Design Build Fee Structure
February 2, 2020
The design build project model is transforming the commercial construction industry by offering owners a cost saving alternative to traditional construction project management. Commercial construction clients are using the design build method to develop more buildings than ever before due to the substantial cost savings available when using this model. Why are the costs different using this mode of project delivery than those associated with the traditional design, bid, build project delivery method?
There are several elements that make up the design build fee structure:
- Project design costs. These costsinclude fees associated with architectural, CAD support, civil engineering, mechanical engineering, and other support.
- Cost of materials. Prices for materials can rise and fall, so cost projections must be made based on anticipated price variations. Some aspects that factor into changes is material costs include availability, delivery requirements, manufacturer production schedules, and order size.
- Quantity of Materials. The quantities of various project materials necessary to complete the project is a crucial element of the overall project cost.
- Labor hours. The complexity of a given project will determine the production capability.
- Labor rates. Estimates for the cost per hour of workers should include specialized skill rates for architectural, engineering, and other specialties as well as overtime estimates.
- Subcontractor fees. Based on the overall project scope, fees for electrical, plumbing, and other specialties will be factored into the design build fee structure. Subcontractor quotes will include the cost of their materials, equipment, labor, and indirect costs.
- Equipment costs. Project conditions will determine the type, size, and capacity of equipment necessary to complete the project.
- Indirect costs. Other materials, labor, and equipment necessary to complete a project such as fees, permits, temporary utility costs, and consumables are legitimate related expenses which are not always part of actual building costs.
In addition to being more affordable, the design build model is also more effective than a traditional construction project structure. When problems arise in the design, bid, build process, project delays and cost overruns can result as owners face disagreements or inequities between architects, engineers, and contractors. Using this model, change orders add nearly 5% to a project’s cost on average. No so with the design build model, where the building owner has a single point of contact when issues arise. The owner, architect, and general contractor usually collaborate on building design and projected costs from the project’s inception. The contractor oversees the entire project, including design. This ensures seamless communication and limited changes, which save significant time and money.
Apex Design Build has an established reputation as a top-quality healthcare facility design build firm. The Apex Continuum combines focused healthcare expertise with a comprehensive, one stop solution for design, architecture and construction to ultimately provide a best in class experience for every client we partner with. To discover how Apex can take your vision of the perfect healthcare facility and bring it to life using a cost effective design build fee structure, contact our integrated construction team today.