DBIA - Design-Build Institute of America Risk Management and Allocation Questions and Answers

Question 1

According to DBIA's principles of risk allocation, how should the risk of unforeseen subsurface conditions be handled when the owner possesses but does not disclose a preliminary geotechnical report?

Accepted Answer

The owner retains the risk, as they are in the best position to manage it by providing known information.

Answer

The fundamental principle of risk allocation in design-build is that a risk should be assigned to the party best able to manage it. In this scenario, the owner possesses critical information about potential subsurface conditions. By withholding this information, the owner prevents the design-builder from appropriately assessing and pricing the risk. Therefore, the owner retains the risk associated with the undisclosed information because they were in the best position to manage that specific risk by sharing the report.

Question 2

In the design-build context, the legal precedent known as the Spearin Doctrine, which traditionally holds the owner liable for defective plans and specifications, is fundamentally altered. How does design-build reallocate this risk?

Accepted Answer

The design-builder assumes the risk for the adequacy and accuracy of the design to meet the owner's performance requirements.

Answer

The Spearin Doctrine establishes an owner's implied warranty that plans and specifications are accurate. In design-build, the design-builder is responsible for developing the design. This delivery method shifts the single-point responsibility for both design and construction to the design-builder, who then warrants to the owner that the design will be sufficient to meet the project's requirements. This transfer of design liability from the owner to the design-builder is a core advantage of the design-build model.

Question 3

An owner establishes a project budget that includes both the design-builder's contract price and a separate owner's contingency. According to DBIA best practices, what is the appropriate use for the owner's contingency?

Accepted Answer

To fund owner-directed scope changes or deal with risks explicitly retained by the owner.

Answer

The owner's contingency is a fund set aside to manage risks that the owner retains. These typically include things like owner-directed changes in scope (e.g., adding a new feature), unforeseen site conditions for which the owner has retained risk, or other defined events outside the design-builder's control. It is not intended to cover costs for which the design-builder is responsible, such as poor performance or design errors.

Question 4

During a design-build project, a nationwide shortage of a specified cost-effective material arises, threatening the schedule. Which of the following actions best demonstrates a proper collaborative approach to managing this risk?

Accepted Answer

The integrated project team (owner and design-builder) collaborates to evaluate alternative materials, weighing cost, schedule, and life-cycle impacts to find a mutually acceptable solution.

Answer

Design-Build Done Right® emphasizes collaboration to solve problems. A force majeure event like a material shortage is a project risk that is best managed jointly. The integrated team can work together to explore options, perform value engineering on alternatives, and make an informed decision that best serves the project's goals, rather than defaulting to a purely contractual or adversarial stance.

Question 5

Which of the following represents a significant misallocation of risk that contradicts the principles of 'Design-Build Done Right®'?

Accepted Answer

The contract requiring the design-builder to assume liability for all unforeseen site conditions without providing any preliminary site information.

Answer

Forcing a design-builder to accept a 100% 'blind' risk for something like unforeseen site conditions is a poor practice. DBIA principles state that risk should be allocated to the party best able to manage it. Without any information, the design-builder cannot reasonably assess or price this risk, forcing them to either carry an excessive contingency (raising the project cost) or potentially face a catastrophic loss. The owner is better positioned to manage this risk initially by providing all known information.

DBIA - Design-Build Institute of America Certification Practice Test

DBIA - Design-Build Institute of America Certification Practice Test

DBIA - Design-Build Institute of America Risk Management and Allocation Questions and Answers