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University reviews building project methods

n the last five years, the University has approved more than 1,300 University capital construction projects totaling more than $1.2 billion – the largest boom in the institution’s 151-year history.

But that boom has come with some busts.

Internal audits completed this year identified “serious potential risks” linked to the University’s use of a streamlined construction method for some projects.

The audits cited a general lack of oversight, budget overruns and construction corner-cutting in certain projects. In response, officials recommended changes to the University’s construction process, as well as increased accountability and oversight of projects by Facilities Management, the office that manages construction.

While Facilities Management implements the new controls, University officials are reassessing whether the building method, called design-build, has a place in the institution’s “tool box.”

Design-build defined

esign-build is one of many delivery methods used in the construction process. Other methods include design-bid-build and construction management. What sets design-build apart is it is relatively new to the University, officials said.

The design-build method involves the owner – in this case, the University – contracting with a building contractor who represents a single team of architect/engineer and builder to design and construct a project. Compared with the traditional design-bid-build method – where the owner contracts with an architect to create a design plan and then puts the plan out for bids to contractors to build – design-build is less costly, quicker and creates a more fluid working relationship between the architect, contractor and owner, proponents said.

“It’s one-stop shopping,” said Dave Johnson, director of public affairs for the Design-Build Institute of America, a national organization representing design-builders.

Design and construction happen simultaneously, allowing changes to be integrated easier and at less expense, Johnson said.

The process also eliminates friction between the architect and contractor when building design conflicts with construction workability arise, because both are working together from the project’s beginning, proponents said. But design-build opponents contend the method is flawed because of a lack of protective oversight on the owner’s behalf.

In the design-bid-build method, the architect serves as a watchdog for the owner, ensuring the contractor is providing sound construction. Construction decisions are based almost entirely on finances, and sometimes the durability of materials and performance is overlooked, said Steve Crane, a fellow with the American Institute of Architects.

Without oversight, design-build provides the opportunity for backroom deals and favoritism when awarding contracts, Crane said.

Critics also said the fast-track nature of the process does not allow time for public comment and can be susceptible to cost overruns due to changes in the construction market.

“Design-bid-build is generally in the best interest of the owner,” Crane said.

As a building method, design-build’s use has increased, especially during the past 10 years, experts said.

According to the construction firm F. W. Dodge, nearly 50 percent of the construction in North America will have used the design-build method over the next 10 years.

While private owners have embraced the method, public entities such as state governments, universities and colleges have been slow to use it.

Awarding construction contracts without the use of a competitive bidding system for publicly paid projects might have contributed to the trend, government officials said.

Minnesota State Auditor Judy Dutcher wrote letters to state officials, saying design-build “negates the purposes of an open bidding process and undermines public confidence in the public contracting process.”

She also wrote it is the best interest of state, as well as the contractors, to make sure taxpayers receive the best bargain for the best price.

Minnesota is not barred from using the method in state construction, as long as the project is deemed a design-build when it goes before the Legislature for funding, said Kath Ouska, assistant commissioner in the Department of Administration.

University’s next step

ith supporters lining up on both sides of the design-build issue, University leaders are split on continued use of the method for pending projects.

“I don’t think at this time we should be doing any design-build until we can assure ourselves we have good oversight and good control, and then we would have to be very, very cautious,” said Regent Anthony Baraga, chairman of the board’s facilities committee. The committee recommends construction projects to the full board for approval.

The University has too much responsibility to the public to continue wildly spending money on construction projects using the method, Baraga said.

While University officials don’t deny the issues raised in the audits, some said banning the use of design-build would be a mistake.

Interim Vice President for University Services Gregory Fox – who assumed the position in February, after the audits began – said with increased oversight and other institutional control measures, design-build is viable, especially given some of the time constraints confronting construction.

The addition of over 300 new beds and other amenities to Territorial and Middlebrook halls was completed on time by using design-build, Fox said.

The construction was completed in less than 18 months and in time for

students to move in prior to the start of the 2001 school year.

“We don’t want to leave the impression that design-build is the panacea of construction projects. It is not,” Fox said. “It is one of the various ways in which we can do our work.”

Design-build examples

he University’s most widely publicized project using design-build is the Coffman Union renovation.

The renovation was bid twice as a design-bid-build project and was unable to solicit bids its first time. The second time, bids were more than the estimated $50 million budget.

To jumpstart the project, regents agreed to use the design-build method as a compromise to complete the project quickly, but at a cost of $72 million, $22 million more than the original budget.

“If it misses by that much, something’s wrong,” Regent Richard McNamara said at the regents’ August retreat.

Facilities Management officials said some of the issues the audits identified could be based on the University’s unfamiliarity with using design-build, but also because of normal, unforeseen construction issues.

Kevin McCourt, a business manager in Design and Construction for the University’s Facilities Management, said some of the increased costs of Coffman and other projects were because of the removal of pollution from the construction sites.

On average, costs of design-build projects are comparable to design-bid-build projects, and the University has instituted a maximum price cap for each design-build project, McCourt said.

Other University officials cite the Ford Hall and Murphy Hall renovations as design-build success stories.

The renovations were finished in 2000 – on time and budget – for $9.9 million and $10.25 million, respectively, said Tim Busse communications director for University Services.

Officials also said the University has examples of design-bid-build projects that encountered increased costs and extended timelines.

Walter Library was completely renovated at a cost of $63.5 million dollars – $7.5 million more than originally projected – and was finished in April, nearly a year after originally planned.

Upcoming projects

n preparing capital projects for the upcoming legislative bonding bill, Fox said, the University would continue planning construction projects using the design-build method, but factors outside the construction process could affect which methods are ultimately used.

For example, the Nicholson Hall renovation and construction of the Translational Research Facility, which were originally design-build projects, are now using the design-bid-build method because of Gov. Jesse Ventura’s bonding bill vetoes in May, Fox said.

Incoming Vice President for University Services Kathleen O’Brien will assume responsibility for managing the methods used in upcoming construction projects when she replaces Fox in September.

O’Brien said she does not have experience managing construction projects using the design-build method but understands how the process works and intends to review the University’s use of design-build.

“Certainly because of the recent experience of a large number of projects and some questions being raised in the audits about the use of design-build, I think it is important for the University to stand back and determine if we are going to use that process,” she said.

Interim University President Robert Bruininks said he agrees with O’Brien’s position.

The University will carefully examine its past construction experiences to institute appropriate controls to meet community expectations, Bruininks said.

“I can’t say definitely how we’re going to proceed with all of the potential projects we have facing us in the future,” Bruininks said. “We’re just going to have to take a good look.”

With no end in sight to the institution’s continued expansion, University leaders are faced with balancing construction risks with the needs of the community.

“We need to make sure the University’s getting its money’s worth,” Bruininks said.

Brad Unangst welcomes comments at [email protected]

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