Matthew DeVries
Partner, Burr & Forman LLP via Best Practices, Contract Docs, Federal Construction, Transportation

April 6, 2017

The Department of Transportation in my home state of New Mexico is the latest to allow the design-build delivery method for highway projects. Although design-build had been approved in New Mexico on limited public projects, road and highway construction had been previously excluded.  That changed on March 9, 2016, when Governor Susana Martinez signed into law the bill authorizing use of design-build on certain, large critical highway projects of more than $50 million.

What’s the big deal?  This is more than an academic exercise for lawyers—there’s a very practical reason to track the legislation opening the roads to design-build contracts. Under the traditional approach, a state Department of Transportation has a design created, it then bids out that design, and the contractor builds the project (…thus, design-bid-build…).  Projects can now be accelerated through the alternative approach of design-build, where the team selected for the construction project has both design and construction responsibilities. The design-build method can lead to significant cost and time savings. The Federal Highway Administration has a good fact sheet on the process.

What does your state say?  To see whether your particular state authorizes the design-build delivery method for highway projects, the Design-Build Institute of America has issued its 2015 State Statute Report (“Report”) that outlines the various states’ laws that provide owners, lawmakers, and industry professionals with the statutory information to guide them on their project delivery processes. The Report summarizes the statutes, laws, and limitations for design-build industry and is not limited to highway projects. You need to check your particular state to determine whether the state legislature has authorized such a method.

What next?  If you are a contractor that works in the highway construction industry, then you will want to know and understand whether design-build presents an opportunity for you and your company. First, you need to determine whether there are any limitations on the project size or amount. Second, you will want to begin exploring potential teaming relationships with design firm who has significant highway experience. Finally, after you have selected your design partner and proceed on the road toward submitting a proposal or bid to the state DOT, you will want to enter a formal joint venture or other teaming agreement for the work. ConsensusDocs has a catalog of teaming and joint venture agreements, including No. 498—Teaming Agreement for Design-Build Projects.