Most contractors give a fake-low SF price up front, then bury you in change orders for the holes and busts in the architect's plans. Here's what 'true design-build' actually changes.
In every contested bid situation Pereff has ever encountered, the losing argument sounds like this: 'Our bid is 12% lower.' What the doctor doesn't know yet — and learns six months into construction — is that the 12% gap was made up entirely of scope the other contractor excluded from the bid. Those exclusions are called holes and busts, and they are the primary mechanism by which design-bid-build delivery becomes more expensive than design-build.
What are holes and busts?
These are two distinct categories of design error that get priced as change orders in design-bid-build delivery:
- Holes: things that are missing from the plans entirely. A drain that needs to exist but wasn't drawn. A conduit that was left off the electrical sheet. A shielded wall that wasn't specified in the radiation report. Each one is a hole — something that has to be built, wasn't bid, and becomes a change order.
- Busts: things that are drawn but designed wrong. An operatory width that doesn't fit the chair and dental unit. A plumbing rough-in that conflicts with the slab the previous tenant poured. An HVAC unit specified at 3-ton that needs to be 5-ton for the air-change requirements. Each bust requires a design revision, a construction revision, and usually a change order.
Design-bid-build creates a constant battle between architect and contractor — 'I drew it right' vs. 'it can't be built that way.' The doctor is in the middle, paying both. [Pereff operating principles]
Why design-bid-build creates adversarial relationships
In design-bid-build, the architect and the general contractor have separate contracts with the owner. They are not on the same team — they are two separate vendors with different economic interests:
- The architect's fee is paid. Their incentive is to defend their drawings and avoid redesign fees. When a hole or bust appears in the field, the architect's default position is 'the contractor should have caught that in the bid.'
- The contractor's margin depends on change orders. Their incentive is to identify everything the architect didn't specify and price each one as extra work. When a hole appears, the contractor's default position is 'this isn't in our scope — here's a change order.'
- The doctor has no leverage. Both parties are technically correct under their respective contracts. The doctor pays the change order or pays a lawyer. Often both.
Stephen Pereff on fake-low bids: 'They end up being over our original preliminary SF cost up front and give the client a miserable experience.' The low bid wins the contract. The change orders are where the money is made. [Pereff operating principles]
How design-build catches holes before the bank
In Pereff's design-build process, the same team that designs the project is the team that builds it. There is no gap between 'what the architect drew' and 'what the contractor bid' — because they are the same entity. Holes and busts are caught in design development, not in the field:
- MEP coordination happens at design development, not during construction. Plumbing conflicts with existing slab rough-in are identified when the architect is drawing — not when the plumber is standing on the slab.
- Scope is built to a real budget target. The bank's loan proforma is created during the construction document phase. If the scope is heading over budget, it gets value-engineered out before the doctor has signed a construction contract.
- The contractor reviews every design sheet before it goes to permit. Not as a check — as a co-author. If something can't be built as drawn, it gets fixed in the drawing.
Example: KVC Pediatric Dentistry
Dr. Velasquez and Dr. Chen needed a 3,000 sf pediatric dental office in Little Elm at a specific bank budget. Their previous dental consultant had failed to deliver a competitive architect or builder — the project was stalling. Pereff replaced the consulting firm, completed the design and construction together, and delivered the project at $423,000 — value-engineered to meet the bank's approved budget. No change orders from holes or busts. The project was complete in 3 months.
Example: Dr. Sheppard Oral Surgery
Dr. Sheppard's ground-up oral surgery facility in Mansfield, TX — 8,272 sf, $3.1M — is a Class 1 medical facility with the full complexity of a ground-up site development: civil engineering, off-site infrastructure, structural, MEP, medical gas, and specialty finishes. In a design-bid-build model, the site development surprises alone (heavy off-site infrastructure costs the doctor didn't know were required when he purchased the property) would have created massive scope gaps. Instead, Pereff identified the site cost issues early in preconstruction, negotiated $200,000 from the City of Mansfield toward infrastructure costs, and structured the financing — during a government shutdown — to cover 100% of the project.
No other contractor is also a Real Estate Developer. The $200,000 the City of Mansfield contributed to Dr. Sheppard's infrastructure was only possible because Pereff brought developer-level city relationships to the project. [Pereff project data, Dr. Sheppard Oral Surgery]
Want to understand what true design-build changes for your project? Read how Pereff structures design-build-finance delivery, or start a project brief and we'll walk you through the process for your specific scope.
Want a project-specific take?
Every number in this post is directional and dated. A 30-minute preconstruction conversation with Pereff gives you a project-specific range you can actually use for budgeting, financing, and scheduling.