What novation actually does
On most design and build schemes the client appoints a design team to develop the scheme far enough to describe it, then novates those consultants across to the contractor at contract signature. The appointments transfer. The people usually stay the same. What changes is who they answer to and whose interests they serve from that day forward.
The logic is sound. Design and build works by placing single point responsibility on the contractor, and a contractor cannot sensibly carry design risk for drawings produced by somebody outside their control. Novation resolves that. It is not a trick and it is not a downgrade.
The mechanism is a novation agreement signed at, or shortly before, contract execution. It substitutes the contractor for the client as the party to the consultant appointment, usually on terms that treat the consultant as having always been appointed by the contractor. That fiction is what allows single point design responsibility to work.
What it removes
What it removes is your technical eyes. Before novation, when a detail was unclear, you had a designer whose duty ran to you. After novation, that same designer has a duty to the contractor, and the contractor has a commercial interest in resolving ambiguity in the cheapest compliant way.
This matters most where the employer’s requirements are loose. A performance description that could be satisfied at two different specification levels will be satisfied at the lower one, legitimately, and the person who could once have told you that is now on the other side of the table.
The window before signature
The practical consequence is that the value of design team advice to you is concentrated in the period before novation. That is when the employer’s requirements are still yours to shape, when a specification can still be made testable rather than aspirational, and when a discrepancy costs a conversation rather than a variation.
Developers frequently spend that window on planning and funding, which are urgent, and treat the requirements as a document to be finished rather than a document to be interrogated. The cost of that choice does not appear until the building is being built.
What has to replace it
Something has to hold the client side of the contract after novation, and it has to be somebody who was not transferred. In most cases that is the employer’s agent, who retains the authority to instruct, to value and to certify, and who has no relationship with the contractor to protect.
The second thing worth retaining is a commercial view independent of the design team. Quantities, valuations and change assessment do not novate, and they are the mechanism by which the specification you asked for is checked against the building you are getting. That work is set out on our client side quantity surveyor page.
What to settle before the transfer
Four things are worth resolving while the design team still works for you. The first is any part of the employer’s requirements that describes an outcome without a test, because after novation the person best placed to make it testable has a reason not to.
The second is the status of every drawing referenced in the requirements. A drawing marked indicative carries no obligation, and a requirement that depends on one has no content. Either the drawing becomes contractual or the requirement has to say what it means in words.
The third is the treatment of items the design has not resolved. Those become provisional sums or they become silence, and silence is a variation later. Naming them, valuing them and deciding who carries the risk is cheaper before signature than after.
The fourth is the scope of the novated appointment itself. What the design team is obliged to do for the contractor after transfer, and what they are obliged to do for you, are set by the novation agreement rather than by habit. [VERIFY: the terms of the novation agreement in use and whether any duty is retained to the employer.]
What this means for you
Treat novation as a deadline rather than an administrative step. Everything you want fixed in the employer’s requirements has to be fixed before it, because afterwards the people who would have helped you fix it are working for the other party.
Ask one question at the point of novation: who is now reading this contract on my behalf. If the answer is nobody, or the answer is a name that does not appear in the contract, the structure has a hole in it and the hole is expensive.
It is also worth asking what happens if the relationship between contractor and design team breaks down after transfer. That is not a remote scenario on a long contract, and the employer has no direct remedy against a consultant who no longer works for them unless something was retained. [VERIFY: whether a collateral warranty or third party right in favour of the employer is provided on novation.]