Government as 'smart client' - Chapter 5 Procurement of buildings and infrastructure

This chapter outlines the various procurement methods in common use and their potential impact on design. It suggests strategies to improve and enable good design outcomes.

You can download Government as 'Smart Client' Chapter 5 - Procurement of Buildings and Infrastructure here or find the full text below.


A key legacy offered by any government is the quality of buildings, infrastructure and the public realm that they produce. Well-designed buildings and places promote community pride and identity and offer an enduring legacy. Over the life of a building, evidence shows that bad design ends up costing money, while good design ends up costing less and, at the same time, adds real value.

Good design does not just happen: it is purposefully and carefully undertaken by skilled practitioners, valued by the client, and needs to be protected through delivery of the project.

The process of procurement of a well-designed building starts with the appointment of a quality design team. From there, procurement refers to the management of the construction of a building to its completion. It involves not just the contractual method used, but also the execution of a built project from idea to delivery and on to operation.

The method by which a building project is procured has a significant impact on the quality of the final building. While good design is able to be achieved with all procurement methods, some make it seriously challenging unless their potential threats to design quality are understood and well managed.

This document sets out the various methods used in Victoria for the procurement of buildings and the strategies recommended for each to assist in achieving quality design outcomes.

Geoffrey London, Victorian Government Architect 2008-2014

Executive summary

The Victorian State Government is the largest procurer of design services in the state, having an enormous impact on the construction industry and on Victoria’s standing as a state with which to do business.1 The government’s legacy from this role is the quality of buildings and public realm it delivers together with Victoria’s reputation for innovation and liveability. It is important, therefore, that government and its agencies are informed appropriately to enable them to deliver and support well-designed outcomes for all Victorian projects.

The Office of Victorian Government Architect (OVGA) considers that there is substantial opportunity to improve design outcomes by improving design procurement practices that impact on design quality. The procurement of a quality project relies upon the engagement of a quality design team. It involves not just the contractual method used, but also the implementation of a built project from idea to delivery and on to operation. It is important to distinguish between the procurement of buildings and infrastructure and the procurement of design services.

Key steps for improving procurement of design services that impact on design quality

  1. Develop the Vision Statement for the project at its inception, including the high level design outcomes to be achieved.
  2. Appoint a design champion to help guide the project and procurement of design services.
  3. Appoint a client team and project managers who understand that good design is fundamental to achieving high-quality buildings and infrastructure.
  4. Create a quality design team brief that clearly articulates the design ambitions.
  5. Ensure a realistic project budget based on initial design testing and benchmarking as part of any business case.
  6. Encourage the use of Expressions of Interest (EOI) and Requests for Proposal (RFP) to procure design teams.
  7. When using competitions to procure design teams, ensure a two-stage submission is used for larger projects, a reasonable budget that reflects the brief and pay bidders for work in stage two.
  8. In assessing bids for architectural services, separate the design fees from the assessment criteria and utilise quality based selection. When the preferred design team is identified, evaluate their design fees to determine the value for money each bid represents.
  9. Engage the design team early.
  10. When using reference designs ensure that they are developed to set a qualitative benchmark, integrate the design ambition and establish a commitment to design excellence.
  11. Ensure design teams value the whole-of-life impact and the social, cultural, economic and environmental performance of a development and environmental performance of a development.

Key steps for improving the procurement of buildings and infrastructure that impact on design quality

  1. Design quality needs to be prioritised and embedded early in a project – regardless of the procurement method. If the risks to design quality are understood all procurement methods can be effective.
  2. When selecting the preferred procurement methodology for a project, ensure design quality is considered as part of the procurement analysis and included as part of the selection criteria.
  3. Ensure there is a clear, well-articulated vision for the project that includes expectations in relation to design and architectural quality.
  4. Allow adequate time and resources in earlier stages of the project to develop a clear design intent and project design brief. This should explain the design outcome to be achieved and form an important part of the tender documents to help protect the design quality.
  5. Seek design advice from a design champion, Design Quality Team (DQT) or the OVGA to assist with quality management in the Expression of Interest (EOI), contract and project brief.
  6. Involve stakeholders, facility managers and users in the design process.
  7. Consult the design team for advice in the appointment and selection of the head contractor.
  8. Provide a realistic contingency for design and construction to ensure design quality can be delivered.
  9. Ensure provision for independent design advice (DQT) or design review at key project milestones.
  10. Undertake Post Occupancy Evaluation to capture key lessons and to inform future projects. 

All current procurement methods have the capacity to enable good design outcomes. However, with improvements to both the client culture and the procurement processes, higher standards can be achieved to the benefit of all those who use public buildings, infrastructure and places.

Victoria’s future reputation for good design and the quality of its built environment relies upon recognising the value that design adds over the lifetime of the building. Well-designed buildings have a direct impact on the standard of public services provided and the quality of life of those who use them.2 If we accept that the quality of architecture affects the quality of lives – and considerable evidence now demonstrates that this is the case – then it makes sense and is responsible to put in place steps that enable such quality to be achieved.

Through discussions with government agencies and industry participants, it was identified that to support good design in public projects further initiatives should be pursued. The following list highlights the key recommendations that will support effective procurement and strategies to enable good design.

