Design-Bid-Build (DBB)

The following is an example of a typical project. Evaluate the circumstances described and

recommend how to proceed. Questions are offered for group discussion. Be prepared to explain

and defend your recommendations.

A growing suburb of a large metropolitan city needed a new elementary school serving

grades K-5. It had a project budget of $7.5 million for site, construction, fees, and related costs.

State law required that the project be bid using Design-Bid-Build.

A local architect was hired and produced a design in a quick four months without any big

surprises. The project was advertised and bid for the statutorily required period. Eleven general

contractors purchased plans and began assembling their bids. For a variety of reasons, a

number of contractors dropped out of the competition. The architect, who was managing the

process, began to worry that not enough contractors were going to submit bids.

Bids were received at noon on the advertised date. A total of four bids were submitted for

general construction. The bids were opened, immediately checked for responsiveness, and then

read aloud. A clerk entered the bids onto a bid tabulation sheet. All bidders were determined to

be responsive. Highlights from the bidding were:

The four general construction bids ranged from $6,222,000 to $7,089,000, approximately a

10% spread.

The submitted bids were:

General Contractor #1 $6,222,000

General Contractor #2 $6,349,000

General Contractor #3 $6,978,000

General Contractor #4 $7,089,000

From the low bidder, five of eight submitted alternates were accepted:

Five alternates $472,500

Note: The total of these five alternates from the second lowest bidder was $363,300.

Related costs:

Property $485,500

Design fees $257,500

Total costs at signing of contracts $7,437,500

This amount was within the original budget, so the city awarded the contract to General

Contractor #1. Upon submission of a list of subcontractors, a time schedule, a schedule of

values, and other required submittals, contracts were signed. The contract completion date was

10 months after contract execution, and there were no liquidated damages. The job proceeded

slowly with a few issues:

The fire inspector required a change in the number of exit signs after contracts were

signed, causing an $11,520 change order.

An error on the topographic survey provided to the contractor during the bidding process

required an additional amount of fill material to be hauled in, resulting in a $30,780

change order.

The owner decided to upgrade wiring for technology in the classrooms, causing a

change order of $172,700.

The owner was forced to add additional electrical work. The design team had left out

electrical service to audio visual equipment that was being furnished by the owner and

installed by the contractor. This led to a $61,475 change order.

After the bids were turned in, the low millwork subcontractor withdrew its bid because it

found a significant mistake in its estimate. The general contractor decided to pay the

additional cost to go to the second bidder. No cost change was given.

Several minor changes, such as partition locations and door openings, were executed

without requests for extra payment.

The constructor requested a change order for special waterproofing that he claimed was

not covered by the contract documents. The owner rejected the request, saying that the

waterproofing was clearly implied by the documents, and ordered work to proceed,

including the flashing. The constructor sent a letter citing its position (request for extra

money) and continued work.

The owner agreed to pay the designer an additional $20,000 to incorporate all of the

changes on the drawings and to provide more onsite assistance. The school was

completed four weeks behind schedule, but the schedule did allow the school

employees to occupy the building during final construction so they could prepare the

school for the students. The punch list consisted of 250 items, which again caused

coordination problems.

The total project cost became:

At conclusion of bidding $7,437,500

Total of all change orders, extra costs + $516,561

= $7,954,061

At the dedication ceremony, the owner expressed satisfaction with the school building but

dismay that the project ended up over its original $7.5 million budget. He did not seem to feel

the reasons for this were entirely caused by the owner.

DISCUSSION ISSUES:

1. Do you think this project was typical of a Design-Bid-Build project? Why?

2. Why do you think some of the contractors dropped out during the bidding process?

3. What do the results of the four submitted bids indicate to you? Explain why you think it

was or was not a "good bid."

4. Does the difference in the amount between any of the bidders mean anything?

5. Besides being responsible for the design, the architect had other roles on this project.

What were they?

6. Was this a good application of the Design-Bid-Build delivery method? Is there additional

information you need to answer this question? If so, what would it be?

7. Did the Spearin Doctrine, highlighting the owner's responsibility for the architect's

performance, come into play on this project?

8. What is your reaction to the owner's thoughts at the end of the project?

9. What thoughts do you have about the low millwork contractor withdrawing its bid to the

general contractor after bidding? Should the owner have had to pay the extra costs to

use the next lowest bidder?