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 may be penalized with an additional fee 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.
Separate pricing and contract terms for design and construction. There are many variations in how design-build contracts are structured. The best approach is to separate the design phase from the construction phase and charge separately for each. The owner should have the right to walk away with the design if, for any reason, the contractor does not end up building the project. While most designers will not release their CAD files, if the client has paid for a full set of working drawings, they should get to keep the drawings (several sets) and the right to use them.
The contract should spell out specific milestones for the design and building process, and how things will work in a separation – a “prenuptial” agreement for amicably parting ways. While everyone starts with the best of intentions, there are many scenarios under which the contractor and client may part ways before building begins. For example, the final price may be too high, the timing does not work, or the owner’s personal circumstances may change. A professional contractor should recognize this fact and provide a reasonable roadmap for parting ways.
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.
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.
Read more on Hiring Design-Build Contractors
Ken Bednar says
Will Design-Build Save Us Money?
Where have you been! We have been looking at buying a lot and building our first custom home for 2 years with lots of frustration because of lack of knowledge on my part and lack of sharing knowledge on the “professionals” part. I’m so glad I stumbled onto your site.
A quick general question before I dive into reading your site. We are considering using a architect instead of a design-build contractor because with a architect you can take your house plans to multiple builders for bids but with a design/builder you can only build the house plan with them. In general, do you save money on the build by asking for bids to offset the added cost of using an architect versus the lower cost of using a design-build contractor to design your home — assuming I do a good job on the bid process? I’m pretty good at negotiating but new to taking bids but ready to learn.
Building your first custom home can be a daunting task. Like many things in life, you don’t even know what questions to ask the first time around. But I would encourage you to ask a lot of questions and, if you don’t get satisfying answers, move on to a different designer, contractor, or whoever you are dealing with.
There is no simple answer to your question. If all goes well, then you can potentially save some money with design-build. To a large extent, you are working with a known budget and designing to the budget. The design builder “value engineers” the house to get the most house you can for the budget that you propose. Your design may not win architectural awards, but should be practical (economical) to build. The design-build bid is generally a negotiated bid, worked out with a little back and forth between the two parties.
If the project doesn’t go so well, surprise costs can drive up the total cost of the project. These can be driven by the owner changing his mind mid-stream, or the contractor failing to include some expensive items in the bid – like landscaping, paving, utility fees, and other soft costs that you did not anticipate.
It is a very collaborative process; you need to find a talented and trustworthy contractor that you have good rapport with.
In the more traditional process, you bring your plan to three or more builders and get competitive bids. The most challenging part of this process is getting bids that are truly apples-to-apples. You may bring the same set of plans and specs to three bidders, but they may still each have their own favored approach to doing things, and may include/exclude different items from the bid. So you really need to meet with each bidder and scrutinize the bids to make sure that it includes everything you want.
The more complete the plans and specs, the easier it is to get apples-to-apples bids. You have the option to pay the architect to oversee the bidding process, (as well as inspect the construction work) but this adds further to your costs.
Will the savings from going with the low bidder cover the costs of the architect? It’s possible, but I wouldn’t count on it. The real benefit you get from an architect is his creative input. A good architect can create a highly customized living space tailored to the specific building site and the needs and tastes of your family. However, an architect may not be as knowledgeable or concerned about construction costs as a design-build contractor.
In some cases, a design-build company will allow you to take their plans to other contractors for bids or allow you to buy the plans outright and put them out to bid as you wish. This provides the best of both worlds.
So I wouldn’t base my choice on which would be cheaper, as it is difficult to predict. Rather, decide which process is more appealing and then look for best professionals to work with. Introduce your budget early in the process and ask the architect or design-builder if they can create the type and size of project you have in mind within your budget. If you are not working with a realistic budget, then no approach is going to work.
Best of luck with your new home!
Read more on: Hiring an Architect Hiring a Contractor Fixed Bids Negotiated Bids Design-Build Bids
Jenny Hoffman says
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 construction 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!
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?