Contractual pros and cons

Design and Build contracts in the UAE can still be improved, yet they can help build solid business relationships. PMP project director Hazem Al Mousli discusses some D&B issues.

Hazem Al Mousli: Approached are experimental.
Hazem Al Mousli: Approached are experimental.

Design and Build contracts in the UAE can still be improved, yet they can help build solid business relationships. PMP project director Hazem Al Mousli discusses some D&B issues.

In straightforward terms, how do you define a contract?

A contract, in its simple definition, is a verbal or written agreement between two or more parties. Accordingly, the parties are obliged to do, or not do, something. It also creates a legal relationship of rights and duties.

The parties involved have to get something in return for what they endure. If the conditions of the contract are breached by any party then certain remedies or compensation have to take place.

What type of contract is most common in the UAE?

In the UAE, Design-Bid-Build contracts once prevailed over other globally-recognised types. They were almost the sole type of contract in both private and public sectors for decades.

However, recently the Design and Build contract has strongly emerged to adapt to the rapid changes in the construction industry.

How does Design and Build differ from Design-Bid-Build?

In the Design-Bid-Build contract the client has to enter into two contracts, one with the engineer (the design professional) to design the project and the second with the contractor (the builder).

In the Design and Build contract, the client has to enter into one contract, as the two phases of design and construction are merged.

Why has Design and Build become the more recognised type?

One can easily notice that in a Design and Build contract, the contractual relationship is narrowed to involve the client and the contractor only. Hypothetically speaking, the engineer doesn't exist.

In an attempt to express their dissatisfaction towards the dissolving role of the engineer, many observers have referred to the construction process under Design and Build as a leap to the past.

Is the role of the engineer diminishing under Design and Build?

Notwithstanding the above, the contractor is sub-contracting the design phase to a professional engineering office in order to produce reliable design and engineering solutions.

Furthermore, it is mandated by the government regulations and legislations that the only authorised entity to provide official accredited design is a licensed engineering office.

How large an impact does the nature of the contract have on a project?

Selecting the right contract is one of the most challenging and crucial decisions that can be made during the life cycle of any project, due to its significant impact on its success.

Such a decision is usually taken after a comprehensive review and comparison between opportunities and threats. Usually, such comparisons are debatable.

Nevertheless, saving time and cost by overlapping the design and construction phases, utilising the contractor's experience and know-how by providing the most cost-effective and doable design and holding the contractor solely liable for both design and construction deliverables are apparent advantages.

At the same time, inconclusive cost estimating and budgeting as the design is evolving during the construction stage, less control on quality of the deliverables due to the absence of the engineer, and the constraints to propose alternative designs to the client can be considered as major pitfalls.

How did Design and Build originate?

Design and Build contracts have been globally recognised and used since the early 1990s. They have been used for simple projects such as the construction of warehouses and other simple structures as well as for complex projects where new technologies and designs have to be incorporated.

It is always recommended to adopt a Design and Build contract when the project has multiple design and construction phases.

Has the adoption of Design and Build in the UAE been smooth?

In the UAE, participants in the construction industry usually recognise and endorse the use of Design and Build contracts, in both government and private sectors, especially with unique designs or construction works. In May 2005, the mega Dubai Metro project was awarded on a Design and Build contract basis.

How has Design and Build progressed in the UAE?

Being relatively new to the local market, working under Design and Build contracts is still subject to experimental approaches and the level of proficiency is yet to be improved. The regulations also have to be modified in order to support and facilitate the use of such contracts.

Allowing the contractor to assume the responsibilities of both the designer and the builder, rather than compelling him to sub-contract the design works to an engineering office, is important.

Is Design and Build here to stay?

Undeniably, Design and Build contracts have played a major role in overcoming many impediments facing the construction industry. They are also the reason behind creating a strong relationship and business bond between the client and the contractor following the completion of a successful project.

However, the conditions of Design and Build contracts should be continuously re-visited to comply with constant changes in the industry.

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Construction Week - Issue 767
Sep 01, 2020