Why design development and design change differ

The terms 'design development' and 'design change' are commonly used in construction law, but are frequently confused.

To explain in turn what each of these means, design development is the process by which a specification or high-level design for a project is translated into detailed design documents.

In the context of a design-and-build (D&B) contract, the employer hands over the responsibility for both to the contractor. Usually, this means that the contractor assumes greater responsibility as well as risk for the design development.

In practical terms, the contractor usually gets no extra time or money for this process – or for building the end product – even if it is more complex or time-consuming to do so.

Design change or variation, meanwhile, describes an alteration to the scope of work that was originally specified in the contract.

A design change can be created by omission from, addition to or substitution in the works, or through a change in the way these works are to be performed. Design changes most often originate with the employer or the design team.

The main difference between design development and design change is who pays for them. A design change might entitle a contractor to more money and time, whereas a design development will give rise to neither.

However, not all design changes would entitle a contractor to time or money. Tables 1A–1C show the relevant provisions in commonly used standard form contracts.

As a result, the point of handover of the design in D&B contracts is often difficult to establish. It is possible for an employer to use design development as a ground to reject a contractor's application for a design change or variation.

Clause 5.1 of the 2016 JCT Design Build Contract, for example, defines a change as an amendment to the employer's requirements that necessitates the alteration or modification of the design, quantity or quality of the works.

Similarly, in the 2017 International Federation of Consulting Engineers (FIDIC) Yellow and Silver Books, a variation is defined as changes to the works that are instructed as such under clause 13. This also includes a change to the employer's requirements.

Therefore, whether any changes to the design are considered a design development or a design change will come down to what is included in the employer's requirements and whether these have been 'changed' or just 'developed'.

This may in turn depend on the level of detail and specificity in the employer's requirements. If the design development solely fills in the blanks in these requirements, it is not considered a design change.

In the New Engineering Contract (NEC) suite, there are no specific terms to cover variations or design changes. However, clause 60.1(1) provides for a compensation event in the case of an instruction from the project manager changing the scope of the contract.

One of the exceptions to this is where the contractor changes its own design, either at its own request or in order to comply with the scope provided by the client.

The distinction between clarifying the interpretation of the works information – a design development – and an instruction that changes the works information – a design change – is a common area of dispute in relation to clause 60.1(1).

In Skanska Construction v Egger Ltd [2005] EWHC 284 (TCC) Skanska was responsible for the design in the employer's requirements, together with developing these requirements into fully workable designs.

A dispute arose over an additional water main and whether it was merely design development or a design change for which payment was due. The employer, Egger, argued that it was not a design change.

Another issue was whether steelwork, which was later constructed by Skanska, was simply a design development, given that the design and supply of the steel was one of Skanska's obligations.

The Court of Appeal agreed with Skanska and held that the instruction to provide a second water main was a design change because the employer's requirements only provided for one.

However, the court also held that the additional steelwork design was part of the risk that Skanska had assumed, even though there was no detailed design included in the employer's requirements.

Meanwhile, in Co-operative Insurance Society v Henry Boot Ltd [2002] EWHC 1270 (TCC) contractor Henry Boot was required to develop a design based on an outline produced by a consulting engineer employed by the Co-operative Insurance Society Ltd.

During the works, water and soil flooded the sub-basement excavations, and one of the preliminary issues was the contractual liability of Henry Boot for the design of the piled walls.

It submitted that its only contractual obligation in relation to the design of these walls, which formed part of the works, was to prepare working drawings in respect of the concept devised by the consulting engineer.

The court held, however, that its obligation under the contract was to complete the design of the bored piled walls and develop the conceptual design into a completed one that could be constructed.

This obligation included a duty to check the adequacy of any preliminary design by others.

In effect, Henry Boot had assumed responsibility for making the employer's preliminary or concept design work; so this was design development rather than design change.

As a result, the way that original design is defined and specified, as well as the wording of responsibility for completing and developing a design, is key to the extent of risk adopted.

All parties need to ensure that the scope of works is sufficiently detailed and covers additional matters that may arise during the construction of the project.

Contractors should ensure that there is sufficient time in the tender period for them and their specialist supply chain to consider properly what their design obligations are.

They also need to identify whether a particular contract imposes wider design development obligations, and whether a higher threshold is needed to demonstrate a design change.

Employers should identify risks and minimise the potential for design changes by ensuring as far as possible that uncertainties are eliminated before the contract is concluded.