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Design and Construct Contract

Written by Nick Gillies and Michael O'Brien on January 30th, 2014.

The D&C contract is similar to the Construction contract, while obviously being tailored for a design and build context.  The key features and main differences with the Construction contract are:
  • The Contractor’s obligations include responsibility for the design as well as construction of the works.
  • The “Principal’s Requirements” defines the requirements for the design.As a minimum this will set out the purpose and performance required of the works, and may also include preliminary or conceptual designs, drawings, specifications and other design documents.The Principal’s Requirements will usually be described or contained in the tender documents, as modified or developed during post tender negotiations.
  • The Principal’s Requirements will prevail over the Contractor’s tender if there is any conflict between them.
  • The Contractor will normally be required to arrange professional indemnity insurance.This will be specified in the Special Conditions (Schedule 1) together with the minimum level of cover.
  • The Engineer may review the Contractor’s design prior to construction and can request explanations or supplementary design documents if the Engineer believes the design is ambiguous, unclear or does not comply with the contract.The Engineer can also reject design documentation if it does not comply with the Principal’s Requirements or the contract (but the Engineer must do so within 10 working days of receipt, unless another time period is agreed).If a design document is rejected, the Contractor is required to submit amended design documents to the Engineer for consideration within a further 10 working days.Construction on this part of the works cannot commence until this process is completed and the relevant documents have effectively been ‘approved’ by the Engineer.
  • Notwithstanding the Engineer’s power to review the design, the D&C contract states (clause 5.1.12) that the Engineer owes no duty of care and is under no obligation to identify or point out errors or omissions with regard to the design, and that no review will relieve the Contractor of liability (clause 6.2.5).This is likely to make it difficult (if not impossible) for the Contractor to allege contributory negligence by the Engineer for any design defects.
  • The Principal can, in certain circumstances, terminate the Contract if unacceptable conditions are imposed by public authorities in licenses for the design or construction.
We note that the D&C contract does not include a standard form warranty from the Contractor’s consultant(s) to the Principal in relation to the design.  The form of warranty at Schedule 13 applies only to the construction works.  As a result, the parties will need to modify this or prepare their own separate warranty for the design.
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