Design & Build: A New Era for Czech Public Construction Contracts

The Design & Build (D&B) method represents a fundamental departure from the traditional Design-Bid-Build (DBB) model in the field of public construction contracts in the Czech Republic. At its core, it is a return to the concept of comprehensive responsibility, where a single entity – the contractor (the Design-Builder) – bears responsibility for the entire project, from the initial design to the completion of construction.

Do you need advice on this topic? Contact our law firm in Prague, ARROWS, via e-mail at office@arws.cz or by phone at +420 245 007 740. Your inquiry will be handled by "JUDr. Jakub Dohnal, Ph.D., LL.M.", an expert on Czech construction law.

From Cathedrals to Infrastructure: A Return to Comprehensive Liability

Historically, this concept reflects a model used, for example, in the construction of cathedrals, where a central figure (the architect or master builder) bore complete responsibility for the entire process, including organizational matters, defects, and potential delays.

The key mechanism of the D&B method is the integration of engineering, design, and construction work into a single contract. This unification has strategic importance: it allows the planning and construction phases to overlap, thereby significantly reducing the overall project delivery time.

Furthermore, it aligns the motivations of suppliers—designers and construction firms—who work within a single consortium or for one contractor. This minimizes the traditional room for disputes found in the DBB model, where liability is often shifted between the designer and the construction company.

In the Czech Republic, the D&B method is becoming increasingly discussed, particularly in connection with large transport infrastructure projects. Even the State Fund for Transport Infrastructure (SFDI) has commissioned a specific methodology for this form of procurement, which underscores the growing relevance of this model under Act No. 134/2016 Coll., on Public Procurement (PPA).

Strategic Reasons for Choosing D&B

For public contracting authorities in the Czech Republic, D&B is attractive primarily due to the transfer of liability and risk management. The subject of the work in D&B contracts is defined mainly by functional and performance requirements linked to the purpose of the contract, rather than strict bills of quantities. This approach reduces the need to address every minor project change through a contract amendment. You might find it useful to read about Cross-Border Construction Law and Building Due Diligence in the Czech Republic: What Foreign Investors Should Know to better understand local investment risks.

D&B also allows the contracting authority to consider factors related to the entire life cycle of the subject of performance when evaluating bids. In addition to the purchase price, other operating costs and environmental impacts can be taken into account, leading to overall more economically advantageous performance. This method is particularly suitable for complex projects because it allows for an ideal level of innovation.

The contracting authority grants the Design-Builder freedom in the design to optimize construction methods and materials, in exchange for the contractor bearing the risk of design errors. Legal support from our Prague-based attorneys is crucial here for correctly setting functional goals and evaluation criteria that effectively reflect these innovations.

The fundamental shift in project management that D&B brings lies in the relocation of the legal dispute. While in the traditional DBB model, legal disputes often revolve around the joint and several liability of the contractor and the designer (whether the contractor should have detected a documentation defect with due care under Section 2630 of the Czech Civil Code), in D&B, the contractor is fully responsible for the design.

The focus of the legal battle thus shifts to the question of correct risk allocation (e.g., geology, permitting) in the procurement documentation and their management through contractual mechanisms (claims). Legal support therefore focuses on proactive risk management in the preparatory phase, rather than reactive attribution of defects.

FAQ – Legal Tips for Design & Build in the Czech Republic

1. What is Design & Build from a liability perspective?

It is a return to comprehensive liability, where one contractor (the Design-Builder) is responsible for the entire project, including both design and implementation.

2. How does Design & Build help with efficiency?

It aligns the motivations of the designer and the contractor and allows for overlapping planning and construction phases, which reduces the total implementation time. Do you want to optimize your project timeline? Contact our Czech legal team at office@arws.cz.

3. Can D&B take operating costs into account?

Yes, D&B allows the contracting authority to consider factors related to the entire life cycle of the subject of performance in the bid evaluation, not just the purchase price. Do you need legal assistance with setting evaluation criteria under Czech law? Contact us at office@arws.cz.

Legal Regulation and the PPA Framework: Constant Supervision by the ÚOHS

Public procurement in the Czech Republic is a strictly formalized process, regulated primarily by Act No. 134/2016 Coll., on Public Procurement (PPA). The procedure of the contracting authority, whether for an above-threshold D&B construction contract or a small-scale contract, must always comply with the basic principles of transparency, proportionality, equal treatment, and non-discrimination.

