Design and Build Projects - Procurement Series 1

Nowadays design and build contracts are used for major projects, where the believe that the cost can be more controllable and predictable is widespread. Nevertheless, the practice usually shows that design-build projects do require comprehensive contract administration. Theoretically, the design-build projects have single point of liability, however, there are four points to be considered.  

- Tender prices are not easy to assess, as they might have been produced for a different design, and are not easy to compare.

- It’s not easy to accept that there will be cases of inferior design and poor site workmanship, which are not excluded from the project. 

- Having thorough contract administration on-site to handle all design and construction records against the working schedule can be demanding. 

- It appears that the actual procurement is the riskiest part of the whole project 

Lack of thorough contract administration could cost millions to parties to solve claims and disputes. Sometimes parties cannot judge whom and what needs to be paid, due to contract ambiguity. For example; ‘’Skanska v Egger 22, in which HH Judge Wilcox’’1 reflected that there is no clarity what is in the original contract and what was the requested design alteration 

Sometime the employer might not have access to the contractor working pattern, which makes it even more difficult to justify claims. In the same light, the employee may wish to employ several specialised contractors for coordinating the work performance. The main point in this procurement method is that the employer should take reasonable care of the contractors against delays and disruptions clashed with other contractors at sites. The employer should take sensible approach to issue proper working pattern and schedules with change orders by the contract. The breach of the same might trigger another delay with the main contractor, which has an adequate magnitude to justify the delay. As a result, the contractor cannot fulfil their responsibilities under the contract, and might seek damages under the employer’s obligation.  

As the liquidated damages are usually part of the contract, the risk behind might be that the contractor might not stand behind the employer’s potential loss in the event of delays. 

Of course, there are always some advantages and disadvantages related to a particular method of procurement.

On disadvantage level:

- Quite big involvement of employer in the whole process, on an administrative and tactical level

- Coordination of various tasks and overlapping works

- Distribution of liability in delays and project disruptions, as well as sanctions assessment 

On advantage level:

- Increased sustainability in overlapping the design and construction phases, reduced overall time for the project 

- Flexible approach to progress with working schedules 

- Reduced risk of insolvency of the main contractor

- Promoted a high degree of cooperation due to direct contact between parties 

Besides, cooperation and collaboration between parties are always key to success. Prolonging the project over the completion date due to bad or incomplete design has nothing to do with a choice of procurement method, but better communication is needed. Due to a lack of the latter, the combination of requirements is always to be incompatible. 

Veselin Shivachev 

Vedera Consulting


+44 (0) 2381941164


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