Design Build Contract – Definition

Cite this article as:"Design Build Contract – Definition," in The Business Professor, updated November 24, 2018, last accessed October 20, 2020, https://thebusinessprofessor.com/lesson/design-build-contract-explained/.

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Design-build Contract Definition

It is a type of contract used in the construction industry where design and construction services are done by a single entity. The project owner signs a single agreement with a contractor who is responsible for both the design and the construction.

A Little More on What is a Design Build Contract

Traditionally, the owner used to sign two separate contracts, one for designing part and another for construction. This may often lead to many complications including the adversarial relationship between the designer and the contractor. It lengthens the project delivery process and often poses challenges, especially in unforeseen situations. During the construction phase, if a change in design becomes necessary for the successful execution, the designer and the contractor often get involved in a blame game. That can even lead to litigation and delay in delivery.
In design-build-contract one single contractor is responsible for the whole project, right from its design phase until the completion of the project. It reduces the risk factors for the owner and the overall costs of the project. The owner can approach one single entity for all the issues related to the project and the problem solving becomes easier and fast. Nowadays, it is a popular practice in the construction industry and is followed in many countries in the world.

References for Design Build Contracts

Academic Research on Design-build Contracts

Preparing for designbuild projects: A primer for owners, engineers, and contractors, Gransberg, D. D., Koch, J. E., & Molennar, K. R. (2006, May). American Society of Civil Engineers. According to this research paper, the design-build contract which was prepared for the design-build project as a primer for owners, contractors, and engineers were exclusively explained in this paper.

Design-build contract award methods for transportation projects, Gransberg, D. D., & Senadheera, S. P. (1999). Journal of Transportation Engineering, 125(6), 565-567. This research paper gives a nationwide survey of the state Department of Transportation which estimate that 15 states are making use of the design-build to get highway construction projects. This paper, however, studied the method adopted by these states and the analysis draw from the study yielded three different systems (low bid design-build, best value design-build, and the adjusted score design-build) which were used to award and advertise the design-build highway project. The strengths of these three systems were compared in this research paper and the conclusion drawn after this examination is that each method possesses a valid system which can be used to get highway construction projects and can also be matched with various project characteristics for effective optimization.

Comparing procurement methods for designbuild projects, El Wardani, M. A., Messner, J. I., & Horman, M. J. (2006). Journal of construction engineering and management, 132(3), 230-238. According to this paper, an important issue which is associated with the design-build delivery termed as a procurement method used in selecting the design-build team was discussed. This paper emphasized the importance of the careful selection of the design-build workers as it is termed as a very sensitive position that needs extra hand and technicality. Hence, several key project team members are said to be readily available and these key members include the owner, contractor organization, and the designers. This study also measures and analyses the correlation and relationship between the performance of the design-build project and the design-build procurement method with regard to the costs, quality metrics and time. This paper also suggests several guidelines to assist owners in selecting the sign-build team.

Contractor selection for design/build projects, Palaneeswaran, E., & Kumaraswamy, M. M. (2000). Journal of construction engineering and management, 126(5), 331-339. According to this paper, several traditional procurement processes are found to be insufficient in meeting the challenges and demands of recent times. Hence, this paper provides the panacea to this problem. The main focus of this paper is aimed at the development of a model basically for contractor prequalification and the evaluation of their bids in building/design projects. However, a comparative overview was presented as regards the overall aim which is to identify and effectively analyze the most important aspects of selecting/choosing a suitable bidder in other to get the best out of the “value of money” channeled towards the success of the project. This paper also explains some weaknesses and strength of the current practices of most contractors.

Selecting designbuild: Public and private sector owner attitudes, Songer, A. D., & Molenaar, K. R. (1996). Journal of Management in Engineering, 12(6), 47-53. In this paper, the manner and rate at which modern owners are investigating constructed facilities as a variety of the alternative procurement method were tagged as “increasing”. The methods adopted by most modern owners according to this paper include construction management, design-build, and turnkey. This study also explains the result of the research carried out to address the owners’ behavior towards a specific alternative contracting method which is the design-build. Also, this paper identified the primary design-build factors and analyses them. These factors include the establishing schedule, reducing claims, the cost, the size of the project and the complexity.

