14.3 Contracts & Procurement: Facilitating the Procurement/Bid Process
Key Takeaways
- Design-bid-build uses separate design and construction contracts; design-build uses one entity for both; CM-at-risk converts the CM to a contractor at GMP
- Bid alternates are separately priced options that let the owner manage budget uncertainty without rebidding the base scope
- FF&E is typically procured separately from construction, often directly by the owner or through the designer, and carries its own purchase orders and lead times
- A purchase order is a buyer-seller contract for goods; it does not by itself include installation unless explicitly added
- Value engineering in bidding is most effective before the bid is sealed, when alternates can still be competitively priced
Why Procurement Method Matters
Procurement is how the owner buys the project. The chosen delivery method sets who holds design liability, who holds construction risk, and how the designer participates in bidding. The IDPX expects the candidate to distinguish three core methods and to know when an alternate or a separate FF&E procurement is the right move.
Delivery Methods Compared
| Method | Design Contract | Construction Contract | Designer's Role in Construction |
|---|---|---|---|
| Design-Bid-Build (DBB) | Owner–designer | Owner–GC (lowest qualified bid) | Administer as owner's agent; interpret CDs |
| Design-Build (DB) | Owner–single entity (design + construction) | Same entity | Designer works for the builder; reduced owner advocacy |
| CM-at-Risk | Owner–designer + Owner–CM (preconstruction) | Owner–CM converts to GC at GMP | Designer coordinates with CM; CM holds the risk |
In design-bid-build, design and construction are separate contracts. Bidders price a complete set of construction documents; the lowest qualified bid usually wins. The designer stays on as the owner's agent during construction administration. This is the model the AIA B101/A201 family is built around and the default for the IDPX.
In design-build, one entity holds both design and construction, giving the owner a single point of accountability and a faster track but reducing the independent check on the builder's design decisions. The interior designer may work as a subconsultant to the builder rather than to the owner.
In CM-at-risk, a construction manager provides preconstruction services (estimating, constructability, scheduling) and then converts to a general contractor at a guaranteed maximum price (GMP). The owner keeps a separate designer; the CM holds the construction risk.
Bid Alternates and Allowances
Bid alternates are separately priced options added to the base bid so the owner can add or subtract scope after prices are known. A common pattern: base bid includes resilient flooring; alternate 1 upgrades to cork in the same locations; alternate 2 adds acoustic paneling to one conference room. The owner can accept alternates 1 and 2 if the base bid came in under budget, or reject both if it came in over. Alternates keep the base bid clean and avoid a costly rebid.
Allowances in the bid function the same as in the design budget: a stated amount for an undefined scope item, reconciled to actual cost later. The designer should make sure the allowance is realistic; an under-stated allowance makes the base bid look low and exposes the owner to over-runs.
FF&E vs Construction Procurement
FF&E is movable furniture, fixtures, and equipment. It is typically procured separately from construction, often directly by the owner or through the designer, because:
- FF&E does not go through the GC's overhead and profit markup.
- FF&E suppliers are usually manufacturers or dealers, not construction trades.
- FF&E lead times run on a different clock from construction.
The designer may issue purchase orders (POs) for FF&E on the owner's behalf. A purchase order is a buyer-seller contract for goods; installation is a separate line unless explicitly added. Lead-time, delivery, install, and freight terms belong on the PO.
Purchase Orders, Lead Times, and Delivery
A well-formed FF&E PO carries:
- Item, model, finish, and quantity
- Unit and extended price, including freight and tax
- Lead time from order acknowledgment to ship date
- Delivery window and install date
- Receiving, storage, and installation responsibility
- Damage, warranty, and return terms
Lead-time cost impacts show up here as expediting fees when a delivery window is shorter than the supplier's standard lead. The designer should price expedite as an option, not a default.
Value Engineering in Bidding
VE during bidding means inviting the bidders to propose cost-saving alternates alongside their base bid. Bidders know the market and the construction details better than the designer at this stage; their alternates can be more realistic than designer-driven VE. Common bid-time VE moves include stocked vs custom finishes, equivalent assemblies, and substituting one manufacturer's product for another at equal performance.
VE after bid is reactive — it happens under price pressure and usually costs more than it saves. The IDPX tests the candidate's ability to time VE to the pre-bid or bid phase, not the post-bid change-order phase.
Liability and Parameters of Maintenance
The designer who facilitates procurement carries liability for specification accuracy and for any explicit warranty of a product. The designer should not warrant installation they did not perform; that warranty belongs to the installer and the manufacturer. Parameters of maintenance — the operational and maintenance requirements the owner must meet to keep a product in warranty — should be communicated to the owner at handover so the owner can budget for replacement parts, cleaning protocols, and service intervals. Failure to convey maintenance parameters is a common source of post-occupancy disputes: an owner who uses the wrong cleaner on a specialty finish and voids the warranty blames the designer, not the manufacturer.
Procurement Delivery and Installation
Procurement does not end at delivery. The designer should confirm receiving conditions (dock-high access, freight elevator capacity, floor protection), storage between delivery and install, and installation sequencing relative to other trades. FF&E installed before the space is clean and dry is at risk of damage; FF&E installed after the owner occupies disrupts operations. The PO should state the installation window, not just the ship date.
Exam Scenario
A base bid comes in at $980,000 against a $1,000,000 budget. Alternate 1 (cork upgrade, +$22,000) and Alternate 2 (acoustic paneling, +$18,000) are both accepted within budget. If the base bid had come in at $1,050,000, both alternates would be rejected and the designer would then facilitate VE on the base scope.
In design-build delivery, who holds both the design and construction responsibility?
A base bid is accepted, and the owner adds a separately priced cork-flooring upgrade. This separately priced option is best described as...