#97 – DESIGN AND BUILD CONTRACTS – OPPORTUNISM OR RISK TRANSFER – MALCOLM PEART

Malcom Peart pixOne of the many purported advantages for adopting a Design & Build (D&B) procurement model is that it allows the Contractor the opportunity to carry out design and construction concurrently thereby ‘gaining’ time when compared against a Design-Bid-Build procurement model.

As part of the D&B procurement process an Employer normally provides a concept or initial design and a set of requirements that may include design criteria or constraints.  As these requirements form the basis of the design component of the Contract the Contractor should be in a position to carry out the design and develop the design accordingly.  One may assume that there would be minimal intervention by the Employer or his Consultant (often Engineer under Contract) insofar as he has, or should have, written a comprehensive brief.

Great in theory…but how often does an Employer engage Consultants to administer the D&B Contract who may, or may not, have crafted the contract and, in particular, the design requirements?  And how often does the Contractor consult the Consultant early on in the design to ‘ensure’ that he, as Contractor, is on the right track?  Several similar questions may be posed but the underlying question is, “by asking for the opinion of the Employer (or his Consultant) is the Contractor denying himself the opportunity to establish a ‘design baseline’ based upon the Contract”?

If there is a need for clarifications with respect to ambiguities, or meaning, the Contractor has opportunities under the rules of expressio unius est exclusio alterius (i.e. the inclusion of the one is the exclusion of the other) or contra proferentem (interpretation against the draughtsman) and need only pose the query.  However, and in the initial ‘wild enthusiasm’ phase of a contract such opportunities for variation may be lost in the informality of the ‘design workshops’ and ‘getting on with design’ that fall under this honeymoon period.  The Contractor needs also to be mindful that any ‘change’ to requirements as a result of ‘getting on with it’ may well haunt him when he is asked to justify why ‘he’ changed things!

While ‘developing the design (requirements)’ any proposals made as part of the design can be deemed to be ‘design development’ and to the Contractor’s account.  However, and very differently, the exercise of ‘developing a design’ to give the Employer the opportunity to consider alternatives (as he has changed his mind), or requires preferential engineering are really variations.  Such ‘Employer input’ may be seen as helping the design along.  However this input can detract from the Contract and oftentimes results in the design being delayed, costing more, and delaying construction.

Consider a Design-Bid-Build contract: it is unlikely that an Employer will specify the method of construction or any construction constraints after any Contract has been awarded.  However under a D&B Contract the Employer (or his Consultant) will often have few qualms as to being ‘included’ in the design process and ‘contribute’ to the design.  Unless a ‘baseline’ design that complies with the Contract is established the Contractor runs a real risk of additional design costs and subsequent construction delays.

The D&B Contractor must be aware that the opportunity for claims for additional time and cost as a result of preferential engineering, optioneering and creeping scope can so quickly be lost when the ‘known risk of ‘design development’ at tender becomes the execution phase ‘unknown risk’ of ‘developing a design’.

Bio:

MBA, MSc DIC, BSc; Chartered Engineer, Chartered Geologist, PMP

Over thirty years’ experience on large multidisciplinary infrastructure projects including rail, metro systems, airports, roads, marine works and reclamation, hydropower, tunnels and underground excavations.

Project management; design & construction management; and contract administrative in all project phases from feasibility, planning & design, procurement, implementation, execution and completion on Engineer’s Design and Design & Build schemes.

 

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