Design Bid Build (DBB) Delivery in North American Tunnel Projects Is Alive and Kicking … and for Good Reasons

By Craig Covil

Introduction
This paper focuses on tunnel projects that are delivered by Design-Bid-Build (DBB) in North America. This paper is not going to compare DBB vs. Design-Build (D-B) – or any other alternative delivery contract methods. DBB is still a mainstream baseline for public works tunneling. This review of the state of practice of DBB is timely as a large number of new projects are being developed, innovations in tunneling have grown, labor and material costs have escalated, insurance and risk management processes have improved, and lessons have been learned through many past projects.

Public agencies and private utility entities and their facility managers, who own, operate and maintain underground facilities such as wastewater, water supply, transit facilities and others, typically utilize DBB delivery to construct their new or rehabilitated assets. This is because they are familiar with tunneling design and construction, they want the project designed and built their way, as they are intimately knowledgeable about the operations and maintenance (O&M) of their assets, and the inherent risks in their underground environment.

These ‘mature’ owners are technically competent in underground engineering and well-versed in the intrinsic risks. They are very much in control of the scope of the project and the required/desired performance metrics, as these factors impact the ongoing O&M as well as their own equipment and processes that live in the tunnels/excavations. By “in control,” we mean they are able to provide definitive plans, detailed drawings and very prescriptive specifications to define the project and its objectives. They employ a designer (Engineer of Record (EOR)) under a separate contract that develops and provides the 100% ready for construction (RfC) signed and sealed drawings and specifications; these documents are the basis of the DBB procurement and the contract. Other information including geotechnical, environmental, and details about user department’s operational requirements including RAMS (reliability availability maintainability safety) are included via the “RIDs” (Reference Information Documents) usually provided at bid time through the “data room.” The author’s experience on MTA NYCT’s $4.5B Second Avenue Subway Phase 1 delivery1 where all the underground contracts were DBB, (and were managed as a program of inter-related and overlapping construction activities), as well as other North American transit systems, is that public transit agency projects are historically based on DBB and as such many of their in-house governance, processes, procurement methodology, and staff experience is fundamentally DBB based.

Owners choose the DBB method for tunnel projects primarily for the owner’s control, price transparency through competitive bidding, and the separation of roles between the designer and contractor. This approach allows owners to hire an independent design/engineering team to create a complete, detailed scope before seeking competitive bids, ensuring the final design aligns with their vision and requirements while allowing for the selection of the lowest-qualified bidder based on that fixed design.

Key reasons for choosing DBB are: (i) full owner control: owners maintain direct control over the design process and can approve all documents before construction begins. (ii) objective design: an independent designer can focus solely on the owner’s needs without contractor influence, leading to more objective decisions and detailed plans. (iii) competitive bidding: by having a complete design, owners can solicit bids from multiple industry specialist contractors. This transparency allows them to compare proposals and select the lowest-qualified bidder. (iv) the owner has the option to also engage a construction manager (CM) consultant to oversee the construction, testing and commissioning and handover to the owner, project and change management, and help review contract payments, (v) clear roles and responsibilities: the process has a definitive, sequential separation of duties: a designer completes the design, and a contractor plans and implements means and methods and builds it according to that design. This is a familiar and well-defined model for many owners and contractors. It is considered the conventional or “normal” method of construction contract delivery. (vi) budget certainty: with a complete design, owners have a more predictable expectation of project costs and can budget accordingly, thus minimizing surprises during the build phase.

