{"id":898394,"date":"2021-01-13T14:33:01","date_gmt":"2021-01-13T21:33:01","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=898394"},"modified":"2021-01-13T14:33:06","modified_gmt":"2021-01-13T21:33:06","slug":"design-build-contracts","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/design-build-contracts\/","title":{"rendered":"The Name of the Game in Design-Build Contracts? Document, Document, Document!"},"content":{"rendered":"\n

Michael McKenna and Timothy Ryan | Cohen Seglias Pallas Greenhall & Furman<\/a><\/p>\n\n\n\n

Design-build contracts<\/a> (and their lesser utilized counterpart\u2014engineering, procurement, and construction (EPC) contracts) are prevalent in the construction industry. Though far from a new contractual relationship, design-build contracts are increasingly chosen by owners in an attempt to reduce risks and costs. The design-build model differs from the \u201ctraditional\u201d design-bid-build model in that, with the traditional model, an owner is often very involved in both the initial design of the project and design decisions during the course of construction. An owner is given the opportunity during the design-bid-build process to tweak the design so that it truly becomes what they want. Design issues based on incorrect original assumptions can be worked out with revisions to the design prior to putting it out to bid. Further, in the traditional model, a design professional is generally retained by an owner and serves as the owner\u2019s representative throughout the duration of a project.<\/p>\n\n\n\n

In a design-build contract, on the other hand, the process is \u201cstreamlined.\u201d At some point, the contractor becomes responsible for both the design and construction of a project. There is no doubt that the owner buys themselves a single point of contact. However, in exchange for that single point of contact and \u201cfixed\u201d price, the owner forgoes the ongoing customization options available in the traditional model. In design-build, once a project goes \u201chard dollar\u201d (i.e.<\/em>, the owner and the contractor come to a financial agreement), the owner is relegated to a far lesser role, limited to reviewing the contractor\u2019s design documents to see if they meet the technical specifications prior to the start of construction. When the owner and contractor are on the same page with regards to obligations and expectations (and the contract is clearly drafted), the design-build model is a mutually beneficial endeavor. Unfortunately, oftentimes owners blur the lines by cherry-picking the most attractive aspects of each model: a single, guaranteed cost of construction (design-build) while simultaneously desiring to maintain a high level of involvement and implement mid-design\/construct changes (traditional model). When an owner begins to blur the lines and overstep their authority, it is imperative for the contractor to document these oversteps because the owner\u2019s actions may constitute a change in the design-build contract warranting additional compensation.<\/p>\n\n\n\n

In the Armed Services Board of Contract Appeals (the Board) decision, RBC Construction Corp.<\/em>, the owner of the project required the contractor to provide additional information concerning the proposed design of an underground fire cistern as part of the design review process. Within its contract, RBC Construction was permitted to proceed with construction only upon the owner\u2019s approval of the initial \u201cfast track\u201d design submittals for each construction phase. The primary issue was that the underground fire cistern designs were not a required part of the \u201cfast track\u201d submissions, but instead in the later \u201cinterim design package.\u201d Though the Board held that the owner\u2019s actions were reasonable (in light of the risks associated with installing an unground cistern), it also held that the owner\u2019s insistence on receiving the fire cistern design at an earlier point in time interfered with the contractor\u2019s work. This was because, in the interim, while the owner was demanding the fire cistern designs, the owner\u2019s designer would not approve the contractor\u2019s \u201cfast track\u201d submittals. Thus, the contractor could not proceed with construction resulting in time impacts and related costs.<\/p>\n\n\n\n

The Board\u2019s holding in RBC Construction Corp.<\/em> demonstrates why it is important to document project issues with written records. In this instance, the contractor found itself negatively impacted and losing both time and costs due to an overzealous owner. With its thorough and contemporaneous documentation, RBC Construction persuaded the Board that the owner\u2019s active and excessive involvement constituted a constructive change to the contract.<\/p>\n\n\n\n

When working on a design-build project, proper written and contemporaneous documentation is vital to ensuring the parties\u2019 contractual obligations are adhered to and that the owner does not overstep their authority and role. There is a surprisingly low number of court decisions addressing design-build contracts. As a result, as played out in RBC Construction Corp.<\/em>, courts generally defer to the language of a contract and require the parties to abide by the contractual language. This puts contractors in a financially dangerous position when an owner starts unilaterally making design and\/or construction changes while refusing to pay for those changes. These owners commonly point to the language whereby the cost of construction is \u201cfixed,\u201d and the contractor is responsible for the changes. RBC Construction Corp.<\/em> demonstrates this is simply not true. Once a contractor\u2019s design is approved and the project goes to \u201chard dollar,\u201d changes requested by the owner require compensation. RBC Construction Corp.<\/em> also shows how important it is to document these change requests, as it is a contractor\u2019s burden to demonstrate how the requests changed the design-build contract and impacted time and money.<\/p>\n","protected":false},"excerpt":{"rendered":"

Michael McKenna and Timothy Ryan | Cohen Seglias Pallas Greenhall & Furman Design-build contracts (and their lesser utilized counterpart\u2014engineering, procurement, and construction (EPC) contracts) are prevalent in the construction industry. Though far from a new contractual relationship, design-build contracts are increasingly chosen by owners in an attempt to reduce risks and costs. The design-build model… Continue reading The Name of the Game in Design-Build Contracts? Document, Document, Document!<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[14],"tags":[9895,12,224,10633],"class_list":["post-898394","post","type-post","status-publish","format-standard","hentry","category-construction-2","tag-advise-consult","tag-construction","tag-construction-contract","tag-design-build-projects","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nThe Name of the Game in Design-Build Contracts? 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