DESIGN-BUILD BIDS

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Design-Build is a form of negotiated bid  in which one company performs both the design and construction. The classic triangle of Architect-Owner-Contractor is based on an adversarial model where the architect is hired by the owner to design the project, and also to make sure the contractor builds what he is supposed to and doesn’t cut any corners. But who protects the owner from the architect, who often knows a lot less about the costs and practicality of construction than the contractor? How do you know you are getting the best design for your needs? If the architect is out of the picture, the contractor may tell the owner that his approach is more practical, less expensive, and better overall than the architect’s. This can be pretty confusing to the owner caught between conflicting advice. Who is he or she to trust?

A COLLABORATIVE APPROACH

Design-build contractors offers an alternative model based on collaboration rather than an adversarial relationship. In this world-view, the owner trusts one company to come up with a design that works functionally, aesthetically, and financially. The designer and builder are working together as a team, and may, in fact, be the same person. On the face of it, this makes a lot of sense. Regardless of the plans, specs, contracts, codes, and everything else, at the end of the day, you have to trust someone to be fundamentally honest and competent, and provide good work at a reasonable price.

If the adversarial approach always worked perfectly, there would be no need for design-build, but of course it often doesn’t. In design-build, you give up the checks and balances (sometimes illusory) of the adversarial process, but gain the benefits of everyone working together to a common goal. If you choose the right company, and build in some reasonable protections, this can be a good approach for certain projects. At best, you will end up with a successful project  that balances the best of both worlds – the designer’s creative vision and the builder’ practical knowledge of construction materials, details, and costs.

Types of design-build firms. Some design-build firms are run by an architect who went into the construction business. Some are partnerships between an architect and contractor. Some employ non-architect designers to do in-house design. Some are run by a contractor who has a knack for design.  Each company has its own formula for pricing the design work and allowing you to go elsewhere with the design. In general, you will pay less for the design than you would with an independent design firm, but you will probably be penalized if you decide to take the design to another builder

Detailed plans critical. As with an independent designer, you will want detailed plans and specifications, so you know what exactly is included in the contract price. This will take some diligence on your part as well as trust in the contractor to not cut corners and hit you with “extras.” Don’t hesitate to ask a lot of questions about what is included (and excluded) from the contract price.

Pros of Design Build

  • Client gets to choose favorite contractor.
  • The project is developed from the start to meet both design and budget needs.
  • The cost of the design is usually less than with an independent design firm.
  • The team is working collaboratively toward a common goal.
  • Contractor’s costs and pricing may be more transparent.

Cons of Design-Build:

  • Design may be less creative than one from an independent designer.
  • Lack of competitive bidding may drive up cost.
  • Depends heavily on trust in design-build contractor.

My Recommendations

Look at other projects completed by the design-build contractor you are considering. Start with companies whose design and quality appeal to you. Check references. Find out, early on, if your budget is realistic for the project you have in mind. Make sure you get detailed plans and specifications so you know exactly what is included (and excluded) from the contract price. Don’t start construction without a completed plan and price. Don’t hesitate to ask a lot of questions. To help keep everyone honest, retain the right to purchase the plans and get bids from other contractors.

 






Comments

  1. Design Fees for Design-Build

    I run a small design-build firm and I need to come up with a new pricing model. I have the framework figured out, but I’m looking for feedback on how much to charge. I will charge 3 separate fees: 1) a price/ square foot fee to document existing spaces and condition,s 2) A percentage of construction fee for for schematic design and construction drawings, 3) a percentage of construction fee for constuction and project management.

    I know some architects who charge 75 cents/ foot for #1 and 12% for #2.
    And many contractors charge 20% for #3.

    But does the 12% architect fee usually include construction management?
    And I think I should offer a discounted rate for bundling services, but how much?

    Grateful for any feedback; this is a very tough topic to find hard numbers for!

    • buildingadvisor says:

      I agree that it is difficult to find hard numbers on this topic. As far as I can tell, residential architectural fees are all over the map. For those that charge a fixed fee, the numbers I hear most often range from 7 to 15% based on the size and reputation of the firm, part of the country, and the complexity of the project.

      I believe that most architects charging in the range of 10% to 15% are providing a full architectural contract including bidding out the job and construction administration. The construction administration phase involves site visits, phone calls, and meetings with the contractor to make sure the project is coming out as planned, and to resolve any design questions that arise. It may also include reviewing the contractor’s invoicing. This phase typically accounts for about 20% of the total architectural fee.

      Your item#3 is “project management” which is very different from what an architect calls “construction administration.” Project management typically refers to the management role provided by the general contractor or a separate project manager. This involves hiring and managing subs, scheduling the work, troubleshooting construction issues, ordering materials, and reviewing invoices from subs and suppliers.

      These are not services typically provided by an architect unless the architect is also the general contractor as in a design-build firm. It’s true that some contractors charge a percentage management fee for their supervision time. Others bill for that time hourly, but most treat their supervision time as an overhead expense covered in the job markup. Just like architects, contractors use a variety of different approaches to pricing their jobs.

      You can read more about how contractors price jobs at this link. Also see Are Supervision Costs Billable?

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