A design and build contract is a single agreement under which one party, the design-builder, takes responsibility for both designing and constructing a project. Unlike the traditional design-bid-build model, where the owner holds separate contracts with a designer and a contractor, design-build gives the owner one point of responsibility for the finished result.
That single point of responsibility is the whole idea. When one entity owns both the drawings and the construction, the owner has one party to hold accountable if something goes wrong, rather than a designer and a builder pointing at each other. For Ontario owners and contractors, the trade-off is real: design-build can compress schedules and reduce disputes over who caused a problem, but it shifts design risk onto the builder and gives the owner less direct control over the details of the design. This guide explains what a design-build agreement is, how it differs from design-bid-build, the Canadian standard forms used for it, how risk is shared, and the legal pitfalls that come up on Ontario projects.
Design Build vs Design Bid Build
The clearest way to understand a design and build contract is to compare it with the model it replaced for many projects.
In design-bid-build (sometimes shortened to DBB), the owner runs the project in three sequential stages. First, the owner retains an architect or engineer to produce a complete design. Second, the owner puts that finished design out to tender and contractors bid on building it. Third, the winning contractor builds what the designer drew. The owner sits in the middle, holding one contract with the designer and a separate contract with the contractor.
In design-build, the owner signs one contract with a design-builder who is responsible for both the design and the construction. The design-builder either employs the designers or, more commonly, retains them under a separate professional services agreement. The owner deals with one counterparty for the entire delivery.
The practical differences flow from that structure.
| Factor | Design-Bid-Build | Design-Build |
|---|---|---|
| Contracts the owner holds | Two (designer and contractor) | One (design-builder) |
| Point of responsibility | Split between designer and builder | Single |
| Design control | Owner directs the design | Design-builder owns the design |
| Schedule | Sequential, design then build | Overlapping, can start build before design is final |
| Pricing certainty | Priced against a complete design | Often priced against performance criteria |
| Change orders | Common when design gaps surface | Fewer owner-driven changes, more contractor risk |
Neither model is automatically better. Design-bid-build gives an owner maximum control over the design and a price tendered against complete drawings, which suits projects where the owner has fixed requirements. Design-build suits owners who value speed, a single accountable party, and a fixed outcome over hands-on design control. The reduction in finger-pointing is often the deciding factor: because the design-builder cannot blame a separate designer for a coordination error, many of the classic design-versus-construction disputes simply disappear.
The Standard Canadian Forms: CCDC 14 and CCDC 15
Most design-build projects in Canada are documented using standard forms published by the Canadian Construction Documents Committee (CCDC). These forms are widely used and understood across the industry, which is one of their main advantages. Lawyers, owners, contractors, sureties, and insurers all recognize them.
The core design-build form is CCDC 14, the Design-Build Stipulated Price Contract. It is the prime contract between the owner and the design-builder, under which the design-builder provides the design services and performs the construction for a single, pre-determined stipulated (fixed) price. CCDC 14 sets out the common construction terms, the roles of the parties, and the role of supporting players such as the Payment Certifier and any Owner's Advisor. A 2013 edition has been the standard for years, and CCDC released a 2026 edition that aligns the form with updates first introduced in CCDC 2 (2020).
Sitting underneath CCDC 14 is CCDC 15, the Design Services Contract between Design-Builder and Consultant. This is the agreement the design-builder uses to retain the architect or engineer who actually performs the design. It matters to owners because it determines how design liability flows between the design-builder and its consultant.
CCDC has also expanded the family of design-build documents to include progressive design-build contracts, which let the owner and design-builder collaborate on the design and price in an early phase before locking in a final price. The right form depends on how much design certainty exists at the outset and how the owner wants to handle price.
A standard form is a starting point, not a finished contract. Owners and contractors almost always negotiate supplementary conditions that amend the standard text. The supplementary conditions are usually where the real risk allocation happens, so they deserve close legal review rather than a quick signature.
