Texas Construction Law Blog

Selecting the right project delivery method is crucial — not just from a design and budgeting standpoint, but also from a legal standpoint. Two of the most common delivery methods are Design-Build (DB) and Design-Bid-Build (DBB). Each approach has its unique legal implications that significantly affect project outcomes, liability, and risk allocation.

I. OVERVIEW

Design-Bid-Build is the traditional method where the project owner contracts separately with a designer (architect/engineer) and a contractor. The design is completed before the work is bid. The construction contractor is not involved in the design process.

Under the Design-Build model, however, the owner of the project enters into a single contract with a design-builder that is responsible for both design and construction services. This integrated approach often aims to streamline communication and speed up delivery.

II. LEGAL STRUCTURE

When employing the Design-Bid-Build method, the owner of the project holds separate agreements with the architect and the construction contractor. There is no contract between the architect and the contractor. This creates the potential for coordination and liability gaps. The construction contractor most often cannot be held responsible for design errors. Similarly, the architect typically cannot be held liable for errors in construction. Likewise, as the Texas Supreme Court held in LAN/STV v. Martin K. Eby Const. Co., Inc., 435 S.W.3d 234 (Tex. 2014), there is no remedy for the contractor against the design professional for errors in design. Specifically, in Eby Const. Co. the Supreme Court of Texas held that the economic loss rule precluded a tort action brought by the general contractor against the project architect. The contractor argued that the architect’s negligence in developing plans and specifications disrupted the contractor’s construction schedule. The Supreme Court of Texas held that “the contractor’s principal reliance must be on the presentation of the plans by the owner, with whom the contractor is to reach an agreement, not the architect, a contractual stranger.” LAN/STV v. Martin K. Eby Const. Co., Inc., 435 S.W.3d 234, 247 (Tex. 2014).

In contrast, with Design-Build there is a single point of responsibility — one contract governs both the design and the construction of the project. The Design-Build entity is often structured as a joint venture, integrated firm, or prime contractor with subcontractors. As such, the Design-Build method minimizes the project owner’s legal exposure to conflicts between the design and construction.

III. LIABILITY AND RISK ALLOCATION

With Design-Bid-Build, design liability rests solely with the design professional or firm, while construction liability is limited to the construction firm, which is only responsible for constructing the project in accordance with the plans and specifications created during the design stage. This has been the case since 2021 when the Texas Legislature enacted Chapter 59 of the Texas Business and Commerce Code, reversing the rule set down in the Texas Supreme Court’s 1907 ruling in Lonergan v. San Antonio Loan & Trust Co., 104 S.W. 1061, 1065–66 (Tex. 1907). Previously, under Lonergan, in the absence of contractual language to the contrary, a contractor—rather than the owner—carried the risk of deficiencies in design document. Chapter 59 of the Texas Business and Commerce Code (and amendments to Chapter 130 of the Texas Civil Practice and Remedies Code) shifted the risk of loss due to design deficiencies away from contractors in most instances.^[1] See Tex. Bus. & Com. Code § 59.051. Furthermore, under Section 150.002 of the Texas Civil Practice and Remedies Code, if the owner of a project wishes to file suit against its designer in a Design-Bid-Build delivery, the owner must file with the lawsuit or arbitration claim a sworn Certificate of Merit from a third-party designer with similar credentials specifically identifying the negligence, errors, or omissions of the designer that are the subject of the owner’s claims. If no such Certificate of Merit is included, the case must be dismissed. See Civ. Prac. & Rem. Code § 150.002. Disputes over design intent versus construction quality are common, with owners often caught in the middle.

Conversely, with Design-Build the design-build firm assumes full liability for both design and construction defects. This can lead to reduced finger-pointing, since the same party is responsible for both. This helps prevent the project owner from being caught in the middle of a dispute between the design-build firm and its designer. Moreover, there are fewer checks and balances. Recognizing the single-entity nature of Design-Build, the Texas Legislature made an exception in 2023 to the requirement of a Certificate of Merit for Design-Build projects involving certain governmental entities. In such projects a design-builder is not required to get a Certificate of Merit against its own designer that is part of a Design-Build team. See Civ. Prac. & Rem. Code § 150.002(i). In Design-Build, owners must ensure the design-builder carries an appropriate amount of professional liability coverage.

IV. CHANGE ORDERS AND CLAIMS

Under the Design-Bid-Build method, design errors discovered during construction often result in change orders. Contractors may also submit claims of scope gaps or unforeseen conditions not reflected in the design. These conditions can easily lead to delays in the project and increased costs.

Under the Design-Build method, fewer changes orders are typically expected, as design and construction are more closely integrated. However, project owners should carefully define project scope and performance requirements in the contract to avoid scope creep and disputes over deliverables.

V. CONCLUSION

The differences between the Design-Bid-Build and Design-Build methods for project delivery have additional consequences relevant to licensing, insurance and bonding, dispute resolution, and legal remedies, as well as regulatory and public procurement concerns. For example, some states and municipalities require the Design-Bid-Build for certain projects in order to ensure transparency and fairness in the bidding process. Choosing between Design-Bid-Build and Design-Build is not just a question of project speed or cost—it is a legal decision with implications for liability, risk, and compliance. Project owners, designers, and contractors must clearly understand their roles, responsibilities, and contractual obligations in either model. Legal counsel should be able to help navigate these important issues. By proactively addressing these legal considerations, stakeholders can better align project goals with delivery strategies and protect themselves from costly disputes down the line.

^[1] For more on Senate Bill 2019, see our previous blog post here.