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Design and Construction Agreement

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DESIGN AND CONSTRUCTION AGREEMENT

This Design and Construction Agreement (the "Agreement") is made as of by and between Owner: whose address is (hereinafter "Owner"), and Contractor: whose address is (hereinafter "Contractor").

RECITALS

WHEREAS, Owner intends to undertake the Project known as located at (the "Project"); and

WHEREAS, Contractor represents that it is duly qualified, experienced and capable of performing design-assist, design coordination, and construction services required for the Project; and

WHEREAS, Owner desires that Contractor perform design and construction services in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, the parties agree as follows:

1. SCOPE OF WORK

1.1 Contractor shall provide design-assist, design coordination, and construction services necessary to complete the Project in accordance with the Contract Documents. The term "Contract Documents" shall include this Agreement, Owner-approved design documents, drawings, specifications, and all modifications issued pursuant to this Agreement.

1.2 Contractor shall perform all Work in a good and workmanlike manner in accordance with industry standards and applicable codes, laws and regulations. Contractor shall supply labor, materials, equipment, supervision and services necessary for completion of the Work unless expressly indicated otherwise in writing.

2. DESIGN SERVICES

2.1 Design responsibilities to be performed by Contractor shall include preliminary design review, coordination of design with construction methods, preparation of design development submittals where required, and incorporation of Owner's comments. Contractor's design services shall conform to the professional standard of care for similar design-assist services.

2.2 Contractor acknowledges that any design work performed shall be reviewed and approved by Owner where indicated. Contractor shall correct, at its expense, any design errors or omissions that materially impair performance of the Work.

3. CONSTRUCTION SERVICES; SUBCONTRACTORS

3.1 Contractor shall construct the Project in accordance with the Contract Documents and shall be responsible for the means, methods, techniques and sequences of construction. Contractor shall supervise and direct the Work and shall be solely responsible for jobsite safety.

3.2 Contractor may subcontract portions of the Work subject to Owner's prior written consent where the Contract Documents require such consent. Contractor shall be responsible for acts and omissions of its subcontractors and suppliers and shall ensure subcontracted Work conforms to this Agreement.

4. CONTRACT SUM AND PAYMENT

4.1 Owner shall pay Contractor for the performance of the Work the sum of $ (the "Contract Sum"), subject to additions and deductions for changes in the Work as authorized in accordance with Section 5.

4.2 Payment shall be made following submission of Contractor's applications for payment and supporting documentation. Progress payments shall be based on completed Work and stored materials accounted for in accordance with the payment schedule. Retainage: .

5. CHANGES AND CHANGE ORDERS

5.1 Owner may, without invalidating this Agreement, order changes in the Work within the general scope of the Contract Documents by issuing written change orders. Contractor shall not proceed with any change in the Work without a written change order signed by Owner and Contractor specifying the adjustment in Contract Sum and/or Contract Time.

5.2 If Contractor believes a change in the Work entitles it to an adjustment in the Contract Sum or Contract Time, Contractor shall submit a written claim with supporting documentation within ten (10) days after the event giving rise to the claim, and shall proceed with the Work as directed.

6. SCHEDULE AND TIME FOR COMPLETION

6.1 Work shall commence on or before and Contractor shall achieve Substantial Completion by , subject to adjustments as provided herein.

6.2 Time is of the essence. If Contractor fails to achieve Substantial Completion within the Contract Time, Contractor shall be liable for liquidated damages in the amount of $ per day, which the parties agree is a reasonable forecast of actual damages.

7. SITE CONDITIONS, PERMITS AND COMPLIANCE

7.1 Contractor shall, at its expense, obtain permits, inspections and approvals required for the performance of the Work unless otherwise indicated in the Contract Documents. Contractor shall comply with all applicable laws, codes and regulations.

7.2 Except as expressly stated in this Agreement, Contractor assumes responsibility for site conditions discovered during performance of the Work and shall promptly notify Owner of differing site conditions which materially affect cost or schedule.

8. INSURANCE AND BONDS

8.1 Contractor shall procure and maintain insurance coverage customary for the type and size of the Project, including commercial general liability, workers' compensation and automobile liability coverage. Minimum limits and additional insured requirements shall be specified by Owner as part of the Contract Documents.

8.2 If required by Owner, Contractor shall furnish performance and payment bonds in form and amount acceptable to Owner. Performance bond required: Bond amount (if required): $

9. WARRANTIES

9.1 Contractor warrants that materials and equipment incorporated into the Work will be new (unless otherwise specified) and that the Work will be free from defects for a period of from Date of Substantial Completion. Contractor shall, at its expense, promptly correct defects discovered within the warranty period.

