DBIA Design-Build Contracting Approaches 2 — Questions and Answers
Question 1: In a stipulated sum (lump sum) design-build contract, who bears the financial risk if construction costs exceed the agreed price?
- The owner
- The design-builder (Correct answer)
- The surety
- The design subconsultant
Correct answer: The design-builder
Under a stipulated sum contract, the design-builder assumes cost risk and must complete the project for the fixed price regardless of actual costs.
Question 2: Which procurement method requires design-build teams to compete primarily on qualifications and approach rather than price?
- Competitive sealed bidding
- Qualifications-based selection (QBS) (Correct answer)
- Best-value selection
- Low-bid selection
Correct answer: Qualifications-based selection (QBS)
Qualifications-based selection evaluates teams solely on experience, technical approach, and past performance, excluding price as a selection criterion.
Question 3: A 'bridging' design-build approach is best characterized as:
- The owner hires a design-builder who completes all design internally
- The owner develops partial design documents used as the RFP basis, then a design-builder completes design and construction (Correct answer)
- Two separate design-builders split design and construction responsibilities
- A GMP contract with open-book accounting
Correct answer: The owner develops partial design documents used as the RFP basis, then a design-builder completes design and construction
Bridging uses an owner's criteria professional to develop preliminary design documents that define scope, which design-build proposers then use to price and complete.
Question 4: Under a Cost-Plus-Fee design-build contract, the owner's primary financial protection mechanism is typically:
- A performance bond
- A Guaranteed Maximum Price (GMP) provision (Correct answer)
- Liquidated damages clause
- Retainage withholding
Correct answer: A Guaranteed Maximum Price (GMP) provision
A GMP caps the owner's financial exposure in a cost-plus arrangement by setting the maximum amount the owner will pay for the project.
Question 5: Which of the following is a key advantage of the design-build delivery method over design-bid-build for owners?
- Greater owner control over design details
- Single point of responsibility for design and construction (Correct answer)
- Lower design fees due to competition
- Easier to change contract scope mid-project
Correct answer: Single point of responsibility for design and construction
Design-build consolidates design and construction responsibility under one entity, eliminating the finger-pointing that can occur between separate designers and contractors.
Question 6: In design-build contracts, a 'teaming agreement' between a designer and contractor before RFP submission primarily serves to:
- Transfer design liability to the contractor
- Define roles, responsibilities, and compensation within the design-build team (Correct answer)
- Satisfy bonding requirements
- Establish the GMP for the project
Correct answer: Define roles, responsibilities, and compensation within the design-build team
Teaming agreements establish the framework for how the design and construction partners will collaborate, share work, and allocate compensation during pursuit and project execution.
Question 7: Which contract pricing approach provides the owner the most cost certainty while incentivizing design-build efficiency through shared savings?
- Cost-plus-percentage fee
- Stipulated sum with no adjustments
- GMP with shared savings provision (Correct answer)
- Unit price contract
Correct answer: GMP with shared savings provision
A GMP with shared savings caps owner cost exposure while incentivizing the design-builder to find efficiencies by splitting any savings below the GMP.
DBIA Design-Build Contracting Approaches 2
In a stipulated sum (lump sum) design-build contract, who bears the financial risk if construction costs exceed the agreed price?