Design And Build Contracts

For us to discuss Design and Build contracts, we must first distinguish them from the traditional, design-bid-build construction contracts. But just before we make this distinction let us understand how a typical construction project works here in Kenya Usually, in a construction contract, there are three parties involved. The developer is sometimes called the employer, a professional consultant, an architect, a quantity surveyor or engineer and the contractor. The contractor is the party that does the construction of a building project. The consultant and the contractor work collectively to execute the instruction of the Employer. Traditionally in Kenya, construction contracts provide the terms of engagement for this tripartite model. The consultant acts as the go-between the employer and the contractor, they will usually prepare the designs of the project, and contractors will be invited to bid for the construction work based on the consultant’s design. The consultant will then ensure that the winning contractor executes the design as intended on behalf of the employer. Traditional contracts will therefore include each of the three parties’ duties and obligations towards the construction project concisely. On the other hand, design and build contracts rid the consultant of the construction project. The contractor takes up the role of both designing and executing the project. Thus the distinction is made between the two contractual agreements. Should you as the developer assign design and build roles to one person? The best answer to that question is: It depends. It depends on several factors, some of which are:

The Level of Expertise Needed for the Project

Some projects are complex and require a high level of expertise to execute. For such kinds of projects, the employer needs to hire the services of a consultant, who works independently from the contractor to design and consult on various aspects of the construction project. For simpler, less complicated projects requiring minimum expertise, design and build contract are the perfect fit.

Project Budget Allocation

Construction projects are expensive, that goes without saying. There are projects whose budget allocation is quite tight and the emphasis on the reduction of expenses is a key priority. For such projects, design and build contracts will be preferred. Why? Because having the same person/firm execute both the design and the build of the project is ultimately cheaper than separating these roles be done by two different persons. Combining the roles means combining the human resource and other resources requirements thus significantly reducing the costs of the project. Design and build contracts also allow the developer to have certainty on the cost of the project.

Time Factor

There are construction contracts that require quick execution. For these projects design and build contact will be preferred compared to traditional construction contracts. Since the model of design and build contract is that both the design and execution of the build are executed from one quarter, a lot of time on consultation, feedback and approvals is saved.

Single Point of Responsibility.

Because the contractor is responsible for both designing and building the project, the developer looks to only one point of contact for accountability. This is easier for the developer to manage and keep track of the project. Liability and questions of, who bears the fault are critical in construction projects. Having a single point of responsibility makes it relatively easier to determine where the fault lay in the construction project and establish how damages are to be paid. The multiplicity of responsibility points in traditional contracts makes accounting for liability as and when it arises complex. For developers who would only wish to easily manage the project and to have one source to seek accountability for the project, design and build a contract present that solution.

The Pros and Cons of Using Design and Build Contracts

Based on several factors, some of which we have just discussed, a developer may favour the use of design-and-build contracts over the traditional design-bid-build contract. Some of the pros of using design and build contacts are:

• Design and build contracts are a cheaper alternative, with certain sources reporting a comparative reduction of up to 10% in cost where design and build contracts were used.
• Projects are faster executed with the design-build contract model compared to traditional construction contracts.
• It is relatively easier to resolve conflicts that arise from design and build contracts compared to the traditional construction contract, given that fewer parties are involved.

Some of the cons of using design and build contracts are;

• Design and build contracts do not present the best option for contracts requiring high-level expertise. This is because the contractor may not have or may not involve the needed highly specialized professionals to design and consult on such projects. It is also good practice to have such complex projects supervised by an independent, consultant or professional, different from the contractor, to minimize on the risk factor.
• Design and building contracts usually relegate the supervisory role to the employer, who must be highly involved with the project execution. The employer might not have the expertise or technical skills to effectively supervise the project and the risk of sub-standard work therefore looms.

Conclusion

Whichever model of construction you might choose to use, you must involve your lawyer in the drafting and review of construction agreements. A well-drafted construction contract minimizes the risk of conflict by setting out definite terms of engagement and provides for ways in which conflicts will be addressed as and when they arise.

HOW CAN WE HELP YOU? 

At CM ADVOCATES LLP, our lawyers work with individual, and corporate developers, architects, engineers, quantity surveyors and contractors. We review and advise on several construction work contract agreements. We also draft bespoke agreements, suited for specific project needs.  Join our CM SME membership club to access our free construction agreement templates CM SME membership club.  For more information, book a consultation to speak to our Advocates. 

Contact Persons & Contributors

Victorine Rotich–Senior Associate and Head of Business Unit Susan Mwango- Associate 

Disclaimer