Using Design-Build Contracts
Design-build is a popular contracting method widely used around the world, including in the U.S. As the name implies, this type of contract combines the design and construction, often called the project delivery, under a single agreement. Design-build can save time over other contracting methods and can prevent situations where the owner is caught between the designer and the builder in contract disputes. On the downside, a design-build contract can present some challenges, such as situations in which the final cost cannot be easily determined or projected.
When Are Design-Build Contracts Used?
Design-build is typically used when an opportunity exists for the owner or agency to save time by having construction begin before the final design has been completed. By contrast, in the traditional system of design-bid-build, the owner contracts separately with a designer and a builder, and the design must be completed before the owner puts out a call for construction bids. By combining both aspects of project delivery under a single agreement, and thus a single bidding process, design-build can save time and, in some cases, money for the owner.
In addition to projects on tight schedules, design-build is often preferred by federal agencies with a need to fast-track projects, so that the return on investment can be capitalized sooner.
Characteristics of Design-Build
The defining characteristic of design-build contracts is simply the presence of only one contract. All other types of standard construction contracts include at least two contracts. Design-build is often described as "single-source" or "sole-source" contracting. If there is a problem or change with either the design or the construction, the owner works with a single source—the contractor—for resolution or approval.
Under a design-build contract, designers and builders work hand-in-hand to produce construction drawings and analyze a logical construction sequence. This single-source collaboration allows for both the design and construction to be completed in stages rather than working from a complete design from the outset of the project.
Advantages of Design-Build Contracts
Design-build contracting offers several potential benefits:
- Reducing design time
- Simplifying construction drawings
- Leaving value engineering alternatives open for discussion and analysis throughout the project
- Shortening the construction calendar
- Limiting communication channels to a single point of contact
- Minimizing change orders
- Fast-track schedules
- Customizing the design to actual site conditions more easily
- Identifying long lead items earlier
- Allowing for the project to be repeated
Drawbacks of Design-Build Contracts
Design-build contracts can also produce some downsides to consider:
- The project outcome might not produce the expected result.
- A project that is not scheduled properly might be substantially delayed.
- The contract doesn't impact labor costs.
- Final costs can be reasonably higher than original estimates.
- Design-build eliminates the possibility of using an integrated design.
- The counterweight between a contractor and the design team might be reduced, and some conflicts might appear.
- The architect’s vision may appear to favor the contractor.
- If the project’s inspector and the team are not experienced, problems could become frequent and costly repairs may be needed.
Variations of the Design-Build Concept
There are several variations on the standard design-build contract:
- Bridging: Owner develops a preliminary project design at a level of 30% to 50%
- Turnkey: Owner requires outside expertise and then allows the entity to turn over the keys at project completion
- Design-Build-Warranty (D-B-W): Combines a warranty provision with design-build
- Design-Build-Maintain (D-B-M): Combines maintenance provisions with design-build
- Privatization: Private entity designs, builds, and maintains a section of roadway in turn for a toll or fee