How Risk Is Allocated in a Design-Build Agreement
The defining feature of a design-build agreement is that the design-builder carries the design risk. In design-bid-build, if the design is flawed, that is generally the designer's problem and, through the owner, can become a basis for a claim. In design-build, the owner hands the design-builder a set of requirements and expects a building that meets them. How those requirements are written changes everything.
Performance specifications versus prescriptive specifications. Owners can describe what they want in two ways. A prescriptive specification tells the design-builder exactly what to install, for example a named product or a specific assembly. A performance specification states the outcome the finished work must achieve, for example a floor that supports a stated load or an envelope that meets a stated energy target, and leaves the means to the design-builder. The more the owner relies on performance specifications, the more design risk sits with the design-builder. The more the owner dictates prescriptive details, the more the owner takes back design responsibility for those elements, because the design-builder is just following instructions.
This is the most important concept for an owner to understand. If the owner over-specifies, it quietly reclaims the design risk it was trying to transfer. If the owner under-specifies, it may not get the building it actually wanted. Getting the project requirements right, often called the owner's statement of requirements, is where good legal and technical advice pays off early.
Professional liability and insurance. Because the design-builder is now responsible for design, the project needs professional liability insurance covering the design work, usually carried by the consultant retained under CCDC 15 and sometimes by the design-builder as well. Owners should confirm the design liability is insured and that the coverage survives long enough to matter, since design defects can surface years after completion.
Key Clauses to Negotiate
Most of the negotiation in any design and build contract happens inside a handful of clauses. Here is what each one does.
Scope and the Statement of Requirements
The scope clause and the attached owner's requirements define what the design-builder must deliver. Ambiguity here is the single biggest source of design-build disputes. If the requirements are vague, the design-builder will design to the cheapest compliant interpretation, and the owner may be unhappy with the result while having no contractual basis to complain.
Price Model: Stipulated Price or Cost-Plus
CCDC 14 is a stipulated price contract, meaning the design-builder commits to a fixed price for a defined scope. The owner gets price certainty, and the design-builder absorbs the risk of building it for that number. The main alternative is a cost-plus model, where the owner pays the actual cost of the work plus a fee, often with a guaranteed maximum price (GMP) as a ceiling. Cost-plus suits projects where the scope is not yet settled enough to fix a price, while stipulated price suits projects with well-defined requirements. The choice drives who carries the risk of cost overruns.
Indemnities
Indemnity clauses decide who pays when a third party is harmed or a defect causes loss. In design-build, indemnities also need to address design errors specifically, since that risk is now inside the contract. Owners should make sure the design-builder's indemnity reaches design defects and is not quietly carved out.
Liquidated Damages
Liquidated damages (LDs) are a pre-agreed amount the design-builder must pay for each day of delay past the completion date. They save the owner from having to prove its actual losses. Under Canadian law, an LD clause is enforceable only if the amount is a genuine pre-estimate of the likely loss at the time the contract was made. If a court finds the figure was set as a threat to force performance rather than a reasonable estimate, it can refuse to enforce it as a penalty, which can leave the owner with no fixed remedy for the delay at all. LD figures should be reasoned and documented, not plucked from the air.
Dispute Resolution
Design-build contracts usually include a tiered dispute resolution clause: negotiation, then mediation, then arbitration or litigation. On Ontario projects there is also a statutory layer that the contract cannot remove, discussed below.
Legal Pitfalls for Ontario Owners and Contractors
A design and build contract in Ontario does not exist in a vacuum. The provincial Construction Act, RSO 1990, c C.30 (formerly the Construction Lien Act) applies to it like any other construction contract, and several of its rules are mandatory.
Holdback and liens. The Construction Act requires the owner to hold back 10 percent of the value of the work as security for those who supply services or materials. Contractors and subtrades who are not paid can register a construction lien, but only within strict time limits. Under the modernized timelines, a lien generally must be preserved within 60 days and perfected within a further 90 days of the relevant triggering event. Missing those deadlines can extinguish the lien right, so both owners and design-builders need to track them carefully.