The DBB Procurement Process
For a tunnel and/or excavation project, a “good” Design Bid Build (DBB) procurement process is less about dozens of micro steps and more about getting a few big stages right and making them project appropriate. A clean way to frame it in 5 steps is:
1. Front End Definition & Risk Framework (planning, goals and objectives, environmental, alignment, right-of-way and site acquisition, safety, permits and approvals, stakeholders, surety, risk management and insurance programs and other funding-based requirements, owner experience and preparedness among other aspects)
2. Owner’s Design & Procurement Packaging (design, technical prescriptive specifications, contract packages, delivery methods and interfaces, owners’ user department requirements as they relate to the project and O&M, ConOps definition prequalification of bidders, constructability reviews, value engineering, etc.)
3. Tendering & Bid Phase (mandatory site visit, with robust data room and appropriate time to prepare and bid, as well as Q&A, market acceptable terms and conditions of contract, clear surety and insurance requirements, ITA risk management2 approaches). Owners typically don’t understand the contractor’s side of procurement, don’t allow enough time and this adds risk. “Early Collaboration” to foster information exchange (confidential of course) which will benefit both client and contractor, as well as the project.
Bid Evaluation, Escrow & Award (clear and well understood evaluation criteria, interviews, escrow files, contracting processes, accountability, public reporting, etc.)
4.Transition to Construction & Baseline lock ins (escrow review meeting, conforming documents, site walkover and validation period, post award value engineering, kick-off and partnering sessions etc.). Partnering has been successful on projects when new contractors need to break the ice with an unfamiliar client. In DBB the EOR must not be too prescriptive in stipulating means and methods (Tirolo, & Almeraris, RETC, 2005). The owner (and their EOR) needs to leave the door open for re-engineering and value engineering with true equitable sharing of savings.

A Modern Data Room
For a DBB tunnel/excavation project, a “state of the art” procurement data room is about two things: (i) giving bidders enough high quality, well structured and reliable information to price risk intelligently, and (ii) doing it in a way that is auditable, controlled, and easy to navigate. These are key factors in successful DBB delivery. Below is a checklist of protocols (how to run it) and ingredients (what to put in) tailored to tunnels.

The core principles for a modern DBB tunnel data room are that it provides a single source of truth: every bidder sees the same information, via the same platform, with a clear version history. It is ground and risk centric; the data room is structured around geotechnical and construction risk, not just around contract sections. It is easily searchable and indexed: information is layered (summary vs. detailed vs. raw data, interpretative vs. factual, all are clearly delineated) with strong metadata and search capability. It is live but controlled: updates are possible (addenda, new investigations) but tightly version controlled and clearly flagged. It is dispute ready: everything is archived with timestamps to support later questions: “who knew what, when?”

There needs to be clear document governance and protocols that are enforced – how a good data room should operate. The software, as well as access, needs to be a secure, enterprise grade platform: (common tools such as Asite, Aconex, Ansarada, SharePoint based platforms), and it must support large file formats (TBM reports, BIM models, GIS/LIDAR, video etc.). Each bidder gets its own workspace but with read only access to a common data room. Named users with two factor authentication; no generic “bidder1@…” logins. There must be an audit trail with automatic logging of who accessed which document, when documents were uploaded/modified, which versions were current at each date. There must be defined version control and change management, with locked “baseline drops”: at clear Data Drop 1/2/Final IFB3/ Award of Contract milestones with each drop a captured frozen snapshot (zip + checksum + index) for audit and later disputes. Addenda protocol must be clearly articulated through the Instructions to Proposers (ITP): New info (e.g., additional boreholes or revised utilities agreements) only via formal Addendum. Each addendum has a concise cover note summarizing changes, a list of added/updated documents and cross reference to Q&A that drove the change.

For your DBB tunnel, a good general rule is: If a reasonable bidder could say “I need this to understand or price a key risk,” then it should be in the data room, indexed, and version controlled. If a document is “informational only,” label it as such, but still give bidders a transparent way to see what the owner knew. The geology for a project site is typically over 100,000 years old – it isn’t a secret, share it all with the bidders. The Gateway Program in NY/NJ set up its data room several years before bids were even asked for, and the market could see and gain confidence that this owner and these projects were a good case study in data room sharing of important information.

Escrow Bidding for Tunnel Projects and Some New Developments
In DBB tunneling, “escrow bid pricing” (or escrowed bid documents (EBD)) are used as a risk management and claims control device rather than a way to change the bid after award. It’s becoming more important as tunnel jobs get larger and more contentious. So how does it work? What are the key issues and some recent innovative developments?

