Is Design-Build Right for You? - Design-Build for Water and Wastewater Projects - page 345

Reallocation of Risk
In DB projects, the design-builder typically requires more contractual reallocation of risk
than in the traditional DBB projects, because the design-builder is required to deliver a
completed and accepted project that meets the owner's performance expectations. Own-
ers should be prepared to navigate the reallocation of risk, which typically involves the
identification of the risk of loss, indemnification against the risk of loss, insuring the risk
of loss, allocating the risk of loss, and finally avoiding the risk of loss against the delivery
of a successful project.
Design-Build Insurance and Bonding
An owner should be prepared for different insurance policies and bonding when using
DB. In general, a design professional's errors and omissions insurance policy excludes
coverage for construction services. The contractor's general liability policy excludes cov-
erage for professional services such as engineering and architectural errors. The contrac-
tor's surety bond may not cover the design professional's errors, which would provide
the owner with limited protection. It is the responsibility of the design-builder to seek
and obtain competent insurance and legal advice before entering into a DB contract with
an owner. Every party must be covered adequately and feel secure in the insurance and
bonding that have been obtained.
Change Orders
In DB projects, the design-builder is entitled to change orders to the scope of work that
are initiated by the owner or are a result of any unforeseen site conditions. Because the
design is a part of the DB contract, the design-builder is usually not entitled to a change
order, which yields a cost adjustment by the owner as a result of design errors and omis-
sions. Any changes resulting from those errors are the responsibility of the design-builder.
COMMON OWNER FEARS
Common fears among owners that are new to DB are addressed in the following sections.
Loss of Design Control
The owner might fear that it will lose design control of the project by over-delegating
design decisions to the design-builder. The contract scope and schedule can be negoti-
ated to show what level of involvement an owner desires for design and construction.
Owners must recognize their responsibility, especially for critical path schedule mile-
stones, for any of their requested involvement. For owners that choose not to be intimately
involved in design decisions in a DB project, having good performance specifications that
are negotiated before the contract is executed serves as a basis for securing the project and
infrastructure that are desired. Owners can also hire a consultant to serve as an owner's
representative for the project.