Procurement Type 2

Design and Build 

The procurement process ‘Design and Build’ is an integrated procurement process, meaning that the design and construction phases can overlap. Differing from the traditional process (described in my last post), the responsibility of the design and the construction lies mainly with the contractor as opposed to the client. The client and the contractor are tied together through a single contract however the client may hire a project manager to protect their interests. This type of procurement system would be reimbursed through a fixed lump sum or a GMP (Guaranteed Maximum Price). The risks undertaken in a design and build contract are carried by the contractor which usually safeguards the client. This route is good for time constrained projects because the design and construction phases are integrated.

 

There are 4 Design and Build options:

1. Develop and Construct 2. Novated Design and Build 3. Package Deal 4. Turnkey

  1. Develop and Construct

Where the client appoints the design team and the detail they achieve varies as the contractor is responsible for the development of the design, going into more detail before submitting bid proposals. Design normally progressed to outline planning stage and possibly to full planning approval point and then the client can invite competitive tenders based on a detailed project concept. This process still requires one organisation to take responsibility for design and construction of the project

  1. Novated Design and Build

Client appoints consultants to carry out the conceptual design and tender document. Once the contractor has been appointed, the client transfers the design team to the successful bidder to carry out the detailed design. The contractor takes on responsibility for the design work carried out to date, sometimes together with the original design team. The consultants’ fees are normally predetermined by the client. Some designers resist this practise because the contractors and consultants may have a conflict of interests.

  1. Package Deal

A package deal is used for repetitive projects whereby projects are relatively simple. The client would need to be relatively flexible. You would gain a complete ‘off the shelf’ product but it would probably be quite a standard design.

  1. Turnkey

A contractor is responsible for overseeing absolutely everything and at completion it would just be a case of handing it over. This is used in more complex projects and is also known as EPC.

Design and Build Advantages
  • The client has only to deal with one firm, giving single point responsibility
  • Benefits from the contractor’s experience during design
  • Friendly relationship between the design team and the construction team (not adversarial as in traditional)
  • Price certainty before construction starts, provided the ERs are adequately specified and changes are not introduced
  • Reducing the project duration by overlapping design and construction phases.
  • The total cost may be reduced by reducing changes to minimum due to early collaboration between designers and constructors
Design and Build Disadvantages
  • Difficulties in preparing comprehensive brief or set of ERs.
  • Client commitment to a concept design at an early stage; often before the detailed designs are completed.
  • Bids are difficult to compare different design solutions, proposals and programmes.
  • No design evaluation: unless consultants are appointed
  • Client changes can be expensive: no BOQ, no competition
  • Design liability is limited by the standard contracts available.
  • Quality may be compromised as the client relinquishes control to the design and build contractor.
  • Total cost may be increased due to higher risks transferred to contractor
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