Design and construct

The principal prepares a project brief, often called the principal's project requirements, and sometimes a concept or schematic design. Contractors tender on that brief, and the successful contractor develops the design through to construction documentation and builds it.

The contractor either uses its own design team or engages external architects and engineers. A common Australian approach is novation: the principal's designers prepare the early design, then their appointments are transferred to the contractor, who takes over responsibility for completing the design.

For a deeper look, read The Rulebook of Revenue: A Guide to Construction Contracts.

AS 4902-2000, General conditions of contract for design and construct, is the standard form most often used for D&C work. It is based on AS 4000-1997 with added provisions for design obligations, design documents and the principal's project requirements.

Many government agencies and large principals use their own D&C contracts instead, and private principals often heavily amend AS 4902. Check the special conditions on fitness for purpose warranties, design approval and reliance on the principal's documents.

Under a construct only contract, such as AS 4000 or AS 2124, the principal provides a complete design and is responsible for it. The contractor builds what is drawn. Design errors are the principal's risk and often lead to variations.

Under D&C the contractor is responsible for the design meeting the brief. This gives the principal a single point of responsibility and usually more price certainty earlier, but less control over design detail. The contractor gets more room to value engineer, in exchange for carrying design risk.

• Single point of responsibility. The principal deals with one party for both design and construction, which reduces gaps between designer and builder.

• Earlier price certainty. A contract sum can be agreed before the design is complete.

• Buildability. The contractor can shape the design around construction methods, programme and cost.

• Less principal control. Once the contract is signed, the principal has less say over design detail unless the project requirements specify it.

• Higher tender cost. Tendering on a D&C basis costs contractors more, which can reduce the number of bidders.

• Quality risk. If the requirements are vague, the contractor may meet them with the cheapest compliant solution.

Whether D&C is the right choice usually comes down to how clearly the principal can describe what it wants, and how much design control it is willing to hand over in exchange for a single point of responsibility.

• Vague project requirements. A loose brief leads to disputes over what was included. Principals should be specific on performance and quality.

• Underestimating design risk. Contractors take on errors in novated design, including work done before novation. Review the design thoroughly at tender.

• Weak design management. Track design deliverables, approvals and RFIs as closely as the construction programme.

• Ignoring fitness for purpose. Many D&C contracts include a fitness for purpose warranty, which can be broader than a duty to design with reasonable care.