https://doi.org/10.24928/2018/0394

Transformation From Design-Bid-Build to Design-Build Contracts in Road Construction

Bo Terje Kalsaas1, Gøril Hannås2, Grethe Frislie3 & John Skaar4

1Professor, Dr. Ing, Faculty of Engineering and Science, Department of Engineering Sciences, University of Agder, N-4846 Grimstad, Norway; e-mail: bo.t.kalsaas@uia.no
2 Associate professor, PhD, Faculty of business and law, Department of working life and innovation, University of Agder, N-4846 Grimstad, Norway; e-mail: goril.hannas@uia.no
3Research Assistant, M.Sc, Faculty of business and law, Department of working life and innovation, University of Agder, N-4846 Grimstad, Norway; e-mail: grethe.frislie@uia.no
4Assistant professor, M.Sc., Faculty of Engineering and Science, Department of Engineering Sciences, University of Agder, N-4846 Grimstad, Norway; e-mail: john.skaar@uia.no

Abstract

This article was triggered by a public client opting to change contracting strategy on a pre-designed 4-lane motorway project from design-bid-build to design-build contract. The goal for the client is to build roads cheaper and faster with the greatest possible economic benefits for society. In the article, we ask: Which changes associated with the transition from a design-bidbuild to a design-build contract can be identified in the contractual relationship between the public developer, contractor and subcontractors? The article focuses on changes in relation to constructability, construction time and costs, and discusses the issues of quality and customer value. The study is theoretically related to the principal-agent theory and transaction cost theory, where the threat of opportunistic behaviour is central. This is also seen through the lens of the Lean Construction triangle, which focuses on the need for harmonisation between commercial element in the contract, organisation and production. We analyse the case in relation to three propositions:  Design-build offers incentives that result in better constructability than design0bid-build contracts.  Design-build results in lower production costs and faster construction than design0bid-build contracts.  Quality and customer value come under pressure in design-build contracts. The first proposition seems to be confirmed by the empirical analysis. Production cost is, however, not the same as the price for the client. It is more uncertainty related to the third proposition. An important finding is that the developer’s change in strategy seems to result in a radical change in working conditions for the consulting design and engineering companies, as well as to a great degree for the head contractor. A strong relationship between the contractor and consulting engineers is especially important to ensure success in terms of execution, and we find indications that alliances have been formed between the parties.

Keywords

Contract form, constructability, cost, progress, customer value

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Reference

Kalsaas, B.T. , Hannås, G. , Frislie, G. & Skaar, J. 2018, 'Transformation From Design-Bid-Build to Design-Build Contracts in Road Construction' In:, 26th Annual Conference of the International Group for Lean Construction. Chennai, India, 18-20 Jul 2018. pp 34-45

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