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Design Build vs Design Bid Build – Which Approach Is Best for You & Your Custom Home?

Whether you are new or experienced with building a home, the Design Build vs Design Bid Build approach is critical to understand for your project. We will make sure to explain what each of these are, as well as the Design Build vs Design Bid Build Pros and Cons. Once you are done reading, you should have a pretty solid idea which approach you should use for your custom home. Here are the topics we will cover.



Design Build Explained

Based on our analysis, approximately 40-45% of custom homes are currently completed utilizing the Design Build approach. This process involves the homeowner interviewing, selecting and then working with a single entity, typically a Design Build company, that manages both the design and construction of their custom home. Design Build companies will either employ directly the resources that will work with homeowners or they will subcontract these resources. From a contractual standpoint, the homeowners most often enter into a Design Agreement to perform design and other pre-construction activities. Once these are completed, the homeowner enters into a Construction Agreement with the Design Build company. The graphic below shows this process.

Design Build Approach

Design Bid Build Explained

The remaining 55-60% of custom homes are done using the Design Bid Build approach, which historically has been the process for building a custom home. This approach requires the homeowner to first interview, select and contract with an architect or designer/engineer to work with them to design the home. Once the design is done, the homeowner then distributes the design to their chosen builders to obtain proposals for the construction of the home. Once the bids have been received and evaluated, the homeowner selects and contracts with a builder for the home construction. The graphic below shows this process.


Design Bid Build Approach

When Do You Need to Decide on the Approach?

It’s important to understand these two approaches and decide which you will be taking at the very beginning of the project before design begins. Since the initial agreements will be a Design Agreement with an Architect or Designer/Engineer for the Design Bid Build process or a Design Agreement with a Design Build company for the Design Build process. This dictates the process going forward.


Design Build vs Design Bid Build Pros and Cons

Since the decision on which approach for your project must be made at the very beginning, lets outline the Design Build vs Design Bid Build differences. These fall into four categories: Accountability, Control, Cost and Timeline. The table below summarizes the differences for each approach for these categories.

Design Build vs Design Bid Build Pros and Cons

Accountability

Using the Design Build approach with the single entity responsible for the Design and Build activities, there is singular accountability which simplifies the process for the homeowner. The expectation of one company responsible for all activities is that there will be good communication of requirements from the design team to the construction team. This primary benefit is less miscommunication which means fewer changes since the homeowners’ desires are documented and transition smoothly from design to construction.


Conversely, the Design Bid Build with separate Design and Build entities, as you might expect, there are miscommunications. This happen either because the construction firm wasn’t involved in the design discussions or because the architectural firm didn’t document the homeowner’s requirements for the transition to the construction team. This adds a level of risk and responsibility to the homeowner, which is why it is not unusual to have more changes during construction.


Control

With the Design Build approach, the homeowner no longer can select a specific architect or take the home plans at the conclusion of Design and distribute them to builders for bids. The Design Build company that is selected at the beginning controls the selection of the designers and has the exclusive right to provide a proposal without competition. While the homeowners’ budget is discussed throughout the design process so as to eliminate surprises, the homeowners’ ability to competitively bid is eliminated.


When it comes to Design Bid Build, as the name suggests, the homeowner controls the ability to select each entity and can then also take the home plans and distribute them to builders to competitively propose. Keep in mind that this additional control and flexibility will add a greater time commitment for the homeowner.


Cost

The Design Build approach has the benefit of involving the builder in the design. Their experience with current construction costs cannot be underestimated. It eliminates many surprises and allows for proactive budget discussions during design that are not easy when just an architect is involved. Yet even with this benefit, our experience is that the lack of competition with no bidding results in higher cost to the homeowner using the Design Build approach.


With the Design Bid Build approach, there is the risk that without a builder involved in the design the home’s cost will exceed the homeowners’ budget. The benefit of this approach is that the bidding process to multiple builders definitely does result in lower costs, but it is important to emphasize that the homeowner doesn’t simply make that their only selection criteria.


Timeline

The Design Build approach is often described as having significant timesaving due to the selection of a single entity as compared to the Design Bid Build approach of selecting two entities. In reality, we would describe this timesaving is smaller than many expect. Although it is true that the Design Build is only selecting a single entity and there is no Bidding in the process, there are still two separate agreements, Design and Construction, that have to be developed, negotiated and executed. This doesn’t take as long as Bidding, but it does take some time and that is why the difference is less than some would expect.


Which Approach is Best for You & Your Project?

So it comes down to the big question – Which one is best for you and your specific project? This comes down to what you value and prioritize most when considering your time, cost, accountability and timeline. To oversimplify the decision, if you have limited availability, value having a single point of accountability for the entire project and can accept paying an additional cost for this convenience, then the Design Build approach would make the most sense for you. Conversely, if you have time to dedicate to the project, you want to take on more control of the process and costs, then the Design Bid Build approach would be best for you. One last consideration for this decision is experience. If this is your first home building project, we do believe the Design Build approach would benefit you greatly due to the emphasis on accountability of a single firm that can assist you throughout the process. On the other hand, if this isn’t your first rodeo, the Design Bid Build may be better suited to you. Finally, remember that roughly half of all new homes use the Design Build approach and half use the Design Bid Build approach. Both are proven to get you a wonderful new home. We wish you all the best with your custom home project!



Additional Resources

  • Design Build Association - Here's the link to the association focused on Design Build

  • Architect - An architect's view of the pros and cons of each approach

  • AIA - AIA article on the pros and cons

  • Percentage - Study showing the breakdown of construction projects for each approach

  • Advisor - This PDF shows how a Owner's Rep or Advisor can help



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“I have known Jon for many years. He and his team at Owners’ Ace are an invaluable resource to anyone looking to design and build a custom home. Having their assistance makes a complex process so much easier and successful. I recommend Owners’ Ace to my clients and to anyone looking to build their dream home.”

BG Holmberg, Top Custom Home Realtor in Tampa Bay Area

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