For over a decade, state and local governments in the United States have been moving to streamline the procurement of roads, bridges, and other public works. Traditionally, they contracted with one firm to design the project, and then, though competitive bidding, let a contract to a second firm to build it. For many projects, public authorities are now replacing this design-bid-build method of contracting with the design-build method of contracting. One contract is awarded, competitively, to a single firm both to design and to build the facility.
Design-build contracts offer several advantages over a design-bid-build contract. Three are most important for public procurements. One, accountability is centralized. If a problem arises during construction of a design-bid-build project, the builder can claim the fault lies not with it but with the firm that designed the project. Two, design-build contracts are usually fixed-price, meaning the price is set before work begins. With a design-bid-build contract, the cost varies with the amount of materials used and often as a result of problems arising during construction. Finally, design-build projects take less time to complete. With design-bid-build, no work begins until after the design is finished. With design-build, preliminary construction work – clearing the site, levelling the terrain – can begin while the project is being designed.
These advantages have not been lost on less developed nations and donor organizations. The number and size of public infrastructure projects the World Bank, the Asian Development Bank, and the other development banks are financing that use design-build are on the rise. According to its 2018 Annual Review of Procurement Activities, the largest contract the European Bank for Reconstruction and Development funded in 2017 was a € 274 million design-build contract for an ore enrichment project in Kazakhstan.
But donors and developing countries should not ignore the major disadvantage of design-build contracts compared to design-bid-build contracts: corruption. Blame for what many consider the most egregious public corruption scandal in American history has been attributed to the abuses that arose from a design-build contract, and indeed, corruption concerns spurred the United States to replace design-build contracts for public works with the more transparent contracting method today known as design-bid-build. Continue reading