The concept: The apparent low bidder, after bid opening but before or shortly after award, must place its detailed bid backup documentation in escrow with a neutral escrow agent (often a bank, title/escrow company, or agency appointed third party). The owner does not use the escrow to renegotiate price. Instead, it’s a “sealed snapshot” of the documentation forming the basis of the bid. It would typically include quantity take offs; subcontractor and supplier quotes; crew rates and productivity assumptions; TBM and/or road-header and other plant and machinery utilization assumptions, shift patterns; schedule build-up with logic, risk and contingency breakdowns; cash flow and phasing assumptions; internal spreadsheets, tab sheets, and estimate books, etc.

The typical contractual mechanics of escrow bidding: The requirements are written into the ITP / Special Provisions. Within a set timeframe (e.g., 24–72 hours after bid opening), the low bidder organizes all estimating workpapers and electronic files, submits them to the escrow agent in sealed form under a formal escrow agreement. The escrow package is confidential as between owner and contractor; not a public record. It is only opened under specific triggers (e.g., major dispute, re pricing negotiations, terminations, extraordinary change conditions). Sometimes, and more so recently, it is reviewed jointly at a pre or post award “escrow review” meeting to make sure it is complete and intelligible.

For tunnels, owners use this because the cost build up is heavily driven by assumptions (site conditions, ground classification, face pressure, seasonal hydrogeological conditions, advance rates, downtime, hyperbaric interventions, mucking logistics). Later claims often hinge on “what did the contractor actually assume?” The escrow documentation gives an evidentiary anchor/baseline.

Owners typically use escrow bid documents (after award) for four main situations: (i) claims involving differing site conditions / ground behavior (ii) If a contractor claims that ground was materially worse than the contract baseline (GBR, GDR), the parties can inspect the escrow to see what baseline the contractor priced and whether the contractor assumed a more optimistic ground mix or production rate than indicated in the GBR. This can support or undermine the contractor’s entitlement or quantum. (iii) Major change orders or re scoping, e.g., if the owner is contemplating material scope deletions/additions, or re balancing of risk (e.g., converting unit rate excavation to lump sum), the escrow helps derive equitable adjustments because it shows the original unit rates, indirects, and mark ups embedded in the bid. (iv) Terminations or default; in termination for convenience or default scenarios, the escrow supports determining what work the contractor had priced into future activities and assessing costs for re procurement or partial re let. In all cases, the contract price stays as awarded. Escrow is about interpretation and adjustment, not re bidding the job.

WSDOT megaproject tunneling practice4 – cited in TRB and ITA/John Reilly references shows that escrow is part of the standard US DBB tunnel risk management toolkit, especially on major underground works, but tunnel contractors and owners both see recurring challenges, there are some common issues and pain points with escrow bidding:

(i) Scope & completeness of escrow documents; Contractors may provide only high level summaries, not the full estimating detail, omit critical “back of envelope” analyses, internal e mails, or risk registers, strip out sensitive margin data in ways that make later reconstruction difficult. Owners may over specify what must be included, creating heavy administrative burden, fail to enforce completeness at the initial escrow review, only discovering gaps when a major dispute arises. The impact on tunnel and excavation projects can be significant: e.g., missing details on how ground classifications, TBM downtimes, or hyperbaric work were priced can make it hard to reconcile delay and productivity claims. Escrow documents are most effective when a detailed review, by experienced “eyes” rather than the default tick box checklist, is conducted. It is better when the details and quality of the bidders’ escrow documents are reviewed and evaluated. Some entities do this in the lead up to the bid interview, i.e., post-bid but pre-award. This is an excellent opportunity and time to check alignment on the assumptions, risks, and contract payment terms. It is important that every contract has a payment mechanism that accounts for all anticipated contract change eventualities; without an agreed payment mechanism the dispute will be harder to arbitrate. Best to solve this pre-award. The award of contract has to be to a responsive bidder; a responsive bidder must have a detailed and useable EBD set.

