Design – Bid – Build: Traditional project management method – a blessing or a curse for higher-priced providers?
- Jörg Appl
- Jan 6
- 11 min read
The design – bid – build method: a classic approach that just won't die in the construction industry. And it's precisely these criteria that determine what building owners, financiers, structural engineers, and architects really ‘are allowed to want’. 🏗️
And here's where it gets exciting (or nerve-wracking): exactly these criteria have a massive impact on how you can market your offer to the target group without slipping into bullshit marketing. 🚨
In this blog post – part of our series on technical marketing in the construction industry – you'll learn how to crack the phases of traditional project delivery and position your offers to make the competition green with envy. 😎
📚 Not enough yet? At the end, practical case studies await you, with which you can take your skills to the next level and finally reach the marketing Olympus.🚀
In the construction industry, the strategic decisions of the building owner are of central importance, in particular the choice of project execution method.
This structured process of designing, bidding and building a construction project has a direct impact on the perception of and selection of technical offers (product, software or service) and presents marketing managers with particular challenges.
Knowledge of this methodology is crucial to position offers appropriately and to effectively address the target groups. The most common methods include:
Design – bid – build,
Design-Build,
Construction Manager at Risk (CMAR),
Integrated Project Delivery (IPD) or Integrated Project Delivery (IPD), and
Multiple contractors or multi-prime delivery system.
Regardless of the methodology chosen, marketing managers in the construction industry need to understand two key boundary conditions before communicating their offers to the target group:
The relationship between the client, contractor and specialist planners:
This is determined by the distribution of responsibilities and risks as well as the course of the project. It influences how potential target groups perceive technical offers and who can and may make decisions in which project phase and about what.
The procedure for awarding construction contracts:
This determines how the contractor is selected and which criteria – such as price, performance or qualifications – are decisive for the client.
So before we take a closer look at the project execution method of design-bid-build, let's first take a look at the procurement methods and award criteria. These are closely related to the execution methods and influence how target groups select technical offers in construction projects.
Selecting the contractor based on the lowest price: The client selects the contractor based on the cheapest offer.
Selecting based on the price-performance ratio: Here, the price is considered together with additional factors such as quality and the long-term value of the service.
Selecting based on qualifications: In this case, the qualifications, experience and previous performance of the contractor are given more weight than the price.
Selecting based on a cost-plus model: Here, the contractor is selected based on the lowest sum of construction costs and construction time..
Design – bid – build: the proven project management method in the construction industry
The design–bid–build method is considered the most traditional and most common way of managing projects in the construction industry. It is based on three clearly defined phases: design, bidding and construction. This method clearly separates the roles and responsibilities of the decision-makers, making the system more of a static model (see figure below)
The client bears the main responsibility and commissions the architect and the consulting team (specialist planners) to take over the planning. The architect creates the designs and often acts as an intermediary between the client and the specialist planners.
Specialist planners provide the technical specifications, such as structural engineering or building services, which are recorded in the tender documents. The contractor, in turn, carries out the work in accordance with the contractual agreements and plans, but has little influence on the planning and tendering phase.
The separation of these phases ensures clarity and transparency 🌐, but offers only limited flexibility. Changes made during the project are often expensive 💰 and time-consuming ⏳ because they can affect the entire structure. Nevertheless, this model has proven itself, especially in public construction projects, because it enables a clear distribution of responsibilities and makes the use of public funds transparent.
In the planning phase, the client is supported by a team of consultants who prepare designs, drawings and technical specifications. These documents form the basis for the subsequent tendering process. Marketing professionals must ensure that their offers meet the tender requirements and offer potential clients a clear benefit. According to Hosseini et al. (2016), careful planning is crucial because it influences the entire course of the project.
Once the planning is complete, the tendering process begins, in which the construction documents are submitted to potential contractors for bidding.
Marketers are required to tailor their offers specifically to the tender conditions and the expectations of the client. Often, price is the deciding factor at this stage, although value for money is becoming increasingly important. The contractor's qualifications also play a role, but less often than price.
During the construction phase 🏗️, the selected contractor is finally commissioned to carry out the construction project. For marketing managers, this means that their offers not only have to meet the practical requirements of the client, but should also provide support during the implementation. This includes, for example, continuous support to ensure that the technical offer also meets the requirements in practice.
