Chicken and Egg Issue Spotting

In the new issue of Under Construction,  Michael Sterling points us to some issues to watch for when negotiating agreements between a design-builder and designer on a PPP project. 

This can present an interesting "chicken and egg" problem.  The concessionaire needs design, scope, and cost information in order to model its financing requirements and complete its concession deal.  The concessionaire, therefore, will put pressure on the design-builder to come up with this information.  In order to provide such information to the concessionary, the design-builder may be looking for a fixed design cost from the designer.  But providing certainty that the concessionaire can take to the bank may be easier said than done for a designer while the design, scope, and duration are still in flux.  

• How do the Design-Builder and Designer fix their contract while the upstream agreements are still in flux?  
• How can incomplete upstream documents be incorporated by reference into the Design-Builder/Designer agreement while those upstream agreements are incomplete? 
• How can the Design-Builder rely on pricing if those upstream agreements are not incorporated? 
• How is designer compensated if the project is ultimately not awarded to the Design-Build team? 
• How are they compensated if the Design-Build team is successful? 
• How is the schedule set at this early time?  What provisions for adjusting the schedule?
• How do the parties allocate ownership of intellectual property that might be developed at a time when they may not have any proprietary processes or copyrightable aspects of the design in mind?
• Is the concessionaire to be made a third party beneficiary of the Design-Builder/Designer contract?  

Check it out in Under Construction.