Negotiated Design & Construct Fixed Lump Sum Profile

We provide below a profile of a Negotiated Design & Construct Fixed Lump Sum arrangement that gives our view of the processes and benefits associated with this type of construction contracting. Under a Design & Construct arrangement, the Builder generally appoints the design team, shifting design responsibility from the client/owner to the Builder. Some of our clients prefer to appoint their own designers, in which case we may still manage the design process on behalf of our clients. The arrangement is then referred to simply as a Negotiated Fixed Lump Sum.
The Design & Construct delivery method promotes strong relationships and is one that we have successfully adopted with a number of our clients, and that have achieved outstanding project outcomes. This delivery method adopts some of the principles of Construction Management arrangements but maintains the practicalities of a fixed price contract often preferred by our clients, and particularly financial institutions.
It is totally transparent and utilises a three-stage procurement process, (i) Pre-Construction – Concept Phase, (ii) Pre-Construction – Design Development Phase and (iii) Construction & Delivery Phase. A significant benefit to our clients is that ConPro assume and control the design risks. It allows our clients to determine their level of involvement in design activities & lets them focus on their core business while we manage their interests & objectives all the way through. A Negotiated Design & Construct Fixed Lump Sum arrangement is a building procurement method where the builder is employed by the client to manage all or parts of design, planning, budget costing, feasibility and building approval processes of a project and then contracted to build on a fixed lump sum basis. The builder is remunerated on a fee basis for the Pre-Construction stage(s) only. The Construction stage is completed on agreed fixed lump sum contractual terms. ConPro’s fee to undertake the Pre-Construction stage(s) is generally not substantial on the understanding that ConPro Pty Ltd will become your contracted builder if the terms can be agreed and the project proceeds.
For the Construction stage our client enters into a contractual relationship only with ConPro. We accept all the relevant contract conditions, terms and arrangements with our designers, subcontractors and suppliers.

Design & Construct Outline

We spend a lot of our time with our clients initially to understand their objectives, get to know their wants & needs and jointly derive a concept. That way we are in a position to confidently move on to the initial concept development phase. We at ConPro select our designers & consultants on their merits & competencies, based on the type & size of the project and their ability to satisfy the project objectives. We have a good working relationship with a number architects and engineers that know how we operate, recognise the need to create impressive architecture but maintain a cost effective & practical design. Because of the working relationships between ConPro and our consultants, and their understanding of our design requirements, we are able to offer highly competitive design fees and certainly lower overall design costs than full documentation & tender delivery methodology.
We stage our quotes & fee proposals per phase because we believe it is important to eliminate unknown risks and define the project requirements clearly before entering into any lump sum arrangements. This way, you are only paying for the level of product/quality/result you require. In our Design & Construct Proposals we separate design costs and other costs such as council and statutory costs which our clients generally elect to pay themselves.

Pre-Construction - Concept Phase

This phase is paramount as it defines the Project Brief and sets budgetary parameters. It determines the critical success factors of the project and develops concepts and the master plan. This is a period of research, design and budgeting that controls all later activity. At the end of this phase you will be in a position to accurately predict the development feasibility & will have a sound knowledge of the construction cost from preliminary budgets prepared by ConPro. The period to finalise the conceptual phase will vary dramatically according to each project’s requirements, the development’s locality, council constraints & corporate governance procedures but will generally be between four (4) and ten (10) weeks. As a guide our services will include:
  • Consultation with you to determine the project’s critical success factors.
  • Operational and functional considerations.
  • Life cycle cost considerations.
  • Preliminary budget costing.
  • Designation of a Project Control Group.
  • Commitment to upfront design costs.
  • Development of conceptual design documentation (plans & elevations).
  • Analysis of Town Planning consent/constraints criteria.
  • Cost Planning and budgeting.
  • Production of CAD drawings for graphic art and marketing purposes (if required).
  • Consideration of all Development Permit requirements.

Pre-Construction – Design Development Phase:

The design development phase is a period of intense design and costing activity. It is also a phase that requires you to make a considerable cost commitment to advance the projects delivery. The design development phase may also be separated into two (2) further sections being for ease of terminology sake; A) Development Permit (MCU) and B) Building Permit. The structure will change from need to need. In many situations our client may include the Development Permit cost within the Concept Phase, or similarly, incorporate the Building Permit cost within the construction phase component. In broad terms our services for the Design Development Phase would include:
During the early period of this stage, ConPro normally prepare further cost plans for our client’s consideration. A project budget is then allocated in conjunction with the client and design team for the construction cost of the project.
The various cost centres are then closely monitored as design develops to ensure the project budget is not exceeded.
  • Consultation with Town Planners and Authorities.
  • Lodgement of Development Application (MCU).
  • Geotechnical investigations.
  • Appointment of specialist consultants and preliminary engineering design.
  • Operational and functional considerations.
  • Life cycle cost considerations.
  • Development of detailed design.
  • Coordination of design disciplines.
  • Consultation with Council and Authorities to maintain compliance.
  • Consideration of buildability issues and other cost exponentials.
  • Building application and approval procedures.
  • Provision of cost plans, cash flows and programmes.
  • Sign off on project design and final budget/cost.
As the design develops and some meaningful drawings become available (including structural, mechanical, electrical, hydraulic services and the like) ConPro will commence preparation of a detailed Bill of Quantities where the significant components of the building elements are measured, quantified and costed. This is done progressively and involves participation from our subcontractors and suppliers for budget costing purposes. Construction programmes are also prepared to ensure time parameters are considered. When the design documents and our quantities are adequate we will go to the market for competitive tendering from subcontractors and suppliers. This ensures that the building costs remain economical and are based on competitive pricing.
We are committed to our clients and our projects. It is our objective to ADD VALUE on every project, and produce an outcome that may otherwise not have been achieved without us. That's our promise.
This whole process is transparent. Nothing is hidden, as we provide a fully costed builder’s Bill of Quantities for presentation to our client, your financiers, Quantity Surveyors etc who are welcome to undertake a comprehensive review of our measurements and costing. Appropriate contract conditions are also discussed, negotiated and agreed during this phase. At the completion of the Pre-Construction – Design Development Stage both parties should be in a position to agree the construction cost, time parameters and contract conditions. We should be in a position to sign a fixed lump sum contract and commence the Construction Stage.

The Construction Stage:

Once construction begins you will have the peace of mind that a professional builder is looking after your interests and that building activities will be carried out in a timely, effective and controlled manner that will produce a result we will all be proud of.
ConPro will continue to work as an active participant amongst the Project Control Group. We will attend the necessary meetings and continue to consider all design and operational aspects of your building while progressing construction to a successful completion. Our project knowledge already gained from the Pre-Construction stage will ensure there are no surprises for all parties. Cost variation will be minimal, negligent or non-existent as our intimate understanding of your requirements and the building process will avoid cost “blow-outs”. We expect variations in costs only to occur in the event that something was totally unexpected or we have been requested to increase the work scope. Because the project is contracted on a fixed lump sum arrangement your administrative time allocated to the project will be nominal. Unlike a Construction Management arrangement, you will only need to make a single payment to ConPro per month (unless otherwise arranged). All contracted risks have been passed onto ConPro and you will be at arms length of the messy little issues involved with contracting practices. The volume of your further involvement in the construction process will be up to you.

What are the Benefits of a Negotiated Design & Construct Arrangement?

Entering into a Negotiated Design & Construct Fixed Lump Sum arrangement with ConPro offers distinct benefits and advantages for our clients. Our early appointment will ensure:
  • Cost & Time effective design.
  • Buildability issues are considered into the design.
  • Alternate construction techniques are considered into the design.
  • Time and cost assessments are considered and implemented.
  • Cost plans are established for alternative materials and finishes.
  • Services are co-ordinated.
  • Life cycle costs have been considered.
  • Budgets, cost plans and construction programmes are realistic and reliable.
  • Trade components are competitively tendered.
  • Supply items are competitively tendered.
  • Fair and competitive pricing for all aspects of the works.
  • Security of a fixed lump sum contract for construction not susceptible to change unless the scope of work is increased.
  • Minimal administrative and project management time/cost.
  • A completed project delivered on time, within budget and of the desired quality.

Hypothetical Process Explanation

A typical process for entering in a Negotiated Design & Construct Fixed Lump Sum agreement with ConPro Pty Ltd may be broken into the following steps (there may be some change in sequence):
  • Opportunity and building need by Client (sometimes proposed by ConPro).
  • Client defines the project brief and delivery method requirement.
  • Commercial terms and responsibilities are defined and agreed.
  • ConPro allocate the management team for the project.
  • ConPro allocate the design team for the project.
  • ConPro provide budget cost on concept.
  • Preliminary documentation initiated.
  • ConPro provide value engineering evaluation during design development.
  • Continuing cost planning by ConPro.
  • Design, documentation, programme and budget finalised and agreed with Client.
  • Working drawings developed progressively.
  • Building elements measured, costed and tendered.
  • Building costs and contract conditions negotiated and agreed.
  • Fixed Lump Sum contract entered into and construction commences.
  • Client signs off on ConPro’ satisfactory performance upon completion.
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