Key recommendations for government from ‘Government as Smart Client’

  1. Ensure that the importance of design quality as a project selection criterion is established from the outset of the selection process through the documentation, in the weighting given to design and design capability in the bid evaluation criteria, and finally in the development of contractual documentation and sign-off procedures.
  2. Allow enough design time for projects of real quality and innovation to emerge with realistic budgets that consider whole-of-life costs.
  3. Develop flexible but consistent procurement processes for engaging architects and other designers to protect design quality.
  4. The OVGA will help identify and support the role of design champions within departments and agencies.
  5. The OVGA, in association with the Department of Treasury and Finance (DTF), support best practice in the establishment of consistent and fair Government contracts to protect design quality.
  6. When appropriate utilise the OVGA’s expertise to assist the Gateway process of a project to ensure design quality. Eg. review of briefs and EOIs, selection panels, design review, internal peer review, design quality teams.
  7. Establish a mechanism for OVGA design advice at a project’s inception.

These guidelines provide practical steps to ensure that government, as a ‘smart client’, delivers excellence in the procurement of design, buildings and infrastructure. The guidelines are not mandatory and do not represent a new layer of process; rather they integrate essential design quality measures within the existing planning and delivery framework of government. They aim to influence design quality for public buildings to ensure an enduring legacy for future generations of Victorians.

Procurement of buildings and infrastructure

Procurement is derived from two Latin words: pro and curare. It means to manage or to care for something.

Within the Department of Treasury and Finance is understood as the process of engaging a supplier to deliver capital asset investments, including buildings, civil infrastructure and information and communications infrastructure. Procurement commences when government makes a decision to invest in responding to an identified objective. It includes the process of seeking market solutions to deliver the investment and concludes with contracting the successful proponent to undertake the required scope of works.

In the context of these guidelines building procurement means the management of and stewardship for the construction of a building or infrastructure. Procurement involves not just the contractual method but also the execution of a built project from idea to delivery and onto operation and audit. The success of a construction project is fundamentally affected by the meshing of the client’s needs and objectives with the appropriate procurement method.

The OVGA is committed to procurement that:

  • Delivers the best value to the government, community, stakeholders and users.
  • Delivers a better designed built environment and provides an enduring legacy.
  • Supports conservation and innovation.
  • Balances social, environmental, economic and cultural issues.
  • Provides a clear and collaborative design and delivery process.

The OVGA has identified strengths and weaknesses in the most widely used procurement processes. Depending on the procurement method chosen, it may either impede or enhance achieving the best design outcomes. Different procurement methods create different balances in the critical relationship between quality, cost and time.

The following outlines the various procurement methods in common use and their potential impact on design. It suggests strategies to improve and enable good design outcomes.

A key difference between various procurement methods is whether they involve ‘direct’ procurement of design or ‘indirect’ procurement of design. Direct procurement of design ensures that the client has direct control of the design process whereas the indirect procurement method sees the responsibility for design delivery fall within the head contractor’s jurisdiction. The selection of an appropriate procurement method is a critical part of the ambition to achieve high quality design, and to the ultimate success of the project.

Direct procurement of design

The ‘direct procurement’ process is where the client selects the architectural and related consultancy services independently of procurement of the building. Direct procurement allows the client to conduct their own selection process for the design team and to engage the successful applicants directly (examples of building procurement methods where this occurs include traditional lump sum, construction management and management contracting).

Direct building procurement

Direct engagement of the design team


  • Established system, well understood in the industry.
  • The selection process for the design team can include a ‘design approach’ or ‘competition process’ that encourages innovative design and enables the client to select on the basis of design ability and a match to their needs. Depending on the selection process chosen, it allows for testing of the capacity of the design team to work well with the client.
  • High level of interaction between the client and the design team maximises results for the client – the design team is primarily concerned to satisfy the client.
  • The client gets the design and scope it wants and can totally control the process.
  • High quality outcome likely.


  • The client retains the risks of time and cost.
  • Changes in detail will open a discussion about a variation and potential cost increases and delay during construction.
  • The overall delivery process is slower because it relies on a completed design and full documentation before tendering to builders.
  • Less opportunity for the builder to innovate.

The ‘procurement of buildings’ is the act or process of bringing about or bringing into existence buildings.

Standen, D. Construction Industry Terminology, RAIA Practice Division, 1993

When appropriate

  • When close control over the design is necessary and there is a need to maximise innovation on behalf of the client.
  • When the client knows what they want and there is little or no likelihood of changes.
  • When the optimum design can be completed without involving the builder or the operator.
  • When the client is able to manage effectively the design process and the interfaces between the design and construction.
  • When the client’s design/specifications can be thoroughly documented and effectively communicated.
  • When there is sufficient time available to complete appropriately the detailed design prior to construction award.
  • When the client is capable of understanding the challenges associated with infrastructure design and delivery and effectively manages the design team to generate a design that meet the requirements of the project definition for the lowest outturn cost.

The following forms of building and infrastructure procurement all work with the direct procurement process.

Traditional construct only

Traditional building procurement is based upon full Lump Sum Contracts. Under these commonly used forms of contract the architect is engaged directly by the client to undertake all stages of the design process and assist in administering the client’s separate contract with the builder.

The client engages the builder independently of the architect to build the works as described in the contract documentation, including specifications prepared by the architect. The client tenders these documents to a field of competitive bidders, which normally comprise a building contractor with a number of subcontractors. The selected bid documents (drawings, specification and tendered price) then form the basis of the lump sum contract between the client and the contractor i.e. the successful bidder.

Construct only contracts are considered appropriate when:

  • The scope of work is well defined and client-instigated changes, resulting in variations to the contract price, are limited.
  • High quality design is critical from the outset of the project. As a result the project is fully designed and thoroughly documented before tenders are called and quality management relies upon the architect and client.
  • The client is requiring, through the period of building construction, expert advice independent of the builder.

