Design-Build Teaming Agreements

Question: I have been approached by a contractor and asked to team with him for a design-build project. It is a good opportunity for my firm and I want to do it, but I don't know what questions to ask or issues to consider. What do I have to know or do differently from my normal practice when I work with a contractor on a design-build team? What questions should I ask or issues should I resolve before agreeing to proceed?

Answer: Those are excellent questions. They are recurring more and more frequently as design-build continues to grow in popularity. Everyone knows more or less what to expect when working on a traditional project, so many issues are never raised because all parties assume that they will be resolved in the usual way. But there is not yet a "most usual way" to resolve many of the issues that uniquely arise in design-build projects.

The following is a useful outline of issues which a designer and a contractor should discuss and resolve in a "Teaming Agreement" prior to committing to any design-build project. The outline is generic, so not all of its issues will apply to all projects, and some projects may raise issues not listed in the outline, but in general I recommend that you make a copy of the outline and keep it with your standard business negotiation materials.

I. Structure of the Team

A. Structure of the Business Relationship

1. One party prime, and the other as subcontractor
2. Joint business venture

B. Lines of Communication

II. Sharing of Risks and Rewards

A. Compensation

1. Amount
2. Timing of payment
3. Conditions

B. Project Profits and Losses

1. Allocation of savings if project exceeds goals
2. Allocation of losses if project fails to meet goals

C. Other Risks ad Rewards

1. Identify and describe each
2. Allocate consequences between the parties

III. Design Phase Services (that may be different from traditional projects)

A. Services Provided by the Contractor

1. Costing, estimating
2. Value engineering
3. Assistance in analyzing owner-provided information
4. Constructability analysis
5. Preliminary scheduling
6. Checking design to anticipate problems
7. Acquisition of long-lead items
8. Procuring subcontractor participation and quotes
9. Negotiation with subcontractors/vendors