(ii) Confidentiality & competitive sensitivity; Contractors worry that their proprietary estimating methodologies and subcontractor pricing could leak, especially in markets with a small number of tunnel bidders. Contractors also worry the documents will be used against them. Owners insist that they need enough transparency to manage project risks and respond to oversight bodies. This tension can lead to negotiations or redactions (e.g., limiting access to some overhead or margin breakdowns) as well as applying strict EBD access protocols (limited personnel, NDAs, controlled review sessions). Owners might consider amending their boilerplate contract terms to allow better relief for contractor claims by offering some reliance on EBD as a condition to resolve claims and disputes. Often, contract terms limit the relief in escrow conditions, as owners routinely rely on their interpretation (often sole discretion) of contract terms as the first defense (example – EBDs never listed in the Order of Precedence for reliance on information). The industry must move to a better understanding of what the EBD are intended to be used for, and by whom, with both owner and contractor following this transparency to get to a more equitable balance.

(iii) Interpretation disputes; Even when the documents are there, parties disagree on what they “mean”: Was a particular productivity assumption a firm baseline or an aspirational target? Were internal risk allowances intended for ground risk, schedule risk, or commercial negotiations? How do you treat blended rates that mix different ground classes or segments? In tunnels, this is especially acute because many key numbers (advance rate, cutter wear, intervention frequency) are inherently probabilistic and intrinsic to the contractor’s means and methods, as well as the ground conditions. Owners may argue that optimistic assumptions reduce entitlement to compensation; contractors argue those were their “business risks,” not a waiver of baseline protections.

(iv) Administrative burden & digital complexity: Modern tunnel estimating is multi platform (Excel, HCSS and other specialized estimating software, TBM simulation tools, Primavera, BIM/5D, etc.). These are all iterative with multiple versions. The crucial issue in capturing “the bid” at a single point in time is non trivial. Large digital archives (tens of GB) complicate escrow, indexing, and retrieval. File formats can become obsolete over long tunnel project durations (10+ years).

Several trends are re shaping how escrow bid pricing is set up and used:
(i) Digital escrow & structured data standards; The movement from a mass of boxes of paper and loose spreadsheets to digitally indexed, searchable escrow repositories (secure cloud or specialized e discovery platforms). Features that are emerging include metadata tagging: Linking cost items to WBS (work breakdown structure), CBS (cost baseline structure), and BIM objects (e.g., TBM rings, cross passages, shafts). Version control logging, capturing which version of the estimate / schedule constituted the final bid. Role based access, owners’ teams, DRBs5, and arbitrators get defined digital access for limited windows. The benefit of tunneling is that it is much easier to cross reference claims about time and cost to the original estimates (e.g., correlate TBM downtime claims to assumed vs. actual ring rates).

(ii) Integration with risk registers & probabilistic cost models; Leading tunnel clients and contractors are moving toward storing not just point estimates, but the underlying risk model: the Monte Carlo or other probabilistic cost/schedule simulations, explicit risk allowances by risk category (geotechnical, environmental, interface, third party). Some innovations: escrow packages include the risk register, risk allocation matrix, and risk cost mapping. The stochastic model files (e.g., @Risk, Crystal Ball, custom Python/R models) show the contingency build-up and the statistical confidence limits on the contingency. This allows more nuanced post event discussions: “This risk was clearly priced and assigned to the contractor” vs. “This event sat in the owner retained risk categories.” On tunnel projects, everyone does a risk workshop early on. Most are qualitative assessments, better are the quantitative analyses, but the quality of the risk register is dependent on the experience of the risk workshop attendees. Fairly commonly ‘group think’ can bias the results and priorities. Risk registers need to be maintained and regularly reviewed with ‘fresh eyes.’ Teams must fight the tendency to use the register as the ‘agenda.’ Challenge the risk register, what is omitted..? Conduct regular health checks of what risks have been mitigated, what has changed, and what has not been captured. It is a ‘live’ document – don’t let it kill you! The author is a key advocate for “Risk & Opportunity (R&O) Registers,” and has led many R&O workshops where we specifically look at, quantify the risks (identification, ownership, their impact, % event probability etc.) as well as looking at the ‘Opportunities;’ their value engineering and capture, their positive impacts, chances of success etc. This is a far more balanced approach, and the author has found that many ‘opportunities’ are in fact risk mitigations in themselves.