Traditional construct only – impact on design


  • Enables client to control scope, design and vision.
  • Allows adequate time to consult a range of stakeholders to develop design fully.
  • Opportunity for clear design intent from the outset of the project with detailed documents outlining overall design intent.
  • Responsibility for the subcontractor performance, time and cost remains with builder.
  • Completion of full documentation prior to tendering the works should reduce risk of additional claims by builder.
  • Established process clearly understood by designers, contractors and client.
  • If there is high quality design and documentation and a good builder, a high quality built outcome is likely.
  • High level of interaction between an informed client and the design team maximises design innovation – the design team is primarily concerned to satisfy the client.
  • Tender and tender evaluation costs are relatively low as only construction work is tendered.
  • If interfaces between design and construction are managed effectively then construction delays are kept low as full documentation defines scope of contract.


  • Removes the opportunity for collaboration with the contractor during design phase. As a result the selected builder has no prior knowledge of the design intent. The tender therefore needs to cover everything on the drawings and specification. Items that are missing from, or not clearly defined on the documents, then become the basis of claims for extras and possible disputes.
  • Potential lack of consideration of whole-of-life cost.
  • Relies on a completed design that is thoroughly documented and effectively communicated before tendering to builders and work commencing on site.
  • Client must outlay almost all the consultant fee costs before proceeding with the construction phase.
  • Industry is engaged only at the final stage of the design process. There may be insufficient consideration of constructability issues during the design development.
  • There is minimal opportunity for innovation by the contractor. Consultants undertake all design work.
  • A reduced scope of architectural services and/or fees leads to documentation that is not of a sufficiently high quality for a client to be confident about maintaining the tendered cost.

Action - to benefit good design

  • A clear design intent and brief explaining the design philosophy as part of the tender documents will help protect the design quality.
  • A well-defined scope of work and comprehensive documentation to reduce variations to the contract price.
  • Careful selection of the design team to ensure requisite design expertise in addition to capacity and experience.
  • Establish appropriate contingencies and clear and rigorous documentation.
  • Engage design advice from the architect to assist with the design quality management in brief and contract development.
  • The client understands the impartial role of the architect and their expert advice, independent of the builder.
  • Ensure provision for independent design advice at key project milestones. This may include advice from a design quality team or design review at the end of schematic design or design development.
  • The client is capable and understands the challenges associated with infrastructure design and delivery and effectively manages the design team to generate a design that meets the requirements of the project definition.

Construction management

A construction management contract is where the ‘traditional builder’ is replaced by a construction management organisation. Their responsibility is to work directly for the client in the management of the construction phase. The works are completed by a series of trade contracts between the client and each contractor. The construction manager does not take any cost risk or design risk although the construction manager may be paid to assist the client with cost control and design advice. A significant aspect of construction management is that the construction manager has no direct involvement in the payments to the trade subcontractors.

These contracts are also used to carry out maintenance or upgrading work. The advantage is that they allow the early stages of construction to commence while the design and documentation of later trade packages are being finalised. For example, hospital upgrades often require staging such that the hospital remains operational while staged construction works are undertaken. The construction manager performs a purely management and coordination role without the same risk in terms of delivery and is generally paid an agreed fee. The fee may be a fixed lump sum, a percentage of the building cost, or an agreed hourly rate. The client manages the scoping and appoints the design team.

The role of the design team and their relationship with the client and construction manager is very similar to the traditional contracts between architect, client and contractor. More recently, the construction manager has taken over some of the architect’s traditional roles, such as certification during construction. It is also becoming more common for the design team to be novated to the construction manager.

Construction management is considered appropriate:

  • Where the client needs to start work on the early stages of construction while the design and documentation of later trade packages are being finalised.
  • Where the client needs to retain direct control over works e.g. in an operating hospital or rail corridor.
  • For complex projects where it is not possible for design of some elements to be started before work is undertaken on others.
  • If a contractor financially collapsed mid-project, it may be more efficient to complete the project through construction management than to fully document and tender the balance of the works as a single package.

Construction management – impact on design


  • The direct payment by the client to the trade contractors provides a climate for a better working relationship on site and removes the typical delay associated with a payment from the builder to the subcontractor.
  • Claims for variations and time extensions are directly related to trade contract claims as opposed to a builder’s claim under lump sum contract that may or may not relate to any particular trade contract delays on site.
  • Input of construction advice into the design is readily enabled.
  • Construction may commence prior to the completion of the design, allowing for project time compression.
  • Construction management allows for competitive tendering as packages of work are developed.
  • The client selects the architect and design consultants.


  • The construction manager does not take any cost risk or design risk although the construction manager may be paid to assist the client with cost control and design advice.
  • The final project cost is not known until later in the construction when the last package is let.
  • The construction manager acts as an agent for the client and only takes the risk for their own services, with a responsibility on a best-endeavours basis to achieve defined objectives. The trade contractors are contracted directly with the client, and the client takes the risk of the trade contractors.

Action - to benefit good design

  • Early involvement of the construction manager to assess buildability prior to commencing design development.
  • Engage independent design advice from either a design champion, design quality team (DQT) or the OVGA to assist with design quality management in preparing the brief and contract development and at key project milestones.
  • An established and positive working relationship between the construction management organisation and the subcontractors.
  • Ensure that the construction management fee is subject to achieving design benchmarks or assessment via Key Result Areas (KRAs) as assisted by independent design advice.
  • Ensure that each trade contract agreement specifically refers to design quality and explains how it will be delivered.

