What is a Design-Build Contract?
A design-build contract is a unique type of project delivery system used in construction and renovation projects. Traditional contracts are awarded using a design-bid-build system, where the project owner starts by hiring an architect. Once the architect has finished the design phase, the project is put out for bid to general contracting companies. The contractor with the lowest bid is awarded the project and is responsible for completing the job according to the plans created by the architect.
With a design-build contract, the owner awards the entire project to a single company. It is typically awarded to a contractor, though architects or engineers may be awarded one in some specialized cases. Once the contract is signed, the contractor is responsible for all design and construction work required to complete the project. This system allows the owner to deal with a single source throughout the duration of the job, rather than coordinating between various parties.
When this type of contract is awarded to a builder, he must hire all architects and engineers required to complete the design work. The owner is still given the right to approve or reject design options, but is no longer responsible for coordinating or managing the design team. Once the owner approves the design, the same contractor then oversees the construction process, hiring subcontractors as needed. Most of these contracts are awarded through negotiation rather than through a bid process.
This type of project delivery offers many benefits to the owner. He or she serves a simplified role in the construction process, and will often greatly reduce his administrative and management responsibilities. Design-build contracts generally result in a more team-oriented atmosphere, and may reduce claims and legal problems over the course of the project. They can have more accurate budgets and estimates as well, and a faster completion time.
The primary drawback is the lack of checks and balances associated with this delivery system. On a traditional design-bid-build system, the architect and contractor act as separate entities, each of which is responsible for protecting the best interests of the owner. When the design team and contractors are all working together, the owner may find himself working against both of these parties.
In many cases, design-build can leave the project owner feeling overwhelmed. As most organizations have limited construction experience, they may find it difficult to coordinate directly with the contractor as the project progresses. Instead of having the architect to represent the owner as in a design-bid-build contract, the owner must represent himself. A lack of experience with this process on the owner's part may lead to project delays or increased expenses in some situations.
I have to say, I don't know how I feel about design and build contracts -- I've heard so many mixed things about them. Though part of me thinks that streamlining the building process could be good, I'm just really leery about the fact that you can't shop around after you start the process.
I've also heard that that the designs they made for you are usually under copyright law (check the fine print of their contract). So even if you have paid for the drawings and love the design you cannot take them elsewhere. I guess design and build contracts are by their very nature a package deal.
What do you all think? Does anybody have any good tips or experience on how to work with this kind of contract?
As with all building contracts, check out the insurance liability with the contractor before accepting a bid. I know someone who overlooked this, and got stung quite badly. You don't want to find out in court that the only areas actually covered are those in the construction section!
@Acracadabra - That's a good point, though you could try to avoid this problem by getting personal recommendations. Or maybe you could request names and references to be included in the construction bids.
This sounds like a great option on paper, except for one thing. I think there could be a problem with building construction contractors who lack solid contacts. I wonder if this could be checked out during the initial bid process.
Sometimes, there is even a bid process with the architect. This is often true in the case of public buildings. When my town got a new library about 6 years ago, they displayed several architects' models and had the public vote; after that, they voted on different bids from contractors.
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