Design and Build Procurement: Cutting Through the Misconceptions

Simon Millman
Design and Build contracts have been used for several decades outside of the UAE, but are not commonly practised in the Middle East at present.

How long has design and build procurement route been practised?

Design and build contracts have been used for several decades outside of the United Arab Emirates (UAE), but are not commonly practised in the Middle East at present. The International Federation of Consulting Engineers (FIDIC), Joint Contracts Tribunal (JCT) and New Engineering Contract (NEC) contract suites have specific design and build options that can be modified to support this type of procurement entirely or by way of partial design liability being passed to contractors.

The basic approach to procuring a design and build contractor

Stage 1 - The employer (client) appoints a design team to develop the design and specification, known as employer’s requirement. This is usually to at least concept or RIBA Stage C, but can be further developed as required.

Stage 2 – The employer tenders their employer’s requirements and the contractor offers a lump sum which includes a fee for completing the design. The contractor may also respond to the Employer’s Requirements (ERs) with their Contractors Proposals (CPs) or alternatively confirm that their CPs are as the ERs. Alternatively, at the tender stage the employer may also request that the contractor continues to employ their design team to complete the design if they wish, novating the design team to the contractor by agreement.

Stage 3 – the contractor completes the design and construction for the lump sum offered in Stage 2. 

What are the advantages of design and build to employers?

No procurement route offers a solution to all issues: it is always a compromise. All procurement routes have advantages and disadvantages, and these are some of the benefits that design and build can offer:

  • Construction can start earlier, reducing the overall project delivery time - from inception to completion
  • A lump sum can be obtained before the design is complete
  • The employer only has one organisation to deal with - one point of responsibility once the design and build contract is awarded
  • The employer can engage with the contractor and their specialists sub-contractors and suppliers early in the design process to get a more practical build-able solution
  • The possibility of reducing overall costs as contractors may be able to design specialist elements at a lower cost than professional consultants  
  • The ability to adopt a two stage procurement approach
  • The ability to novate the design team to the design and build contractor

What potential disadvantages should employers be aware of?

  • If the specification is too open to interpretation, the contractor may exploit this to their advantage, proposing specifications for products that are the lowest grade possible to achieve the basic requirements in the specification
  • Tender returns may be difficult to compare if an inadequate pricing document is not included with the tender documents
  • The employer may pay more if they ask the contractor to take on an unreasonably high level of risk due to a lack of design clarity at the point of tendering
  • The quality may be compromised if the employer’s requirements do not protect the employer adequately by way of ensuring specifications are adhered to

On which projects is design and build an option?

This procurement route can work successfully in almost any type of new build project. Faithful+Gould has delivered projects in these sectors:

  • Residential
  • Commercial office (new build and Cat A / B fit out)
  • Hotel and leisure
  • Pharmaceutical
  • Industrial

Some applications are less suited to this type of procurement. For example, where complex projects require cost certainty prior to tendering.

Frequently Asked Questions

Will my building be of a lower quality than traditional full design?

Design and build should definitely not be seen as a route that brings lower quality. The quality of any finished building is not attributable to any one factor. When projects suffer from low quality, we have to take in to account other influential factors. The key to understanding this type of procurement is to stop thinking that design and build opens up the doors for contractors to deliver an inferior building.

The key to understanding this type of procurement is to stop thinking that design and build opens up the doors for contractors to deliver an inferior building.

What can employers do to make design and build work to their advantage?

One of the key ways of ensuring buildings are delivered for the best value for money and are finished to a satisfactory level of quality is to ensure that the design is focused and developed in the areas that are important to the employer. In addition it is critical that the employer’s requirements are written in a way that protects the employer. There is often no value to an employer paying for a full design if a contractor can design some of the elements more efficiently.

If I chose this route does it mean less control?

Absolutely not - less control is another misunderstanding. The employer has just as much control to make decisions and changes along the design and build procurement route as with traditional procurement. Of course adequate control mechanisms should be put into place to ensure this is possible, like a robust pricing document. I would usually advocate using the scheme design cost plan as the pricing document. From the employer’s perspective this acts in the same way as a detailed bill of quantities (BOQ) but costs much less to produce.

The employer has just as much control to make decisions and changes along the design and build procurement route as with traditional procurement.

Like any contract - not just construction - ambiguity leads to problems and disputes. Successful design and build contracts will succeed if the employer’s requirements are clear and unambiguous.

For success, the contractor should be given the scope to use their expertise where you want them to. This may be in areas that are performance rather than aesthetically driven. In areas that are aesthetically important, the design and specification should be developed prior to contractor appointment, to a level that removes any scope for ambiguity.

Summary

In the Middle East, true design and build procurement may require a better understanding of the advantages for employers; before they accept this as usual practice.

It is interesting to note that, in the Middle East, most projects are procured traditionally under the FIDIC Red Book, with a full design. However employers may well miss out on the advantages of a full design, as elements of design liability are regularly passed onto the contractor to complete the design, post award.

It would therefore appear from a design perspective, that many employer’s requirement documents reach tender stage incomplete to some extent, So employers may unknowingly be involved in a project that has elements of ’contractor design’ already.

Perhaps once this is understood more widely, employers may conclude that true design and build is not such a big step after all.

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