Navigating the Future: Progressive Design Build in Civil Infrastructure

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Welcome to Engineering Influence, a podcast from the American Council of Engineering Companies.
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We're coming to you live from our annual talk conference in New Orleans.
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And I'm very pleased to be joined today by Darren Black, the National Practice
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Leader at Risk Strategies. Darren, welcome to the show. Thanks for having me.
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In terms of progressive design, Bill, we were talking a little bit before you
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came on the show, and you mentioned this panel that's coming up.
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Can you talk to that and give our viewers a little bit of information about
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what that looks like, who's going to be involved with that panel?
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Sure. Yeah, progressive design build is a relatively new alternative project
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delivery method that tries to speak to some of the major issues created,
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particularly on big, horizontal,
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heavy, civil infrastructure type projects, where many of those design builders
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had basically pulled out of that market.
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Our client constituency, much more engineering and architecturally driven.
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They're concerned about design build generally and more concerned the larger
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the project because those design builders.
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And in a nutshell, the issue is, particularly the larger, the more complex the
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project, the bigger the problem becomes,
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but owners were insisting on getting GMPs from the design builder at as little
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as 30% completion of the construction documents.
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And at that point, there's so many unknowns.
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And, you know, project outcomes and objectives aren't well defined. Neither is the scope.
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And so progressive design build is a more integrated delivery method within
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which the owner sits with constructor designer and it works in phases and the
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guaranteed maximum price isn't delivered until, say, 60%.
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So majority of the design is completed and hopefully that will alleviate because
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if you're doing it 30, they're going to be cost overruns.
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And when you're talking about huge projects, they tend to be huge,
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and the design builder has historically tended to look to the design team as its contingency.
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Which had implications, among which were the drying up of the project-specific
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professional liability market.
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And it's our hope that progressive design build will alleviate some of the concerns
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on the part of the underwriting community, as well as bring back more competitiveness
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because so many of those large design build firms just said,
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there's too many unknowns,
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too much business uncertainty, too much risk.
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And so there wasn't much competition for those projects, which,
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you know, with infrastructure money sitting out there, hopefully Progressive
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will solve a lot of solutions, will bring a lot of solutions.
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And we put together a panel that will include David Hadam, kind of the godfather
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from a legal perspective in terms of teaming agreements on big tunneling and
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roads and bridges projects, head of Kiewit's infrastructure division,
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our own Donna Hunt, kind of representing the underwriting community,
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because until becoming a broker,
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she had served as an underwriter on large projects for I think two decades,
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probably, and then representing the engineering perspective will be the head
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of risk finance from Gresham Smith.
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So we've got a number of different perspectives that will be represented and
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we hope it'll drive some good conversation. Sure. Sure.
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So, you know, thinking about that, that process and you're saying 60%,
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right? Do you want to get there 60% of the growth?
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What what was saying i mean the starting of getting
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where it's like it just is the cost structure we're looking at and
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then you would get changes along the way this is a big shift i guess where i'm
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going it's a pretty big shift yeah yeah you you had less owner involvement design
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builder would sub out design services to a design team and design builder that's ultimately selected,
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with traditional design build is selected based on
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in large part on that gmp right at a
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time where it's very early in terms of the design development
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and again that's what brings about
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so much uncertainty and nobody really
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knows if that gmp is going to hold until you get much
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further into the cd process and
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the commitment on the part of owners to move towards progressive design
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build have that more integrated approach collaborative approach
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but the big thing again is to wait to
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reach a joint consensus as to
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what the guaranteed maximum price should be once the cds are a majority complete
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typically 60 plus percent do you think that's the shift are you coupled what
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does the future look like right is this going to become more of a stable within
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the industry or is this, hey.
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You said there's a lot of infrastructure money around, right?
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Yeah. Sitting there, we're waiting.
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Is this a way to unlock some of that in people's contracts?
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Yeah, those projects have to be led. It's our hope that particularly on the large, complex,
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projects that progressive design and build will facilitate less risky outcomes,
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more predictable outcomes with better defined objectives and scope
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and more mutual understanding the traditional design build delivery method was just a setup for.