Managing contractor

This form of contracting involves the client appointing a head contractor (the managing contractor) who may deliver or engage subcontractors to deliver the works. The managing contractor is responsible for administering these subcontracts and accepts some delivery risk, manages the scope definition, some or all of the design documentation and construction of the works. The client and the managing contractor generally negotiate a fixed lump sum management fee. The managing contractor may also receive incentive payments for achieving cost and schedule targets. There are many variants of the managing contractor model in use by agencies across Australia. The design team, including architect, may be appointed prior to the managing contractor where their primary role is to create a design brief, documentation and specifications as a basis for the tender documentation to be issued to competing managing contractors. Once the managing contractor is appointed, the design team continues to develop the documentation so that the managing contractor can let each specialist package.

They may be engaged early in the process to manage the scope definition, design documentation and construction of the works. The managing contractor can also determine elements of the design and/or construction and is paid for these services, in addition to the management fee. The managing contractor does not undertake the work – rather, they are engaged to manage the work of the subcontractors.

The managing contractor is typically:

  • The person who engages the subcontractors, with the managing contractor being paid a management fee (based on a fixed lump sum or percentage of actual cost) and may receive incentive payments for achieving target price or other key parameters.
  • Responsible for preliminaries (e.g. crane hire, site sheds, supervision services etc), general project requirements (e.g. security, insurances etc) and project management (e.g. scheduling, coordinating, liaising, monitoring, reporting etc).
  • Responsible for preparing the trade packages, conducting the tenders, and selecting suppliers in close collaboration with the client.
  • Responsible for the quality of the design and construction.
  • Responsible for warranting the fitness for purpose of the design and the completed works and the completion of the works by the date for practical completion.
  • Responsible for the planning and implementation of quality assurance covering all of the works undertaken by the subcontractors, suppliers and consultants.
  • Warrants the suitability and completeness of the subcontract construction documentation and for ensuring that it is consistent with the developed design.

Managing contracting is considered appropriate:

  • For complex or high-risk projects with uncertain scope, risks or technology.
  • Where a high degree of expert government input is available.
  • Where early contractor involvement is beneficial.
  • Where the managerial skills of the parties involved can best be utilised.
  • When industry input and innovation during the design stage are desirable. The specialist subcontractors, architect and managing contractor work together to develop project requirements, resolve issues and develop the design.

Managing contractor is virtually the same as construction management with one major difference – the managing contractor not the client, enters into numerous trade contracts directly with trade contractors.

Managing contract – impact on design


  • The client may appoint the design team before the managing contractor.
  • Potentially allows for a reduction in the project duration and improved working relationships between the project parties.
  • There is a single point of responsibility for the design and construction of the works including fitness for purpose.
  • The client retains a higher degree of control over the management of the project – the client has the ultimate right to choose which consultants and subcontractors are used and also has final say over the design.
  • Design changes to the works may be easier to accommodate due to the progressive nature of letting trade contracts. If a finishing package (e.g. joinery) has not been let, it is possible to delay the final documentation until much later in the overall program than would be allowed under a traditional lump sum approach.
  • The client brings insider knowledge, stakeholder interactions, technical skills etc to complement supplier skills and it is necessary for the parties to collaborate to achieve optimal project outcomes.
  • Can facilitate the early involvement of the contractor allowing buildability issues and whole-of-life considerations to be addressed during the design phase.
  • The client and the managing contractor are able to collaborate to develop the project requirements and resolve issues through the design and construction phases of the project.
  • The client can provide input into the design development and has opportunity to influence the design and construction processes.


  • Insufficient time to establish the scope and develop the tender documents.
  • When payment does not include quality of design as a key performance parameter.
  • Difficulty setting cost targets with limited design details.
  • Contract obligations to achieve design ambitions are not clear and do not clearly outline the architect’s role in the process.
  • The managing contractor takes the risks of on-time completion and trade contractor performance. The number of tenderers who want to take on this role may be limited.

Action - to benefit good design

  • Encourage the client to be involved continuously in the project and to appoint only a highly experienced and competent managing contractor.
  • Fully resolve the brief and scope to ensure the design team has clarity and confidence in undertaking the concept design.
  • Nominate the key specialist stakeholders to assist the development of the design.
  • Directly engage the design team early in the process and then novate the design team across to the managing contractor.
  • Allow adequate time and resources in earlier stages of the project’s program to develop the design.
  • Engage design independent design advice from either a design champion, design quality team (DQT) or the OVGA to assist with quality management in contract and brief development and at key project milestones.
  • Effective project delivery, especially for alterations to existing buildings, necessitates a realistic contingency for design and construction.
  • Ensure the contract clearly defines what constitutes the completion of design development.
  • Be responsive to the contractual time constraints of the design team and managing contractor.

Indirect procurement of design

The ‘Indirect Procurement’ process is where the design team is engaged partly or wholly by an agent rather than the client, for example, by a developer or consortia. In effect, the Government – as client – procures a contract which includes the design and construction costs and may also include a combination of the finance and operating costs.

Indirect engagement of the design team


  • The design scope is more “open”, and offers the potential of a higher degree of innovation regarding buildability and a greater variety of design options.
  • The overlap between design and construction schedules enables faster project completion.


  • Loss of control over the design outcome and limited direct management of design quality.
  • Danger of reduced design quality and consequently not a ‘fit for purpose’ outcome.
  • Design team’s primary concern may be to satisfy the consortium it is part of, rather than the client.
  • The building contractor may be more focussed on the time and cost of the project than the quality of the design outcome.
  • Opportunities for stakeholder and end-user input are often limited, potentially diminishing effectiveness and acceptability of outcome.
  • Whole-life performance is not likely to be a key concern without direct incentives.

