DESIGN-BUILD CONSTRUCTION CONTRACTING

"Design-build" construction contracting is really not new at all. For the most part, major projects of long ago embraced the design work and the construction activities all being done together. However, some time ago, design work began to be done by professional architects and engineers who have come to play very important roles within the construction industry.

Along with the growth of design professionals has been a large body of law establishing responsibilities and liabilities of design professionals. Perhaps the only "good news" on this front is the availability of professional liability insurance to defend and protect design professionals. Design professionals today are generally regarded as having a very high degree of visibility, and an equally high degree of liability.

Besides the traditional duties of the design professional, their tasks have expanded to include monitoring the schedule and state of completion, and approving payment requests. One of the most difficult assignments confronting design professionals is to make fair and impartial decisions regarding "claims and disputes" between owners and contractors. This three-party arrangement is at the heart of most of the traditional construction projects.

Recently, however, "design-build" contracting has emerged anew wherein the owner looks entirely to one entity hired by contract to do all functions normally provided by the previously independent design professional and all of the construction as well. Further, there have been efforts made in recent years by various public agencies to do either "pure" design-build contracting or to use some variation thereof, which at least in New Jersey has come to be known as "modified design-build" procurement.

The majority of construction work, both public and private, being done today is still proceeding under the traditional three-party arrangement where the owner retains the design professional, who in turn completes the design package which is then offered for bid quotations, ultimately ending up with the construction contractor being hired by the owner under separate contract. However, in a variety of private projects done in the past few years the owner has hired under one agreement a combination of design professionals and a construction contractor (or a construction manager). Most of these private projects appear to have gone well since there are virtually no reports available concerning unsuccessful private design-build jobs.

Some public agencies in New Jersey, among other states, have experimented with design-build contracting, although in New Jersey most have included more than a minor amount of the basic design work already done by design professionals hired in advance by the public owners. The limited experience to date with public projects in New Jersey does not provide a meaningful basis to judge the overall worthiness of proceeding on some kind of design-build basis. Some of the good parts of this kind of contracting is a shorter time frame for the overall project and the design work is competitively bid with the traditional construction activity.

There are some good reasons for everyone to worry about whether design-build contracting will really turn out to be a benefit to those involved. For example, owners may hold designers to the more traditional standards of submission, review, revise and resubmit, etc, all of which quickly starts to eat up the overall project time schedule. Such a situation can quickly put the designer and his construction contractor partner at odds with each other, and the dollar consequences of such unanticipated delays in the overall project plan can grow. Further, entitlement to change orders, claims for unanticipated differing site conditions and alike become difficult issues where the owner claims that the design-builder has 100% responsibility for project completion and no additional payment.

It is hard to use legal concepts which have grown out of the traditional design-bid-build history to predict how disputes arising within the design-build framework will come out. Proceed with great care, paying the most careful attention to the proposed arrangements between the owner and design-builder on the one hand and the contractual relationship to be established between the designer and the builder on the other hand. Design-build contracting may work well for some projects where a knowledgeable owner hires a competent design-build team. However, "look before you leap and then leap with great care."