An exploration of design-build risk and project profitability in the architecture, engineering and construction sector

Design-Build (DB) project delivery has been studied extensively for the last 30 years. Researchers and project sponsors have focused on comparing DB project performance to other project delivery methods (PDMs) and determining how a range of critical success factors (CSFs) relate to key performance indicators (KPIs) such as project quality, cost, schedule, claim and dispute. Little empirical research, however, has explored DB impacts on the internal DB team. And no DB research has explored the effects of CSFs on an insufficiently investigated KPI: project profitability—a crucially relevant project outcome and a beacon of health for the larger Engineering and Construction (E&C) industry. This dissertation focuses on the overarching research question of how selected CSFs, such as DB risk management and DB teaming practices, relate to project profitability. Additionally, while past E&C research have largely emphasized owner or contractor data-furnished CSFs and KPIs, this study emphasized Architectural and Engineering (A/E) firms. A/E firms have particularly been exposed to heightened standards of care, contract liability gaps, and increasing insurance requirements stemming from DB participation. These externally transferred risks, and how DB teams internally organize to counter the related project dynamics, have been studied less systematically in the project delivery research literature. This research then sought out to examine DB project performance through different lenses by ascertaining how novel metrics can contribute to predicting this crucial project outcome and potentially other KPIs. Two distinct and methodically developed industry questionnaires collected diverse DB data across the U.S. marketplace, encompassing key firm and project characteristics, framing qualitative risk transfer practices and team interaction factors, and measuring DB participation and internal project performance through profitability. This overarching DB exploration was conducted through three interconnected studies. The first identified the latest DB market trends and mapped the salient DB challenges from a firm-based inquiry perspective. It critically detected indicative patterns to be explored more in-depth through a project-based inquiry in the subsequent two studies. Building on the first set of findings, the second study assessed how pricing DB risk transfer, inequitable contract flow-downs, and limitations of liability, correlate with project profitability in the DB industry. Acknowledging the important role that team characteristics and team interactions have on KPIs in the larger E&C industry, the third study examined how DB strategic alliances and trusted partnerships within the internal DB team, past relationships with the owner, and owner’s intervening practices in the project, relate to DB project profitability. While each study investigated distinct aspects of relatively unknown internal DB dynamics, together they advance a theoretical and practical understanding of the effects of DB participation on project outcomes other than cost and schedule. The emerging knowledge is expected to (1) serve as basis to refine future investigations in ascertaining the association of novel significant variables with expanded KPIs, whether in DB or across other PDMs; (2) raise awareness to DB contracting parties about the effects of unbalanced and inappropriately transferred risks; (3) deepen investigations on specific and efficacious DB teaming practices; (4) improve DB project performance and satisfaction across the industry through the open inclusion of diverse perspectives; (5) cultivate an interest in scrutinizing project profitability and the predominant factors associated with its outcome; and (6) ultimately implement DB effectively to the benefit of all DB team members in the growing DB marketplace.