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Design Build vs Design Bid Build

We get three types of inquiries from homeowners in the Toronto area.  The first is from homeowners who are looking to build, and want to have one company look after design and construction.  The second is from homeowners who already have a set of plans, and are looking for a builder to construct their project.  And finally, there are the homeowners that don’t know where to start – should they start with a builder, or should they start with an architect?  A design build approach, or a design – bid – build approach?

Very simply, design build is a project delivery system where one person or company is responsible for the entire project from start to finish.  This includes design, obtaining building permits, and finally building the project.

With the design – bid – build approach, the homeowner hires an architect to complete the design work.  The plans are then given to various builders to get a bid, or a price, on the project.  The homeowner then decides which bid and builder they will accept.

Both approaches are good for all types of projects: major renovations, house additions, and custom homes.   And both are equally popular.  There are pros and cons to both methods.

Some of the key benefits of design build are:

–       Single point of contact – One company handles everything from start to finish

–       Faster completion – Eliminating the bidding process saves time, and phases of work can be overlapped, for example pricing can start before all work is completed

–       Less risky for the homeowner – One entity is held accountable if problems occur.

–       Earlier knowledge of final cost – With the design build approach, the homeowner knows at an earlier point what the estimated cost of the project will be, and can alter plans to meet the budget.

The key attraction of the design – bid – build approach is the potential to save money.  In theory, with all builders bidding on the same set of plans and specifications, the homeowner can obtain the best price for the construction portion of the work.

There are drawbacks to design – bid – build:

–       Multiple points of contact – The homeowner deals with an architect and a builder, and may find themselves serving as a mediator between the parties if a dispute arises.

–       Increased risk to homeowner – The builder is bidding on a set of plans.  Errors in the plans may lead to increased cost and time delays, and change orders due to design issues are common.  Over the years, we have often received plans that have had errors.  When we do find an error, our first call is to the homeowner, who then has the additional responsibility of dealing with the issue.

–       Increased time to complete – The additional bidding time required after plans are complete automatically increases the amount of time it takes to get the construction portion of the work underway.  Homeowners and architects sometimes try and speed up the process by sending an incomplete set of plans to the builder to obtain a bid.  The danger with this approach is reliance on a “bid” that really should be called an estimate.

–       Cost is not known until design is complete – With design – bid – build, the final cost is not known until the design is complete and the bids have been received.  In many cases, homeowners spend thousands and thousands of dollars in design, only to find out no builder is able to build their project within the funds they have available.  Over the years, we have seen numerous projects where design has been completed, and in some cases the building permit obtained, only to be cancelled because the homeowner is not able to afford the project.  We have seen design – build projects cancelled as well, and these cancellations are less frequent, and have occurred early on the process before large amounts of money have been spent on design.

So how should a homeowner proceed?

If you’re going with a design build approach, make sure the company you choose has a track record of building the type of project you are undertaking, within budget.  And sign agreement for the design portion of the work only, so that you are not required to build with that builder in the event things don’t work out.

With the design – bid – build approach, the most important thing is to understand what the cost of building is going to be.  It may be prudent to hire a builder to provide an estimate on the design and changes to the design on an ongoing basis, to  ensure the project will be affordable when design is complete.   The second most important is to work with an architect who has a track record of producing complete and accurate plans.