Design and Construct vs Construct Only Contracts (2023)

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Construct Only Contracts: No Design Responsibility

A Construct Only Contract is a type of construction contract where the contractor is solely responsible for the construction phase of a project. Under this contract, the contractor is not involved in the design or planning stages, which are typically completed by the owner or a separate design consultant before the construction begins.

Here are some key features of a Construct Only Contract:

  1. Defined Scope of Work: In a Construct Only Contract, the contractor is provided with a complete set of plans and specifications by the owner. The scope of work is clearly defined, and the contractor is expected to build according to these plans.
  2. Focus on Construction: The contractor’s primary responsibility is to execute the construction phase. They are not involved in the design or decision-making processes related to the project's concept or layout.
  3. Fixed Price or Lump Sum: Often, Construct Only Contracts are based on a fixed price or lump sum, where the contractor agrees to complete the construction for a set amount based on the provided plans and specifications.
  4. Limited Flexibility: Since the design is already completed before construction begins, there is limited flexibility for changes during the construction phase. Any changes to the design or scope of work usually require formal change orders and can affect the cost and timeline of the project.
  5. Risk Allocation: The contractor assumes the risks associated with the construction process, such as labor, materials, and adherence to the schedule. However, the risks associated with design errors or omissions typically remain with the owner or the design consultant.
  6. Quality and Compliance: The contractor is responsible for ensuring that the construction is carried out to the required quality standards and complies with relevant regulations and codes.

Construct Only Contracts are commonly used when the owner has a clear vision of the project and has already completed the design phase. This type of contract is suitable for projects where the scope is well-defined, and there is a low likelihood of significant changes during construction. It allows the owner to have greater control over the design, while the contractor focuses on efficiently executing the construction.

However, there is a "gap" risk, where the contractor is responsible for the construction of the works and the Principal's designer is responsible for the design - this can mean that arguments occur about responsibility for defective works if it is unclear whether faulty design or construction was the cause.

In my experience

D&C Contract - Contractor takes design risk, no "gap", less risk to Principal

Construct Only Contract - Principal engages Designer, Designer prepares design, Contractor follows the design. "Gap" risk and disputes about defects and design responsibility vs construction responsibility are common

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Design and Construct Contracts: A One-Stop Shop

Design and construct contracts are a popular choice for projects where the owner wants a single point of responsibility for both the design and construction of the project. Under this type of contract, the contractor is responsible for both designing the project to meet the owner’s requirements and constructing it to the agreed specifications.

Design and Construct Contracts are mostly the same as Construct Only contracts. However, some additional clauses are added, including:

    • design obligations

    • fitness for purpose

    • professional indemnity insurance obligations.

In my experience… design and construct contracts can simplify the management of the project for the owner and can lead to efficiencies in the design and construction process. However, they also require the owner to clearly define their requirements at the outset, and they place a high level of responsibility on the contractor.

From the Contractor’s perspective… Design and Construct Contracts can be challenging, as they require a wide range of skills and capabilities. However, they also provide an opportunity to add value through innovative design and efficient construction methods.

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About the Author

Rachelle Hare

Rachelle Hare - Managing Director and Principal Practitioner of Blaze Business & Legal

Rachelle Hare

Rachelle Hare is a highly experienced Construction Lawyer and Contract Lawyer, with over 23 years of experience in Tier 1 and Tier 2 Construction Firms, Top Tier Private Practice and Government.

With 23+ years of experience as a Senior Lawyer, Strategic Contracting Adviser and Management Consultant in Construction Law, Contracts, Major Projects, Commercial Advisory, Compliance, Procurement, Contract Management and Risk Management, Rachelle has the rare skills to offer you seamless business advice and legal advice to help support your organisation.

As well as a Lawyer and Business Adviser, Rachelle has also acted as a Strategic Procurement Adviser, Compliance Manager, Strategic Risk Adviser and Commercial Manager.

Rachelle owns
Blaze Business & Legal, a combined Commercial Law Firm and Business Advisory Firm located in Brisbane, Queensland, Australia. Blaze Business & Legal assists a broad range of clients in the Construction Industry and related industries, and advises owners, contractors, subcontractors, NFPs and other organisations on a broad range of Construction Law, Commercial Law, Business Advisory and Management Consulting issues in Brisbane, Queensland and around Australia.

Rachelle also owns Blaze Professional Learning, where she offers practical contracting skills, hands-on experience in drafting and working with contracts, and industry insights to help Professionals upskill and advance their careers with real-world skills.

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