The method has proven itself because its clear structure offers easy traceability and a high degree of legal certainty. It is particularly preferred in public construction projects, such as the construction of schools or administrative buildings, due to its transparency. The strict separation of the phases also promotes competition 🏆 between contractors, which often leads to a better price-performance ratio.
Despite the advantages, there are also points of criticism ⚠️. The method is not very flexible, as later changes are associated with high costs and delays. Furthermore, the late involvement of the contractor often leads to practical solutions not being considered during the planning phase. The strong emphasis on the lowest price can also affect the quality of the construction work, and the strict separation of roles increases the potential for conflict between the parties involved, as they may have different interests.
One example of this is a hospital project in which changes in medical technology during the construction phase caused significant cost increases and delays because they had not been taken into account in the original planning.
The challenge of pricing and selection criteria for this project delivery method
The traditional project delivery method often uses the lowest price as the selection criterion, which can pose a particular challenge for marketing managers (Figure 11).
Although the cost-performance ratio and the qualifications of the providers are becoming increasingly important, Scott et al. (2006) reports that price often remains the deciding factor in public construction contracts. At the same time, the quality of the offer is increasingly being considered as a supplementary criterion, which makes the requirements for bid design more complex.
Marketing experts can set themselves apart from cheaper providers by clearly communicating the added value of their offer and specifically addressing the needs of their target groups. Long-term advantages such as longevity, efficiency and sustainability should be the focus, supported by case studies and transparent pricing.
An engineering firm could highlight the added value of its high-quality planning software, which saves time and money in later project phases thanks to more precise calculations. Customer testimonials and concrete savings figures from completed projects could reinforce these arguments.
A construction company that stands for quality could differentiate itself by emphasising adherence to deadlines and a low rework rate. One example would be to present a project that was completed on time and within budget despite unexpected challenges.
A supplier of building materials could highlight the longer lifespan and sustainability of its products. A campaign could show how a high-quality insulation material reduces energy and maintenance costs in the long term, supplemented by certificates and independent test reports.
Additional services such as consultancy, training courses or extended warranties, combined with emotional storytelling and customised solutions, make the offer particularly attractive – especially for customers who value quality and service more than price.
Marketing experts from low-cost providers can set themselves apart from the competition with clever strategies and clear positioning. The focus should be on the cost advantages, efficiency and reliability of their services, supported by transparent communication and practical examples.
An engineering firm that offers cost-effective solutions could emphasise the advantages of its standardised processes, which enable fast and reliable results. One example would be a simple planning software that is ideal for smaller projects and convinces with short implementation times.
A construction company could differentiate itself by emphasising price security. Instead of focusing on individual solutions, it could score points with clearly defined fixed prices and fast building. A campaign could highlight the savings that can be made through optimised processes.
A supplier that offers affordable building materials could point out the cost savings that can be achieved by using their products. One example would be a low-cost insulation material that still meets the minimum energy efficiency requirements. Customer reviews and simple examples of how the product is used could boost confidence in the product.
In addition, low-cost suppliers could convince through special offers, quantity discounts and widespread availability. A strong presence on online marketplaces, combined with clear and honest communication, builds trust and shows that price-conscious solutions can also be of high quality.
Extra fact:
In Germany, the awarding of public construction contracts is strictly regulated by the Federal Procurement Act (Bundesvergabegesetz, VgV). It requires that the selection of the contractor be based either on the lowest price or the price-performance ratio. Marketers must be aware of this legal requirement and align their offers accordingly in order to be successful in the tendering process.
In the US, the tendering process is usually more flexible and the qualification of the contractor also plays a greater role. These differences in tendering regulations require adapted marketing strategies, since companies in the US may be able to focus more on their qualifications and experience, while in Germany price plays the main role.
Conclusion
Despite modern alternatives, the design – bid – build method remains one of the most frequently used project execution methods in the construction industry.
For marketers, it is crucial to understand the process of this method and to design their offers according to the requirements of the client as well as the legal framework, such as the Federal Procurement Act in Germany.
Different national regulations, such as those in Germany and the USA, require differentiated marketing approaches that take into account both the legal framework and the specific expectations of the client.
