Page 251 - Sustainable On-Site CHP Systems Design, Construction, and Operations

224 C o ns truction

“EPC (engineer, procure, and construct)” contracts calls for one entity, known as the
design-builder, to undertake the responsibility for both the design and the construction
of the project.
CHP facilities are particularly appropriate for a design-build contract delivery
method. First, design-build enables the owner to hold one party accountable both for
the design and the construction of the entire project. A design-build approach brings
the construction project much closer to being a product than under the traditional
methods of contracting. This single-point contact not only relieves the owner of the
need to coordinate the engineer and the contractor, one cause of construction disputes
and overruns, but also enables the owner to specifically contract for performance guar-
antees relating to project.
It should be noted that there are several risks that an owner assumes when using
the design-build contracting approach. For example, although the owner derives the
benefit of having one party responsible for the complete development and construction
of a project, the owner must rely solely upon that party for any recovery of compensa-
tion if something goes wrong. To counter this risk, many owners ask for financial guar-
antees or bonds from third parties so as to ensure that there is substance behind the
construction organization. Others seek equity participation by the design-build entity
as a means of ensuring proper project performance.
Another risk is that the design-build method eliminates the checks and balances
that are present when design and construction are separate. Under the traditional
approach, design professionals closely examine a general contractor’s performance to
determine whether it meets specifications and justifies payment. No such checks and
balances exist when the design and construction are being done through one entity.
Prudence suggests that an owner have his or her own in-house staff, or hire an outside
engineering firm, to review the work of the design-builder and ensure that the product
that is being furnished to the owner meets the owner’s CHP project objectives.
Also, another risk is that under the design-build contract, the contractor has an
incentive to provide the minimum acceptable quality that meets the owner-operator’s
project requirements and that will minimize call backs. It is, therefore, wise, if using the
design-build method, for the owner-developer to be as detailed as possible with written
requirements. As a minimum, the owner-developer should develop (or have developed
for them) a basis-of-design document outlining the owner’s project requirements. A
better choice is for the owner to develop 30 percent design “bridging” documents that
become part of the contract with the design-builder.
Finally, it should be remembered that a true design-builder is one who takes full
responsibility for design. Some design-builders attempt to mitigate costs by performing
large portions of the design in-house, and executing a contract that purports to be
design-build. This can lead to arguments over whether the design-builder was merely
completing the design, based upon assumptions of the owner-developer, or was fully
certifying the adequacy of the entire design. In this situation, should the design-builder
be responsible for extra costs arising out of that portion of the work designed by the
developer? The design-build contract should resolve this issue clearly.

Integrated Project Delivery Process
Integrated project delivery (IPD) is a project delivery approach advocated by the
American Institute of Architects (AIA) that attempts to integrate people, systems, busi-
ness structures, and practices into a process that is intended to harnesses the talents and