Design-Build Novation – It’s Time for Some Rebranding
The design-build novation model is a project delivery method where a design team and contractor are joined together by the client and form a contractual and working partnership.
If you have experience in the construction industry, you’re probably familiar with projects that are described as an “arranged marriage,” a type of business partnership where you collaborate with individuals from organizations that you did not choose. Someone else, probably the owner client, arranged the partners to come together for the project — even when desiring a design-build delivery method. That’s where the term design-build novation was born.
What is Design-Build Novation?
The design-build novation model is a project delivery method where a design team and contractor are joined together by the client and form a contractual and working partnership. Instead of facing this forced partnership with a culture of mistrust and suspicion, a group of progressive clients, designers, and contractors are viewing this method with a fresh set of eyes to advance the design-build method and maintain a collaborative mindset.
Novation is not a new legal term, and it covers replacement of one individual or business contract with a new party. Everyone agrees — there are no hostile negotiations or takeovers. Novation supersedes the original contract and transfers rights and obligations to the new party. With design-build novation, we can use many of the design-build delivery processes and address contractual issues, which differs slightly from the traditional approach.
Design-Build Novation Project
The University of California Riverside (UC Riverside), a highly experienced client in collaborative project delivery is using the design-build novation model in three phases to deliver the North District Phase 2 Student Housing Development, a project of 1,568 beds. Before construction began, the campus worked with a trusted design partner, SCB Architects, to advance the project through 100% Schematic Design in Phase 1 before competitively procuring the design builder, McCarthy Building Companies, Inc. The combined team of McCarthy and SCB jointly collaborated “pre-novation” under separate contracts during Phase 2, to advance to 100% Design Development. Transitioning into Phase 3 Construction Documents, the contract novation occurred, when the owner from UC Riverside had cost confidence while ensuring the housing design met their requirements.
Reviewing the process through these three phases, the team could see the benefits of the architect’s influence on Phase 1 with the critical project requirements. In Phase 2, the team received the best of a Construction Manager at Risk arrangement with McCarthy expertise and assistance. Finally, during Phase 3, the benefits of a highly integrated and collaborative design- build team created a trusted environment to finish the documents.
Advantages of Design-Build Novation
Advantage 1: The criteria architect is the designer on the design build team.
During the planning stage of a design-build project, clients often procure a criteria architect to establish project criteria, such as Owner’s Project Requirements, drawings, and specifications. These documents form the foundation of a Request for Proposal from design build teams. Historically, the criteria architect provides continuing and limited assistance to the client but is precluded from participating as a member of the design build team when the project begins. This can be an unfortunate loss of project fidelity, as the criteria architect has likely invested hundreds of hours engaging with project stakeholders, understanding the client’s conditions of satisfaction, and even developed a conceptual design that the client likes. With design-build novation, the client’s criteria architect remains on the project instead of the contractor bidding with their own designers on a traditional design build delivery.
Advantage 2: Clients select the designers and contractor separately.
If clients have a history of working with a trusted architect and/or contractor, design-build novation allows them to offer contracts to each separately, but still reap the benefits of design-build delivery method’s collaborative approach.
Advantage 3: Many variations can occur with criteria document development and contractor procurement methods.
As design and construction industry professionals advance into more complicated projects with funding, state/federal regulations, and owner requirements, the need for flexibility and collaborative project team environments are apparent. Industry professionals can advance together, and design-build novation allows for variations with criteria document development and subsequent contractor procurement methods.
Design-Build Novation Done Right combines the benefits of a design team that has been engaged from the start and results in a fully integrated design build partnership that can ensure project success while driving to target budget.
Disadvantages of Design-Build Novation
With every project delivery method, disadvantages exist, and it won’t work for every owner. A few disadvantages for design-build novation are:
- This method doesn’t work well for novice design-build clients. It takes experience to understand how to manage the novation of contractor and architect and turn it into a collaborative environment and trusted team. Both the designer and contractor must have already established highly collaborative cultures.
- This method requires modification of contract documents to properly address the novation. This means bringing in legal experts who can work through the contractual issues in a timely manner.
- This method may not be compliant in all states and with all agencies.
Four Tips for Successful Design-Build Novation
- Tip 1: It’s beneficial for the architect, contractor, and owner to have experience in collaborative delivery methods to create the type of culture necessary.
- Tip 2: Minor adjustments should be made to the contractor-designer agreement (recommend DBIA 540) to address novation and transfer of design risk. The design risk shift occurs later than a traditional Design Build project. This contract language change addresses Spearin Doctrine. (Per DBIA, Spearin Doctrine is, “an implied warranty of sufficiency; in essence, a promise by the owner that the plans and specifications contain information entirely sufficient for the contractor to bid and build the project.”)
- Tip 3: It’s crucial to establish a clear communication matrix through the phases of Schematic Design, Design Development and Construction Documents.
- Tip 4: Create a foundation of trust that encompasses the designer’s communication channels with the owner and includes the design builder in Design Development and Construction Documents phases.
As experienced design-build individuals know, there is a history of poorly executed examples when two parties are forced into a partnership on a project. Most professionals assume the experience will be difficult and tension filled.
Excitedly, we are now three decades in from the inception of the Design-Build Institute of America (DBIA), and almost two generations of professionals are changing the culture and behaviors of our industry with design-build certification and training. Design-build novation is one method you can use with confidence on your next “arranged marriage” project.
Jason Dunster, P.E., is an Integrated Design Director at McCarthy Building Companies, Inc. in Newport Beach, Calif. He has more than two decades of experience as a designer, owner advisor, and contractor, much of that time spent as a design-build practitioner. Jason is an active regional and national participant in DBIA, a lifelong student of project delivery models, and a licensed civil engineer in California.
