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Design-Build

Cost/Design Competition. A variant of pure cost competition incorporates rational, quantitative evaluation of design into the selection process. Designs are evaluated and ranked, and a formula which combines cost and design quality is used to determine the superior proposal.

What Types of contracts Are Used?

Single Responsibility inherently affords a high degree of flexibility. A variety of contract formats have been developed to permit tailoring a design-construct program which satisfies the client's and contractor's needs. Generally, the parties enter into a multi-phase agreement and initial design proceeds at a nominal fee. When firm construction costs are determined and the parties are in agreement, additional phases covering detailed and actual construction are then added utilizing one of the contract formats below:

Fixed Fee-Guaranteed Maximum. The contractor and owner agree upon a fee for the contractor's overhead and profit, and the contractor develops upset maximum cost for the work. The contract provides for a sharing of any savings between the parties, and protects the owner against cost in excess of stipulated maximum.

Lump Sum. The contractor, resulting from negotiation or competitive bids, provides a stipulated lump sum amount for design and construction of the entire project. All risks and rewards as to project cost accrue to the contractor.

Cost-Plus. Certain types of construction projects do not lend themselves to accurate advance cost estimates. Therefore, the owner and contractor agree upon the design fee and contractors fee for overhead and profit and commence work under a cost-plus agreement. Under some circumstances, the cost-plus agreement is converted to a guaranteed maximum when scope and cost are better determinable.

Design-Construct-Leaseback. Additionally, many Single Responsibility contractors are able to provide design-construct-lease packages to clients wishing to lease rather than own their facilities. The selection process can be identical to the normal design-construct approach.

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