FMI predicts design-build will continue to grow, despite tough economic environment
- Consulting firm FMI released an updated study on design-build construction spending last week, showing a positive outlook for the delivery method.
- While overall construction spending is expected to total up to $7.9 trillion through 2025, design-build spending is expected to reach $1.7 trillion, or around a fifth of spending in the assessed market segments, according to the study. These segments include industries such as manufacturing, education and healthcare.
- Overall, design-build spending is anticipated to grow 34%, with the water/wastewater sector showing the highest annual growth (11.1%) out of all sectors, which include highway/street (9.4%), healthcare (8.8%), educational (7.8%) and office (5.0%).
Despite a tough economic forecast, supply chain issues and a workforce shortage, design-build construction is trending upward.
FMI released the results of its design-build utilization update, forecasting a CAGR of 7.6% from 2021 to 2025, according to the study. The survey is an update of a 2018 paper of the same topic, and consists of electronic records, market modeling and industry interviews.
While national construction spending for 2020 and 2021 saw a decline, design-build construction spending for recent years saw upticks of 1.3% in 2020 and an estimated .5% increase in 2021. It’s projected that design-build will also outperform national growth rates by 1.6% over the 2021-2025 window, according to the press release.
Design-build is not a new way of creating projects, but it is one that’s gaining ground. While a traditional delivery method would have the owner manage separate contracts with both a designer and a general contractor, a design-build method has the owner working alongside a design-build firm towards both goals on one single contract, according to the Design Build Institute of America (DBIA).
“At my agency, only 10 to 15 short years ago, we used to recommend, kind of officially, that design-build should only be used for simple or straightforward projects. It wasn’t appropriate for complex projects. And at my former agency, even we have changed our mind,” said Laura Stagner, the owner of Stagner Consulting and the former assistant commissioner of the General Services Administration, at a recent webinar hosted by DBIA. Stagner went on to say that design-build projects are more accepted than they used to be.
FMI’s survey focused on the United States and used census tract geography data to divide the areas and group them up. The West South Central (8.8%), South Atlantic (8.6%) and Middle Atlantic (8.2%) census divisions are anticipated to yield the highest annual growth rates for design-build, according to the study. The South Atlantic, the West South Central and the Pacific regions are anticipated to account for the largest volume of design-build spending over the 2021-2025 forecast period.