One company's experience with design/build: labor cost risk and profit potential

James Ernzen, Cliff Schexnayder

Research output: Contribution to journalArticle

32 Scopus citations

Abstract

This paper offers the data from one construction company's experiences with design/build. Specifically, the paper presents an analysis of the company's labor cost risk based on a case study of two similar projects. One project was a typical design/bid/build job and the other was a design/build job. The design/build project experienced consistently greater fluctuations in the labor cost. These fluctuations seem to indicate that it is very difficult to accurately estimate labor costs for design/build projects, thus adding to the risk of such projects. The second half of the paper presents an account of this same company's overall profit experience with design/build work. Profit margins were analyzed using three categories-design/build versus non-design/build, client-specific design/build, and design/build construction types. The design/build projects' average profit margin was 3.5 percentage points greater than that for the non-design/build work.

Original languageEnglish (US)
Pages (from-to)10-14
Number of pages5
JournalJournal of Construction Engineering and Management
Volume126
Issue number1
DOIs
StatePublished - Jan 1 2000

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Building and Construction
  • Industrial relations
  • Strategy and Management

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