When appropriate

  • When there is a need to move quickly to tender and/or construction.
  • When design can be specified.
  • When design control is not critical, allowing a reduction in the contract administration, or when design requirements are well understood by all concerned.
  • When financiers (e.g. Treasury) require the design risk to be removed from the client and carried by the developer or consortia.

The following forms of building and infrastructure procurement are all forms that work with the Indirect Procurement Process.

Design and construct

The procurement method of design and construct is where the client enters into a single contract with a construction company that provides both the design and construction of a project based on requirements specified by the client. The project requirements typically include functional performance, quality and design life requirements. The design services may be subcontracted to a team of designers, depending on the requirements of the tender.

The client tenders a project brief and each tenderer prepares a preliminary design and basic indication of the time and cost needed to complete the project. The contractor/builder engages their preferred design team to undertake the design work and tenders a price for the delivery of that design and its construction costs. Once all tenders have been received the client (or client’s representative) and the client’s quantity surveyor will review and select a proposal best suited to the client’s requirements. A single contractor is then appointed to manage the design, documentation and construction of the project, generally for a fixed price. Typically, all design risk as well as construction risk is allocated to the contractor. Essentially, it represents a package deal. The design team is appointed and contracted directly to the contractor from the start of the project. Following construction, the client owns and operates the facility to deliver the service promised in the Business Case.

Design and construct is considered appropriate when:

  • An early commencement on-site is required. This allows design and construction to occur in parallel and for a faster construction time.
  • The client can prepare clear, concise and well-documented performance and technical criteria for the project. These include criteria and objectives for durability, community standards, environmental standards, whole-of-life and any other significant issues. This will allow the contractor to understand and sensibly accept and price the risks.
  • The client requires a total commitment for time and cost for the project, at a fixed price.
  • Client control over design quality is not a priority or design requirements are clearly specified and understood.

For design and construct, the design team functions as a normal design team, but with the building contractor, interpreting the client’s requirements against the known maximum cost. Both the design and construction will be ‘tailored’ by the contractor to fit within the ‘agreed price’. It is the architect’s duty to put the interests of the building contractor in front of the interests of the building owner or occupier. The process can lack independent assessment or monitoring and the design team is normally unable to deal directly with the client or user. According to DTF, recent D&C contracts have additional provisions for the client to review and approve designs including independent quality assurance.

Except in the case of very simple or repetitive buildings, design and construct project delivery provides clients with reduced assurance that they will receive an end product that fully satisfies their needs or expectations.

Design and construct – impact on design


  • Faster and less exposure to risk of variations for trivial or design related issues.
  • In theory, design scope is more ‘open’ and a higher degree of innovation regarding buildability advice is possible, as well as a greater variety of design choice.
  • Suitable for projects of basic infrastructure, low complexity and that can be simply specified.
  • The contractor has control over design details and timing of work. This gives potential for overlapping of design and construction activities, resulting in time and cost savings.


  • The definition of quality relies on the preliminary bid documentation which, by definition, is preliminary and generalised. The qualitative interpretation of this documentation is therefore totally in the hands of the D&C builder/contractor which may result in the client obtaining a different standard of building from that apparently conveyed by the preliminary documentation.
  • Indirect relationship between client and designers.
  • Changes to the design brief after early design phases can be costly and should be minimised.
  • Tender evaluations are complex, taking more time to evaluate and potentially increasing costs to client and causing contract award delays.
  • Loss of control of design outcome and limited direct management of design issues resulting in reduced design quality.
  • Lack of option to select a preferred design expertise.
  • Few opportunities for stakeholder and end user consultation to influence the design.
  • Design teams’ contractual obligation is transferred to contractors and removed from client, thus potentially compromising desired outcomes.
  • Building contractor captures all benefits associated with final design arrangements and specifications.
  • Limited connection to client compromises the design intent of the project as project develops through detailed design and documentation. This may also apply to personnel changes to the design team.
  • The price may be exceeded if extra costs are requested or authorised by the client and the design quality is not protected or adequately detailed.
  • Insufficient time allowed for tenderers to prepare quality designs that allow innovation and minimise risk allowances by finding appropriate alternative solutions. 

Variations to design and construct include:
- design, novate and construct
- design, develop and construct
- design, construct and maintain

A guaranteed maximum price is often part of a design and construct offer which includes the cost of design and the cost of construction.

While some design is usually undertaken before the guaranteed maximum price is established, the design is not complete and the owner is unlikely to have made all of the decisions that will affect the design. In this case extra costs are almost certain to arise as the owner finalises his or her design requirements.

For these reasons 'guaranteed maximum price' is probably a misnomer and there is no such thing as a true, unqualified guaranteed maximum price.

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Action - to benefit good design

  • Support the client in seeking independent design advice to ensure that the ambition of design quality and performance criteria are appropriately embedded within the brief.
  • Encourage collaboration between the client and consortium.
  • Seek independent design review at key project milestones, e.g. brief, schematic design and design development.
  • Ensure that the client is capable in attracting and evaluating the tenderers to ensure high quality contractors and designers are selected.
  • Include non-negotiable deliverables in the brief to ensure quality and the delivery of key design features that have been signed off by the stakeholders.
  • Not recommended if the project is of special design interest or if there is uncertainty in the brief or in the desired outcomes of the client.
  • Require the completion of a design intent document before finalising the contract and then ensure independent assessment of its achievement.
  • The client needs to prepare clear, concise and well-documented performance and technical criteria for the project. These include criteria and objectives for durability, community standards, environmental standards, whole-of-life and any other significant issues.


