There are two alternative approaches to the traditional Design and Build Procurement:
1. The employer engages a team of consultants at a primary stage for both design and cost control. The work should be fully designed and recorded under a specifications document (known as the Employers’ Requirements) before tenders are invited from contractors (third parties). The design and construction processes are therefore differentiated. The contract is usually let on a competitive basis and the job passes sequentially through “Plan of Work” Stages, following the ‘fully designed project, single stage tender’ route, or:
2. The employer engages an architect to prepare an outline scheme together with a performance specification on which basis contractors will be invited to prepare a tender. The contractor will engage its own design team to prepare Contractor’s Proposals that satisfy the performance specification and are submitted with the Tender offered. Subsequently the contractor’s design team complete the detail design development and production documentation stages to permit the construction of the building.
In this context, Novation is a process by which the original contract between the Architect/Consultant and the employer is replaced by another contract on identical terms between the architect and the contractor. Because, as noted above, the contact between the architect and employer and the architect and contractor will require different terms, novation agreements commonly incorporate a schedule of changes. Contractor accepts all obligations and liabilities that had formerly been the Employers and the consultants’ obligations and liabilities are subsequently owed to the Contractor.
The architect assumes liability to the contractor and releases the employer from liability. To be effective, the original contract between architect and employer must contain a clause agreeing to the novation and the three-party novation must be attached to the contract to signify that both parties are agreed on the wordings.