Best Practices – GC led Design Build – Why This is the Worst Contracting Model And You Should Never Use It.

No matter how many times I counsel against using a contractor to lead design-build projects there is always someone who rationalizes away all of the negatives.

I have written about General Contractor led Design Build (GC led DB) a number of times, but I continue to encountered Stakeholders who simply insist on this model.  Quite frankly there is little that I find redeeming about this model and I remain steadfast against it.

With respect to every other contracting model, I can honestly say that I hold a neutral point of view.  I see viable applications for everything from Multi-prime T&M to Stipulated Sum GMP and everything in between, but I honestly feel that GC Led DB is the most despicable form of contracting in the market.

I know how strong that statement sounds, but I’m taking the gloves off for this one.

Before I go on (and alienate all of my contractor friends) let me clarify that none of what follows is meant to suggest that ALL contractors are bad, nor am I suggesting that there are No contractors capable of delivering a good project under GC-led-DB.

For clarity, I feel I must take a moment to describe how GC led Design-build works.

GC led Design build is a variation of design-build where the General Contractor takes a prime contractual relationship with the Owner. All other parties (including the Architect) are sub-contracted to the GC.

This means that the Owner hires the General Contractor and then the General Contractor hires the Architect, the Engineers, and all the trade contractors.  In its worst form this model also allows the GC to subcontract the commissioning agents and maybe even buy the furniture.

This is your classic one-throat-to-choke turn-key design-build model.  Yes, all of those terms mean the same thing.

So why is GC-led DB so bad?

Oversight

Let’s start by considering the lack of oversight that a GC led DB model creates.

Regardless of how trusted your GC might be, there is no doubt that he is under strong financial pressure.  This is especially true if you have a stipulated sum contract. Such pressures tend to create ripe environments for bad behaviors.

You may recall the Cole Report which documented research performed by Professor John Cole CBE RIBA on construction work completed on 17 elementary Schools in the UK.

The studies were done in response to a collapse of a masonry wall at one of the schools.  Cole found construction flaws at all 17 schools.  His report concluded that the flaws were a direct result of a lack of oversight during construction.

All 17 schools were contracted under a GC-led-DB and in all cases the GC excluded construction administration from the Architect’s contract.  This left the GC as the only administrator of construction, allowing the work to be done with no independent oversight. The result was that the contractor cut corners failing to perform the work correctly.

Under schedule and cost pressures the GC’s from Cole’s report allowed improper construction techniques which were uncovered only years later.

With such strong financial pressures, it is inconceivable to believe that even the most thoughtful GC would not be tempted to cut corners when no one is looking.  Without a technically competent overseer (such as an Architect), the Owner’s exposure is too high and the risk to safety is simply unacceptable.

Conflict of Interest

Another critical flaw of the GC-led-DB model is the conflict of interest that is created for the Architect.

Consider for a moment that you have hired a Lawyer to defend you against a crime.  If your Lawyer uncovered some piece of information that incriminated you, would you expect your Lawyer to bring that information forward to the prosecution?  Or, would you expect your Lawyer to come to you first so you could present the information in the most favorable light making it appear less incriminating?

Most people would expect the latter and some may even elect to hold the information back hoping the prosecution is not as thorough.

This is exactly the scenario you create when you allow a GC to subcontract an Architect.

Contractually the Architect’s allegiance is with the GC NOT with the Owner.  In essence what you have created is a committee of technical experts free to conspire against you.

Under this model, the Owner has no technical expert of their own to objectively evaluate the Contractor’s work.  Should they suspect anything has gone wrong they have no one who can give them an unbiased point of view.

Closing

I could probably go on about cost and design control in this discussion but those would be comments more about the Design-Build model itself rather than a comment on the Contractor as prime.

I don’t expect this article will change the minds of those who strongly support GC-led-DB.  Those folks have an inherent bias difficult to overcome, but for those of you who perhaps are not as vested in this approach, I would hope that these two concerns would be compelling enough to influence you against this model.

Again, these are not jabs at GC’s.  There are many thoughtful builders who make a sincere effort to do their best work and would not cave to the pressures we have discussed here.  This is a comment about the inherent checks and balances that an Owner should have to ensure their project receives the highest standard of care.

What about you?  Do you use GC-led-DB?  Do you agree with the concerns I’ve raised?  Tell me your stories.

Thanks for reading.  If you enjoyed this content, please feel free to browse my previous articles and please like, share, comment, and subscribe.  This helps promote my content and is greatly appreciated.

 

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