Basic Principles and the Role of the ÚOHS (Office for the Protection of Competition) in the D&B Concept

Supervision of compliance with the Public Procurement Act (ZZVZ) is exercised by the Office for the Protection of Competition (ÚOHS). The possibility of imposing an administrative sanction or cancelling the entire tender process by the ÚOHS represents the greatest legal risk for both contracting authorities and suppliers. Especially in the complex environment of D&B projects, maintaining transparency is critical under Czech law.

If a contracting authority decides to exclude a participant from the tender process (e.g., due to failure to meet sophisticated qualifications specific to D&B), the reasons for exclusion must be demonstrably established and recorded in specific documents that form part of the procurement documentation. A failure in documentation and transparency in such cases is a direct trigger for the risk of contract cancellation and financial loss in the Czech Republic.

Critical Phase: Correct Setup of Tender Documentation

D&B projects require exceptionally precise preparation of tender documentation. Given that this method is less common in the Czech Republic than traditional DBB, it is essential not only to define functional goals but also to clearly communicate the fundamental differences and specify the contracting authority's expectations to the market.

To achieve legal robustness and prevent challenges from suppliers or the ÚOHS, the effective use of Preliminary Market Consultations (PMC) is recommended. PMC allows the contracting authority to obtain market feedback and refine expectations before the official launch of the tender. 

This active communication and legal analysis of the tender documentation is essential for defending requirements in later proceedings, as the ÚOHS actively monitors whether qualification requirements are non-discriminatory and do not contradict the objective reality of the Czech market. Thus, legal analysis becomes a shield against ÚOHS sanctions, ensuring that technical qualifications are defensible in relation to the actual complexity of the D&B project.

FAQ – Legal Tips for Tender Documentation

1. What is a Preliminary Market Consultation (PMC)?

It is a tool that allows the contracting authority to obtain market feedback and refine expectations before the official launch of the tender. It is key to defending requirements before the ÚOHS.   

2. How to avoid ÚOHS sanctions?

The foundation is compliance with transparency principles and the preparation of legally robust tender documentation. Our Prague-based attorneys handle these issues daily. Do you need legal assistance? Contact us at office@arws.cz.    

3. Can I be excluded if I do not meet the qualifications?

Yes, the contracting authority must have demonstrably established reasons for exclusion recorded in the procurement documentation. For an immediate solution to your situation, write to our Czech legal team at office@arws.cz.    

For a complete overview of this service, visit our page HERE.

Contractual Architecture: The Role of FIDIC and Claim Management

In international and Czech construction practice, the backbone of contractual relationships in D&B projects consists of the conditions of the International Federation of Consulting Engineers (FIDIC). Knowledge of these standards is essential for the success of a D&B project and, as confirmed by the decision-making practice of the ÚOHS, it is also becoming a relevant qualification criterion.

The FIDIC Yellow Book as a De Facto Standard

For procurement using the Design & Build method, the FIDIC Yellow Book is primarily used, which is designed for contracts where the contractor provides both design and construction. Other FIDIC standards also exist (e.g., the Red Book for measured contracts, the White Book for regulating relationships with designers and consultants).

Claims and Variations: Measuring Qualifications and Risks

The ÚOHS has confirmed in its decision-making practice that the requirement to demonstrate the experience of key personnel with project management according to FIDIC standards is relevant and consistent with the goal of preventing delays. This particularly concerns knowledge of "claims" and "variations" (changes), which represent specific mechanisms for resolving unforeseen events, financial compensation, and changes to the scope of work.

The Office agreed that these institutes are so specific within the context of Czech contract law that experience with them cannot be replaced by any other contract for work, even if it were another D&B project that does not apply FIDIC standards. Knowledge of the claims mechanism thus demonstrates the Design-Builder's ability to manage the contractual relationship and minimize the risk of escalating disputes. 

As a result, FIDIC is becoming de facto specific contract law within the Czech construction sector. Furthermore, the ÚOHS has shown flexibility by recognizing experience with the FIDIC Red Book for proving knowledge of claims and variations, as these general institutes appear across various contractual standards.

