In a $57 million cash deal that is expected to close before the year is out, U.K.-based general contractor Balfour Beatty announced it has agreed to sell its design services and construction management firm Heery International to real estate behemoth CBRE Group.
Balfour Beatty said the sale would remove the potential for a conflict of interest when bidding on some U.S. projects as some jurisdictions do not allow a general contractor to bid on a project when it is also involved in other capacities.
The company will continue to partner with Heery, which has 19 offices and 530 employees in the U.S., according to Engineering News-Record.
These types of conflicts are simply a matter of perception in some circumstances, but they can be rooted in the law in others.
John-Patrick Curran, principal at Sive, Paget and Riesel in New York, told Construction Dive in October 2016 that the state of New York has laws preventing design–build on publicly funded projects as well as on private ones. That's due to an education law which states that only licensed design professionals can perform and be compensated for design services.
Case law has found that design–build is permitted as long as the construction company in question has a detailed contract with a design firm making clear each firm's roles. However, having both of those functions under the same roof would likely present a problem in that regard.
Curran added that a 2014 New York law permitting some state agencies to enter into design–build contracts doesn't change the education law, which raises questions around the legality of that type of arrangement.
Attorney Lisa Dal Gallo, a partner at California-based law firm Hanson Bridgett, told Construction Dive last year that more states are allowing design-build because "design-bid-build doesn't work" and that the more traditional delivery method can cause delays and cost overruns.
Last year, Orange County, CA, started construction on the first design–build highway authorized under a new state law allowing the method to be used on highway projects.
Still, there are some limitations to design–build work in California. Contractors must be in the lead position on the project, and the contract must be between the agency and the contractor. The architect of record would perform the design work.