The Design Build Institute of America, or DBIA, is a nonprofit organization dedicated to promoting the understanding and use of design-build project delivery methods. Its contracts, which are structured to ensure success for both building owners and design professionals, cover all steps from preliminary agreement to final payment.
Why Design-Build Contracts?
When design-build construction appeared, professional associations such as the American Institute of Architects, the Association of General Contractors of America, and the Engineer’s Joint Contract Documents Committee acknowledged that new contracts were needed to address this new mode of construction. They issued their own design-build contracts, but those drafted by the DBIA were more widely adopted because they were easy to follow, well-organized, and appeared to make a reasonable allocation of risk between the parties.
The DBIA contracts published today document the relationship between and responsibilities of the different parties, such as:
- Trade contractors
They are fairly flexible, can be used in a wide range of design-build projects, and are appropriate for different industries.
How DBIA Contracts Are Structured
DBIA contracts assume that the project owner will engage the design-builder to carry out preliminary design and studies that end in a proposal to put together the construction documents and build the project. They can consist of up to three documents:
- The preliminary agreement
- Standard agreement between owner and design builder (may be for a lump sum payment or cost-plus-fee with an option for guaranteed maximum price)
- Standard form of general conditions.
What are the Terms and Conditions?
Below are some of the more noteworthy terms and conditions from DBIA forms 520, 525, 530, and 535.
- Ownership of documents: The design-builder owns the product of their design efforts while the project owner receives a limited license allowing them to use the documents under specific circumstances. If the owner terminates the business relationship and continues the project with another design professional, they must pay the design-builder a premium. The owner also cannot use the design as a prototype for other projects.
- Change: The project owner may make reasonable changes to the project. Change orders are used when both sides agree on a time and price adjustment to perform the work. The owner may also issue a work change directive when all parties agree that a change will be made but have not yet agreed on time or pricing adjustments.
- Hazardous conditions: If pre-existing hazardous conditions are discovered at the construction site, design-builder must stop work and notify the owner, who is required to remedy the situation and compensate the design-builder for any time or pricing impacts due to the delay.
- Standard of care and warranties: The design-builder must meet the standard of care necessary to achieve the agreed-upon performance standards. They agree to correct any work for a one-year period from the date that construction is substantially completed.
- Right to stop work: The design-builder may stop work and terminate the agreement if the owner takes certain actions that are tantamount to default. This includes failure to make payments when they come due. The design-builder must provide the owner with a seven-day notice before stopping work.
- Dispute resolution: In DBIA contracts, dispute resolution is a five-step process. After submitting a written notice within 21 days after the events giving rise to the dispute, the design-builder and owner must attempt to resolve the issue themselves. If this does not work, they must meet with senior representatives of both sides within 30 days. The matter is then submitted to nonbinding mediation and, if the disagreement persists, to binding arbitration.
Contact a New York Construction Law Attorney
While DBIA contacts are a common and reasonable starting point for design-build project negotiations, all parties should seek the advice of a construction law attorney. At Rosen Law LLC, we have negotiated these contracts for both owners and design-builders and will work to achieve a balanced document that is fair to both sides. For more information, please contact our office.