YOUR ULTIMATE GUIDE TO DESIGN-BUILD

What is design-build? There are a number of terms out there relating to the design and construction process, and design-build is an odd one. However, it’s a fairly common process used to build new homes, so let’s take a look at it.

Design-build is the process where the owner contracts with a single business to obtain both the design the house and the construction of the house. This is a simplified process since you don’t have to seek out separate companies to design and to build.

The Basics

Traditional Method

The traditional method of designing and building a house uses the design-bid-build process. This is where the owner hires an architect to design the house. The architect works with the owner to establish a budget for the project and then designs the house.

Once the design is complete the architect creates documents which are sent to a number of general contractors for bidding. The general contractors use the bidding period to obtain separate bids from subcontractors and material suppliers from which the general contractor selects his team and submits his proposed cost to the architect.

Once all bids have been received the architect reviews them and asks the contractors for any any clarifications needed to further explain the bids. Once that information is obtained the architect reviews the bids with the owner, who then selects the contractor. A separate contract between the owner and contractor is formed, with the architect as a coordinator of the contract.

Design-Build Method

The design-build method combines the design contract and the construction contract into a single contract. The design-build process utilizes a business led by either an architect or by a contractor. If architect-led, the architect acts as the designer as well as the contractor. If contractor-led, the contractor acts as the designer as well as the contractor.

This method allows the owner to work with one entity from the start of the design through the completion of construction. That entity is responsible for establishing a budget with the owner, designing to that budget, and building the project.

Because you’re working with one entity the contractor is part of the package from the beginning. Conversely the traditional design-bid-build method doesn’t bring a contractor into the project until after design is complete.

Let’s take a look at how this works through the full process of designing and building a house.

Design Services

Like any new house project, the house has to be designed first.

The architect-led designer-builder has the design effort led by the architect. This provides a direct relationship with the owner through the design of the project.

The contractor-led designer-builder will have either in-house designers (designers employed by the contractor) or will have a contractual relationship with a separate architect or house designer to provide the services. The contractor coordinates the design between the owner and the designer during the design of the project.

An architect-led designer-builder can often provide a more customized design since they lead the design process. This customization can allow for a broader range of material and finish options, along with more plumbing and electrical fixtures options.

Many contractor-led designer-builders act more like showrooms, with pre-designed plans that the owner can then modify, and some can sometimes provide fully-customized design. Many will often provide a select range of material and finish options as well as plumbing and electrical fixtures options that will fall within the budgets of their available plans, with selections outside of those options being an up-charge to the cost.

Design Process

Both the design-bid-build and design-build services will use a standard design sequence:

• Schematic Design – when the concept for the design is establish and the final plan and exterior design are created
• Design Development – when the design is refined, construction systems and materials are integrated, and selections are made for finishes and fixtures.
• Contract Documents – when drawings are produced to be submitted for permit approval and used for construction.

In design-build, each phase will have a cost check to ensure the design fits within the budget. Any design changes will be made before completion of the documents to make sure the construction costs remain consistent.

Costs

An advantage of the design-build process is that you have one entity responsible for both the design costs and the construction costs before the design is completed. The company works with the owner at the outset to establish a budget for the project and then takes on the responsibility of designing and building to that number.

This process allows the designer and contractor to work together during the design. The contractor will have a good sense as to the costs while the design is being developed, utilizing their costs database from recent projects.

The contractor will check these costs by creating in-house estimates and reviewing with subcontractors the mechanical, electrical, plumbing and other specialty systems during the design process. The design can be adjusted as needed to bring costs in line with the budget before construction.

Though you don’t receive the advantage of competitive bidding for the project, overall costs can often be comparable or even less. This is due to the efficiency of the process and earlier coordination between all parties before construction starts, reducing change orders that can increase construction costs.

You can also save project time due to the efficiency of this process, and as we all know, time is money.

Construction

The construction process is the big differentiator between design-bid-build and design-build.

The traditional design-bid-build process doesn’t bring a contractor to the project until after design is completed and the project is bid out to multiple contractors. If the bids come in higher than the budget, the design must then be adjusted to align with the cost and then re-bid. The selected contractor typically wouldn’t have had any input on the design to ensure costs fall in line with the budget.

The design-build process has the contractor on board from the beginning and has input during the design process. However, this doesn’t allow for the traditional competitive bidding process and so might not allow for the best price.

The designer-builder will be able to bid portions of the project to sub-contractors such as plumbers, electricians, heating and cooling companies, and others, and will often share that information with the owner to make sure the owner gets the best costs for those portions of the work.

Licensing, Bonding, and Insurance

Licensing, bonding, and insurance are important things to understand when it comes to design-build companies.

Licensing

A license is a requirement to be registered with a state or local jurisdiction in order to perform certain types of work. Licensing is a means for authorities to make sure companies providing certain services meet minimum criteria to perform their work.

Professional architects are licensed with the states in which they work. Their licensing requires testing to ensure their knowledge regarding design, life safety, building codes, and other information.

House designers are not professionals and aren’t licensed but can design houses in most states. However, some states require all houses to be designed by licensed architects.

For contractors, licensing is a means to make sure contractors hold a minimum level of insurance and bonding. Some states and most jurisdictions require contractors to be licensed to perform work in their jurisdiction. Some authorities require contractors to pass tests to prove they have competency in regards to trade skills and business practices.

Contractor, and occasionally architect, licenses are often required for a building permit to be authorized by a local jurisdiction. Each license will have a unique number assigned to it.

Be sure to review the licensing requirements of your state and local jurisdiction as well as any licensing requirements for house design. Review with each designer-builder what licenses they have. States will have licensing boards from which you can obtain license numbers and confirm if a license is valid and active. You can also confirm if any complaints or disciplinary actions have been made.

Bonding

A bond is an agreement between a contractor and a third party to provide funds to complete a project if a contractor fails to do so, provides poor quality of work, fails to pay for building permits, fails to pay subcontractors, fails to pay for delivered or stored materials, or goes out of business. The agreement is established by the contractor’s purchase of a surety bond.

Bond requirements and coverage values will vary by state and local authority. Licensed contractors are typically required to be bonded.

Insurance

Insurance is a guarantee to pay for damage or negligence.

Architects must carry professional liability insurance that covers any costs brought about through design errors or omissions.

Contractors must carry both liability insurance and worker’s compensation insurance.

Liability insurance covers property damage and any injuries caused by the contractor’s work.

Worker’s compensation provides payments to workers injured during the project. These payments include lost wages and medical costs, regardless of fault. It also provides death benefits to a worker’s family.

Results

Design-build can be an effective alternative for your project. Having all parties on board at the same time and coordinating together can provide a more effective process and smoother construction. Be sure to review with any designer-builders you’re considering what their processes are, what’s to be included in their work, and what their licensing, bonding, and insurance status is.

Note: All images are by Cayl Hollis unless noted otherwise, except for currency image which is public domain.