Chapter 13: Design-Build Contract Structures and Payment Methodologies

13.1 Introduction

The relationship between an owner and a design-builder is defined largely by the type of contract used on the project and how the design-builder will be paid for its services. The four most common types of contract structures are (1) lump sum, (2) cost-plus, (3) cost-plus with a guaranteed maximum price (GMP), and (4) unit prices. Each structure has unique characteristics particularly relative to when the price for the work will be determined that can affect the rights, responsibilities, and roles of the parties. This chapter addresses some of the most significant characteristics of these contracting methods. ^[1]

13.2 Lump-Sum Contracts

Under a lump-sum contract, the design-builder agrees that for a specific price it will provide the owner with the services called for in the contract. The design-builder will receive that price regardless of the actual costs it incurs in performing the work. Lump-sum contracts are frequently used when the owner does one or more of the following:

• Selects the design-builder through cost competition

• Provides design development documents to prospective design-builders under the bridging concept ^[2]

• Selects the design-builder directly, without competition, and uses the design-builder s programming and design skills to achieve a specific budget

• Specifies a fixed price for the design and construction of...