The likelihood of being awarded a contract as a more expensive provider under the design-bid-build project delivery method depends heavily on the award criteria and the type of bid invitation.
If criteria such as quality, references and sustainability are taken into account alongside price, the chances for more expensive providers increase. Such additional factors can often account for 20–40 % of the evaluation, which means that the probability of success for more expensive providers is around 30–50 % (BDEW, 2023).
Private tenders, where the award criteria are more flexible and long-term perspectives such as operating costs are included, increase the success rate to as much as 40–60 %. By contrast, the chances of success fall drastically if the price is the sole award criterion, which is often the case with public tenders In such cases, the success rate for more expensive providers is usually below 10–20% (BDEW, 2023).
Strategies to increase chances include emphasising long-term cost advantages such as lower maintenance or operating costs and transparently demonstrating the added value of higher-priced offers Early contact with decision-makers can also increase the chances of success by up to 20%, especially in private tenders.
The data show that even more expensive providers can be successful through strategic, technical marketing and clear communication of their unique selling points, even in price-driven procurement systems (BDEW, 2023).
Questions that will take your marketing expertise in the construction industry to the next level!
You are the marketing manager of an engineering firm that offers high-quality planning software. A potential client is seeking a quote for a publicly funded construction project that will be carried out using the ‘design – bid – build’ 🏗️ method. What is the best way to proceed?
A) Focus on the lowest price, since this is the deciding factor for public contracts.
B) Highlight the added value of your software, e.g. time and cost savings in later project phases.
C) Focus on the shortest implementation time to guarantee quick results.
D) Focus on a long-term relationship with the customer and work out the details later.
Solution: B) Highlight the added value of your software, e.g. time and cost savings in later project phases.
Explanation: Publicly funded projects are often based on price, but additional factors such as quality and long-term benefits can also be important. By clearly communicating the added value of your software, such as time savings and precision, you can stand out from cheaper competitors.
Your company offers inexpensive building materials 🧱. A builder is planning a project based on the ‘cost-plus’ model. What should you focus on in your offer?
A) The longevity and sustainability of the materials.
B) Clear information on cost savings 💰 and construction time optimisations.
C) Special offers and discounts as additional incentives
D) The qualification of your company as the main argument.
Solution: B) Clear information on cost savings 💰 and construction time optimisations.
Explanation: In the ‘cost-plus’ model, contractors are selected based on the lowest total cost (construction costs + construction time). Your offer should show how your products help to reduce construction costs or shorten the construction time.
A private client has issued a tender based on the ‘design – bid – build’ model. Your company stands for high-quality but more expensive services. How can you increase your chances of winning the contract?
A) Focus only on price, as it is often the deciding factor.
B) Contact the client early on to influence the award criteria 📑
C) Highlight the quality and long-term benefits of your offer, such as operating cost savings 💡.
D) Lower your price drastically to be competitive.
Solution: C) Highlight the quality and long-term benefits of your offer, such as operating cost savings 💡
Explanation: Private clients often have more flexible award criteria than public ones. Communicating quality and long-term benefits, such as lower operating costs, can help you to stand out against cheaper competitors. Early contact (B) can help, but is not enough on its own.
You are bidding on technical services for a publicly funded construction project in Germany. The tender is based on the price-performance ratio 📊. Which strategy makes the most sense here?
A) Present a detailed cost overview and case studies of savings through your services.
B) Ignore the requirements and emphasise the outstanding quality of your offer.
C) Offer discounts and special conditions to make the price more attractive.
D) Focus on the technical complexity of your offer.
Solution: A) Present a detailed cost overview and case studies of savings through your services.
Explanation: For tenders with a focus on cost-effectiveness 📊, you need to show how your offer provides added value while also being cost-efficient. Case studies and concrete figures help to convincingly demonstrate the added value of your offer.
Further reading
Hosseini, M., Lædre, O., Andersen, B., Torp, O., Olsson, N., Lohne, J. (2016). Project Delivery Methods in the Construction Industry: A Comprehensive Review.
Scott, W., Smith, J., & Jones, R. (2006). Procurement and Project Delivery: Methods and Implications in Construction.
Bundesvergabegesetz (VgV), Germany
Great Blog Post!