ParsCo’s Design/Build Delivery MethodJuly 9, 2013
One of the most important items that Owner’s neglect to consider when starting a new project is what type of "delivery method" is best. This is a unique question and depending on the project and the circumstances, the answer may be different. An increasingly popular method that ParsCo has used on numerous occasions is the "Design Build" delivery method. The hallmark of a design/build project is where a single firm is responsible for both design and construction of a project. The design/builder contracts directly with the subcontractors and is fully responsible for the delivery of the project.
ParsCo’s typical design/build approach is to have the owner select a design/builder/ CM working on a professional fee basis who can implement many of the advantages of construction management along with design/build such as:
- Early project cost guarantee
- Open book exposure of subcontractor costs
- Optimal scope change advocacy on behalf of the owner
- Shared savings with a guaranteed maximum price option
This eliminates any concern that the owner may have with splitting contract responsibilities, by creating CM/builder and designer with capabilities tailored to the project. Design/build is best suited for clients who want the simplicity of a single source or have new or renovation projects that are highly schedule driven so it can most readily fast-track if required.
Primary Benefits of Design/Build:
- Single point of responsibility for design and construction
- Fastest schedule delivery
- Early identification of guaranteed cost
Some of the other positive advantages of the ‘design and build’ procurement approach are:
- speed of delivery from concept to completed building. There is normally a much quicker delivery time than for traditional procurement. In its simplest form, design and build allows work on site to begin earlier (that is before the design is fully complete) than under traditional forms of contract, because of the level of design control given to the contractor. Normally, the design and build procurement approach allows programmes and budgets to be more easily met and the speed of construction is also often quicker;
- single point responsibility. The contractor is responsible for the design and the construction. Therefore the client should have a single point of responsibility and liability against the contractor. This is more advantageous than the traditional forms of contract where the client has entered into separate construction and design agreements. A common problem with the latter approach being that if a claim is made, the contractor, architect or other design consultants may argue over the extent of their own individual responsibilities. Consequently, there is less likelihood of claims being made by the contractor in respect of the split responsibility of design, and the contractor will be unable to make a claim for late design instructions being issued (other than for changes subsequently made by the client);
- acceptance of design. Because the contractor is responsible for the design and the construction, the contractor and his/her supply chain are involved in the production of the design to be used, and hence ‘buy in’ to that design. Also, it follows that the design is more likely to be ‘buildable’ than may be the case under other procurement methods;
- novation of design. There is normally the facility for the client’s own designers to be novated to the contractor. This approach has several perceived benefits, including; the client may have used those designers many times previously and will be happy with the quality of their work; the design team is likely to be more attuned to the client’s requirements; the design team can continue with the contractor where they left off with the client; and some clients believe that through the novation of their own designers they (in effect) have an independent voice in respect of the contractor’s subsequent design intentions;
- cost certainty. It is generally the case that, as the contractor can use his experience and expertise in providing a design that allows him to buy goods and services which allows him to obtain the best buying margins, the design and build procurement route can be more cost effective and can provide more cost certainty – provided, of course, that the client does not continually change the brief;
- there is less client management/consultant involvement required post contract, and this therefore results in lower management costs and lower consultants’ fees;
- unless a contract states otherwise, the law implies a duty of fitness for purposes on a design and build contractor. This is more onerous than the normal duty of ‘reasonable skill and care’ imposed on a design consultant. Of course, often the contract does state otherwise, and the contractor’s design obligation is limited to a duty of reasonable skill and care. One of the reasons for this is that most professional indemnity insurance policies do not cover for a fitness for purpose obligation.
There are always negatives to any delivery method. Some of the disadvantages of the ‘design and build’ procurement approach are as follows:
- the initial price may be higher as the contractor may build into his price a ‘risk premium’;
- post-contract variations can be more expensive, and it is often more difficult to monitor the additional charges raised (particularly where works are priced on the basis of a specification and drawings – for example);
- the client has less control and influence over design matters;
- inflexibility. There is only limited scope for the client to make changes to his requirements once the client’s requirements and contractor’s proposals have been agreed otherwise the cost consequences may be prohibitive. If the client does not have a firm and robust set of client’s requirements he may be given a design that he did not want, or may be required to pay considerably more to obtain the design that he did require;
- there may be a conflict between the client’s requirements and the contractor’s proposals unless both documents are carefully checked. This conflict can be obviated by making it clear in the contract which document takes precedence;
- design quality. Because it is often perceived that the contractor is driven by price rather than by design standards, it is often considered that the design and build procurement route is not the appropriate route to use where a high quality design is required, unless a robust specification is included within the client’s requirements;
- the question of the quality achieved can be an issue because of the lack of control that the client has over the architect. The architect acts for the contractor not for the client;
- the lack of independence of the architect. If the client wishes to take independent advice on design issues following the building contract being entered into, the client will have to pay additional fees.
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