Preface: It is important to note that a Design Build Form of Contract uniquely places all responsibility with the Contractor. It follows that the key to assured project outcomes and minimising risk, is the careful selection and appointment of the most demonstrably competent Contractor. To this end, we recommend that Clients first appoint suitably experienced Consultants to guide them through the complex procurement and Contractor selection process and, thereafter, oversee the end-to-end project delivery.
What is a design-build contract?
A design-build contract is a project delivery method in which a single entity handles both the design, material selection, and construction of a project. It is especially suitable for complex, specialist Overcladding projects and assures positive outcomes, provided the correct, demonstrably competent Contractor is appointed. This arrangement creates a unified team with single-point clear roles and responsibility for the entire project being ‘fit for purpose, BSA 2022 compliant, complete with the golden thread of responsibility, with responsibility for all project outcomes vested in the Contractor, who is, by this method, instilled with the extra vigilance required to assure positive outcomes for the complex task. Applied correctly, from concept to completion, this approach is empirically proven to ensure positive project outcomes, streamlining communication, removing ambiguity, reducing disputes, costs, and accelerating end-to-end project delivery through to completion. Warranty and handover with seamless integration of design, materials and workmanship.
QC/QK advice: Form of Contract : Options:
1. The traditional building contract
Under the traditional Contract, the design is carried out by architects and engineers, and sometimes other specialist professionals. They will be liable to the employer for design failures, but only where the failure arose out of the professional’s failure to exercise reasonable care and skill.
In the traditional building contract, the contractor does not have design obligations but must construct in accordance with the design provided by the employer’s design team.
A situation can arise, for example, where the design specifies a novel system or material that a reasonably competent practitioner would not have foreseen the particular problem. This is often known as the “state of the art” defence. This form of contract does not provide ‘fit for purpose’ cover afforded to the employer.
2. The Design and Build contract
Under the design build contract, there is an express or implied warranty that the works will be reasonably fit for the purpose for which they are agreed or known to be required.
The result is that where there is a design, material or workmanship defect which renders the building not fit for purpose, the contractor will be liable. Unless the contractor’s design obligation is expressly lowered so that it is akin to the liability of a professional to ‘use reasonable skill and care’, there is no defence.
Thus, where a contractor designs and builds a building envelope to use a system or material in any way, be it novel or unusual, and that fails, the contractor will still be liable. The consequence is that a design and build contractor may be liable where an architect or engineer who contracted with the employer would not be liable. The contractor may not have a “state of the art” defence.
3. The common Hybrid contract
A very common way for projects to be procured involves a hybrid of these two approaches.
The employer will employ relevant professionals to develop the design which fulfils the employer’s aim. The project will be tendered to design and build contractors who will be required to quote on that basis.
However, under this scenario, difficult issues can arise where the root cause of the problem was a design decision or system selection or material choice taken prior to tender; the contractor may then be able to say that the design defect was part of the ‘scope of the design’ he was obliged to construct in which he was denied choice or opportunity to use his skills knowledge or experience. Whether that affords the contractor with a defence will depend upon the precise nature of the defect, and the terms and conditions of the contract.
What is a two-stage design build contract
A two-stage façade design and build contract allows early contractor involvement (ECI) to refine complex projects, reduce risk, improve VFM and cost certainty. The first stage selects a contractor via a Pre-Construction Services Agreement (PCSA) to collaborate with the client team and develop fully detailed, integrated survey, design, sequence, methodology, obtain approvals and finalise design and price; the second stage commits to the construction stage contract. This method facilitates full delivery team collaboration and ensures best value, compliance and the most positive project outcomes whilst effectively de-risking otherwise high-risk and/or complex projects.
Key Stages of a 2-Stage Design & Build Tender
Stage 1: Tender & PCSA (Pre-Construction Services Agreement)
The client invites 2-stage offers from Contractor(s) for the fixed-price supply of ‘pre-construction services’ including survey, design, specification, mock-ups, statutory approvals, methodology, risk and method statements, price and programme, either directly or via frameworks or using a mini-tender. The ‘invitation’ is based on limited information comprising only extant building information and high-level Employer Requirements (ER’s) and/or aspirations.
A PCSA is signed, appointing the Contractor to work and collaborate with the client design team to develop detailed ER’s and concludes with submission of fully detailed, comprehensive Contractor Proposals (CP’s).
Stage 2: Final Price & Contract
The Contractor submits fully developed ER’s and comprehensive CP’s to form the basis of the Design Build Contract.
If negotiations succeed, the Contractor is awarded the Design Build Contract.
If negotiations fail, the Contractor retains copyright of his bespoke designs and/or methodology.
Key Advantages
Early Contractor Involvement (ECI)
Utilises Contractor expertise in value engineering and buildability to ensure positive outcomes.
Reduced Risk
Full identification of unforeseen costs and/or technical challenges before finalising the Contract.
Removes Ambiguity
The Contractor led ‘concept to completion’ process ensures single point responsibility.
Faster Start
Allows early site work and procurement of long-lead items while the final design is completed.
When to Use
Two-stage Contracts are the best option for highly specialist complex and/or fast-track projects where the design cannot be finalised in the absence of the Contractor.
Key aspects of a design-build contract:
The owner contracts with one entity (the design-build team) for both design and construction services.
The design-build team includes both specialist designers and specialist contractors who collaborate from the project's outset.
In some cases, manufacture and/or construction can begin at the contractor's risk before the final design is completed, reducing the overall project timeline.
By streamlining processes and reducing the potential for disputes, design-build can lead to cost efficiencies.
The design-build approach emphasises clear roles, responsibilities, communication and collaboration among all stakeholders.
Project risk is transferred in its entirety to the design-build entity.
Commonly used design-build contract forms:
Suitable for construction projects where the contractor is responsible for both design and construction, particularly when detailed provisions are needed.
Used for projects where the contractor is responsible for design, build, and operation/maintenance.
Benefits of using a design-build contract:
The single point of contact simplifies project management and communication.
Clear lines of responsibility can minimise potential conflicts.
Early construction and efficient collaboration can lead to quicker project completion.
Fixed-price or guaranteed maximum price contracts can provide cost certainty to the owner.
The collaborative nature of specialist design-build can foster creative solutions, innovation and enhanced project outcomes.