DBB vs. DBOM Debate

Two Perspectives

Proponents of DBOM P3s maintain that it provides an economic incentive for the designer/builder to provide a better quality project design and construction because it transfers lifecycle responsibility for operations and performance of the facility to the designer/builder. “In a DBOM or DBFOM agreement where the concessionaire is responsible for the long-term operations and main­tenance of an infrastructure asset, they will likely make certain design and construction decisions that would otherwise be unlikely under a design-bid-build model due to costs (i.e. using more costly materials that will require less maintenance or provide ease of operation in the decades to come).” P3 Infrastructure Delivery: Principles for State Legislatures, National Conference of State Legislatures, July 2017.

Proponents of DBB counter the premises underlying the DBOM argument:

 

Premise I

Design engineers in a traditional project delivery method do not take into account lifecycle costs when designing a project because the engineers will not be operating the project once built. Interviews with numerous design engineers suggest that standard industry design practices routinely include lifecycle analysis of construction design options. Further they indicate that standard industry practices routinely include bringing the project operations staff into each stage of the design process, including during preliminary design, and at 30%, 60% and 90% design plan review, assuring operability concerns are addressed in advance. They further note that peer review buildability and value engineering further align the engineering team’s interests with the long term interests of the project owner to ensure optimum project lifecycle value.

 

Premise II

In a DBOM procurement, since the same party is responsible for the design, construction, and long term operation/maintenance, that party will value its long-term operating and maintenance profitability over its short term design/construction profitability, and accordingly will design and build a more robust (and presumably more costly) project than will an engineer/contractor in a traditional procurement. Interviews with design engineers, contractors and government project owners indicate that this premise has not been statistically proven, and that often the DBOM vendor retains separate sub-vendors for each of the project segments, with each sub-vendor having its own incentive to maximize profit in the sub-vendor’s project segment. They further indicate that even where the vendor controls all project segments, the vendor will be as likely to choose to maximize short-term design/construction segment profitability with the expectation that potential resultant future operations and maintenance negative cost impacts would be mitigated by change order requests (and that the higher present value of current profits versus future profits would tend to eliminate the supposed life cycle profit incentive).

 

Given the lack of empirical data and double-blind studies analyzing the two sides of the debate, government entities will have to weigh the merits of this debate based on their own experience and their perception of the quality of their staff and the professionalism of their engineering consultants versus knowledge and experience with the pool of prospective DBOM vendors likely to bid on their projects.