Design-Build Contract: Terms, Examples & Standard Forms

A design-build contract simplifies construction by putting design and construction under one agreement. Instead of juggling multiple contracts and teams, the owner works with a single entity that handles everything from blueprints to the final build. This setup cuts down on miscommunication, speeds up timelines, and often keeps costs in check.

But not every design-build contract works the same way. The terms, pricing, and responsibilities vary, and getting them right can make or break a project. This guide breaks down what goes into these contracts, the risks to watch for, and when they’re the best choice.

What is a Design-Build Contract?

A design-build contract is a legally binding agreement where a single entity handles both design and construction. This approach simplifies project delivery by eliminating the need for separate contracts with architects and contractors. It streamlines decision-making, reduces disputes, and holds one party accountable for the entire project’s success.

This contract is not the same as the design-build delivery method, which refers to the broader project execution strategy. The contract is the legal framework that defines responsibilities, costs, and risk allocation, while the delivery method outlines how the work gets done.

If you're comparing different Construction Contracts, it's important to understand how design-build differs from other contract types in terms of risk, cost control, and project efficiency.

What is Included in a Design-Build Contract?

Design-build contracts can be customized to fit the needs of both the design-build firm and the customer. However, certain core elements should always be included to protect both parties and define project expectations.

• Names & Contact Information: Includes the full legal names and contact details of both the design-build firm and the customer.
• Legal Property Description: The official property details, typically taken from the deed recorded with the clerk’s office.
• Project Cost & Payment Terms: The agreed-upon price, payment schedule, and what happens if the customer cannot secure financing. Some contracts, such as a cost plus contract, allow for more flexibility in pricing, while a unit price contract bases payment on measurable quantities of work completed.
• Scope of Work & Completion Date: A detailed description of the work, along with a target completion timeline.
• Licensing, Permits & Insurance Requirements: Specifies the responsibilities for obtaining necessary approvals.
• Change Order Process; Defines how modifications to the project scope, design, or cost will be handled.
• Liability Clause: Clarifies who is responsible for design errors, construction defects, or unforeseen site conditions.
• Breach of Contract & Remedies: Outlines what happens if either party fails to meet contractual obligations.
• Dated Signatures: A legally binding signature section to confirm both parties agree to the contract terms.

How to Draft a Strong Design-Build Contract

A well-structured design-build contract protects both the owner and the contractor. It sets clear expectations, reduces risk, and helps keep the project on track. Without the right terms in place, disputes, cost overruns, and delays can quickly become major problems. Here’s what to focus on when drafting a strong agreement.

1. Clearly Define the Scope

A vague contract leads to misunderstandings and costly disputes. Outline exactly what’s included—materials, design specifications, construction phases, and deliverables. Make sure the contract leaves no room for assumptions.

2. Choose the Right Pricing Model

Different projects call for different cost structures. Pick the model that aligns with the project’s complexity and risk tolerance. Whether it's structured as a lump sum payment, a GMP contract, or another pricing model, the design-build approach brings flexibility to project delivery.

3. Specify Performance Standards

Define measurable quality benchmarks for design and construction. Include requirements for materials, safety, workmanship, and project milestones. This ensures both parties understand the level of quality expected before work begins.

4. Address Risk Allocation

Clearly state who is responsible for unexpected issues like design errors, cost overruns, or site conditions. Shifting too much risk onto one party can lead to inflated pricing or disputes down the line. A fair balance protects both sides.

5. Include a Change Management Process

Establish a clear process for handling design modifications, budget adjustments, and schedule changes. Define how changes are approved, who pays for them, and how they impact the timeline.

📌 Pro Tip: A strong contract is only as good as how well it’s managed. Tools like Mastt’s Contract Register help project managers monitor active contracts, track costs, and manage changes seamlessly, ensuring better financial control and contract compliance.

Standard Forms for Design-Build Contracts

Using standardized contract forms ensures consistency, legal protection, and risk management in design-build agreements. These forms define responsibilities, pricing structures, and performance expectations, reducing ambiguity and potential disputes.

While contracts can be tailored to specific projects, many countries have widely accepted standard forms that provide a reliable framework for design-build projects.

United States: AIA and DBIA Standard Forms

The American Institute of Architects (AIA) and the Design-Build Institute of America (DBIA) publish widely used contracts for design-build projects. AIA forms are commonly adapted for design-build, while DBIA contracts are specifically created for this delivery method.

