Progressive Design-Build Model and Co-Development Agreements in Canada: Five Key Considerations

Whether public or private, large infrastructure projects involve complex risk and resource management. Project owners must first identify, describe and mitigate design, construction, financing and operational risks, and then allocate each of these risks to the party that is best able to manage it. These crucial steps ensure not only the quality of a project, but also its delivery in a timely and cost-effective manner. In this context, the use of co-development agreements and the progressive design-build model has recently emerged in Canada, allowing for greater collaboration between parties ahead of the execution phase of a project. Through these novel approaches, parties can better define a project’s parameters and manage the risks involved.

Here are the top five things you need to know about the progressive design-build model and co-development agreements:

1. Progressive design-build. The progressive design-build model is a collaborative process that is introduced at the initial stages of a project, with three key phases: planning, co-development and execution.
2. Co-development. The novel component of the progressive design-build model is the addition of a co-development phase (carried out within the parameters of a co-development agreement). The earlier involvement of the partners in the development process allows the projects to benefit from greater flexibility and increased potential for technological innovation. Procurement processes (usually qualitative in nature) are generally shorter and less costly, which can be viewed favourably in the current construction market.
3. Challenges. Despite its benefits, this collaborative model is not without its challenges. It requires seamless communication between multidisciplinary parties, significant resources at the outset and exemplary governance. One major obstacle is resistance to change, particularly in adopting innovative delivery mechanisms. A collaborative culture can be supported by appropriate coaching and incentives to ensure the effectiveness of the processes.
4. Complex projects. Co-development agreements require an intensive mobilization of resources from each party at the early stage of a project. As such, this type of agreement is particularly well suited for projects that are complex, scalable or with uncertain risks. They are less well suited for simple and well-defined projects for which a more traditional model would generally be a better fit.
5. Quebec’s Bill 62. Quebec introduced major legislative amendments through Bill 62, An Act mainly to diversify the acquisition strategies of public bodies and increase their agility in carrying out infrastructure projects, paving the way for more flexible partnership models. Bill 62 expands the definition of partnership agreements by incorporating collaborative approaches, including consensually sharing risks. These amendments improve parties’ abilities to adapt to the specifics of a given project, providing crucial flexibility for complex and scalable projects. It will be interesting to see whether these amendments will contribute to a more widespread adoption of co-development agreements and the progressive design-build model by public-sector project owners in Quebec.

Have more than five minutes? Watch our recent webinar (in French only) on this topic or contact any member of our Infrastructure group to learn more.