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Antagonism if you will and that created issues in
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our industry when it came to professional liability with the
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drying up the hardening of that project specific market
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owners and design builders were insisting on engineering and architectural firms
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carrying much higher limits than they used to at a time when the insurance market
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was reducing available capacity at the same time.
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So hopefully, Progressive Design Build will give rise to a softening of that
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hard project market, and that
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will have implications beneficial for our clients as well. Sure, sure.
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So is there an entry point where you would introduce the Progressive Design
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Build? it's interesting it's my hope and I've had conversations with experts
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that come from different perspectives within the AEC community right um.
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The benefits of progressive design build can be seen on vertical construction as well.
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Now, the more onerous burden on the part of owners to be integrally involved
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in that phased process causes some people to say,
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look, if the upside is only a $50,000 savings, they're not going to do it.
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But there are obviously some very large, complex design and build jobs that
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other than just horizontal construction, and we've seen it successfully delivered in that market.
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Question is, will private owners take it up as frequently as we think public's grow? Right, right.
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So in terms of the citizen, going back to 6% of its build.
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Not 60% build. 60% construction document.
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So the design is 60% by yachting. Is the coordination that's required to have
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all the parties come back together? You're saying product owner.
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Is there any concern there or is it it's a pretty easy process once you get to that point, you know?
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The difficulty is in getting buy-in on the part of the parties to the agreement
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to collaborate, to make it a collaborative process and therefore eliminate
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more unknowns that have existed within the traditional design build delivery method,
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you've got the benefits of quote-unquote integrated project delivery right without
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the pretense that there is no need for risk allocation right people still have
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their responsibilities under the contract one to design one to build so on and so forth but,
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it is all about collaboration and mutual agreement in phases that will hopefully
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eliminate some of those unknowns.
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And I think the phasing part is really important here. So I think we'll go really
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deep into the progressive design build.
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Would you like to continue to answer it? Is there more information that if someone's
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listening to this or watching this podcast, they can get more information about this process?
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This program that I referenced, we're actually doing it to junction with ENR.
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And so it'll be actually delivered on their platform because it's more robust
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than what we could do internally.
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Risk-strategies.com. There will be plenty of information as it comes out,
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the program itself, and we will record it and make it available to anybody that can't make it live.
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But December 11th, I believe, is the date that's selected. Yeah.
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And make sure to drop us a line. We'll make sure to get it posted on our website as well.
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And we'll write a blog post about it and get it up so that our audience can
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certainly access it. I appreciate it. That would be wonderful.
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Is there anything else you'd like to cover while we have you here?
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No, it's an interesting time. You know, insurers are still citing social and
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economic inflation as having increased claims costs.
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That's one of the things I'll be doing in our rapid fire session tomorrow.
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But the fact of the matter is, is that our world is largely driven by professional liability.
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When we, that's what keeps engineering and architectural firms up at night.
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And we tend to handle all of the other coverage lines kind of ancillary to that
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because that's where they need advice and counsel, whether it's on workers and
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acquisitions or contracts or loss prevention, education.
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So I think mostly about professional liability, not that cyber and employment
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practices aren't important.
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But so it's funny, there are a number of insurers here that are certainly specialists
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and they continue to cite increased claims costs as necessitating increasing rates.
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If they're not going up 5%, they're going backwards.
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But the fact is, is that as respects the annual practice policies,
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as opposed to the project specific that we talked about earlier,
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there's enough competition in the market right now that good firms that are
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willing to really communicate what they're doing from a centralized risk management
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protocol perspective. That was a mouthful. I apologize.
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We're seeing rate decreases. We're seeing premiums go down. And this is the
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first year we've seen that in some while.
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So there's good news out there from firms when it comes to professional liability
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coverage. Oh, that's great.
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Yeah. So anytime you get a decrease in rates, I'd like to be able to do a good
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sign to shop around maybe if you're not sure and see what's up there.
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Well, Darren, thank you so much for joining the show and for attending Fall
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Conference and also being a sponsor, exhibitor.
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It means a lot to ACEC or the Council of Engineering Companies and all of our
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members. I really appreciate it. Thanks for having us here.
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This has been another episode of Engineering Influence podcast from the American
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Council of Engineering Companies. See you next time.
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Music.