Design-build is a project delivery method that combines design and construction functions into a single contract, rather than as two independent services performed consecutively by separate entities. With design- build procurements, owners execute a single, fixed-fee contract for both architectural/engineering services and construction. The design-build entity-also known as the "constructor"-may be a single firm, a consortium, joint venture or other organization assembled for a particular project. With design-build delivery, the design-builder assumes responsibility for completing a final design for projects and undertaking construction activities for a fixed fee. As such, the design-builder also assumed the financial risks associated with possible cost overruns. Most design-build contracts also include penalties for schedule delays and bonuses for the early completion of construction. The project sponsor remains responsible for financing the project, and operates and maintains it after construction is complete.
Design-build procurements are often used with large and complex projects. Because they are fixed price agreements, design-build contracts incentivize the design-builder to innovate and identify strategies to streamline construction costs. Project completion can also be accelerated by undertaking some design and construction activities concurrently rather than sequentially, as is the case with design-bid-build projects. This has the potential to result in further cost reductions by shielding projects from the risk of inflation and commodity cost escalations. Project designs are generally 10 to 30 percent complete at the time most design- build procurements are let, and design-build procurements contain comprehensive performance requirements that the bidder's final design must meet. This structure provides the design-builder with the flexibility to innovate and find the most cost-effective solutions both in terms of project design and construction techniques.
The award of design-build contracts is made on a best value basis that takes price and technical quality as well as the qualifications of the bidding teams into consideration. Under the right conditions, design-build procurements can result in cost reductions compared to the traditional design-bid-build approach and can accelerate the completion of projects.