What is a design and build contract?
Delivery of a construction project can be complex, with associated risks impacting not only the initiating company but those stakeholders involved. Selecting the right contract type is important to ensure things go as smoothly and stress-free as possible. A design and build contract brings with it a number of advantages but should only be selected if it is right for the unique circumstances for the project it enfolds.
Company culture, preferences and ability to manage project phases and risks internally all play a part in final decision of contract type and it is key that you evaluate all potential disadvantages and advantages in line with specific project requirements.
In this article we discuss the various benefits and drawbacks of a design and build contract and the elements that should be considered in its selection.
What is a Design and Build Contract?
A design and build contract is one where the contractor holds responsibility for both the design and construction phases within a build project. In this type of contract the client does not directly hire separate contractors for the different phases of the project, rather the client agreement is solely with the main design and build contractor, who then operates on their behalf for managing and delivering the entire project. This is opposed to a traditional procurement contract, where design consultants are first hired before handing over to the contractor for construction.
Advantages of Design and Build Contract
The approach gives a clearer understanding of practical application of designs throughout the project, with potential issues being identified earlier and saving rework further down the line – thus reducing timescales and costs. With a close-knit and collaborative team throughout the project, the project benefits from the practical knowledge of the construction team at earlier design phase. Transparency is increased and a blame-focused culture is reduced.
The client benefits from a single contract, the delivery of which is solely the responsibility of the contractor. Costs are by and large agreed from the beginning (though not necessarily contractualised) without the client needing to negotiate with multiple suppliers and it is in the best interests of the contractor to deliver on time, quality and cost commitments without any opportunity to “pass the buck” should something go awry, creating a solutions-focused culture on the project.
An added benefit of engaging the construction team earlier on in the project is that they can start their phase earlier – for example gaining planning permissions and building regs approvals, or even starting the construction itself.
The early involvement of the construction team allows for the application of value engineering and construction expertise to be incorporated right at the start of the project, meaning budgets have more potential for optimisation. Likewise, workstreams can be streamlined through the overlap of roles within close-knit project teams.
Is a Design and Build Contract Right for You?
The decision on any construction project contract type should be led by what is most important to the client. Price and speed of delivery may be the priority for one company, whereas excellence in design may be of utmost importance to another. Some companies are led by their ability to stay involved and in control of a project – whereas another may benefit from fully handing over responsibility to an external supplier and thus lowering their internal risk.
Before deciding which contract type is right for you, you should spend time with your project stakeholders, understanding how you need to work as a client and what is most important to you. This should happen before any researching of potential suppliers to ensure you go into the project focused on achieving the right outcome for you.
At FEG we operate at all phases of your construction project – from initial feasibility to management of build.
We can support you in ensuring you select the right contract type for your project and individual circumstances.