Novation is a form of design construct. Novation relates to the transfer of the architect’s contract with the client to the builder/head contractor after the design has reached an agreed stage – ideally, the conclusion of the design development stage. Once the contract and its terms have been ‘novated,’ the architect is responsible to the builder and no longer to the client, i.e. it is the client/architect agreement, which is novated to the builder. The builder is appointed after the submission of tenders based on a brief and preliminary design development documents.

The selection is made on the tender price and the construction period. The architect and the other design consultants are initially contracted to the proprietor for the pre-design, schematic design and the preliminary design development stages of the project. In some instances, this can extend to documentation. After the selection of the builder these consultants are then novated and become contracted to the builder. They are initially paid a fee for the first stages by the proprietor.

The builder takes responsibility for:

  • the completion of the documentation, depending on when the builder is appointed 
  • the construction of the project generally for a lump sum fee

The level of documentation required before novation varies. As a minimum, it is recommended that the schematics and design development would be complete along with some part of contract documentation. A specification and preliminary schedules should also have been drafted, as is typical at the end of the design development phase.

By novation of the client-architect’s contract to the builder, the client’s architect is taken on by the builder at the time of the construction contract award. The builder assumes full responsibility for the design, including payment of the designer’s fees, and the architect no longer has direct contractual obligation to the client. However, the client bears a risk with respect to the detailed finish of the project and the level of quality, dependent upon the stage at which novation takes place. The project outcome, as per design and construct, generally depends upon how well the client’s project requirements have been defined in the brief and/or request for proposal documents.

Novation is considered appropriate where:

  • The client requires more extended control of the design than design construct allows, but with minimum risk (the builder as head contractor carries most of the risk).
  • The builder is considered skilled enough to be responsible for the design documentation and construction.
  • The client requires competitive, comparable prices through tendering albeit in the first instance based on abbreviated documentation.
  • The extent of works need to be fixed such that any variations to the construction contract are limited, post novation.

Novation – impact on design


  • When compared with D&C, client maintains greater control during the preliminary design phase, particularly during schematic design.
  • Design teams’ initial contract with client can develop design to achieve the desired outcomes.
  • Design team continues as design champion and carries the history of strategic decisions prior to contractor engagement.
  • Head contractor takes on responsibility at novation for the design documentation and construction, having won the tender. The client is then no longer responsible for design or documentation errors post contract award, however, the client bears a risk with respect to the detailed finish of the project and the level of quality, dependent upon the stage at which novation takes place.
  • Collaboration opportunities between design team and head contractor.
  • Detailed construction methods are tailored to the preferred systems of the contractor, resulting in enhanced time, cost and quality performance.
  • The contractor is given full access to the original designer, with a continuity of the designer’s involvement.


  • Design teams’ contractual obligation is transferred to contractors and removed from client, potentially compromising desired outcomes.
  • Subject to timing of novation, design quality can be compromised by contractor using design changes to save costs. There is potential for client specification and requirements not to be clear enough to achieve the desired outcomes.
  • Potential lack of focus on lifecycle costs.
  • Does not provide for measurement or assessment of design outcome.
  • Unforeseen variations are required after novation due to changes to the scope of work or a change in authority requirements.
  • Post contract the level of risk to government/user is high if bids are contracted on loose and generalised documentation or at insufficient scales of detail.
  • There is limited opportunity for innovation by the contractor because of their late entry into the project.
  • Tenderers may include a contingency price to cover the risks associated with entering into a contract without having established close working relationship and by having to adhere to, terms over which they had no input.
  • Potential lack of design team fees allocated to the post-novation phase.

Action - to benefit good design

  • Develop design at an appropriate level that allows you to go down the path of tendering for a D&C contract.
  • Ensure delivery of good design is a key criteria in the assessment of D&C tenders, including demonstrating previous works undertaken in similar contractual arrangements.
  • Ensure collaboration between all parties is preserved during the delivery of the project.
  • Clearly communicate the intent to novate the design team prior to their appointment, so that the design team understands this arrangement, fees are clear and suitable design professionals are sought.
  • Engage an experienced project manager with a strong understanding of the need to deliver the design intent of the project.
  • Ensure there is a clean line of novation, outlining level of design development and documentation to be completed and agreed as part of the contractual arrangements.
  • Allow the design team opportunity to comment on proposed construction team tenderers based upon past performance and relationships.
  • Appoint the architect in advance of contractor and only novate the design team after the qualitative dimensions have been determined, including design intent and documentation.
  • Ensure adequate detail on documentation as part of the contract.
  • Ensure provision for independent design advice/assessment at key project milestones.
  • Require the completion of a design intent document before finalising the contract – and then ensuring independent assessment of its achievement and associated reward/penalty.

Public private partnerships

Public private partnerships (PPPs) are where the design team is one part of a bidding consortium (private) that bundles design, construction, finance and operational services into a single contract with government (public).

A PPP is characterised by a service contract between the public and private sector where the government pays the private sector to deliver infrastructure and related services over a specified period of time. The private provider will not only build the facility but will also operate or maintain it to specified standards over a long period. The private provider usually finances the project (as Government payments typically only commence once the infrastructure is complete and operating in accordance with contracted service levels). The private sector profits through various means, including the cost of capital that is passed onto government, by efficiently managing the design, construction and operation phases and by developing a part of the site as a complementary adjacent property asset.

