Design-Build (Firm Fixed Price) – A Brief Overview
- Integrated design and construction contract
- Typically, best-value procurement
- Price is fixed at the procurement stage based on the information known at that time
- Design-Builder takes responsibility and risk for delivering the project according to the Owner-defined requirements and specifications
- Design-Builder responsible for design errors and omissions
- Design-Builder self-performs part of the scope and procures subcontractors to perform remaining scope
Design-Build – Advantages and What it Does Well
- Typically utilizes best value evaluation rather than low bid, allowing for evaluation of qualifications and approach, in addition to price
- Transfers the risk of the design and construction interface to the contractor
- Provides greater opportunities for the contractor to accelerate schedule by optimizing the design and construction schedule
- Pricing is obtained in a competitive environment
- More detailed technical approach submitted in response to the RFP, allowing for more substantive evaluation of the technical/design proposal before selection
Design-Build – Challenges and Lessons Learned
- Reduces Owner control of the design
- The full pricing for the design and construction of the project is obtained as part of the procurement and early in the design process, when:
- Design is still at an early stage of development (typically, 15-30%)
- Risks have not been fully evaluated and there remain a high degree of unknowns
- There may still be some uncertainty with respect to Owner-retained risks. For example, the Owner may have to commit to site access dates to allow the proposers to develop the schedule and price for the full project before the Owner has obtained all the necessary property rights. As a result, this may increase risk contingencies in the pricing obtained from proposers and/or lead to high-cost changes/claims following contract award
- Limited opportunities for flexibility to adjust to changes impacting the project
- As the design-builder, the contractor is not focused on lifecycle cost, long-term maintainability and asset renewal. It is up to the Owner to prescribe the design criteria and construction requirements to meet their lifecycle cost and long-term operation and maintenance objectives
Design-Build – Summary: When to Use this Delivery Method
Fixed-price Design-Build offers the greatest benefit to project delivery when:
- The Owner is seeking an outcome and is willing (and able) to rely on performance / outcome-based specifications, allowing sufficient scope for the contractor to bring design innovations
- The Owner has established project readiness at the time of the procurement and therefore able to stand behind any Owner commitments and Owner-retained risks
- There is a low likelihood of material change to the project scope
- Proprietary or complex design elements where integration of design and construction scope is beneficial but where the design is not reliant on an interface outside of the contractor's control or such a high degree of complexity that it is not possible to price with any certainty at the procurement stage
- Schedule is a key objective for the Owner and opportunities for schedule optimization by the contractor is beneficial
Explore Design-Build in more depth
Members will soon gain access to detailed statutes, federal requirements, project case studies, and market insights on fixed-price Design-Build.
Legal Disclaimer: The information included in this Online Resource Center is summary information provided as an introduction to the delivery methods referenced. It does not constitute legal advice and is not intended to provide a comprehensive review of the delivery methods nor the related law and practice, nor is it intended to cover all aspects of each delivery method referred to. Please take legal advice before applying anything contained in these materials to specific issues or transactions. If you are a member and would like more information, please reach out to CALINFRA to enquire about scheduling a training session.