JCT design and build risk is usually explained in a sentence: the contractor takes the design responsibility, so the client gets a fixed price. That sentence is true in outline and misleading in practice, because what transfers depends entirely on how the scheme was described before the contract was signed.
The contract form is the same on every project. The commercial outcome is not, and the variable is the Employer's Requirements.
The Employer's Requirements do the work
Under design and build the client describes what they want and the contractor is responsible for designing and delivering it. That description is the Employer's Requirements, and its quality determines everything that follows.
Described tightly, with performance specified, key elements dimensioned and the standards stated, the contractor carries genuine design responsibility and the price reflects a defined outcome. By contrast, described loosely, the contractor is free to design down to the minimum that satisfies the words, and the client discovers the gap at handover rather than at tender.
The failure is rarely dramatic. It shows up as finishes a grade below expectation, as acoustic or thermal performance at the regulatory minimum, as details resolved cheaply, and as a building that complies with the document and disappoints the client.
Contractor's Proposals and the order of precedence
The contractor responds with Contractor's Proposals. Where the two documents conflict, which prevails is a matter of what the contract says, and the position is not always what the client assumes.
This is the single most common source of argument on design and build projects. A client believes their Requirements govern; the contract as amended may provide that the Proposals do. The consequence is that an item the client thought they had specified has been priced at a lower standard and the contract supports it.
Reading the two documents against each other, item by item, before signature is unglamorous work that repeatedly pays for itself. The alternative is the situation described in contract interpretation disputes.
Novation, and who the designer now works for
On most design and build schemes the client's design team is novated to the contractor. The same people continue on the project, and their duty is now owed to the contractor rather than to the client.
This is normal and workable, and it also removes the client's independent design advice at precisely the point the design starts being value engineered. The architect who would have told the client that a proposed substitution is a downgrade is now employed by the party proposing it.
Clients who retain some independent technical and commercial advice after novation tend to end up with the building they specified. Equally, clients who do not tend to end up with the building the Requirements allowed.
Changes still exist
A fixed price under design and build is fixed against the Requirements. Any change to them is a variation, valued under the contract, and design and build variations are typically more expensive than under a traditional contract because there is no competitive market for them at that point.
Client changes are therefore the main way certainty is lost. That is not a criticism of the route; it is the arithmetic of it. The corollary is that the Requirements have to be right before signature, because afterwards every correction is bought at negotiated rates.
Where a client expects to keep making decisions, design and build is the wrong route and the certainty it appears to offer will not survive.
What has not transferred
Ground conditions, depending on the amendments. Statutory approvals outside the contractor's control. Existing structures where the client has better information. Client supplied information that turns out to be wrong. Delays caused by the client or by parties the client controls.
Each of those may or may not sit with the contractor depending on how the contract has been amended, and amendments are where the real allocation happens. A standard form heavily amended is not a standard form, and reading the amendments is reading the deal.
This is the point at which commercial review and legal review meet. Where the question is what a clause means, that is a matter for solicitors. Wherever it is what a clause costs, that is ours, and the two work best together.
Residential schemes and the specification trap
On residential development the risk is sharpest in the fit out, because unit specification drives sales value and is exactly where a contractor can save money without breaching a loosely drafted requirement.
Naming products or stating performance with a named equivalent standard is the practical protection. A requirement for a good quality kitchen is not a requirement. The related commercial issues are set out under residential development.
What this means for you
Spend the money on the Employer's Requirements. It is the cheapest risk transfer available and the only one that works. Every pound saved by issuing a thin document is spent several times over during the contract.
Then check the order of precedence, read the amendments, and keep some independent advice after novation. Those three steps decide whether design and build delivers the certainty it was chosen for. Our role in that sits under tendering and procurement.
About to sign a design and build contract?
Send the Employer's Requirements and the Contractor's Proposals. We will tell you what has actually transferred and what has quietly stayed with you.