Risk of Contract Modification: Particular Conditions

Significant legal risk in D&B projects often arises not from the FIDIC standard itself, but from its modifications implemented through "Particular Conditions". These modifications often attempt to transfer all risks that would otherwise be borne by the contracting authority (e.g., unpredictable geology, errors in the assignment) back to the Design-Builder. 

Petitioners in proceedings before the ÚOHS repeatedly point out that Particular Conditions can lead to the complete negation of basic FIDIC institutes. Furthermore, contracting authorities in the Czech Republic often negotiate high contractual penalties for delays in completion (e.g., ranging from 50,000 CZK to 200,000 CZK for each day of delay). 

Legal analysis of Particular Conditions is therefore critical for contractors to avoid signing contracts with toxic clauses that disproportionately increase their liability beyond standard risk allocation. Knowledge of FIDIC standards is thus only the starting point; expertise in detecting and eliminating hidden risks in Particular Conditions is key.

Contractual Risks and FIDIC Standards

Risks and Sanctions	How ARROWS Assists
Failure to manage claims and variations mechanisms according to FIDIC, leading to delays, disputes, and reduction of subsidies (due to subsidy time limits).	Professional training for employees or management including certification, focused on FIDIC contract administration and claim management. Connect with our Prague-based attorneys at office@arws.cz.
Signing a contract with Particular Conditions that disproportionately transfer risks (e.g., unpredictable geology, permits) back to the contractor.

Preparation or review of contracts (FIDIC Particular Conditions) and legal consultations protecting against disproportionate risk transfer. For an immediate solution to your situation, email us at office@arws.cz.

Loss of the possibility to claim for design documentation defects, as you bear full responsibility for the project in D&B (defense under Section 2630 of the Czech Civil Code is no longer applicable), leading to financial losses from work defects. 

Legal opinions on the scope of Design-Builder liability and support in internal contractual arrangements with the designer. Do not hesitate to contact our law firm in Prague – office@arws.cz.

Imposition of high contractual penalties for delay, which can reach CZK 50,000 to CZK 200,000 per day, even in situations beyond the contractor's control. 

Legal consultations that protect against penalties and assist with negotiating the proportionality of sanctions and claims for time extensions. Need legal help? Contact our Czech legal team at office@arws.cz.

Concentration of Liability: The Greatest D&B Risk for Contractors

While for the client D&B represents a method of transferring complex risk to a single contractor, for the Design-Builder it means an extreme concentration of legal and financial liability under Czech law.

Full Responsibility for Design and Execution

In D&B, the contractor bears responsibility for both the preparation of project documentation and the actual implementation. This automatically eliminates the possibility, which exists in DBB, to argue that a defect in the work arose as a result of faulty design documentation provided by the client. 

The contractor loses the ability to defend themselves using the case law of the Czech Supreme Court, which in the traditional model requires the contractor to act with due care and identify only discoverable defects in the design documentation. In D&B, the design liability is full and irrevocable.

Risk Transfer and Pricing

D&B practice in the Czech Republic brings specific and potentially costly risks that require close attention, such as issues related to subsoil conditions or lengthy permitting processes.

Incorrect legal allocation of risks has a direct financial impact. If the client allocates risks that the Design-Builder cannot control, there is a high probability the contractor will reflect these risks in the total price through a financial reserve, making the project more expensive. 

Legal expertise that helps the client correctly and proportionately allocate risks (e.g., by setting precise boundaries of responsibility for geological surveys) serves as a mechanism for optimizing total project costs, as it reduces the Design-Builder's uncertainty and leads to lower bid prices.

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Critical Phases of Procurement and Czech Anti-Monopoly Office (ÚOHS) Case Law

In addition to risk allocation in the preparatory phase, the subsequent phases of the procurement process and contract performance are crucial, where there is a risk of tender cancellation and financial sanctions.

Management of Commitment Changes: Extra Work and Legislative Limits

The greatest risk after signing a contract is the need for a change in commitment (variations) that would exceed the legal limits set by the Czech Public Procurement Act (ZZVZ) and be classified as a material change. The Czech Office for the Protection of Competition (ÚOHS) has a strict practice in this area, especially regarding additional construction work (extra work). 

These can only be commissioned in a negotiated procedure without publication if cumulative conditions are met, primarily not exceeding 20% of the original public contract price (for construction works). A critical finding of the ÚOHS is the strict prohibition of any "deductions" of the financial value of less-work from the financial value of extra-work for the purpose of reducing the total volume of the change. 

