A recent report from FMI Consulting forecasts continued growth of design-build over the next three years, despite recent industry challenges and market volatility. FMI’s findings indicate that design-build is anticipated to account for 47 percent of construction spending and a 22.5 percent growth in total design-build spending by 2026.
“With the positive projections reported by FMI in this update, design-build will be integral to keeping our nation’s infrastructure projects moving forward,” says Design-Build Institute of America (DBIA) Executive Director/CEO Lisa Washington, CAE.
Building on FMI’s 2021 report on design-build utilization, the new survey reexamined the industry following the challenges of the past three years, including the COVID-19 pandemic, labor shortages and supply chain issues. The flexibility and collaboration inherent in design-build uniquely position the project delivery method to resist stagnation, and respondents overwhelmingly indicated that design-build project delivery – regardless of procurement approach – is better able to manage cost uncertainty. The projected decrease in design-bid-build alongside the growth in design-build demonstrates the industry is moving toward collaboration as a norm and an expectation.
Washington adds: “Over the last three years, we’ve seen design-build withstand the uncertainty of a volatile market and continue to demonstrate optimal results. It is a delivery method that performs, even in the face of adversity. In fact, during times of crisis, the flexibility of design-build has helped communities recover more quickly and cost-effectively by delivering projects on time and on budget.”
FMI found that design-build continues to see usage in all sectors and regions of the United States, and the industry has witnessed extraordinary project outcomes and innovation across all sectors. The FMI Design-Build Market research report provides detailed geographic and sector data, including market analysis and projections. Here are just a few highlights:
- Overall, design-build is anticipated to represent up to 47 percent of construction spending in the assessed segments and geographies in 2026.
- Total growth in design-build construction spending is anticipated to be 22.5 percent from 2022 to 2026. Design-build is anticipated to account for $1.9 trillion of construction spending in the assessed segments over the 2022 – 2026 forecast period.
- The majority of respondents (83 percent) indicated design-build can help them with supply chain issues over other delivery methods.
- Highway/street (18 percent), educational (13 percent) and manufacturing (14 percent) are anticipated to hold the greatest share of design-build spending through 2026.
- Together, the transportation and highway/street sectors are expected to represent 27 percent of design-build spending by 2026. These sectors include aviation, marine, land and street projects.
- Water/Wastewater was the smallest segment of spending but fastest growing – combined annual growth remains the highest.
- Over three-quarters of survey respondents believe that design-build facilitates greater utilization of prefabrication on projects.
- Competitive Best Value (CBV), Progressive Design-Build (PDB) and Qualifications-Based Selection (QBS) account for a majority of the procurement approaches. Respondents indicated CBV, PDB and QBS were better able to manage cost uncertainty in a volatile market environment than Low Bid. PDB was at the top with the majority of respondents indicating it is either moderately (31 percent), very (37 percent) or extremely (15 percent) well-suited to managing cost uncertainty.