Merits of Design and Construct Contract

Introduction

The ‘Design and Construct’ contract method is generally utilised in medium to large construction projects. The advantages and disadvantages of selecting the ‘Design and Construct’ contract method are outlined below. 

‘Design and Construct’ Contract Method

Under a Design and Construct Contract method, the Contractor will be responsible for the construction of the works and preparation of the design based on a project brief provided by the Principal.  As a result, the Contractor assumes the construction risk and design risk. 

Under this method, a Principal engages design consultants for a limited role, namely to prepare the preliminary design for the project. The consultancy agreements between the design consultants and the Principal will then be novated to the Contractor, which will be responsible for finalising the design.

Construct-Only Method

The Design and Construct Contract method can be contrasted with the ‘Construct-only’ contract method in which the Contractor’s role is limited to the construction of the works.

Pursuant to the a ‘Construct-only’ contract method, a Principal will engage design consultants separately to prepare the design for project. The design is then provided to the Contractor to construct the construction works. 

Advantages and Disadvantages

The advantages and disadvantages of the ‘Design and Construct’ contract method will vary for a Principal and a Contractor.

Principal

The advantages for a Principal are:

(a)   The Contractor assumes both the construction risk and the design risk and is the single point of responsibility.  Accordingly, the Contractor is unable deny liability for defects on the basis that they have been caused by the deign being defective.

(b)   Key design and construction issues can be identified early as buildability issues, which can improve efficiency and reduce costs, including by way of value engineering.

(c)   The Principal provides the design criteria and performance standards to the Contractor early on in the Project in the project brief, which results in a more team oriented approach and time and cost savings.

Contractor

The advantages for a Contractor are:

(a)   Structural issues can be addressed early on in the design process.

(b)   Construction can be fast-tracked ahead of the full design.

(c)   Contractors can charge extra for assuming the design risk subject to the additional cost purchasing professional indemnity insurance coverage for the design.

Conclusion

It is important to select the most suitable contract form of delivery for a project, namely whether a Design and Construct method should be utilised, or alternatively, a Construct-only method.  In doing, consideration should be given to some of the issues outlined above.

To learn more about any of the matters discussed here, or if you require legal assistance, please contact Chris Moshidis, Director and Principal Lawyer on +61 3 9521 7956 or chris@urbanlawyers.com.au.