The contractor is hired to design and build the project in the design and build contract/procurement technique. Consultants are hired to design the project, and the contractor is hired to execute it like most other procurement techniques. In this procurement technique, however, the contractor will complete all design work for the client.
Government and semi-government bodies primarily use this procurement approach for renovation and refurbishment projects.
Advantages of Design and Build Procurement
Project Cost Savings
Design & Build eliminates the need for different parties to cooperate on the same project by allowing expenses to be agreed upon from the start under a single Design & Build supplier.
This results in a more simplified and efficient management style, which lowers the project’s overall expenses. Due to the availability of more field data from the main contractor and the early discovery and correction of design mistakes or omissions that may have surfaced during the building phase, rework is reduced.
Mitigated Risk to the Client
Every undertaking involves some level of risk. Design & Build has the advantage of tying the consultant and contractor to a single contract. Because the consultant and contractor bear a substantial percentage of the project’s risk, collaboration is essential throughout the project to guarantee that errors are minimized and rework is kept to a minimum. Any design concerns will be the responsibility of the Design & Build contractor rather than the client.
Working as a cohesive team can only lead to positive outcomes and eliminates avoidable conflict and arguments between the MEP contractor and the Design & Build team (in a traditional project this would be channelled through the client). Instead than attempting to assign blame for project issues, the teams collaborate to find solutions.
Client satisfaction leads to increased business for both the consultant and the contractor, and once the contractor and consultant are on the same page in terms of work styles and project teams, there is less time spent resolving issues. This results in lower costs for the main contractor/client and the convenience of a single point of contact for install and design questions for the main contractor.
Once a relationship between the MEP contractor and the consultant has been established, the main contractor will be willing to introduce the MEP consultant to their client base and vice versa. This coordinated approach between the MEP consultant and the MEP contractor leads to repeat and, more importantly, referral business.
Disadvantages of Design and Build Procurement
The owner has complete control over the details of the plans and Specifications under traditional design-bid-build, and does not publish them for bids until it is satisfied that they reflect its Requirements, including functional and aesthetic preferences.
The owner relinquishes some control when using design-build, advancing the design level through the design development stage (30% or more) before awarding the design-build contract.
Of course, by doing so, the owner may forfeit some of the design-build benefits.
Need for Earlier Requirements Definition
The owner must lock in its requirements considerably earlier with design-build. If the owner is unsure about his or her functional or aesthetic requirements, he or she can clarify them throughout the design phase after seeing where the designer is going.
Post-award programming adjustments can be costly and disruptive with design-bid-build.
Compliance with Subcontractors
Bidders must list their subcontractors with their bids under the Subletting and Subcontracting Fair Practices Act. For a design-build bidder, this can be a problem. Subcontractors cannot accurately do construction cost estimation without thorough design drawings.
However, designating a subcontractor without a firm subcontract price disadvantages the design-build contractor when it comes to pricing the subcontract work later.
The main design-build contractor is over the barrel because of a named subcontractor. Because a subcontractor can only gouge the design-build company once, this is a manageable concern for a design-build contractor with lots of the same type of projects in an area.
Parking garages and housing projects are good examples of design-build projects where the design-build entity works with a number of subcontractors on a regular basis and the subcontractors can estimate their work on a per-space or per-square-foot basis.
For subcontracts not mentioned in the prime proposal, the design-build contractor must seek competitive bids. The issue with this strategy is that it is predicated on certain legislative authorizations that do not apply to the country.
As a result, the safest option may be to mandate subcontractor naming at the time of bid, even though this may result in some contingency and mark-up from either the subcontractors or the prime design-build organization.
In most cases, a payment bond is necessary, which must be paid according to the contract’s provisions.
Must the payment bond be in the whole amount of the design-build contract or simply in the amount of the Construction part when the design services and construction are obtained under a single contract? Logic would suggest that 100% of the construction section would satisfy the statute’s goal.