(iii) Aligning escrow with DRBs & early dispute resolution; Instead of opening escrow only in litigation/arbitration, some tunnel programs now give the DRB limited controlled access to escrow materials when evaluating major DSC6 or productivity disputes thus providing non binding recommendations early, and before positions solidify. The benefits are that the DRB can assess whether claimed cost growth is consistent with the original bid logic/assumptions and this in turn encourages fact based negotiation rather than purely contractual posturing. The more emphasis on GBR and DRB, the better in keeping DBB equitable.

(iv) Hybrid “open book plus escrow” models; Particularly on mega tunnels (greater than $1B), agencies blend open book cost reviews pre award or pre NTP to undertake limited high level reviews of the bid structure to detect gross underpricing of risk (e.g., unrealistically low TBM production). The detailed workpapers and source quotes are still escrowed and protected. The objective is to avoid catastrophic underbidding that leads to early contractor distress or extreme claims behavior, while still preserving competitive tension and intellectual property. Pre-award meetings are the right time to test the ‘responsiveness’ of the bidders, this is where owners must sideline non-responsive bidders, the award goes to the lowest priced responsible bidder.

(v) AI assisted audit & anomaly detection: This is an emerging innovation, with a few pilots on large infrastructure projects: Digital escrow datasets are run through Analytics / AI tools that flag inconsistencies (e.g., unit rates far below market, mis aligned productivity vs. ground classes) and identify where the contractor’s risk pricing appears to contradict the contract baselines. There is potential future for this approach in the tunnel market as owners screen before award for systemic underpricing of high risk activities (like deep shafts, cross passages, or ground treatment). It’s a more open collaborative approach that acknowledges that both parties are checking underlying assumptions. Bidding contractors use the same tools internally to check that their own pricing is coherent across disciplines.

(vi) Practical takeaways for a tunnel focused DBB environment: If you’re involved in DBB tunnels and dealing with escrow bidding, it is important to define escrow scope clearly. Enumerate exactly what must be escrowed: digital estimates, take offs, subcontractor quotes, TBM modeling, schedules, etc. Require an “escrow index” so that future users can navigate the content. Use an early escrow review meeting. Do a joint verification session to confirm completeness and to clarify file structures and naming conventions. Avoid later disputes that “this wasn’t in the escrow.” Integrate escrow with your GBR and risk allocation. Make sure that the ground risk definitions in the GBR, the Contract clauses on DSC and the escrow requirements are all aligned, so the escrow truly illuminates how the contractor priced the baselines. Plan access protocols up front by deciding who can access the escrow (owner, contractor, DRB, mediator, arbitrator) and when and under what triggers (threshold claim values, formal disputes) and with what confidentiality protections. Do leverage digital tools, but keep it simple enough to use, even a disciplined folder structure + index + common viewer formats (PDF, XLSX, standard scheduling formats) is a big step up from unstructured archives.

There are still many unanswered escrow bidding questions and different industry perspectives: What are the essential components that should be included in an EBD package to ensure completeness and clarity? How can tunnel project owners effectively balance the need for transparency with contractors’ confidentiality EBD concerns? What protocols should be established for access, review, and use of escrowed bid data in claims and dispute scenarios during tunnel construction? How can integrating escrow bid pricing with GBRs and risk registers improve management of DSC claims? In what ways can digital escrow platforms with metadata tagging and version control enhance the efficiency and reliability of escrow processes in tunnel projects?

