Procurement through Design and Build

Procurement through Design and Build

Normally a contractor is selected, in competition to execute a project under the Design and Build option. Tenders are invited on the basis of an Employer’s Requirements document prepared normally by the Employer in consultation with his design team. The Employers Requirements set out the project needs in terms specification, function and performance of the building required and if applicable will also define planning and any other restrictions.

The Contractor responds with a set of Contractor’s Proposals upon which the tender bids are assessed. Assuming the Contractors Proposals fulfil the Employer’s Requirements, the lowest bid is often accepted, but this may not be the case because subjective consideration of the overall design and quality of the proposals may be considered more important than cost alone.

In many cases and particularly where a project is of a complex nature or facing difficult planning procedures, the Employer often appoints a design team to negotiate planning, prepare preliminary designs and specifications and a detailed design brief which is incorporated into the Employers Requirements before seeking Design and Build proposals from contractors. Employers often refer to this process as Develop then Design and Build, and Contractors refer to it as Design and Dump.

This development of the design ensures the client gets a design that works for him and the risk of the final design and construction works is assumed by the Contractor. In some instances and where the Employer agrees or requires it, the initial design team can be novated to the contractor.

Once appointed the Contractor either commences the works with his own design team or where it is specified in the tender he employs the Employers design team through novation agreements between the design consultants, Employer and Contractor. Novation Agreements are discussed in greater detail in another MALCONLAW Article.

The Employer normally retains his quantity surveyor to act as his representative This person is assumed to be non-technical and could be the only named party apart from the Contractor and as there is no quantity surveyor included in the Contract Form it is therefore logical for the Employer to retain his quantity surveyor to protect his interests and to act as his representative.

Currently apart from FIDIC Standard Forms the PWD DB Standard Form of Contract is the only dedicated design and build Standard Form of Contract developed for the domestic Malaysian construction market. This standard form is for Government projects but has been amended for use by private clients. Under the PWD DB Form there is no requirement for novation of the design team which is employed under the Contractor.

The PWD DB Form of Contract or FIDIC Yellow Book is suitable where the Employer requires a firm lump sum price and where the required standards and quality can be easily defined in the Employers Requirements before tenders are sought.

For more control over quality and cost, this procurement route can be used in a Develop then Design and Build form where a private Employers design team initially negotiates and obtains planning permission, prepares outline designs, specifications and a detailed brief for the Employer’s Requirements, particularly where more complex buildings are required under this procurement method.  In some instances the Employer’s design team is required to be novated to the Contractor after award of the Contract.

Advantages of adopting Design and Build are:

It provides single point responsibility.

A fixed lump sum price is established at onset, subject only to any Employer changes.

Variations are normally pre-agreed and the Employer has the opportunity to instruct or otherwise, knowing the full consequences in terms of cost and time.

The Contractor is responsible for organising and programming the design team’s activities. The Employer is therefore not responsible for extensions of time in the event that design information is not produced on time or similar events.

Generally the risk for unforeseen circumstances are the responsibility of the Contractor.

The Disadvantages of Design and Build are:

It provides the client with arguably a less sophisticated building in terms of design detailing than would be the case with other forms of procurement.

It gives less control over the work in total and of the costs of any variations required.

It can be difficult in certain instances to precisely define the standards and quality of design required.

A higher contract value than would otherwise be the case results as a result of the risks imposed on the Contractor.