Which option describes the most common arrangement for price certainty in PDB?

• A. Single contract approach
• B. Two-contract approach
• C. Lump Sum with incentives
• D. Open-book with guarantees

Answer: (B)

In this arrangement, price certainty is achieved by splitting the project into two separate contracts: one for the design work and one for the construction work. This setup gives the owner clear, defined price baselines for each phase, helping to control the overall budget from the outset.

Having a dedicated design contract fixes the scope and cost for design deliverables, so the owner knows what the design phase will cost. The construction contract then locks in the price for building the project based on that defined design, creating a second, separate price anchor. With costs defined in two places, changes and cost growth can be managed within the appropriate contract and tracked more predictably, reducing the risk that design changes will cause uncontrolled increases in the construction price.

This separation also tends to ease change management. If a design change is required, it can be priced within the design contract; if a construction change is needed, it’s handled within the construction contract. The owner gains better visibility and control over each cost element, which enhances overall price certainty.

Other approaches pool pricing into one agreement or rely primarily on guarantees or incentives to drive cost behavior. Those methods can blur cost drivers or depend on performance-based incentives, which may not provide the same straightforward, early visibility and control over both design and construction costs that a two-contract structure offers.