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.