DBB remains the dominantly preferred delivery contract method for tunneling
DBB remains dominant in tunnel construction largely because of how risk, uncertainty, and public sector procurement regimes interplay in the delivery. From literature, industry experience and practice, DBB dominates in tunneling, as tunnels are: (i) geotechnically high risk (ii) CapEx intensive and politically sensitive (urban metros, water conveyance, road/rail tunnels, scientific labs) and (iii) often procured by conservative public owners (DOTs, transit agencies, water authorities and federal entities) with rigid statutory requirements. There are distinctions in the DBB approach for these differing types of tunnel projects.

DBB fits this context because it separates design risk from construction risk in a way traditional public owners and contractors know how to plan and price. It aligns with conventional public procurement law (open low bid, clearly defined project scope). DBB provides strong price competition on a well defined design which is critical when budgets are scrutinized. It matches the risk appetite of tunneling contractors who can be wary of design liability and subsurface risk under integrated models.

Tunnel projects are particularly sensitive to subsurface conditions: Highly variable geology (rock classes, fault zones, overburden changes), water ingress and pressure, gas pockets and contaminated ground, urban constraints (overlying and adjacent buildings, aged utilities, existing tunnels). Under DBB, the owner’s designer should be commissioned to do extensive front end site and geotechnical investigations, detailed designs, value engineering and R&O registers. The owner retains a bigger share of geotechnical risk, expressed via Geotechnical Baseline Reports (GBRs) and detailed specifications. The contractor prices construction risk against a fixed design and baseline, not against design assumptions they themselves made under bid time pressure (as in design build). Mature, asset managing owners tend to prefer to hold and define the ground and geotechnical risk first, then go out to bid in what they see as an “apples-to-apples’ competitive procurement. The industry prices the ground risk with the contractual risk sharing mechanism(s) the owner has developed.

This structure is attractive because: Owners feel they maintain better control over both design development and ground risk allocation. Contractors do not have to fully price design and geotech uncertainties; in a D-B/P3 scenario, many contractors simply will not bid some high risk tunnels or will load the price heavily for unknowns. Result: for complex tunnels, DBB is often perceived as the least worst compromise between risk allocation and getting competitive bids.

Most large tunnel owners (state DOTs, transit agencies, water/wastewater authorities) operate under traditional public works statutes, which define the procurement, codes, auditability, and set the culture: They require separate procurement of design and construction, often with qualifications based selection (QBS) for the designer and low bid or low bid plus prequalification for the contractor.

There are several DBB advantages in this environment: (i) legal and procedural familiarity; standard forms, design manuals, and risk protocols (e.g., tunnel codes, insurance frameworks) are written assuming DBB. (ii) review entities (auditors, courts, inspector general, permitting agencies) understand DBB and see it as the default “fair competition” model. (iii) perceived transparency and fairness; full design is completed. Bids are opened and the lowest responsive, responsible bidder wins. This is easy to explain to politicians, the public, and oversight bodies for multi hundred million dollar tunnels. (iv) ease of protest defense; with a finished design and well defined quantities, disputes over bid awards are simpler to defend than qualitative best value selections. Therefore, even when agencies know integrated delivery could bring schedule benefits, they often revert to DBB for large, controversial, or first of a kind tunnels because it is politically and procedurally safer.

The global tunnel industry is inherently a safe construction sector. Tunnel failures can have catastrophic consequences (loss of life, economic loss, network outages, reputational and political fallout). Owners often want direct, detailed control over the design, including tunnel lining and waterproofing philosophy, fire life safety systems, ventilation, egress, emergency cross passages; durability (100+ year life?) and O&M provisions such as interfaces with rolling stock, signaling, road ITS, or utility equipment and process systems.