10. INDEMNIFICATION

10.1 To the fullest extent permitted by law, Contractor shall indemnify, defend and hold harmless Owner, its officers, agents and employees from and against all claims, damages, losses and expenses, including reasonable attorneys' fees, arising out of or resulting from the performance of the Work, provided such claim is caused in whole or in part by any negligent act or omission of Contractor, a subcontractor, anyone directly or indirectly employed by them or anyone for whose acts they may be liable.

11. TERMINATION

11.1 Owner may terminate this Agreement for cause if Contractor fails to correct defective Work or otherwise breaches material obligations and fails to cure within fourteen (14) days after written notice. Owner may also terminate for convenience upon thirty (30) days' written notice, in which case Contractor shall be paid for Work executed and costs reasonably incurred.

12. DISPUTE RESOLUTION

12.1 The parties shall attempt in good faith to resolve disputes arising under this Agreement through negotiation between senior representatives. If unresolved within thirty (30) days, the parties agree to proceed to mediation. If mediation fails, either party may pursue litigation in a court of competent jurisdiction as provided in Section 14.

13. NOTICES

13.1 All notices required or permitted by this Agreement shall be in writing and delivered personally, by certified mail, return receipt requested, or by nationally recognized overnight courier to the addresses listed below or such other addresses as the parties may specify by written notice.

14. GOVERNING LAW

14.1 This Agreement shall be governed by and construed in accordance with the laws of the state indicated below. The parties consent to the exclusive jurisdiction of the courts located in that state for resolution of disputes not resolved by alternative dispute resolution.

15. ENTIRE AGREEMENT; SEVERABILITY

15.1 This Agreement, together with the Contract Documents referenced herein, constitutes the entire agreement between Owner and Contractor and supersedes all prior negotiations, representations or agreements, either written or oral.

15.2 If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall continue in full force and effect and the parties shall negotiate in good faith to replace the invalid provision with a valid provision that approximates the parties' original intent.

16. AMENDMENTS; WAIVER; COUNTERPARTS

16.1 No modification, amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by authorized representatives of both parties. Failure of either party to enforce any provision shall not constitute a waiver of that or any other provision.

16.2 This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

Owner:

By:

Date:

Contractor:

By:

Date:

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What a Design and Construction Agreement Is

A Design and Construction Agreement is a single contract that assigns responsibility for both design services and construction work to one contracting party or a coordinated team. It defines scope, deliverables, schedule, payment terms, change order procedures, warranties, insurance, and dispute resolution. The document aligns obligations between owner, design professional, and contractor to reduce gaps between design intent and constructability. In the United States the agreement is commonly used for design-build projects, integrated project delivery, and single-prime contracts where one entity assumes design and construction risk.

Why this Agreement Matters for Project Risk and Delivery

A combined Design and Construction Agreement reduces fragmentation by centralizing responsibility for coordination, schedule, and cost control while clarifying change order procedures and warranties.

Why this Agreement Matters for Project Risk and Delivery

Who Typically Prepares or Signs This Agreement

Common signers and preparers include owner representatives, design-build firms, and general contractors who will coordinate both design and construction.

  • Owners and developers responsible for project funding and approvals, requiring clear payment and scope terms.
  • Design-build firms or single-prime contractors who accept combined design and construction obligations.
  • Architects, engineers, and specialty subcontractors brought in under coordinated contract provisions.

Parties should confirm authority to bind each organization and ensure the agreement reflects procurement method and financing conditions.

Core Sections to Include in a Professional Agreement

A robust Design and Construction Agreement organizes responsibilities, risk allocation, and performance measures into discrete contract sections for clarity and enforceability.

Scope of Work

Detailed description of design and construction deliverables, design standards, drawings, specifications, and any phased or milestone requirements to avoid scope disputes.

Payment Terms

Contract price, payment schedule, retainage, invoicing requirements, and remedies for late payment; include audit rights and conditional payment triggers.

Schedule

Milestones, notice-to-proceed, critical-path logic, liquidated damages for delay, and procedures for excusable delay and time extensions.

Change Orders

Formal process for pricing, approval, and documentation of design changes, differing site conditions, and scope adjustments; include time and cost impact rules.

Warranties

Express workmanship and materials warranties, start and duration of warranty period, and requirements for remedying warranty defects.

Insurance & Indemnity

Required insurance coverages, limits, additional insured endorsements, and indemnity allocation for third-party claims and design defects.

