Design-Build Contract Risk Allocation - Design-Build for Water and Wastewater Projects - page 113

It is also critical, from the design-builder's and the owner's perspectives, to clearly
define the circumstances under which the design-builder will be entitled to an extension
of the contract time and/or an adjustment to the contract price for project delay. Again,
this requires that both parties, as part of their risk analyses, define the problems that are
likely to arise in connection with the project and then decide which party is best able to
manage that risk. An obvious starting point for this analysis is for the party responsible
for the delay to assume responsibility for the associated consequences. Thus, a design-
builder should not be entitled to a time extension for problems it causes, and an owner
should adjust both the contract time and price if the owner is the cause of the delay. The
more difficult question, of course, is which party assumes responsibility for project delays
caused by circumstances, events, or third parties beyond the control of both owner and
design-builder. Each project is different and different solutions exist for dealing with
these issues. For example, the design-builder may be granted a time extension only and
not an adjustment to its contract price if the project is delayed; or the design-builder may
be granted time and costs but have its recovery limited to extended field costs only.
THE DESIGN-BUILDER: RISKS AND
MANAGEMENT STRATEGIES
The risks and management strategies of design-builders are discussed in this section.
Organizing the Design-Builder Team
The design-builder can successfully complete a water and wastewater project only
if the design-builder creates a successful team comprised of construction and design-
professionals that are committed to working together to meet the owner's obligations con-
sistent with the design-builder's budget and schedule. This section explores the inner
workings of the DB team, focusing on the unique risks the DB process presents to the DB
team and the strategies the DB team can employ for managing those risks so that each
member can realize its contract objectives.
The success of the relationship among DB team members depends on their trust and
confidence in each other's ability, as well as their understanding of the DB process. Thus,
team members should share similar values and philosophies regarding goals and business
practices and must be fully committed to the project, by dedicating the resources neces-
sary to ensure project success.
Once team members have been selected, the parties have to decide how to orga-
nize themselves. The parties' choice of the appropriate structure for the particular proj-
ect will be influenced by a number of factors, including licensing requirements in the
jurisdiction in which the project is located; the owner's requirements or preferences; each
member's tolerance for risks associated with the other members' performance; each mem-
ber's relationship with the owner; and other project requirements, such as socioeconomic
requirements.
A frequently used organizational structure for the DB team is a prime contractor-
subcontractor relationship, where the contractor holds the DB contract with the owner
and subcontracts the design services to design professionals. This structure has emerged