Prompt payment and adjudication. The Construction Act contains a mandatory prompt payment regime and an interim adjudication process run through Ontario Dispute Adjudication for Construction Contracts (ODACC). These give contractors and subtrades a fast route to payment disputes that the contract cannot contract out of. Amendments that came into force on January 1, 2026 strengthened these rules further, introducing a mandatory annual release of accrued holdback and broadening the matters that can be sent to adjudication. Any design-build agreement signed for an Ontario project should be read against the current version of the Act, since the statute now does work the contract cannot override.
Design liability gaps. The most common design-build pitfall is a mismatch between the design liability the owner thinks it transferred and what the contract actually says. If the consultant's design obligations under CCDC 15 are narrower than the design-builder's obligations to the owner under CCDC 14, a gap opens up. Owners should confirm the chain of design responsibility is unbroken from consultant to design-builder to owner.
Over-specification. As noted above, an owner that fills the requirements with prescriptive detail can unintentionally take back the design risk it wanted the design-builder to carry. Reviewing the requirements with that risk in mind, before signing, is far cheaper than arguing about it after a defect appears.
Related Questions
What is the difference between design-build and design-bid-build?
In design-bid-build, the owner holds two separate contracts, one with a designer and one with a contractor, and the design is finished before construction is tendered. In design-build, the owner holds one contract with a single party responsible for both design and construction, giving the owner one point of accountability and often a faster, overlapping schedule.
What is CCDC 14?
CCDC 14 is the Canadian Construction Documents Committee's standard Design-Build Stipulated Price Contract. It is the prime contract between an owner and a design-builder, under which the design-builder provides design services and performs the construction for a single fixed price. It is the most widely used design-build form in Canada.
Who is liable for design errors in a design-build contract?
In a design-build contract, the design-builder is generally responsible to the owner for design errors, because it owns both the design and the construction. The designer is usually retained by the design-builder under a separate agreement, so design liability flows through the design-builder rather than directly between the owner and the designer.
Is a design-build contract cheaper than traditional construction?
It depends on the project. Design-build can reduce costs by overlapping design and construction, cutting change orders, and removing disputes between separate designers and builders. It does not guarantee a lower price, and the savings depend on clear requirements and a well-drafted contract. Price certainty, not just price, is often the bigger benefit.
What is a stipulated price design-build contract?
A stipulated price design-build contract, such as CCDC 14, fixes a single price for a defined scope of design and construction work. The owner gets price certainty and the design-builder carries the risk of completing the work for that amount. It differs from a cost-plus model, where the owner pays actual costs plus a fee.
Sources & Official Resources
Ontario Statutes Cited
Standard Form Resources 2. Canadian Construction Documents Committee (CCDC) Document Catalogue 3. CCDC 14 Design-Build Stipulated Price Contract
Government Resources 4. Ontario Dispute Adjudication for Construction Contracts (ODACC) 5. Construction Act: prompt payment and adjudication overview (Ontario)
Helpful Resources 6. Ontario Business Registry
Contact Hadri Law
Whether you are an owner planning a build or a contractor pricing one, a design and build contract decides who carries the design risk, who pays for delay, and what happens when the finished work falls short. Getting the requirements, the price model, and the indemnities right is far easier with advice before you sign than after a dispute. Our team advises Ontario businesses on commercial agreements and construction contracts and on the essential contract clauses that decide how risk is shared.
Hadri Law's founder, Nassira El Hadri (Law Society of Ontario, 2021), advises on commercial and corporate transactions, and the firm reviews and negotiates contracts for businesses across the Greater Toronto Area.
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This article is for general information only and does not constitute legal advice. Reading or relying on it does not create a solicitor-client relationship with Hadri Law Professional Corporation.