Risk analysis in fixed-price design-build construction projects, Öztaş, A., & Ökmen, Ö. (2004). Building and environment, 39(2), 229-237. According to this research paper, the design-build was said to have been a very popular contract system in recent years. This system provides several advantages via entailing the contractor and also being responsible for the construction of several projects as well as their designs. This paper, however, ruminates that the design-build system turns out to be very risky for both contractors and owners and unless the risks are identified, evaluated and technically managed, it could jeopardize the whole project which will eventually lead to loss of capital and if not properly tackled could result in loss of life. Hence, the aim of this paper is to explain the risk analysis in fixed-price design-build construction projects.

Public-sector design/build evolution and performance, Molenaar, K. R., Songer, A. D., & Barash, M. (1999). Journal of Management in Engineering, 15(2), 54-62. This paper explains the various problems the design-build project delivery is experiencing. According to the study, the design-build project delivery process is said to be experiencing what is known as the “expansive growth” which is observed in both the public and private sector of the economy. These changes in federal procurement law have made compulsory formalization, development and the investigation of new design-build practices and guidelines. This paper however observed and explains the rapid growth (evolvement) noticed in the public sector and analyzes the result gotten from over 104 completed public sector design-build projects.

Analysis of the owner’s design and construction quality management approaches in design/build projects, Gransberg, D. D., & Molenaar, K. (2004). Journal of management in engineering, 20(4), 162-169. This research paper explores, studied and classified the current approach towards evaluating and estimating the quality in the design-build proposal. The process involved in these evaluations according to this study is via a strict and thorough content analysis of 78 requests for proposal for the public design-build project with a mean contract value of more than 3.0 billion USD which was advertised between 1997 and 2002. According to the traditional design-build system, testing for quality is done via the plans and specification of the project and consideration from the owner because he has the authority to fix the project delivery period. This paper studied 6 owner approaches to carrying out an effective design-build quality testing via their requests for proposal.

Predicting the performance of design-build and design-bid-build projects, Ling, F. Y. Y., Chan, S. L., Chong, E., & Ee, L. P. (2004). Journal of construction engineering and management, 130(1), 75-83. According to this study, the design-build and the design-bid-build are explained as tow independent and principal project delivery system which is used in various developed countries. This paper, however, explains several models which constructed with the sole aim of explaining the concept and performance of the design-build and the design-bid-build project by focusing mainly on 11 areas using the project-specific information (data) gotten from 87 different building projects. Also, this paper explains that vast and robust models are used to predict the delivery and speed and constriction efficiency of the design-build and design-bid-build projects. However, for most design-build projects, if the contract is allowed to fluctuate during the mild evaluation, it could lower the rate at which the project will be delivered which in turn could lead to project termination.

Design-build pre-qualification and tendering approach for public projects, Al-Reshaid, K., & Kartam, N. (2005). International Journal of Project Management, 23(4), 309-320. According to this study, the main reason why the design-build delivery system appears to be the most successful system was explained most especially in the private sector and this is due to its success rate. Most public sector owners according to this paper are hesitant skeptical to adopt the design-build delivery system while the area of the private sector taking the risk and enjoying the outcome. This paper also describes in details the process involved in selecting contracting firms for the design-build project; both the implementation and the methodology used in this process were explained. Hence, this paper focuses on design-build pre-qualification and the tendering approach for public projects.

Use of design/build in E/C industry, Yates, J. K. (1995). Journal of Management in Engineering, 11(6), 33-38. In this paper, the concept of the design-build system was studied as a fragment of the project research that studied trends and drivers that solely affects the United States construction and engineering competitiveness in the next decades. According to the result gathered from this research, the keynotes presentations were summarized and explained in this paper as it helps provide extra information as regards the use of the design-build system for future purposes. This study also explains various issues that were encountered from the research process as regards the further implementation of the design-build processes by the United States construction and engineering firms.

One company’s experience with design/build: labor cost risk and profit potential, Ernzen, J. J., & Schexnayder, C. (2000). Journal of construction engineering and management, 126(1), 10-14. This paper provides information extracted from one construction company’s past jobs as regards the use of the design-build system. It provides an analysis of the company’s labor and cost risk by explaining two similar projects having a case study similar to the design-build process. According to this paper, the design-build experienced a series of consistent fluctuation which is mostly in the labor cost. The reason why these fluctuations occur is to confirm that it is a rather difficult process to estimate the labor cost for design-build projects which in turns add to the risk of such a project. After this process, estimation was carried out as regards the average profit margin of the design-build project. The result gotten from this calculation indicates an average profit margin of 3.5% points greater than the non-design-build project.

 

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