Novation case study

Need some help to understand novation and how it can benefit good design? Find out more in this case study.

You can download the novation case study here or find the full text below.

Novation is a form of Design and Construct (D&C). Novation relates to where the architect’s contract with the client is transferred to the builder/head contractor on the same terms after the contract has progressed through the design development stage. Once the contract has 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.

Action to benefit good design 

  • Develop design in detail prior to tendering to D&C. Alternatively, retain contract with designer while developing design in collaboration with D&C contractor, and novate at documentation.
  • 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.
  • Preserve a right for the architect to communicate with the client after novation, but not a responsibility.
  • Identify the intent to novate the design team prior to their appointment, so that the team understand 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 upon prior to novation.
  • Allow the design team opportunity to comment on proposed construction team tenderers.
  • 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 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.

Case study: 41 Exhibition Street, Australian Institute of Architects (Victorian Chapter)

The project’s inception dates back to 2006, when the Institute’s National Council commissioned consultants to prepare a detailed feasibility study for the site, encompassing a range of potential options for its future. In 2008, after extensive consultation, National Council decided that the site would be redeveloped into a 21 storey strata-title commercial office tower that would set the standards in Australian architecture.

The institute held a two-stage design competition. Stage 1 required an Expression of Interest (EOI) and Stage 2 required the shortlisted entries to develop a visual presentation and design intent document within a two-week response time. The commission was awarded to Lyons with a concept that explored ideas about the hybrid public/commercial building, the engagement of the Institute with the public and creating a benchmark sustainability project.

The construction contract was a modified version of the Australian Standard contract for D&C, which provides for novation of the architect and other consultants. Critical modifications to the contract included; deferral of novation to a point after significant design decisions are agreed upon, and a direct line for the architect and consultant team to report any non-agreed design changes back to the client. These modifications offered an alternative model for other commercial development projects.

Key initiatives adopted to protect the design quality

  • At the end of design development require a high level of documentation to be complete before novation. Benefits include a reduced risk profile to the building contractor and client.
  • While novated, the design team remained connected to the client. The preliminaries within the contract include initiatives to protect design. e.g. ‘Novation deeds’ that offer the architects a ‘whistleblower’ clause on items that will impact negatively on the design intent.
  • If incentives include delivering on ‘time’ and ‘quality’ then the ‘cost’ as a Guaranteed Maximum Price (GMP) is less of an issue. Incentivising the GMP encourages savings to client and contractor.
  • Clear selection process for contractors that isn’t fixed on the lowest cost but rather the best qualifications, teams, methodology, company culture and experience level. The input of the architects (on the PCG) assisted in the selection of the contractor, Hickory.
  • The client, design team and contractor, Hickory, worked collaboratively through a form of integrated project delivery.
  • A sound relationship with user groups and stakeholders.
  • Prototyping for repetitive elements (e.g. façade detail) helps to reduce risk.


  • Unfavourable economic conditions beyond the client’s control.
  • A small site footprint to develop as commercial office space.
  • A client balancing best practice with commercial imperatives as developer.

What worked well

  • Advanced design development of documentation and a high performance specification completed prior to novation.
  • Clarifying documentation and scoping issues with the builder during the tender process. This helps avoid variations and risk associated with cost.

Reviewed 21 April 2020

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