrastructure BC, Infrastructure Ontario and Metrolinx are currently using the Progressive Design-Build model on select healthcare and transit projects. The cities of Moose Jaw and Regina have also recently implemented the model to renew their Buffalo Pound Water Treatment Plant. By implementing Progressive Design-Build, these organizations are sparking discussions between other project owners who are curious about this collaborative approach.

Design-Build versus Progressive Design-Build

A traditional Design-Build procurement model typically includes three main steps:

  1. Issuing a Request for Qualifications (RFQ) and identifying a shortlist of proponents.

  2. Inviting the shortlisted proponents to respond to a Request for Proposals (RFP). The Design-Build RFP includes high-level details for how the owner envisions the project coming together – usually in the form of an owner’s statement of requirements, an indicative design and performance specifications. Proponents then use that information to develop a design and construction solution, fixed price proposal and schedule for the project with limited owner interaction prior to submission. Once the owner evaluates the designs, schedules and proposed project costs, they will then award the Design-Build contract to the preferred proponent.

  3. The owner initiates the Design-Build phase, starting with detailed design and construction through to project delivery.
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The common challenge with this approach lies between awarding the Design-Build contract and following through with its implementation. It's during this time that the transfer of risk from the owner to the Design-Builder occurs. Although fitting for simple or straightforward projects – such as new builds on greenfield sites – this series of events can result in significant residual risk to one or both parties on more complex projects, like rehabilitations or renewals with ongoing operational requirements and multiple stakeholders.

Some of the known risks that may arise between awarding the RFP and getting started on the Design-Build phase include discovering: poor soil conditions; a high-water table; property acquisition and/or access restrictions; a need to maintain ongoing operations; labour, economic and/or community benefit agreements, utility relocations; and constraints embedded in third-party agreements such as funding. Owners need to establish responsibility for these known risks prior to awarding the RFP. Given the maturity of the Design-Build approach, owners and their legal advisors have decades of experience developing Design-Build contracts that, for the most part, prevent them from re-assuming risk once the contract is awarded. Signing on to a traditional Design-Build contract in today’s economic climate can weigh quite heavily on consultants and contractors, to the point where they will refrain from submitting a proposal or risk the adjusted bid price, exceeding the owner’s affordability ceiling.

The Progressive Design-Build model is a form of early contractor involvement that can help reduce risk to all parties involved. It introduces additional steps that enable the owner and Design-Builder to collaborate and progressively develop a design solution before jumping directly into detailed design and construction. In some cases, a target price may be introduced by the owner.

This progressive delivery approach enables the owner, the final design consultants and the contractor to collaborate to refine the project design, better mitigate known risks and reduce overall project risks through the following additional steps:

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  1. Negotiating and awarding the design and pre-construction services (PCS) contract: Before starting the design process, owners will negotiate, as required, to enter into a design and PCS contract that is typically based on a fixed fee submitted as part of the preferred proponent’s proposal. The PCS contract enables the Design-Builder to commence both the design and early works where warranted or desired. By combining the traditional Design-Build approach with a PCS phase, the Design-Builder assumes responsibility for the design and PCS prior to being awarded the final Design-Build contract.

  2. Collaborating on design and PCS enables the owner, the owner’s consultants, the Design-Build team, stakeholders, etc. to further identify project requirements, constraints, risks, permits, approvals, investigations, assessments, stakeholder or third-party agreements and other factors that will inform the overall project cost and duration. By bringing the contractor and the final design team to the table earlier in the process, the project team can better manage known risks and mitigate the need for major changes after the execution of the final Design-Build contract. It’s during this PCS stage that the Design-Builder develops the preferred design and construction solution.

  3. Conducting open book negotiations: At this point, the project team has translated the owner’s vision and objectives into a design and construction solution to a point where the Design-Builder is able to present their proposed costs, schedules and informed assumptions surrounding project risks in an ‘open book’ environment. The owner can accept or take this opportunity to further negotiate with the Design-Builder to alter the scope of work, timelines or costs before officially awarding the final Design-Build contract. Remember that the owner has paid the Design-Builder for their work up until this step. If they don’t feel that the proposed design or costs to complete the project represent fair value, they have the option to take the preferred design solution and continue the competitive procurement process by entering into similar open book negotiations with the next highest ranked proponent from the RFP process.

Progressive Design-Build benefits

As mentioned, Progressive Design-Build offers advantages that extend beyond the owner to Design-Build contractors, consultants, stakeholders and third parties. Some of the practical benefits of choosing a Progressive Design-Build approach include:

  1. Collaboration

    Generally speaking, most owners, consultants and contractors would choose a collaborative working environment as opposed to the adversarial approach inherent in many traditional forms of contracting.

  2. A shorter procurement cycle
    Although there are more steps with this delivery model, proponents usually* don’t need to come up with a design solution that is 30 percent or more complete as part of the procurement process. By eliminating this requirement, the time and cost to prepare, design, respond to and evaluate an RFP is reduced.
    * Some owners do request a design solution as part of the Progressive Design-Build procurement.

  3. No honorarium
    As there is no design work to complete as part of the RFP process, Progressive Design-Build avoids the need for honorarium payments. Under this model, only the preferred proponent is paid for their design and PCS.

  4. Accommodation of third-party agreements
    Progressive Design-Build projects often involve multiple stakeholders and third parties, such as municipal, road, railway and utility authorities, regulatory and permitting agencies and others. Although the completed project may positively impact the third parties involved, project stakeholders may also have services that they need to continue to operate throughout construction without disruptions. This is where third-party agreements come into play. Progressive Design-Build brings stakeholders and third parties to the same table as part of the design and PCS to work with the Design-Builder to identify a plan that best accommodates each party and minimizes operational risks due to construction. This added step can reduce project costs and disruptive delays or claims compared to a standard Design-Build approach.

  5. Buy-in from consultants
    Coming up with a responsive design solution can involve a lot of upfront work. A Progressive Design-Build model saves the design consultants time and money putting together a submission that may never move past the RFP. By awarding a design and PCS contract to the preferred proponent, consultants are essentially paid in-full for their design. Additionally, they have the opportunity to better understand project requirements, as well as owner and stakeholder expectations – enabling them to tailor the design to meet project needs while minimizing risks.

  6. Increased competition
    We’re currently in a challenging construction market across much of Canada. With inflation, supply chain disruptions and capacity constraints impacting the delivery of many capital projects, owners need to look carefully at alternative approaches that help ensure optimum value for their capital investments. By reducing risks and eliminating the time and cost required to provide a design as part of the RFP response, more contractors and consultants will be willing to put their hat in the ring, thereby increasing the quality and size of the competition.

Offering numerous benefits in current market conditions, it’s not surprising that Progressive Design-Build is gaining popularity across Canada. Although best suited for seasoned owners taking on complex, higher-risk projects, it’s an approach that all owners should consider adding to their repertoire.

Familiarity with this and other collaborative delivery solutions can help ensure you’re selecting the best delivery model to optimize project success. If you or your team is looking for a way to lower risk, work collaboratively and improve the procurement and early design process, Progressive Design-Build might be the solution for you.