Security and Compliance Essentials for Contract Documents

Encryption: AES-256 at rest
Transport: TLS 1.2/1.3
Audit Trail: Timestamps and IP logging
HIPAA: BAA required
Certifications: SOC 2 Type II
Regulatory: ESIGN / UETA compliance

Step-by-Step: Completing the Agreement

Follow a clear sequence to minimize negotiation cycles and ensure all parties have consistent contract copies.

  • 01
    Collect Documents: Gather permits, drawings, licenses, and proof of insurance before drafting.
  • 02
    Fill Party Details: Enter legal names, addresses, and authorized signers exactly.
  • 03
    Define Scope & Price: Attach technical exhibits and set payment milestones explicitly.
  • 04
    Execute and Distribute: Obtain signatures, store originals, and circulate final executed copies to stakeholders.

Setting Up an Online Completion Workflow

Configure the electronic workflow to match your approval path and authentication requirements before sending.

Field Configuration
Authentication Email link, SMS code, or advanced ID verification per risk level
Conditional Fields Show or hide clauses based on role or selected options
Bulk Send Enable for multiple similarly formatted contracts
Retention Set automatic storage and export policies

Where to Send or File the Executed Agreement

After execution, route copies to parties and retain authoritative records according to project governance.

  • Contract Parties: Owner, Design-Builder, and key subcontractors each keep an executed copy.
  • Project File: Maintain a master project file with exhibits and approved change orders.
  • Lender or Financing: Provide executed contract to lender when required by loan documents.
  • Permitting Authority: Submit required signed documents with permit applications if jurisdiction requires.

Digital Signing and Technical Requirements

Select an eSignature platform that supports required authentication, audit trails, and allowed file formats for contract exhibits.

  • File Formats: PDF, DOCX, or flatten to PDF/A
  • Integrations: Salesforce, NetSuite, Procore supported
  • Authentication: Email, SMS, or KBA options

Confirm the platform supports ESIGN/UETA compliance, offers audit trails, and can retain a reproducible record for disputes or regulatory review.

Key Contract Dates and Timing Expectations

Document the primary dates that control performance, payments, and remedies to avoid disputes over timing.

Effective Date:

Date when contract obligations begin and warranties are measured from.

Notice to Proceed:

Start of construction and schedule baseline; ties to milestone payments.

Substantial Completion:

Milestone for reduced retainage, occupancy, and commissioning.

Final Completion:

Punch list completion, final payment, and release of retainage.

Warranty Period:

Starts at substantial or final completion as contract specifies.

Common Mistakes to Avoid When Preparing the Agreement

  • Vague scope descriptions that leave key deliverables undefined and invite costly change orders during construction.
  • Omitting a clear change order procedure, which causes disputes over entitlement, pricing, and schedule extensions.
  • Failing to confirm signatory authority or corporate resolution, leading to questions about enforceability and delays in execution.
  • Neglecting to attach technical exhibits, drawings, and specifications that should be incorporated by reference into the main contract.

Penalties and Legal Risks from an Incorrect Agreement

Liquidated Damages: Enforced if properly drafted
Delay Claims: May increase costs and damages
Payment Disputes: Triggers liens or stop-work
Lien Risk: Subcontractors can file mechanic’s liens
Insurance Gaps: Exposes parties to uninsured losses
Regulatory Fines: Noncompliance with licensing or permits

eSignature Vendor Comparison for Contract Execution

Compare common vendor features relevant to signing and storing Design and Construction Agreements. signNow appears first per platform comparison guidelines.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial Yes, 7-day trial Yes Yes Yes Yes
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies by plan Varies by plan Varies by plan

Real-World Examples of Contract Use

Practical examples show how organizations use combined design and construction agreements to improve coordination and reduce disputes.

Martin Properties — Tim Martin

Local developer chose a design-build agreement to centralize responsibility for schedule and budget.

  • The single-prime approach reduced change order negotiation cycles.
  • Tim Martin reported faster turnaround on approvals and consistent execution across multiple small commercial projects while retaining clear remedies for delay and defects.

BIS — Dan Rotelli

An engineering firm used a combined contract to manage design deliverables and contractor performance.

  • The agreement clarified liability for constructability issues.
  • Dan Rotelli emphasized the importance of detailed exhibits and warranties to resolve disputes without litigation, and the firm maintained audit trails for all change orders.

Frequently Asked Questions About Design and Construction Agreements

Answers to common questions about enforceability, e-signatures, notarization, and contract changes for U.S. projects.


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