Design-Build v. Design-Bid-Build: Legal and Practical Considerations

Before taking on a construction project, developers must consider the right project delivery method. Two of the most common approaches offer different structures for allocating risk, responsibility, cost, and scheduling: these are the "design-build" (DB) method and the "design-bid-build" (DBB) method.

In large and fast-growing states like California and Texas, where public and private construction projects are heavily regulated and rising costs can result in thinner margins, understanding the legal and practical implications of each method can make or break a project.

This post explores the key differences between these delivery methods, examines their legal frameworks under California and Texas law, and offers guidance on selecting the right approach for your project.

Understanding the Two Models

Design-Bid-Build (DBB)

Design-bid-build is the traditional project delivery method. As the name suggests, it involves three distinct and sequential phases:

1. Design: The owner contracts separately with an architect or engineer to prepare the design documents.

2. Bidding: Once the design is complete, the project is put out to bid and contractors submit proposals.

3. Build: The owner selects a contractor, and construction begins.

DBB is a linear process with a clear separation between design and construction. Because of this separation, the owner typically bears greater design risk. If the plans contain errors or omissions, the contractor may not be responsible unless the defect was obvious and should have been identified.

Additionally, because the contractor is not involved during the design phase, DBB projects may encounter constructability issues, scope gaps, or challenges obtaining materials that surface only after construction begins.

Design-Build (DB)

Under the design-build model, the owner contracts with a single entity (the design-builder) who is responsible for both design and construction. This creates a single point of responsibility and typically fosters greater collaboration.

Because design and construction phases often overlap, DB can accelerate project delivery (meaning completion). The integrated structure also allows cost, constructability, and scheduling concerns to be addressed earlier in the process.

Other Delivery Models

While DB and DBB are the most common delivery methods, others exist, including:

• Construction Manager at Risk (CMAR)

• Integrated Project Delivery (IPD)

• Public-Private Partnerships (PPP)

Each carries its own legal and risk-allocation considerations and may be authorized differently depending on the jurisdiction.

Public vs. Private Contracts

California

In California public works, DBB remains the default method at the local level. The California Public Contract Code generally mandates competitive bidding to promote transparency and prevent favoritism (see, e.g., Cal. Pub. Contract Code sections 20111 (school districts), 20162 (cities), 20815.1 (parks and recreation districts)).

Historically, design-build was restricted in public works. However, the Legislature has expanded its availability in recent years for certain state agencies, school districts, and infrastructure projects, subject to statutory authorization and procedural requirements.

Private projects in California offer more flexibility, allowing owners to select the delivery model that best suits their objectives.

Texas

Texas also traditionally relied on competitive bidding for public works. However, Texas law (primarily under Chapter 2269 of the Texas Government Code) expressly authorizes multiple project delivery methods for public projects, including design-build, CMAR, and job order contracting.

Public entities in Texas must follow specific statutory procedures when selecting design-build, including separate evaluation of qualifications and price components in many circumstances.

As in California, private Texas projects are generally free to adopt DB, DBB, or other delivery models based on contractual agreement and business considerations.

Licensing and Qualifications

California

In California, a design-builder must hold the appropriate contractor license. The Contractors State License Board (CSLB) does not issue a separate “design-build” license.

Design services must be performed by properly licensed architects or engineers, either as employees or subcontractors. Strict compliance with the Business and Professions Code is essential. Under section 7031, an unlicensed contractor may be barred from recovering compensation and may even be required to disgorge amounts already paid (a harsh, even draconian, penalty).

Texas

In Texas, contractors are not licensed at the state level in the same way as in California (with certain trade-specific exceptions). However, architects and engineers must be licensed by the Texas Board of Architectural Examiners or the Texas Board of Professional Engineers and Land Surveyors.

For design-build projects involving public entities, Texas law imposes specific structural requirements, including the use of a single legal entity or contractual arrangement that assumes responsibility for both design and construction. (Tex. Gov. Code section 2269.301; see also section 2269.304).

In both states, failure to comply with licensing or statutory requirements can jeopardize enforceability and payment rights.

Risk Allocation and Liability

Under DBB

With DBB, the owner assumes greater design risk. If a design defect exists, the contractor may avoid liability unless the defect was obvious or the contractor contributed to the issue.

Change orders are common in DBB projects. Because the contractor is not involved during design development, discrepancies between plans and field conditions often emerge during construction. These issues can lead to delays, increased costs, and disputes.

DBB projects may also generate conflict between the designer and contractor, particularly when responsibility for errors is unclear.

Under DB

Design-build reduces fragmentation by placing responsibility for both design and construction with one entity. This creates a single point of accountability.

Disputes that might otherwise arise between designer and contractor are often resolved internally within the design-build team. Early contractor involvement typically reduces scope gaps and constructability issues, which may decrease change orders and claims.

By unifying design and construction under one contract, DB can improve risk management, clarify accountability, and mitigate cost and schedule exposure.

Cost and Schedule Considerations

Under DBB, initial bid prices may appear lower because contractors bid on completed plans. However, the sequential nature of the process often results in longer overall schedules. Change orders, delays, and claims can increase total project cost.

Design-build projects often move faster because design and construction phases overlap. Streamlined communication may reduce inefficiencies and administrative burdens.

That said, DB proposals may be based on performance criteria rather than fully completed plans. Owners must carefully define scope, quality standards, and expectations to avoid ambiguity and pricing disputes.

Dispute Resolution

DBB projects tend to present a higher likelihood of disputes, particularly those involving design defects, change orders, and scope interpretation.

DB projects often experience fewer inter-party disputes due to unified responsibility, but contract drafting remains critical in both California and Texas.

Key considerations include:

• Clear allocation of design liability

• Indemnity provisions (particularly important in Texas, where anti-indemnity statutes apply)

• Attorney’s fees clauses

• Mediation or arbitration prerequisites

Careful drafting ensures that risk allocation aligns with the selected delivery method.

Factors to Consider When Choosing a Delivery Method

When selecting between DB and DBB, consider:

• Project complexity

• Schedule urgency

• Budget certainty and cost control

• Risk tolerance

• In-house expertise and oversight capacity

• Applicable public sector requirements

One factor might overwhelm the others in the decision, but each should be given due consideration.

Conclusion

Clear and carefully drafted contracts are essential regardless of delivery method. Expectations, scope, and performance standards must be explicit.

Design-build offers meaningful advantages in speed, coordination, and unified accountability, but it is not always the optimal choice. Design-bid-build remains appropriate in many circumstances, particularly where competitive pricing and clear design control are priorities.

Contractors, developers, and public entities in both California and Texas should understand the structural and legal nuances of each method before selecting the one best suited to their project’s goals.