Under DBB the owner hires an Engineer of Record (EOR) who they manage closely through concept, preliminary, and final design. Safety regulators, fire marshals, and third party reviewers interact directly with the owner’s design team, often over several years. Stakeholder negotiations (cities, utilities, railroads, property owners) are worked out before bidding. In a design–build scenario: The owner must hand over more discretion to the D-B team and rely heavily on performance specifications. Many public owners—particularly those with limited D-B experience—are uncomfortable relinquishing this level of control on high risk tunnels. Thus, DBB is often chosen because owners want detailed, prescriptive control over the design and interfaces before the project goes to the market. DBB also provides the Owner with greater ability to control and manage stakeholder, abutter, environmental compliance and other third-party risk and related public relations exposures.

The international tunnel market ecosystem is segmented by well-known specialist companies: A small set of high end tunnel design consultancies (geotechnical, structural, fire life safety, systems) often working globally fulfil the market’s needs. This with a separate but overlapping group of specialist tunneling contractors and TBM suppliers. DBB fits this ecosystem of players: Owners want an independent engineer who can enhance alignment and methods without commercial bias, and an engineer during construction (interpret the contract, review claims, certify quantities, and monitor safety). There is limited contractor appetite for full design liability. Many tunneling contractors are comfortable with temporary works, ‘means-and-methods’ design and specialist tunneling equipment performance. Fewer are comfortable taking full permanent and precast works design liability, especially under punitive risk transfer (e.g., full geotech risk, performance guarantees over long concessions). ‘Fitness for purpose’ requirements are a whole other ‘can of worms.’ The result is that for many tunnel markets (particularly where there isn’t a deep pool of D-B savvy tunnel contractors), DBB remains the path of least struggle that best aligns with existing supply chain capabilities.

Owners of tunnels are extremely sensitive to up front CapEx (headline project cost), downside risk of major overruns or claims and long-term O&M running costs. With DBB: The design can be developed to a higher-level of detail, allowing tighter quantity estimates and unit prices. Bidders have a more common baseline for pricing; this usually yields narrower bid spreads and can suppress risk premiums. Claims and change orders are common—but they are generally focused on changes in ground/site conditions, owner-promoted changes, or sometimes errors/omissions (E&O) in the owner’s design. The role of the EOR during DBB construction is heavily focused on verifying contractors’ quality compliance rather than design issues perse. Most E&O insurance tunnel claims are less about actual design errors, some about omissions, but most are disagreements in contractual and payment terms. Most Owners can partially recoup via designer’s professional liability insurance or contingency.

With design–build/P3 delivery: Contractors must price a much broader scope of risk (design liability, latent defects, long term performance, complex interfaces). Literature and agency experience show that for complex geotechnical projects, D-B/P3 bids can come with large, embedded risk premiums, sometimes exceeding the value of theoretical schedule savings. Under extreme unknowns, the market response may be very few bidders, which is itself a risk. Many agencies therefore judge that for tunnels: “Yes, D-B or P3 could accelerate delivery, but the risk premium and market response are too uncertain; DBB gives us more predictable competitive pricing on day one.” This was the recent case with the Gateway Program; The Palisades Tunnel procurement in New Jersey, where the owners’ team originally developed the project, and a past D-B team further developed the design to well over 60% before the project was stopped. So, the second time around, the owner was able to promote switching from D-B to DBB as there was a higher level of design completeness. The owner then changed to DBB in reaction to market soundings and feedback. The result; 6 teams submitted qualifications, and the end result was that Gateway had a lot more certainty on the contract price and award7.

The tunnel world has mature standards around DBB, such as: ASCE’s Geotechnical Baseline Reports (GBR) with clear guidelines on what is “anticipated” vs. “differing site condition.” (DSC). Established patterns exist in how courts/arbitrators interpret subsurface risk under DBB contracts. As well as Joint Codes of Practice for risk management in tunnel works and standard project specific professional liability structures like UCA’s Guidelines for Improved Risk Management (GIRM)8 which covers both DBB and D-B recognizes that “there are unique differences that apply to projects undertaken in the United States of America (USA). In other countries, codes and standards are generally universal for the country in which they are being adopted. In the USA, different states and even cities have differing statutory requirements and other legal constraints with respect to procurement of contracts and contracting methodologies.”
These frameworks are historically built around DBB: Contractors carry construction all risk (CAR) and third party liability, focused on construction risks. When disputes arise, parties and insurers have a clearer expectation of how risk is split. For D-B or P3 tunnels, these frameworks become more complex: (i) Integrating designer and contractor liability in a joint venture. (ii) Higher professional liability limits for integrated design–construction teams. (iii) More complex negotiation of who carries what portion of subsurface risk. This complexity alone pushes many risk averse owners back toward DBB for major tunnels. This again underscores why the “pure” DBB model still dominates many tunnel programs.

