Procurement method selection
Form D
Traditional contracts
Selection of a contract type
Please view the Index of construction documents to locate all documents referenced
throughout this text.
Contract details
Contract name:
Introduction
Consider the statements below to identify an appropriate contract type if Form B Preliminary assessment indicates a traditional contracting arrangement is suitable or to
develop a public sector comparator for a PFP. If Form C - Traditional contracts Assessment of whether multiple contracts are required indicates that multiple contracts are
appropriate, consider the statements for each proposed contract.
Each type of contract involves allocating risks differently between the contracting parties.
With traditional contracts, a primary difference is the amount of design control the contractor
is given. The more design the agency completes before a construction contract is awarded,
the greater the risk of errors and omissions in the tender documents. However, the more
design the contractor is required to complete, the higher the allowance in the contract price
for documentation risks and other unknowns. The less design details the agency provides,
the greater the risk that the contractor will not fully understand and allow for the agency’s
requirements.
If more design is allocated to the contractor, there is increased potential for the contractor to
introduce innovation or construction expertise to improve the value of the project. The
contractor may also be able to compress the program in order to achieve the target date, but
the longer tender process may offset this advantage.
Contract type
Consult with the agency responsible for the project to determine the preferred allocation of
design control and related risks, and consider the statements below.
Tick the relevant box if the following statement is true for the project.
1
The agency wishes to maintain control of the design
AND
there is sufficient time available for the agency to fully develop the design and
prepare construction documentation.
If this statement is true, then a developed design contract would be suitable. There may be
many reasons why an agency wishes to control the design, including an inability to define
the project requirements clearly enough to be confident that a contractor will produce the
required outcomes.
However, the agency may wish to allocate some of the design risk to the contractor.
Consider the following statement.
Tick the relevant box if the following statement is true for the project.
2
The project brief can be defined clearly
AND
the agency is prepared to give the contractor control of, and responsibility for,
the majority of the design, providing only a functional or performance
specification, and can reasonably expect that the contractor will be able to
introduce innovation and project improvements to increase value for money
AND
there is sufficient time available to document the project requirements and call
and evaluate relatively complex tenders.
If this statement is true, then a design and construct contract would be suitable.
October 2009
© NSW Government
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Procurement method selection
Form D
The agency may wish to control the concept design, to increase the certainty that the
finished product will meet its requirements. If the agency is not prepared to give the
contractor full control of all the design, but is able to provide the contractor with facilities and
component standards, then the agency’s design risk can be reduced by giving the contractor
responsibility for detailed design and documentation.
Tick the relevant box if the following statement is true for the project.
3
The project brief can be defined clearly
AND
the agency is prepared to give the contractor control of the detailed design and
documentation, on the basis of facilities or component standards, giving the
contractor the opportunity to improve buildability and increase value for money
AND
there is sufficient time available to develop concept designs and call and
evaluate tenders for detailed design.
If this statement is true, then a design development and construct contract would be
suitable. In addition, consider the following.
Tick the relevant box if the following statement is true for the project.
4
There is a significant, specific advantage to be gained by requiring the contractor
to engage the consultant who provided the concept design to complete the
detailed design.
Under these circumstances, a design novate and construct contract could be considered.
If sufficient time is not available to implement any of the above options, then a managing
contractor contract or multiple contracts should be reconsidered (see Form B Preliminary assessment or Form C - Traditional contracts - Assessment of whether multiple
contracts are required). Note that while the preparation of tender documents for a developed
design contract will take longer than for a design and construct contract, the tendering and
tender evaluation period for the latter will be longer.
Figure D - Selection of a contract type is a graphical representation of the above
considerations and provides a basis for determining an appropriate contract type. Record the
contract type identified through the diagram as an output on this Form.
Maintenance
Consider the following statements to assess the option of including a maintenance
component in the main construction contract.
Tick the relevant boxes if the following statements are true for the project.
5
The business nature of the facility will remain unchanged during the
maintenance period, say 10 years.
6
The agency wishes to trade off some control over maintenance to maximise the
potential for the contractor to introduce innovation into maintenance and (for a
DD& C or D&C contract) better allow for maintenance in design and
construction.
7
It is possible to clearly specify maintenance requirements, and associated
performance measures.
If all of statements 5 to 7 are true, then a maintenance component could be included in the
main construction contract. Note that this option becomes more effective as the contractor
is given more responsibility for the design.
October 2009
© NSW Government
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Procurement method selection
Form D
Outputs
Select only one contract type for each proposed contract.
Proposed contract type:
DD
Developed design
D&C
Design and construct
DD&C Design development and construct
DN&C Design novate and construct
Other considerations
Select the appropriate option:
Are multiple contracts being reconsidered?
Yes
No
Is a managing contractor contract being reconsidered?
Yes
No
Is maintenance is to be included in the main construction
contract?
Yes
No
October 2009
© NSW Government
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