Only the total material sum and the total financial value of the increase are monitored. In cases where the total volume of extra work exceeded 20% of the original contract price, the procedure was found to be in violation of Czech law. Although D&B is intended to reduce the risk of unexpected additional costs, the strict interpretation of limits by the ÚOHS means that every necessary change must be handled with maximum legal caution to avoid jeopardizing the entire contract.

 Risks During Implementation and Contract Amendments

Risks and Sanctions	How ARROWS Assists
Material change of commitment (extra work) exceeding the 20% price limit, leading to illegality, cancellation of the public contract, and risk of subsidy reduction.	Legal analysis and assessment of amendments to the contract and extra work to ensure compliance with the rules of Section 222 of the Czech Public Procurement Act. Our Prague-based attorneys are ready to help – write to office@arws.cz.
Strict prohibition of deducting less-work from extra-work for the 20% limit, leading to an unexpected breach of the legal price increase limit.	Legal opinions on change management and professional training for project managers regarding the strict limits of the Czech Public Procurement Act. Connect with us at office@arws.cz.
Risk of subsidy reduction by the provider due to formal errors in the procurement process or unauthorized change management.	Defense against subsidy reduction and representation in proceedings before control authorities and audits in the Czech Republic. For an immediate solution to your situation, email us at office@arws.cz.

Qualification and Defense of Abnormally Low Tender Price (ALTP)

For contractors in D&B tenders, the bid preparation phase is critical and must be flawless and fully compliant with the client's requirements. Qualification requirements must be set proportionately and directly relate to the subject of the public contract, as inappropriate settings are the most common means of discrimination.

It is important to strategically prepare a defense for the bid price, especially if it is evaluated by the market as abnormally low. In D&B, where the contractor assumes more risks, the ALTP defense must be robust and convincing to prevent unjustified exclusion.

Legal support is essential here for a detailed review of the bid and analysis of the tender documentation before submission, including the timely filing of objections against discriminatory conditions under Czech legislation.

ARROWS: Your Strategic Partner for Design & Build Projects

The complexity and high concentration of legal risks in the Design & Build method require a partnership with a law firm in Prague that can strategically integrate construction law, public procurement regulatory law, and the specifics of FIDIC contractual standards.

Ensuring Legally Watertight Processes and Documentation

The ARROWS law firm provides comprehensive legal services for both contracting authorities and contractors. For public contracting authorities in the Czech Republic, preventing challenges is paramount. ARROWS assists with the preparation of complete and legally watertight tender documentation, setting reasonable and defensible qualification criteria, and defining functional requirements. This minimizes the risk of fines from the Office for the Protection of Competition (ÚOHS) and the cancellation of the tender.

For contractors, preparing a flawless bid is key. Our Prague-based attorneys perform detailed analyses of tender documentation, identify risky clauses in FIDIC Particular Conditions, and help assemble bids while minimizing formal errors. We also ensure the preparation of robust justifications for abnormally low tender prices (ALTP) that will stand up to the strict scrutiny of the contracting authority and the ÚOHS.

Strategic Management of Contractual Disputes and Variations

During the execution of a D&B project, expert support is critical for claim management. ARROWS provides advice on asserting and defending claims for time and money, effectively managing operational and strategic risks under Czech law.

Legal support in resolving variations and extra work is also essential, where the strict limits of the Czech Public Procurement Act (20%) require precise assessment of contract amendments. Our law firm ensures that any changes to the commitment comply with the rules for material changes under Section 222 of the Public Procurement Act, thereby minimizing the risk of the entire contract being challenged or cancelled.

In the event of disputes, ARROWS provides comprehensive representation in objection proceedings before the contracting authority and in subsequent proceedings before the ÚOHS and Czech administrative courts.

Global Dimension: ARROWS International for Complex Projects

Given that large infrastructure D&B projects often involve international consortia, foreign subcontractors, or are funded by EU funds, an international reach is crucial. The ARROWS law firm provides legal services in the Czech Republic, the EU, Asia, Africa, and the Americas.

This global network is vital for clients involved in cross-border public procurement. Considering that public procurement regulations in the Czech Republic are based on EU directive requirements, ARROWS provides support that aligns with international standards and is capable of addressing legal issues concerning foreign partners and jurisdictions.

