Design and build contract

A Design and Build contract is an arrangement between a client and a construction company in which the company is responsible for both the design and construction of a project. The company is responsible for the overall management of the project, from initial concept and design through to the completion of the build. This type of contract combines the functions of design and construction, and one entity is typically responsible for managing the entire process. The contractor is responsible for the overall performance of the project, and the client is usually only involved in the design and selection of materials and products.

Example of design and build contract

• Design and build contracts are common in the construction industry, and involve a client hiring a contractor to both design and construct a building project. For example, a client may hire a contractor to design and construct a new office building. The contractor would be responsible for the overall management of the project, from initial concept and design through to the completion of the build. The contractor would also be responsible for selecting materials and products, and ensuring compliance with local building codes.
• Another example of a design and build contract is the construction of a residential home. In this case, the contractor would be responsible for designing the home and then constructing it according to the client’s specifications. The contractor would also be responsible for the overall management of the project, from initial concept and design through to the completion of the build. The contractor would also be responsible for selecting materials and products, and ensuring compliance with local building codes.
• A third example of a design and build contract is the construction of a bridge. In this case, the contractor would be responsible for designing the bridge and then constructing it according to the client’s specifications. The contractor would also be responsible for the overall management of the project, from initial concept and design through to the completion of the build. The contractor would also be responsible for selecting materials and products, and ensuring compliance with local building codes.

When to use design and build contract

A Design and Build contract may be used in a variety of situations, such as:

• When the project is particularly complex or large in scale, and the client needs the assistance of a team of design and construction professionals to ensure it is completed on time and to budget.
• When the client is in need of a quick turnaround time on the project and wants to have the design and construction occur simultaneously.
• When the client needs to ensure that the design and construction are completed in accordance with specific standards and regulations, such as those related to building codes and health and safety.
• When the client wants to reduce their overall risk on the project by having one entity responsible for the design and construction.
• When the client needs to ensure that the design and construction are well-coordinated and integrated.
• When the client does not have the in-house resources to manage the design and construction process.

Types of design and build contract

Design and build contracts come in a variety of forms, each of which has its own advantages and disadvantages. The most common types of design and build contracts include:

• Lump Sum Contracts – These are contracts in which a single price is agreed upon for the entire project. The contractor is then responsible for delivering the project for the agreed sum, regardless of any changes or unforeseen costs.
• Cost Plus Contracts – These contracts involve the client agreeing to pay the contractor for the costs associated with constructing the project, plus an additional fee for the contractor’s services.
• Turnkey Contracts – With this type of contract, the client pays the contractor to design and build the entire project at a fixed price. The contractor is responsible for any changes or additional costs that may arise.
• Performance Contracts – Performance contracts involve the contractor agreeing to complete the project in accordance with predetermined performance criteria. The client is not responsible for any additional costs that arise.
• Design-Build-Finance Contracts – These contracts involve the contractor financing the construction of the project, in addition to designing and building it. The contractor is responsible for managing the project and any associated costs.

Advantages of design and build contract

A design and build contract offers several advantages for clients looking to complete a construction project. These include:

• Flexible scheduling: Design and build contracts allow for more flexible scheduling than traditional contracts, as the contractor is responsible for both the design and construction of the project. This can be beneficial for clients who need to complete their project in a timely manner.
• Cost savings: Having one entity responsible for both the design and construction of the project can lead to cost savings as the contractor can coordinate the design and construction processes more efficiently.
• Risk management: With one entity responsible for both the design and construction of the project, there is less risk of conflicts between the designer and the builder, as well as less risk of delays or completion of the project above the budget.
• Streamlined communication: Having one entity responsible for both the design and construction of the project can lead to a streamlined communication process, as the contractor can coordinate the design and construction processes more effectively. This can also lead to faster completion of the project.

Limitations of design and build contract

Design and build contracts can be a great option for getting a project completed, but there are some limitations to be aware of. These include:

• Limited control for the client – Since the contractor is responsible for both the design and construction of a project, the client may have limited control over the project. The client may be unable to make changes to the design or construction process, as this would be the responsibility of the contractor.
• Potential for conflict of interest – With one entity responsible for both the design and construction, there is a potential for conflicts of interest. The contractor may be more inclined to select materials and products that are more profitable to them, rather than those that are best suited to the project.
• Increased cost – The cost of a design and build contract is typically higher than a traditional contract, as it includes the cost of both design and construction.
• Potential for delays – Since the contractor is responsible for both the design and construction, the timeline for the project can be difficult to predict. If the contractor runs into any issues with the design or construction, it can lead to delays in the project.

Other approaches related to design and build contract

Design and Build contracts are just one of the many options available to clients who need to construct a project. Other approaches to consider include:

• Design-Bid-Build (DBB): This is the traditional method of construction management, in which the client hires an architect or engineer to design the project, and then puts the project out for competitive bids from contractors. The lowest bidder is awarded the contract.
• Design-Build-Operate (DBO): This approach combines design, construction, and operational elements into a single contract with a single entity responsible for the overall performance of the project.
• Integrated Project Delivery (IPD): This is a collaborative approach which brings together multiple stakeholders, including the client, the design team, the contractors, and the suppliers, to work together to ensure the highest quality product and timely delivery.

In summary, there are several approaches to consider when planning a construction project, including Design and Build contracts, Design-Bid-Build, Design-Build-Operate, and Integrated Project Delivery. Each approach has its own advantages and disadvantages, and the right solution will depend on the needs of the client and the project.

Design and build contract — recommended articles

Labor and material — Types of procurement — Construction project — Integrated project delivery — Forms of contract — Unit price contract — Project management office — Open tender — Design bid build

References

• Chen, Q., Xia, B., Jin, Z., Wu, P., & Hu, Y. (2016). Choosing appropriate contract methods for design-build projects. Journal of Management in Engineering, 32(1), 04015029.