Conclusions
DBB underground projects are routinely procured with escrow bid documents (EBD). More and better use of modern data rooms is helping. Fundamentally risk allocation and payment must be mutually understood and agreed to, and ideally before the contract commences. The contract solutions need to address the causes rather than the symptoms. The key drivers of DBB prevalence in tunnel construction and tunneling is because:
1. Safety; Owners’ want the contractors to focus on safety throughout construction, to lead and be responsible for the project’s safety.
2. Geotechnical risk: Owners prefer to define, allocate and clearly pass the responsibility during construction to the contractor via the owners’ design, specifications, GBR and contract.
3. Statutory and procurement constraints: Many public works laws (federal, state and municipal) and audit frameworks are built around DBB and low bid.
4. Owner control over design: High risk tunnels push owners toward prescriptive designs and intensive oversight including end-user and facility operator/manager departments.
5. Market structure: Separate specialist designers and contractors; limited appetite for full design liability among contractors.
6. Risk pricing: D-B/P3 can produce greater risk premiums and thin competition for complex tunnels; DBB yields more predictable bid spreads.
7. Mature contractual risk-sharing insurance frameworks: Established GBR, EBD, DSC, DPRs and updated insurance are DBB centric in tunneling.

References
1. Caiden, D, Covil. C.S. Giffen R, Ho, C, Potter, R and Solway, J (2017) “Second Avenue Subway” Arup Journal Issue 1, 2017
2. ITA – International Tunnelling Association, and specifically the Code of Practice for Risk Management of Tunnels Works – 3rd edition 2023.
3. IFB – Invitation for Bid
4. WSDOT tunneling practice for mega-projects is not contained in a single manual but rather in a combination of specialized manuals, design guidelines, and specific lessons learned from major projects like the Alaskan Way Viaduct Replacement (SR 99 Tunnel). Key resources include the WSDOT Tunnel Inspection Manual, Construction Manual, and Bridge Design Manual, alongside federal guidelines.
5. DRB – Dispute Review Board
6. DSC – Differing Site Condition
7. https://tunnelingonline.com/gateway-development-commission-awards-palisades-tunnel-contract/
8. UCA Guidelines for Improved Risk Management (GIRM) for tunnel and underground construction projects in the USA (2015)

About the Author
Craig Covil is a senior consultant, (previously a geotechnical engineer in the construction industry), advising on project delivery, DBB, Design-Build, P3 and other alternative delivery, engineering, design management, strategic technical reviews as well as interface and risk management for projects and programs. Craig is an SME and senior advisor to NFP, part of the Aon Group, currently advising on a number of projects including the Gateway Program, the largest current US infrastructure/tunneling program at $16B. Craig was also involved in MTA NYCT’s $4.5B Second Avenue Subway delivery and DOE’s Long Baseline Neutrino Facility in South Dakota which recently completed excavation at 4,500 ft depth of three massive DBB mined caverns. Covil acknowledges here a select number of industry friends who discussed and debated these topics, and who were kind enough to read the draft of this article. Thank you to David Hatem, Chad Mathes, Gary Almeraris, Sal Taddeo, Seth Pollak, and Colin Lawerence; any ‘E&Os’ in this paper are purely those of the author.

NOTE: This paper is a follow up to the article “Revitalizing Design-Bid-Build for Tunnel Projects” by David J. Hatem that appeared in the February 2026 issue of TBM: Tunnel Business Magazine.