Collaboration is an Investment in Predictability

The Design & Build method offers public contracting authorities and contractors speed, efficiency, and a comprehensive transfer of responsibility, which is essential for 21st-century projects. However, this efficiency comes at the cost of a high concentration of legal risks and constant oversight by the ÚOHS.

The success of a D&B project depends not only on engineering prowess, but primarily on first-class legal preparation and strategic risk management. Incorrect risk allocation (geology, permitting) leads to overpriced bids, and a formal error in setting qualifications or managing contract changes (extra work) can lead to the cancellation of a multi-billion CZK tender.

The ARROWS law firm in Prague offers expertise that bridges technical specifications with the rigid legal framework of the Czech Public Procurement Act and FIDIC contractual standards. Thanks to our deep knowledge, ARROWS can transform complex regulatory rules into a strategic advantage for our clients. 

Professional legal support at every stage of a D&B project – from precise preparation of Tender Documentation and defining risk allocation, to defending qualifications and ALTP, through to managing claims and variations during performance – is an investment in predictability and the minimization of costly disputes for both contracting authorities and contractors.

FAQ – Frequently Asked Legal Questions on Design & Build Public Procurement in the Czech Republic

1. What are the biggest differences in liability between D&B and the traditional DBB model?

In the D&B model, the contractor (Design-Builder) bears comprehensive responsibility for the entire project, including the design (project documentation) and the actual execution. In contrast, in DBB, responsibility is shared with the contracting authority/designer, with the contractor only liable for obvious design defects. In D&B, the contractor cannot defend themselves by citing defective documentation from the contracting authority. If you are dealing with a similar issue, contact our Czech legal team at office@arws.cz.    

2. What is the role of FIDIC contracts (Yellow Book) in Czech D&B tenders? 

The FIDIC Yellow Book is the de facto standard for D&B contracts in the Czech Republic. Its use and knowledge of mechanisms such as claims and variations often even become qualification criteria. FIDIC helps structure risk allocation, but it is necessary to check the Particular Conditions, which can disproportionately alter the standard. Do you need legal assistance with contract review? Write to us at office@arws.cz. 

3. What are the risks if we exceed the limit for extra work after signing a D&B contract? 

If the value of additional construction work (extra work) exceeds 20% of the original contract price, it constitutes a material change to the commitment, which violates the Czech Public Procurement Act and can lead to the cancellation of the entire public contract and financial sanctions. Furthermore, the ÚOHS strictly prohibits offsetting "lesser work" against "extra work" for the purposes of this limit. Our Prague-based attorneys are ready to help – write to office@arws.cz.    

4. As a contractor, how can I protect myself against risks associated with unpredictable geology or permitting? 

In D&B models, these risks are often transferred to the Design-Builder. Appropriate risk allocation in the tender documentation and contract is key. If the allocation is unreasonable, the contractor must reflect the risk in the price. A legal consultation will help you set transparent boundaries of responsibility or prepare a price defense regarding risks. Get a tailored legal solution – write to office@arws.cz.    

5. Is it possible to use Preliminary Market Consultation (PMC) for D&B tenders? 

Yes, Preliminary Market Consultations (PMC) are highly recommended, especially for complex Design & Build projects in the Czech Republic. They allow the contracting authority to obtain market feedback, refine functional specifications, and justify the proportionality of qualification requirements before the Czech Office for the Protection of Competition (ÚOHS). It is a strategic tool for ensuring transparency under Czech law. For an immediate solution to your situation, please contact us at office@arws.cz.    

Do you prefer not to handle this issue alone? More than 2,000 clients trust ARROWS law firm in Prague, and we have been honored as Law Firm of the Year 2024. View our references HERE and it would be our honor to assist you with your legal matter. Initial inquiries are free of charge.

Disclaimer: The information contained in this article is for general informational purposes only and serves as a basic guide to the subject matter. While we strive for maximum accuracy, Czech legislation and its interpretation evolve over time. To verify the current wording of regulations and their application to your specific situation, it is essential to contact our Prague-based attorneys at ARROWS directly (office@arws.cz). We accept no liability for any damages or complications arising from the independent use of information from this article without our prior individual legal consultation and professional assessment. Every case requires a tailor-made solution under the Czech legal system; therefore, do not hesitate to contact us.