Pros & Cons of Design/Build Construction Contracts, by Corinne Maddox, CCM, CFM
Design/Build is a good construction delivery method for companies to consider who have very
tight budgets and schedules, and who prefer a more "turn-key" project management approach. It
is not the best option when architectural design and building quality are a priority, nor if the owner
wants to actively participate in design decisions and details. Design/Build means that one entity
(usually the construction contractor) is responsible for both the design and construction of a
building project. The primary benefit is that the owner can lock in the building cost prior to any
capital outlay; however, there are numerous hybrid methods of executing this type of contract.
The owner pays a fixed price no matter what the project costs to build, and he only has one point
of contact. The contractor is responsible for hiring the architect and guiding the design to keep
costs as low as possible while holding to the design criteria outlined in the contract. Another
advantage to Design/Build is that the contractor can build with limited design documents, which
can expedite the schedule and reduce design costs, but can add risk. Design/Build can be done
on a cost-plus-fee basis, where the contractor fee is added to the project cost; however, this does
not provide the same incentive to keep costs low and requires competitive subcontractor bidding
or a third-party cost estimator to establish a fair contract cost.
The biggest challenge of Design/Build is developing thorough contractual design criteria. The
design criteria must be outlined in detail to include every element of the sitework, building and
interior construction. When reviewing the proposals, look for limits and exceptions to the work of
the contractor. If contractual terms and conditions are not properly written and if the project scope
changes in any way, the owner may be liable for extra costs. The contractor is likely to provide
the cheapest possible solution, so if the design criteria are incomplete, the owner may end up
with a building that does not meet his quality expectations.