A PPP is where the client is seeking to engage a consortium that is capable of delivering integrated design, build, finance and facilities management services over an extended period (usually 25 years). Some contracts may also include the obligation to operate the facility (for example a prison with a private operator).

In a typical PPP project, the government:

  • Prepares an output-based specification rather than a prescriptive specification.
  • Commissions a reference design on which budget estimates are based (the public sector comparator). The output specification is issued to bidders detailing the design and technical requirements (and therefore needs to be consistent with the reference design assumptions), against which bids are assessed.
  • Engages a provider to deliver services over a long term, e.g. 20 to 35 years or more.
  • Requires the provider to design, build, finance, maintain and in some instances operate the facility. The private party also provides ancillary services including cleaning, security, facilities management, catering etc (or some combination of those functions) and takes the risk for those functions.
  • Typically makes no payments to the provider before the facility has commenced operations.
  • Provides payments over the term of the contract based on services delivered against the achievement of key performance indicators, ensuring the infrastructure is maintained over its lifetime.
  • Eventually takes back the operations (if applicable), maintenance and ancillary services obligations of the asset at the end of the contract term, such that the private party’s involvement ceases.

The state is typically seeking the whole-of-life innovation and efficiencies that the private sector can deliver in the design, construction and operating phases of the project. The state becomes a purchaser of asset-based services that are paid for according to their performance. The state allocates certain risks to the private party, locks in whole-of-life budgets and quality standards and facilitates focus on its core business. By specifying measurable outputs, rather than inputs, the state invites the private sector to deliver the service in innovative ways. The interactive tender process (ITP) conducted during the RFP phase of the tender, allows state to give feedback to the bidders regarding their design, and also allows the bidders to clarify any ambiguity.

A PPP is considered appropriate from a design perspective:

  • Where the project is of sufficient scale.
  • Where there is a need to consider a competitive environment to promote innovative solutions.
  • Where outputs are measurable (and therefore an input-based specification can be avoided).
  • When there is a desire to create a collaborative relationship between the design team, the builder, the operator and the facilities manager.
  • When there is support to give sufficient weighting to design in the evaluation process.
  • Where the private sector would be better placed to manage a considerable proportion of the project risks.
  • Where there is a need to consider the whole-of-life costs and for this to be the responsibility of the private sector partner.

Public private partnerships – impact on design


  • Design proposals can be part of the assessment process and bring together an integrated supply team from the earliest stages of the design process.
  • Interactive Tender Process (ITP) between the government and private consortia (conducted during the RFP phase in advance of bid submission) ensures that feedback is sought/given so as to minimise the risk that the private sector misinterprets the output specification.
  • Government and bidders’ interests (including design optimisation) are aligned, since the successful bidder will be responsible for providing ancillary services, often alongside government which is providing the core services within the facility.
  • Client is given the choice between different design approaches of respective consortia.
  • Places a greater emphasis on the whole-of-life costs as a part of the design process. Penalties defined within PPP contracts provide commercial incentive to perform.
  • Design risk rests with the private party (including fitness for purpose risk).
  • Can offer the prospect of better value for money over the full life cycle by integrating, under the responsibility of a single consortium, upfront design and construction costs with on-going service delivery, operational, maintenance and refurbishment costs.
  • Provides opportunities and incentives for innovative solutions in the delivery of service requirements.
  • Innovation – private sector PPP consortiums will want to use the latest, but tested, best practices for undertaking their project and reducing operational costs.
  • Capital costs reduced. Where possible, contractors will ensure that facilities are not over-engineered, encouraging facilities to be poorly maintained. Contractors will encourage building is fit for purpose and ensure that appropriate maintenance regimes are in place.
  • Commercial and operational efficiency, where the private sector will deliver facilities as planned, on time (or ahead of schedule) and to budget. Private sector is focused on ensuring minimal waste of time, materials and labour.
  • Facilities are operated and maintained to levels that are clearly defined by contract.


  • The reference design is a ‘point-in-time’ estimate. Care must be taken to ensure the design brief is consistent with the quality proposed in the reference design.
  • Failure to include lifecycle and handback clauses that ensure that quality is protected. For example when materials and products reach maximum warranty period at the time client is taking ownership.
  • Inadequate specification detail from the State’s design team or time during the interactive tender process.
  • The time and cost required may limit the pool of design teams with the resources and finances to offer a bid.
  • Lack of client expertise to appropriately manage design quality.
  • Funding periods can be lengthy. Compared to other contracts, PPPs are inherently complex. PPP financiers will conduct thorough due diligence to ensure they minimise their risk to cash flow generated by the PPP (especially through the high risk phases of construction and operation). As a result, obtaining project funding can often take longer than other contracting arrangements.
  • Transparency of costs can be difficult to establish given the complexity and commercial nature of PPP arrangements that may impact design.
  • Strong relationships are required between government agencies and consortium parties to produce effective partnerships. 

During the design development phase, the architect will develop the approved concept design and provide documentation to explain it to the client, coordinate the work of specialist consultants, provide a schedule of proposed finishes, review the developed design against the budget and coordinate, and prepare an updated estimate of the cost of the works.

