To the home owner and principal, Design & Construct (D&C) contracts present as an attractive, all in one, cost effective solution. However for the assigned builder and contractor, it is a buck-stops-here contract paved with risk. And from a Small Builders perspective should be avoided.
What is a Design and Construct Contract?
A D&C contract is the agreement encompasses the work of the project from beginning to end. Often drawn up with a ‘guaranteed price’ carrot, a D&C contract assigns the contractor complete responsibility of the Design and Construction of the project. This may seem obvious to note but these are two very distinct elements of a build involving two very distinct skills.
Party 1: Design The design process of a build usually involves a design professional such as a draftsman or an architect or an engineer. This stage is all about putting the vision down on paper with drawings/plans that include specifications, building restrictions and reports that the builder can work from.
Party 2: Construct Managed and lead by a head contractor (the builder), the construct part is all about the execution of the building/construction works, as specified by the design instruction. Along with the head contractor, it involves all the relevant specialist subcontractors (the construction team) to make it happen.
The risks of Design and Construct Contracts
Despite some project tasks naturally falling across both camps, each still host a potential for liability unique to a party role and its knowledge base. Merging the overall responsibility of liabilities from each camp is where a contractor often falls into trouble.
For example when a building dispute arises where the fault is due to design rather than construction, under a D&C contract it is the contractually assigned head contractor who becomes ‘the fall guy’ as a result of inheriting the liabilities of the designer. And if appropriate insurance cover is not in place, which is often difficult to secure due to the bespoke nature of D&C contracts, a contractor may lack the resources to defend litigation.
A Small Builder’s Best Practice
If you are a contractor, by all means, get involved as early as possible with the design of the works so that you are aware of the client’s vision, what the expectations are, and any potential issues. It will help continuity and to build a healthy relationship with all parties and But avoid responsibility for the design work. Play it safe and keep the risk allocated to the design professional.