The expanded use of the design/build method of construction procurement reflects a widespread belief that it offers significant advantages to the project owner. With a single source of responsibility for both design and construction, there is less of the reciprocal finger pointing common in the more traditional design/bid/construct format. Public project owners in particular are convinced that the design/build method reduces claims during the construction phase.
Design/build presents a different allocation of risk, however. This is illustrated in a standard federal contract clause used in soliciting fixed-price bids for design and construction. The contractor’s proposal is incorporated into the contract, but only to the extent the proposal meets or exceeds the government’s project description and design requirements. If the proposal fails to meet the requirements, the contractor must upgrade the project at no additional cost to the government. But if the proposal exceeds the requirements, the contractor must honor both its proposal and its fixed price. From the government’s standpoint, it’s “heads I win, tails you lose.”
I welcome your comments on design/build contracting. Do you feel the allocation of risk and responsibility is appropriate? Or does the allocation favor the project owner and expand the cost risk of contractors? If the solicitation contained sufficient design detail to insist on upgrading even minor aspects of the project, why didn’t the owner just put that design out to bid?
Featured in next week's Construction Claims Advisor:
- Delay Disclaimer Not Enforced – Contractors Recover for Lost Productivity
- Contractor Forced to Comply with Specified Dewatering Method
- Agency Did Not Waive Order Limitation Clause in Requirements Contract
Bruce Jervis, Editor
Construction Claims Advisor