• A101-2017 – Standard Form of Agreement Between Owner and Contractor (Adaptable for design-build projects).
• A195-2008 – Standard Form of Agreement Between Owner and Contractor for Integrated Project Delivery (IPD) with design-build elements.
• B101-2017 – Standard Form of Agreement Between Owner and Architect (Relevant when the owner hires an architect separately before forming a design-build contract).
• B102-2017 – Standard Form of Agreement Between Owner and Architect for a Project of Limited Scope (Used for smaller design-build projects).
• DBIA 530 – Standard Form of Agreement Between Owner and Design-Builder.
• DBIA 535 – Standard Form of Agreement Between Design-Builder and Architect.
• DBIA 545 – Standard Form of Agreement Between Design-Builder and General Contractor.

United Kingdom: JCT and NEC Standard Forms

The UK construction industry relies on Joint Contracts Tribunal (JCT) and New Engineering Contract (NEC) forms for design-build projects. These contracts focus on risk allocation, project efficiency, and legal clarity.

• JCT Design and Build Contract 2016 (JCT DB 2016) – The most commonly used design-build contract in the UK, transferring design and construction responsibility to the contractor.
• NEC4 Engineering and Construction Contract (ECC) – Option D – Tailored for design-build projects, emphasizing collaboration, risk sharing, and early contractor involvement.

Australia: AS Standard Forms

Australia has nationally recognized standard contracts that support design-build project delivery. These contracts, developed by Standards Australia, provide a structured approach to managing risk, cost, and performance.

• AS 4902-2000 – General Conditions of Contract for Design and Construct (Most widely used design-build contract in Australia).
• AS 4300-1995 – General Conditions of Contract for Design and Construct (Previously the standard but largely replaced by AS 4902-2000).

Canada: CCDC Standard Forms

The Canadian Construction Documents Committee (CCDC) publishes contract forms specifically for design-build projects. These contracts provide clarity on risk, pricing, and roles in the construction process.

• CCDC 14 – Design-Build Stipulated Price Contract (Used for fixed-price design-build projects, ensuring a clearly defined scope and budget).
• CCDC 15 – Design Services Contract Between Design-Builder and Consultant (Defines responsibilities between the design-builder and architects/engineers).

International: FIDIC Standard Forms

For global design-build projects, the International Federation of Consulting Engineers (FIDIC) provides internationally recognized contract forms that set clear expectations for project execution.

• FIDIC Yellow Book – Conditions of Contract for Plant and Design-Build (Commonly used worldwide for performance-based design-build projects).

When to Use a Design-Build Contract

A design-build contract isn’t the right fit for every project, but in the right situations, it offers faster delivery, cost control, and streamlined project management. It works best when owners need a single point of responsibility and want to reduce delays and disputes. Here are the most common scenarios where design-build is the ideal choice.

Infrastructure Projects

Large-scale infrastructure projects, like highways, bridges, and public transit systems, benefit from the design-build approach because of its efficiency. Government agencies and private developers use this method to meet tight deadlines while keeping costs under control.

Commercial Construction

From office buildings and hotels to retail spaces and mixed-use developments, design-build is widely used in commercial construction. Owners appreciate having one contract that covers both design and construction, reducing coordination headaches.

Fast-Track Projects

When time is a priority, design-build is the go-to choice. By overlapping design and construction phases, projects move faster than traditional methods. This makes it ideal for projects with strict completion deadlines, such as stadiums, healthcare facilities, or tech campuses.

Projects with Budget Constraints

Owners who need cost predictability often choose design-build. Contractors provide early cost input, helping prevent budget overruns. This approach minimizes expensive design changes and unexpected costs later in the project.

Clients Seeking Single-Point Responsibility

Design-build works best for owners who want to reduce disputes and simplify project management. With one entity handling both design and construction, there’s less finger-pointing when issues arise. This streamlined approach leads to smoother execution and fewer legal conflicts.

Design-Build Contract Example

A well-structured design-build contract clearly defines the responsibilities, scope, and risk allocation between the owner and the design-build entity. Below is a basic example that outlines the key sections typically included in a design-build agreement. This sample serves as a starting point and should be customized to fit the project's unique needs and legal requirements.

Final Notes on Design Build Contracts

A design-build contract brings efficiency, accountability, and cost control to construction projects by integrating design and construction under a single agreement. By clearly defining roles, risk allocation, and project scope, it reduces disputes and accelerates delivery. However, selecting the right contract type, pricing model, and legal framework is crucial to ensuring project success.

Whether you're working on large-scale infrastructure, commercial developments, or fast-track projects, choosing the right design-build contract can make a significant impact. Standardized contract forms provide a strong foundation, while customized agreements ensure flexibility. With the right structure in place, owners and contractors can collaborate effectively to deliver high-quality projects on time and within budget.