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Action - to benefit good design

  • Ensure there is a clear, well articulated vision for the project that includes expectations in relation to design / architectural quality.
  • Establish, before the bidding process, a detailed and robust reference design that has been developed through a close working relationship between the client and an architect.
  • Ensure that the output specification is aligned with the reference design in terms of design quality (i.e. so that the output requirements can be delivered for the PSC).
  • Place emphasis on design quality in the initial briefing and request for proposal documentation.
  • Allow adequate time for the interactive tender workshops during the RFP phase, with appropriate involvement from the design quality review team.
  • Ensure that the bidding process is not rushed, allowing sufficient time between the selection of the preferred bidder and financial close to negotiate excellent design outcomes.
  • Ensure that the output specification documents emphasise to the bidding teams the importance of engaging expert design architects.
  • Require an appropriately detailed set of drawings and documents as part of the bid submissions, to assist in evaluation and to enable the client to understand what levels of quality, functionality and performance is promised to be delivered.
  • Ensure a mechanism for end-user input into the briefing process and into any options-testing or interactive tender workshops that may be undertaken in the bidding process.

Project alliancing

Under an alliance contract, a state agency (the 'client') works collaboratively with private sector parties ('non-owner participants') to deliver the project.

Alliancing is aimed at creating mutually beneficial relationships between all involved parties. An agency’s decision to use alliance contracting to deliver a project requires a strategic procurement analysis to be undertaken, and a good understanding of the delivery method that is most likely to best deliver value for money against business case objectives. It incorporates a legal agreement between all major participants, including the client, which sets out joint risk / reward arrangements. The alliance methodology allows such risks to be worked through collaboratively as the project develops.14

In principle, the design team, the client and the contractors are working together in good faith, acting with integrity and making best-for-project decisions. The risk or reward regime is developed from and with reference to the client’s specific project objectives, minimum conditions of satisfaction and cost and non-cost key result areas. All key result areas, such as timelines, budget performance, design quality and stakeholder satisfaction, are set out in the alliance agreement to encourage and reward exceptional performance (if required by the owner), address poor performance, align the private sector participants’ commercial interests with the client’s project objectives and drive the private sector participants to meet their behavioural commitments.

In principle, the alliance contract seeks to promote a positive culture based on “no-fault, no-blame” and unanimous decision-making. As the behavioural culture is crucial to the success of alliancing, the selection of the right team is paramount.

Project alliancing has evolved from partnering and is sometimes called strategic partnering. The main difference between 'alliancing' and 'partnering’ is the introduction of risk and reward, based on the performance of the alliance team, usually comprising the major consultants, contractors and owner.

Project alliancing has been used for major infrastructure and mining projects, but is relatively untried in the Australian building industry, although it has been used for the national Museum of Australia in Canberra and the Hamer Hall redevelopment in Melbourne.

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Alliancing is generally considered appropriate:

  • In the delivery of complex and high-risk high-value infrastructure projects.
  • The owner has embedded knowledge, skills, preference and capacity to influence or participate in the development and delivery of the project.
  • Urgent project start is required where the solution is unclear.
  • Where a high level of innovation is required.
  • Where risks are unpredictable and best managed collectively or too costly to transfer.
  • If the client can appoint senior executives to represent and manage its interests in relation to other participants and the alliance contract.
  • If the client is able to be closely involved, has sufficient internal resources and can add value.
  • Where there is a diverse and demanding range of stakeholders.

Alliance – impact on design


  • Supports a collaborative culture capable of delivering outstanding design results.
  • Avoids dispute culture between designer, contractor and a principal/client and greater potential for win/win outcomes.
  • Provides flexibility to modify design and allows on-going changes to be incorporated during construction.


  • Success highly dependent on getting the best skilled consultants and contractor, clear project objectives and lines of responsibility that are defined in the contractual agreement.
  • Over emphasis on commercial incentives at the expense of design quality.
  • Client not able to properly and clearly articulate the project design objectives/requirements that align to the approved business case.
  • Failure to fully consider lifecycle costs.
  • Failure to include design quality as a KPI and to correctly weight.

Action - to benefit good design

  • Ensure that the alliance supports a collaborative environment.
  • Ensure that the project team shares the same high expectations of design quality outcomes using key result areas (KRAs) and performance measurement.
  • Seek design advice from the OVGA when developing the tender documents.
  • Ensure a process that formalises design review workshops during development of the target outturn cost (TOC).
  • Ensure provision for independent design advice (design quality team) or design review at key project milestones and link that into the performance regime.
  • Ensure an equitable balance of risk/reward for all involved parties.
  • Decide upon the design KRAs early in the process and ensure they are well communicated.
  • Allow adequate time to develop the brief.
  • Choose the design team early in the project.
  • Consult the design team about the building program, selection of builder and establishing the design deliverables.
  • Ensure the culture of the alliance facilitates a high level of mutual respect and trust between members of the team.
  • Ensure that qualitative outcomes are measured during the project and inform future projects.

All departments and agencies which are planning alliance contracting are required to comply with the Government Alliancing policy, which has been published as the National Alliance Contracting: Policy Principles and Guidelines (July 2011). The Policy and Guidelines have been developed to promote knowledge, best practice, and give rise to cost savings by creating a consistent national alliance contracting standard, whilst ensuring the existing benefits of alliancing around the Nation are maintained.

Delivering a complex project like Hamer Hall requires exceptional problem solving. The alliance delivery method removes the contractual barriers to effective problem solving, enabling all parties to participate in ensuring the outcomes. That enabled us to protect the design integrity by having the architects at the table solving problems with us throughout the delivery of the project.

Annette Pitman, Major Projects Victoria


1 The Victorian State Governments 2013-14 budget provided $6.1 billion funding for infrastructure investment, Budget Paper No.1 Treasurer’s Speech, 2013-14, p16
2 Bryan Lawson, “Healing Architecture”, AR March 2002, Sheffield University School of Architecture research, p72-75
14 National Alliance Contracting Policy July 2011, Australian Government, Department of Infrastructure and Transport

Reviewed 21 April 2021

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