14.1 Introduction

One key challenge to successfully executing any commercial venture is for the parties to give proper attention to their contracting arrangements. This is particularly true on design-build projects, since the participants may not be familiar with the process and there is little legal precedent defining the relationship among the parties.

It is well understood that the primary purpose of a contract is to define the rights and responsibilities of the parties to the contract. However, contracts in the construction industry also serve the purposes of

• Providing a uniform basis for competitive bids and/or proposals from those performing services on the project

• Assigning and managing risk among the parties to the contract

• Identifying the goals and expectations of the parties relative to the project and each other

• Establishing a project planning and management tool for the project

This last point is particularly important, since a well-drafted contract can become a handbook for performance on the project, addressing such important procedures as inspections, payments, and interpretation of the contract documents.

This chapter focuses on some of the most common issues associated with the contracts between the owner and design-builder, including (1) principles of risk allocation, (2) standard form of contracts available for design-build relationships, and (3) unique issues in the design-build contract. ^[1] The reader should also refer to Chaps. 13, 15, and 16, each of which addresses areas that are important to the contracting process.