RISK ASSOCIATED WITH DESIGN-BUILD PROJECT DELIVERY METHOD

Posted on August 23, 2025August 23, 2025 by David Adelstein

The design-build project delivery method is when the design-builder (typically the contractor) is responsible for both the design and construction of the project. Thus, the responsibility for both the design and construction falls under the same umbrella and, naturally, carries more risk. The discussion below demonstrates risk involved in the design-build project delivery method, particularly in the government contracting arena:

Design-build contracts are common for construction, renovations, and repair projects, where the government provides the contractor with its requirements, but the contractor is free to exercise its ingenuity in achieving that objective or standard of performance and selecting the means to do so. It is not uncommon for issues to arise in design-build contracts. One of the more common issues is when the contract describes a certain requirement, but later during the design process, the contractor will submit in the 35% or 100% design submittal with a lower requirement. The government will unknowingly approve that design, not realizing the contractor may have “slipped in” or made an error on one of the requirements; thus, the approved 100% design has a lower requirement as compared to the contract. In these situations, we have found that the government is justified in demanding the contractor provide the requirements specified in the RFP and resulting contract.

Thus, our long-held rule has been that the government cannot properly be blamed for approving the design when the contractor failed to inform the government that its design deviated from Task Order minimum requirements.

Appeals of – Meltech Corporation, Inc., ASBCA No. 61766, 2025 WL 2166133 (ASBCA 2025) (internal citations omitted).

What about the opposite? If the government approves a design that contains components of a HIGHER, not lower, quality?

In a recent appeal with the Armed Services Board of Contracts Appeal, the design-build contractor made a mistake during the design process where it was giving the government a higher quality than required of it in the RFP with the design criteria for the project. (It is typically the opposite where the design-builder gives the government a lower quality than required of it in the RFP.) The design-build contractor sought to substitute the higher quality material for the material required by the RFP. Through the substitution, the government wanted a credit claiming the design-builder should be bound by the 100% design that the government approved with the higher quality material. The Board, however, did not see it the unfair way the government saw it:

As we have held that the government does not waive RFP requirements when it unwittingly approves a lesser quality design, a contractor’s reasonable mistake should not require it to provide materials above and beyond the contracts requirements. This is an example of a contractor’s mistake during the design-build phase, in which the contractor ultimately provided a finished material at the quality specified in the RFP/Design Criteria. There was no savings by [the design-builder] nor a loss to the government. The equitable adjustment should not increase or decrease the contractors’ loss at the government’s expense. Moreover, the government presented no evidence to the Board that it incurred any costs of significance associated with its review of [the design-builder’s] submittals on these issues. Accordingly, the government has failed to carry its burden of establishing that it is due a deductive credit….

Appeals of – Meltech Corporation, Inc., ASBCA No. 61766, 2025 WL 2166133 (ASBCA 2025) (internal citations omitted).

Thus, while the design-builder cannot skirt its responsibilities by providing a lesser quality than required of it. The government can’t take advantage of the design-builder’s mistake with a higher quality when the higher quality exceeds the benefit of the bargain.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

GENERAL UNDERSTANDING OF CONSTRUCTION PROJECT DELIVERY METHODS

Posted on August 15, 2015November 8, 2024 by Edward Garber

Ever hear the expression, “there are many ways to skin a cat?” Of course you have! Well, this expression can apply to construction as there are many ways to build a project to accomplish the same objective–to deliver a completed project.

The various ways projects are delivered are oftentimes referred to as construction project delivery methods. Such delivery methods can be the traditional method of design-bid-build to the much more sophisticated and collaborative delivery mthod of integrated project delivery (“IPD”) to the method aimed at delivering needed public projects (such as infrastructure) known as the public private partnership (“P3”).

Below is a basic presentation illustrating the following construction project delivery methods:

1) design-bid-build

2) design-bid

3) construction manager at-risk

4) integrated project delivery (“IPD”) and

5) public private partnership (“P3”).

Check out the presentation to get a general understanding of the highlights of each of these project delivery methods.

[gview file=”https://floridaconstru.wpengine.com/wp-content/uploads/2015/08/project-delivery-methods.pdf”]

DESIGN-BUILD PROJECT DELIVERY IN FLORIDA (AND LICENSING EXEMPTIONS)

Posted on May 31, 2014November 8, 2024 by Edward Garber

Under a design-build project delivery, typically the general contractor contracts with the owner to be responsible for both the design and construction of the project. This benefits the owner because if there is a design or construction issue–whether causing an increase in budget, a defect, or a delay–the owner can point to the contractor since it is the entity responsible for both disciplines. This benefits the contractor (in addition to the owner) because it is now working closely with the design professional so their interests are aligned and the contractor can have more control over value engineering or cost savings implementation and obtaining answers to requests for information or approvals to submittals and shop drawings. Since the contractor is fully accountable for both the design and construction, it is working closely and collaborating with the design professionals to improve the efficiency in the construction process. Furthermore, since the contractor is responsible for the design, it has more flexibility fast-tracking the construction in phases even though the complete design is not finalized. By fast-tracking the construction and overlapping the construction with the design, the contractor is ideally in a position to efficiently meet scheduling and production requirements.

A contractor is able to offer and perform design-build services because there is an exemption under the required licensing statutes for a contractor, architect, and engineer that allow these entities to negotiate / contract for design-build work as long as they are engaging a licensed professional to perform those tasks in which they are not licensed. For instance, a contractor is exempt from the requirement of being a licensed architect when contracting and offering design-build work as long as the contractor engages a licensed architect to perform the design. This is set forth in Florida Statute s. 481.229(3) that provides:

“Notwithstanding the provisions of this part, a general contractor who is certified or registered pursuant to the provisions of chapter 489 is not required to be licensed as an architect when negotiating or performing services under a design-build contract as long as the architectural services offered or rendered in connection with the contract are offered and rendered by an architect licensed in accordance with this chapter.”

Similarly, while less common, an architect or engineer is exempt from the requirement of being a licensed contractor when contracting and offering design-build work as long as these design professionals engage a licensed contractor to perform the construction. This is set forth in Florida Statute s. 489.103(16) that provides:

“An architect or landscape architect licensed pursuant to chapter 481 or an engineer licensed pursuant to chapter 471 who offers or renders design-build services which may require the services of a contractor certified or registered pursuant to the provisions of this chapter, as long as the contractor services to be performed under the terms of the design-build contract are offered and rendered by a certified or registered general contractor in accordance with this chapter.”

Despite these exemptions, recently the Florida Board of Architecture and Interior Design in Diaz & Russell Corp. v. Department of Business and Professional Regulation, 39 Fla. L. Weekly D 1125a (Fla. 3d DCA 2014), charged a general contractor for improperly performing services as an architect (when it was not a licensed architect) simply because the general contractor was offering design-build services. Basically, the Florida Board of Architecture maintained that the contractor needed to identify the designated architect in its proposal to the owner offering the architectural services. On appeal, the Third District Court of Florida correctly reversed this ruling because there is nothing that requires the contractor to identify the architect or engineer at the time of the proposal / contract just like there is nothing requiring the architect or engineer to identify the contractor at the time of the proposal / contract. The statutory exemption would simply require the contractor to engage a licensed architect to perform the design, which was not an issue in this case because the contractor properly hired an architect to prepare the design.